Ferroalloy Ores, Except Vanadium

SIC 1061

Companies in this industry

Industry report:

This category covers establishments primarily engaged in mining, milling, or otherwise preparing ferroalloy ores, except vanadium. The mining of manganiferous ores valued chiefly for their iron content is classified in SIC 1011: Iron Ores. Establishments primarily engaged in mining vanadium ore are classified in SIC 1094: Uranium-Radium-Vanadium Ores, and those mining titanium ore are classified in SIC 1099: Miscellaneous Metal Ores, Not Elsewhere Classified. The ferroalloy classification includes the following ores: chromite, chromium, cobalt, columbite, ferberite, huebnerite, manganese, manganite, molybdenite, molybdenum, molybdite, nickel, psilomelane, pyrolusite, rhodochrosite, scheelite, tantalite, tantalum, tungsten, wolframite, and wulfenite. While production and consumption of particular ores can vary as much as their names, industry-wide trends tend to influence ferroalloys as an overall group of ores serving related applications responding to similar market forces.

Industry Snapshot

The ferroalloy industry is serviced by dozens of international mining companies, often with special subsidiaries responsible for specific alloys. As ferroalloys are primarily used in the production of steel, the state of worldwide steel production impacts that of the ferroalloy industry. Ferroalloys serve three main functions in steel: they help eliminate undesired elements such as oxygen and sulfur; they impart special characteristics, such as heat- and corrosion-resistance and strength; and they neutralize undesirable elements in the steel. The leading ferroalloy producers are China, South Africa, Ukraine, Russia, and Kazakhstan, accounting for 70 percent of the worldwide total.

From 1989 onward, ferroalloys underwent substantial market decline, largely spurred by a decline in steel production in the United States and other Western nations. Several economic factors placed continued strain on steel--repercussions from the oversupply and price boom of the late 1980s, a flood of exports from Commonwealth of Independent States (CIS) and China, and the lingering effects of worldwide economic recession in the early 1990s. A glut of low-priced imports forced many ferroalloy companies, including world giants, to drastically reduce production and contend with losses and severely reduced profits. Moving into 1993, established market economy countries (EMEC) did not compensate for these factors with sufficient reduction of output, resulting in growing inventories and uncomfortably low commodity prices. From 1993 onward, stainless steel producers in the Western World experienced an annual growth of about 10 percent per year, forcing many to operate at full capacity. However, ferroalloy production forged ahead in anticipation of future demand a little too soon, causing a market flooded by ferroalloys.

By the mid-1990s, industry analysts anticipated a turnaround in the nonfuels minerals industry, particularly in metals. With modernized plants, lower operating costs, and more efficient workforces, producers were poised to capitalize on moderate economic expansion. Although forecasts for the late 1990s indicated increases in commercial building construction, infrastructure projects, and the motor vehicle industry, demand for many types of steel and, consequently, for ferroalloys remained low due to an unanticipated economic recession in the United States, which was worsened by the terrorist attacks of September 11, 2001.

During the latter 2000s, a global economic recession caused new construction to fall off, and some categories of ferroalloys fell off dramatically during 2009. China, which had been growing rapidly, suddenly contracted its growth, causing a significant global decline in the demand for certain ferroalloys. However, by 2010, demand had once again begun to grow slowly, and once very pessimistic outlooks were replaced with small glimmers of anticipation of increased demand and, consequently, price hikes. Nonetheless, ferroalloy dealers anticipated a long road to full recovery that would last well into the early 2010s.

Organization and Structure

The Market.
Like mining in general, the ferroalloy industry is organized along the complex lines of worldwide consumption and supply, with different countries consuming different metals--in varying quantities--according to the demands of their industrial bases and capital goods markets. The London Metal Exchange (LME) served as the general barometer of price fluctuation in metals trading, reflecting the ever-shifting balance between world demand and supply of those commodities.

Ferroalloys and the Former Soviet Union.
Due to the complexity of international forces governing consumption and supply, however, the industry's organization seemed anything but organized, as evidenced by the turmoil following the collapse of the Soviet Union in the early 1990s. Before that event, the metal mining industry was still coping with the adverse effects of a recession taxing the Anglo-Saxon economies and eventually Japan and Germany as well. For the most part, metal mining companies weathered the storm by repairing their balance sheets with high metals prices in the late 1980s. Industry stocks were cautiously maintained at low levels, while the rapid growth of newly-developing countries translated into new demand for most metals minerals and ferroalloys.

