Legislation and Government Programs


Dissolution of the U.S.S.R. into the
C.I.S. and other independent states at the
end of 1991 resulted in the reevaluation
of the NDS. The absence of a single
large adversary encouraged many to
advocate reduction of the NDS. Others
argued that history has demonstrated the
need for a stockpile because periods of
relative peace have been interspersed with
conflict and that there is no reason to
expect this pattern to change. Based on
new international political conditions,
DLA submitted to Congress its annual
materials plan and identified the following
for disposal: 299,371 tons of chromite
ore in 1993, and 335,658 tons of
chromite ore and 43,359 tons of
ferrochromium in 1994.13
In accordance with the President's
November 1982 directive and Public Law
99-591, the DLA continued to upgrade
NDS chromite ore to high-carbon
ferrochromium. The Agency reported
conversion  of   chromite  ore  to
ferrochromium on a contract year basis.
DLA signed a contract with Macalloy
Corp., Charleston, SC, in 1990 to
upgrade NDS chromite ore. The contract
period covers the years 1990-94, the last
2 years of which are optional for DLA.
DLA contracted with Macalloy to have
chromite ore converted to about 73,000
tons ferrochromium between September
1992 and October 1993. DLA has the
option of extending its contract to have
about another 7,000 tons produced to
satisfy the public law mandating the
program. (See table 8.)
As part of its plan to modernize the
NDS, DLA contracted with Elkem Metals
Co., Marietta, OH, to upgrade NDS
nonspecification-grade  low-carbon
ferrochromium into electrolytic (vacuum
melting-grade) chromium metal. Elkem
converted low-carbon ferrochromium to
chromium metal in 1989, 1990, and
1991. In 1992, DLA contracted with
Elkem to convert low-carbon
ferrochromium to about 1,600 tons of
chromium metal. (See table 9.)


Strategic Considerations


Supply Security.-There is no
production of chromite ore in the United
States; primary consumption of chromium
by U.S. industry is by companies that use
chromite ore to produce ferrochromium,
chromium chemicals, and chromite
refractories and by chromium metal
producers that use ferrochromium.
World chromite ore reserves are
abundant, ensuring adequate long-term
supply. However, supply sources are
few and remote from the United States,
making supply vulnerable to disruption.
The problem for the United States is one
of national security. Ferrochromium is
essential to stainless and some alloy steel
production, which are in turn essential to
the domestic economy and to the
production of military hardware.
Use.-Strategic use of chromium is
primarily in the metallurgical and
chemical industries. Chromium is used
in stainless steel and nickel- and cobalt-
base  superalloys.   There  are  no
substitutes for chromium in these uses.
Stainless steel is essential to many
industrial applications. Superalloys are
essential to the production of gas turbine
engines and to other high-temperature
applications. Chromium chemicals are
used for metal surface treatment and
pigments.
Stockpile.-The NDS contains the
following chromium materials: chromite
ore, chromium ferroalloys, and chromium
metal. The purpose of the NDS is to
supply military, essential civilian, and
basic industrial needs of the United States
during a national defense emergency; by
law, the stockpile cannot be used for
economic or budgetary purposes.  In
addition to private and Government
stocks, there exists a large unreported
inventory of chromium contained in
products, trader stocks, and scrap. The
amount of these stocks varies with
demand and price of the material. Under
severe price pressures resulting from
primary chromium shortages, recycling of
consumer materials could add to the


supply.
Chromite ore must be converted to
ferrochromium before it can be used to
make steel. Prompt response during a
national defense emergency requires that
conversion be carried out by domestic
industry.     However,   domestic
ferrochromium production capacity is not
adequate to meet anticipated domestic
demand under mobilization conditions.
To ensure prompt NDS response to a
national defense emergency, the President
chose to convert stockpiled chromite ore
to ferrochromium. Changes in industrial
capacity and new manufacturing and
technological developments have rendered
selected chromium materials in the NDS
inventory obsolete, either in quality or
form or both, and in need of upgrading.
Subsequent to legislative mandate, DLA
began modernizing chromium materials in
the NDS by converting nonspecification-
grade low-carbon ferrochromium into
chromium metal. (See Legislation and
Government Programs section of this
report.)
As a result of reduced threat to the
territory of the United States, stockpile
goals have been reduced and may be
reduced further. Disposals of stockpile
material have been made and were
expected to continue until all excess
material is disposed. Disposal takes the
form of sale or payment for services
contracted by DLA. In 1993, the DLA
disposed of 192,000 tons of metallurgical-
grade chromite ore and 59,000 tons of
high-carbon ferrochromium, together
containing about 97,124 tons of
chromium. (See table 9.)
Issues
World ferrochromium production
capacity in 1993 significantly exceeded
demand, resulting in low capacity
utilization.  Strong  demand   for
ferrochromium, resulting from high levels
of stainless steel production worldwide in
1987-89, resulted in ferrochromium plant
expansions and new plant construction.
Since 1970, the trend has been for
ferrochromium production capacity to
move from major stainless steel-
producing countries (e.g., Japan, the


CHROMIUM-1993






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