Primary Smelting and Refining of Nonferrous Metals, Except Copper and Aluminum

SIC 3339

Companies in this industry

Industry report:

This classification covers establishments primarily engaged in smelting and refining nonferrous metals, except copper and aluminum. Establishments primarily engaged in rolling, drawing, and extruding these nonferrous primary metals are classified in SIC 3356: Rolling, Drawing, and Extruding of Nonferrous Metals, Except Copper and Aluminum, and the production of bullion at the site of the mine is classified in various mining classifications.

Industry Snapshot

This industry supplies nonferrous metals for further consumption to secondary smelting and refining establishments. The metals refined include antimony, babbitt, beryllium, bismuth, cadmium, chromium, cobalt, columbium, germanium, gold, iridium, lead, magnesium, nickel, platinum, rhenium, selenium, silicon, silver, tantalum, tellurium, tin, titanium, zinc, and zirconium. These metals are extracted from their ores and poured into basic shapes, such as slabs, pig molds, or ingots.

According to industry statistics from Dun & Bradstreet, the total number of operations in this industry was 363 in 2010. Together these establishments generated $5.0 billion in revenues and employed 10,732 people. The majority of the refineries were located in Florida, California, and New York.

Background and Development

In its March 1999 issue, Engineering and Mining Journal reported on the market status of many of the metals in this industry, including cobalt, lead, nickel, and zinc. Lead experienced increased consumption due to steady demand for lead acid batteries. The lead market had been depressed in the early 1990s, recovering in the mid-1990s. Lead prices on the London Metal Exchange (LME) averaged 28 cents per pound in 1995 and 1997, peaking in 1996 to 35 cents per pound; the price continued to fall to 24 cents per pound in 1998. Seventy percent of domestic lead production, however, occurred at secondary smelters, which primarily recycled lead acid batteries, leaving only 30 percent of production for primary smelters.

Cobalt prices plummeted in 1998 due to weak end-markets and inventory stockpiling. Producers had been hoping for price reductions to spur consumption, but the price fell further than expected while consumption failed to increase, creating an imbalance. The future of the cobalt market promised continued consolidation to weather its fluctuations. Similarly, nickel prices plunged 33 percent in 1998, averaging $2.13 per pound across the year. Western consumption grew slightly, while Western production grew 2.3 percent to 713,000 metric tons. These conditions combined to create a volatile market for nickel, with recovery at the mercy of global economic growth. Zinc experienced similar market conditions, with prices on the LME falling from 48.7 cents per pound at the opening of 1998 to 41.6 cents per pound at the year's close, averaging 46.5 cents per pound, representing a significant decrease from 1997's average of 59.8 cents per pound. Western consumption similarly declined.

Shipments in 2001 were less than half the value of industry shipments in 1997. Refined primary zinc, which accounted for 17.2 percent of industry shipments in 2001, saw the value of goods shipped decline from $542.9 million in 2000 to $490.3 million in 2001. The value of goods shipped for the primary precious metals and precious metal alloys sector, which made up 18.8 percent of industry shipments in 2001, dropped from $549.2 million to $537.1 million over the same time period.

Shipments of primary nonferrous metals, not elsewhere classified, had declined steadily throughout the late 1990s and early years of the first decade of the 2000s, before beginning to increase. Between 2000 and 2001, total industry shipments declined from $2.77 billion to $2.2 billion. They rose steadily in the early 2000s to over $3.6 billion in 2005.

In 2008, primary nonferrous metals, not elsewhere classified, operations held 28.1 percent of industry share, employing 4,076 and shipping $905.4 million. The primary precious metals sector operated 108 refineries, which accounted for 33 percent in market share, with 1,756 employees and shipments of more than $1.1 billion. With just eight operations and 1.8 percent in market share, beryllium manufacturers shipped $911.3 million. Additional leading industry performers included zinc smelting (primary), including zinc residue, which generated $550 million; silicon and chromium shipments that totaled $437.5 million; lead smelting and refining (primary) valued at $244.3 million; and gold refining (primary), with $212.4 million shipped.

In the late years of the first decade of the 2000s, the bleak outlook for nonferrous metals remained. Refined metal production was expected to climb 1 percent if at all in 2009. "With the construction and transportation sectors likely to remain in recession for some time, expect the biggest fall in global zinc consumption since the late 1980s and early 1990s," Sean Sexton of Fitch Ratings in New York told Purchasing in March 2009.

For example, Horsehead Holding Corp., parent to zinc producer Horsehead Corp., saw its net income fall dramatically during the last quarter of 2008, to $6.3 million compared to $17.2 million in 2007. The company blamed zinc prices that plummeted some 55 percent. "The fourth quarter was unprecedented in the speed in which market conditions deteriorated," Jim Hensler, president and CEO of Horsehead told Pittsburgh Business Times in March 2009. Horsehead cut production as well as part of its workforce in order to offset the challenging conditions.

Current Conditions

By 2010, the United States did not have any operational nickel or cobalt mines, although a few companies produced cobalt compounds and nickel byproducts. Missouri was the main source of mined lead in the early 2010s, according to the U.S. Geological Survey, with Alaska and Ohio also contributing to the 400,000 metric ton total. One smelter-refinery in Missouri processed primary lead, whereas 20 other plants produced secondary lead. Prices of lead had declined due to a surplus resulting from the economic recession and a decrease in demand; the LME price for lead in 2010 stood at an average of 94 cents per pound. In 2010 zinc was mined in 12 states and was valued at about $1.6 billion. The LME price was around $1 per pound. Co-products of zinc mining and smelting included lead, sulfuric acid, cadmium, silver, gold, and germanium.

Industry Leaders

The Renco Group Inc. of New York City reported sales of $5.0 billion in 2010 with 12,000 employees. Part of the Renco Group and the second largest lead smelter, Doe Run Co. had operations in Arizona, Missouri, and Washington. The company recycled some 150,000 tons of lead every year. Former leader Horsehead Industries Inc. filed for bankruptcy in 2002, and the new company, Monaca, Pennsylvania-based Horsehead Holding Co., formed in late 2003. By 2010 the company had facilities in Illinois, Oklahoma, Pennsylvania, Tennessee, and Texas. Revenues in 2010 were $382.2 million with about 1,100 employees.

Research and Technology

In 1993, researchers at the National Institute of Standards and Technology (NIST) in Boulder, Colorado, announced they had developed a new alloy. The alloy was a combination of nickel, chromium, manganese, molybdenum, copper, nitrogen, and iron that could withstand temperatures below -269 degrees Celsius (-516 degrees Fahrenheit). Its intended use was for fusion energy studies, superconducting magnets, and physics experiments funded by the U.S. government. The importance of the alloy lay in welding seams in superconducting magnets, which must resist fracture in such low temperatures. In 2000, the NIST developed another new alloy, which was a combination of tin, silver, and copper that was designed to offer a non-lead-based alternative for the manufacture of electronic equipment.

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