The collapse of the Soviet Union, however, placed tremendous strain on the supply side of the metals industry with no apparent let-up in sight. Seeking hard currency to prop up its staggering economy, the Commonwealth of Independent States (CIS) began aggressively exporting any commodities of immediate value, with LME-traded metals and precious metals at the top of the list. The old Soviet Union had been a leading customer for ores as well as the world's leading producer of iron ore, lead, manganese, nickel, and potash. The crisis prompted convulsions in the economies of Russia and other republics and caused severe industrial production problems, affecting a virtual halt to imports of minerals and metals. Consequently, Western stocks soared and prices plummeted, forcing Western mining companies to slash capital spending and exploration expenditure to a minimum and absorb serious short-term losses.

While the CIS might have lessened supply of metals exports, Chinese producers filled in the holes, resulting in an abundance of metal on the market. Many analysts predicted that the CIS would not only develop substantial new markets for metals, but that it would become a net importer as well. China's ore grades were lower than in Western countries, and mine output was falling, while production costs rose. For example, the worldwide market continued to rely on China and the CIS for most of its tungsten; however, by the end of the 2000s, China dominated the market while Russia had tumbled to a distant second.

Background and Development

The mid-nineteenth century saw an explosion in U.S. mining, with the discovery of great mineral deposits, the development of transcontinental railroads, and a rapidly growing population. Responding to such growth, the American Institute of Mining and Metallurgical Engineers (AIME) was founded in 1871 (it was eventually renamed the American Institute of Mining, Metallurgical and Petroleum Engineers in 1956). Since that time, the ferroalloy industry became fundamentally international in scope, depending on worldwide producers to stabilize the delicate balance between consumption and supply and thereby stabilize prices.

From the mid-1980s onward, several new factors further influenced the industry. Roughly 100 years after the beginning of the industrial revolution that proved so bountiful for ferroalloys, many western countries, particularly the United States, began a trend of deindustrialization, with employment in industrial areas shifting toward service-oriented sectors. In 1986, the U.S. Department of Labor included ferroalloy ores mining on a list of industries that were expected to experience more than a 20 percent decline in output over a 15-year period.

With diminished threat of war with the former Soviet Union, attention shifted to management of the so-called "peace dividend," which included some funds that would have been formerly allotted to ferroalloys in the defense industry. In 1992, the U.S. Department of Defense announced an ambitious plan to sell many of its stockpiles of ferroalloys, including cobalt, nickel, manganese metal and ore, ferromanganese, derrochrome, chrome ore, and silicon carbide. Debate continued over the wisdom of the sales, however, spurring mixed reactions from legislators and ferroalloy industry groups. The government stockpiles have been severely depleted since that 1992 decision, and sales now have little effect on the market.

Starting in 1995, steel production began a decline that has affected prices and demand for many ferroalloys. By 1997, the steel market appeared to have settled down and prices were on the verge of rising, which in turn could have had a domino effect on the ferroalloys industries. However, the U.S. economic recession of the early 2000s pushed both specialty steel and stainless steel consumption down 17 percent in 2001, according to the Specialty Steel Industry of North America. U.S. ferroalloy production declined 10 percent in 2002. Exports declined 18 percent, and imports increased 11 percent, according to the U.S. Geological Survey.

The early 2000s saw a deterioration of the domestic ferroalloy industry performance, reflecting a fall in Western world steel production, a sustained flood of exports from the CIS and China, and a backlash from oversupply dating back to the late 1980s. A total of 33 U.S. steel companies declared bankruptcy between 1998 and 2002. Stainless steel production in 2002 declined 18 percent to 1.01 million metric tons.

Environmental Issues.
As world attention shifted increasingly toward environmental issues, the ferroalloy industry responded on numerous fronts. Issues such as waste water, waste disposal, and land reclamation placed additional planning and economic pressures on mining companies, prompting many to seek development in other countries with less stringent regulations. The minerals industry was primarily controlled by three environmental acts: The Resource Conservation and Recovery Act of 1976 (RCRA), regulating both hazardous and non-hazardous solid waste; The Clean Water Act (CWA), regulating surface water discharges; and The Clean Air Act (CAA), regulating air emissions. Many clauses included in these and other environmental acts met with industry resistance due to increased costs of doing business or even prohibition of some practices deemed standard in the past. In 1990, for example, the EPA required mine owners to comply with terms of the National Pollutant Discharge Elimination System, which called for the monitoring and testing of storm water runoff. The American Mining Congress challenged the rule but was overridden in a 1992 court decision. The result of such proposed legislation has been to force companies to take extra environmental precautions, incurring an added expense over the cost of producing the same metals in other countries. The effect has been to put American companies at a slight disadvantage, at least.

Federal Lands.
Another factor affecting the development of the ferroalloy mining industry--and, indeed, mining in general--was the availability of federal lands, which traditionally accounted for about 75 percent of U.S. metals mining. As minerals exploration and mining were dependent on access to these lands, growing efforts to limit or restrict access to federal lands for mining have understandably captured the industry's attention. Natural resource development prescriptions stipulated by the U.S. Forest Service and the Bureau of Land Management grew in scope. From the mid-1960s to mid-1990s, more than 96 million acres of federal lands were withdrawn from mineral entry and placed in the National Wilderness Preservation System. Compounding these debates about mining on federal land were ongoing reinterpretations of key elements in the 1872 Mining Law that determined issues of self-initiation, free access, and security of tenure for mining operations on federal lands.

Despite declines in the U.S. steel industry, worldwide demand for stainless steel has expanded at an annual average rate of 5.6 percent. Surveying the specific performances of key metals--nickel, chromium, molybdenum, cobalt, manganese, niobium, and tungsten--yields a clearer picture of the ferroalloy industry in general.

A highly ductile and heat- and corrosion-resistant metal, nickel is used primarily in stainless and specialty steel production, plating, and high-temperature superalloys. Total global production in 2007 was nearly 1.7 million metric tons headed by Russia (19 percent) and Canada (15.5 percent), followed by Australia (nearly 11 percent), Indonesia (nearly 9 percent), and New Caledonia (7 percent). When the only U.S. producer, Cominco Resources International Ltd.'s Glenbrook Nickel in Riddle, Oregon, was forced to curtail operations to cope with low metal prices in the late 1990s, the U.S. effectively exited the nickel mining industry. As of 2007, no active nickel mines existed in the United States; however, a mine was in development in 2007 in Michigan's Upper Peninsula. U.S. nickel consumption declined from 252,000 metric tons in 2006 to an estimated 231,000 tons in 2007.

Resistant to tarnish and corrosion, chromium--which derives its name from chrome, the Greek word for color, due to the lustrous nature of its compounds--is primarily used to produce stainless steel and to harden steel alloys. It is also used as corrosion-resistant decorative plating and as a pigment in glass. It is found primarily in chromite, a combination of iron, chromium, and oxygen. Increased demand for chromium in China pushed prices to historic highs in the early 2000s. As a result, both China and India began to export ferrochromium. Domestically, production of contained chromium via secondary sources climbed from 174,000 metric tons to 179,000 metric tons between 2005 and 2006 as imports decreased from 444,000 metric tons to 421,000 metric tons, gross weight of all grades.

First used widely in World War I to toughen armor plating, molybdenum is commonly used as an alloy to strengthen steel and inhibit rust and corrosion. Total world mine production equaled 185,000 metric tons in 2006, a slight decrease from the prior year but 26,000 metric tons higher than 2004. The United States was the leading producer with 32 percent, followed by China with about 24 percent and Chile with 23 percent. The three major molybdenum mines in the United States were the Henderson Mine located in Colorado, the Thompson Creek Mine located in Idaho, and the Questa Mine located in New Mexico. Molybdenum production in the United States rose significantly from 33,500 metric tons in 2003 to 59,800 metric tons in 2006. The United States exported 37,200 metric tons of Molybdenum in 2005, a drop from 46,400 metric tons in 2005. Imports for consumption over this period fell from 19,300 metric tons to 15,800 metric tons of contained molybdenum.

In use since at least 2250 B.C. as a colorant in Persian glass, cobalt is mainly used in high-temperature alloys, magnetic alloys, and hard-facing alloys resistant to abrasion. Though the United States had no mining or refining activities for cobalt in 2006, some mining resulted in insignificant amounts of a cobalt byproduct. Although a major consumer of cobalt, the United States stopped producing the metal in 1971. According to the U.S. Geological Survey, only three U.S. mines were developing the capability to produce cobalt during 2006, which were located in Idaho, Minnesota, and Michigan. Cobalt consumption by the United States decreased six percent in 2006 from the previous year though imports increased by five percent during that same time. Congo was the largest mine producer of cobalt in 2006 with about 41 percent of the market, followed by Zambia with nearly 12 percent, Australia with nearly 11 percent, and Canada with about 10 percent.

In addition to its critical role in steel production, manganese is used in dry-cell batteries, pig iron, animal feed, fertilizers, and other chemicals. The U.S. apparent consumption rose by 36 percent from 2005 to 2006, or about 1.05 million metric tons. Only a small amount of manganiferous material was mined during that year in South Carolina, which was utilized in brick coloring. Overall, manganese ore production increased by 8 percent in 2006 worldwide from the previous year, or 11.9 million metric tons. South Africa led in 2006 production of manganese ore with 19 percent, followed by Australia with 18 percent, China with 13 percent, Brazil with 12 percent, and Gabon with 11 percent.

Commonly known as columbium, niobium is one of the refractory metals primarily used as a microalloying element in high-strength and stainless steels. It is also a common ingredient in superalloys, popular in the aerospace industry, and carbide cutting tools. No substantive production has occurred in the United States since 1959. The U.S. apparent consumption of 10,072 metric ton in 2006 marked a 36 percent rise from the previous year. Brazilian mines accounted for nearly 89 percent of niobium production in 2007. Three mines are almost exclusively responsible for world niobium production: the Araxa mine and smelter of Companhia Brasileira de Metalurgia e Mineralcao (CBMM) and the Catalao mine operated by a subsidiary of the Anglo American Group, both in Brazil, and the Niobec, Quebec, mine in Quebec, Canada.

Also called wolfram, tungsten is found in wolframite and scheelite ores and is primarily used as a carbide to harden metal-cutting tools and as a alloying agent in steel making. Its good thermal and electric conductivity also make it very suitable for electric contact points and lamp filaments. China was by far the world's largest tungsten exporting country, with a mine output at almost 86 percent of the world's supply in 2007. Following China was Russia, Canada, Austria, Bolivia, Portugal, and North Korea. In 2006, the United States had no tungsten production though a California mine was reinstated with shipments resuming in October 2007.

Current Conditions

As of 2009, the United States had no active nickel mines. However, limited amounts of byproduct nickel were recovered from copper and palladium-platinum ores taken from mines in the western United States. According to the U.S. Geography Survey, 111 facilities, primarily located in Pennsylvania, Kentucky, West Virginia, and Illinois, used nickel in 2009. Forty-five percent of primary nickel consumed in the United States was used in stainless and alloy steel production; 39 percent in nonferrous alloys and superalloys; 11 percent in electroplating; and five percent in other uses. The 2009 estimated apparent primary consumption was 88,100 metric tons, valued at $1.32 billion.

In 2009, the United States had one functioning chromite ore mine, located in Oregon. During much of the 2000s, about 70 percent of chromium consumed in the United States was imported. Most of the remainder was obtained from recycled stainless steel scrap. In 2009 the United States consumed approximately seven percent of global chromite ore production in various forms (e.g., chromite ore, chromium ferroalloys, chromium metals, stainless steel). The value of chromium material consumption in 2008 was $1.28 billion but declined to an estimated $320 million in 2009. Apparent consumption (including recycling) was 260,000 metric tons in 2009.

In 2009, 11 U.S. mines produced molybdenum ore. Four mines (one each in Colorado, Idaho, Nevada, and New Mexico) produced primary molybdenum and ten copper mines (seven in Arizona, plus one each in Colorado, Nevada, and New Mexico) recovered molybdenum as a byproduct. U.S. production totaled 50,000 metric tons in 2009, down from 55,900 metric tons in 2008. Total value of production in 2009 was approximately $1.3 billion. Iron, steel, and superalloy producers consumed about three-fourths of all molybdenum used in the United States in 2009.

No primary cobalt was mined in the United States during the last half of the 2000s. In 2009, negligible amounts of cobalt byproduct were recovered from U.S. mining operations. Secondary cobalt totaled 1,700 metric tons in 2009. Imports totaled 7,300 metric tons in 2009, down from 10,700 metric tons in 2008. One U.S. company produced extra-fine cobalt powder and seven companies produced cobalt compounds. About one-half of cobalt consumed in the United States was used in superalloys, primarily in aircraft gas turbine engines. Total value of cobalt consumed in 2009 was approximately $270 million.

According the U.S. Geological Survey, the United States stopped producing substantial amounts of manganese ore containing 35 percent or more manganese in 1970. As such, in 2009, the United States was 100 percent dependent on imports for its supply of manganese. The world's major producers of manganese were China, Australia, and South Africa. Manganese ore consumed in the United States was primarily used to manufacture pig iron and ferroalloys. Other uses included the production of dry cell batteries, plant fertilizers, animal feed, and brick colorant. Eight U.S. firms dominated the consumption of manganese ore in 2009. Total value of consumption in 2009 was approximately $510 million.

Like manganese, the United State no longer reports any significant mining production of niobium. Although some sources of niobium are available in the United States, most are not economically feasible to recover, and active mining has not taken place since the late 1950s. Relying on imported sources, U.S. companies use niobium to produce ferroniobium and other compounds and alloys that are primarily used in the steel industry, which accounts for over 75 percent of niobium consumption. The aerospace industry is the primary end user. As measured by the value of imports, the estimated value of consumption in 2009 was $108 million, down from $324 million in 2008. Apparent consumption fell to an estimated 2,200 metric tons in 2009, down from 8,450 metric tons in 2008.

About eight U.S. companies processed tungsten concentrates or other tungsten products to make tungsten powder, tungsten carbide powder, and tungsten chemicals. The United States had one active mine in California in 2009 that produced tungsten concentrates. About one-half of tungsten was consumed as cemented carbide parts on cutting and wear-resistant materials in the construction, metalworking, mining, and oil- and gas-drilling industries. Other uses included heavy alloys for high density applications, electrodes, filaments, wires, and other electronic applications. Apparent consumption in 2009 was estimated at 10,800 metric tons, valued at about $400 million.

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