The MacNeil/Lehrer Report; 6253; Strategic Metals

ROBERT MacNEIL: Good evening. In World War II it wasn`t a shortage of oil which halted the Nazi war machine; what they ran out of was chromium. That`s the kind of warning the Defense Department has been uttering recently, and has found a ready listener in Ronald Reagan. In March, the President said it`s now widely recognized that our nation is vulnerable to sudden shortages in basic raw materials that are necessary to our defense production base. Since then, the administration has mounted a campaign to build up stockpiles of vital metals. Last week, for example, they asked the Congress to approve selling 52 million ounces of government-owned silver to finance stockpile purchases. The administration is also considering subsidies to encourage domestic producers of minerals like cobalt. There are four different bills before Congress on bolstering the strategic metals position. The Senate Armed Services Committee opened hearings on the matter today. But there are a lot of skeptics around. Some say the U.S. isn`t nearly as vulnerable as claimed. Some see the anxiety as a cover for mining interests to get access to federal lands. Others feel it`s just a rationale for friendlier relations with mineral-rich South Africa. Tonight, the complicated politics of chromium. Jim?

JIM LEHRER: Robin, chromium is one of 36 minerals the United States considers strategically important. Our supply of 20 of those comes all or partly from abroad. That includes the most critical from a military standpoint -- cobalt and titanium as well as chromium -- which go into things like gun barrels, armor plate, and airplane engines and fusillages. Take the F-16 fighter plane, the kind we sell to the Israelis and was used in that Iraqi nuclear reactor raid last week. An F-16 jet engine alone requires 5,366 pounds of titanium, 1,656 pounds of chromium, and 910 pounds of cobalt. Eighty-eight percent of our titanium is imported, but the major supplier is Australia, so that`s not considered that big a problem. But for chromium and cobalt it`s a different story; 90 percent of each comes from overseas: the chromium from Zimbabwe, South Africa and the Soviet Union; two-thirds of our cobalt from the African nations of Zambia and Zaire. The problem of depending on the Soviet Union as a reliable supplier in times of armed trouble or political turmoil are obvious. The same goes, say some officials, for the others, making our supply of these minerals vulnerable to a cutoff at any time. Robin?

MacNEIL: Those who say the United States is vulnerable to strategic metals shortages base their argument on the changes in the international market for those metals, including the behavior of the Soviet Union. One such interested expert is Simon Strauss, director of ASARCO, one of the world`s largest metal and mining companies. Mr. Strauss is also chairman of the minerals availability committee of the American Mining Congress -- the industry`s trade association. Mr. Strauss, what has happened to the market and supplies of these metals to make people think the U.S. is vulnerable?

SIMON STRAUSS: Well, really nothing new has happened. We`ve been vulnerable all along. Our import dependence on chromium and cobalt, since you mentioned those two. has been a persistent factor with us ever since World War II. As a matter of fact, during World War II, we were so concerned about chromium that efforts were made to bring into production the low- grade deposits that exist in southern Montana at very great expense. Some chromium was produced; the quality was poor. And the result was that we decided we would be better off having a stockpile.

MacNEIL: Well, why all this anxiety now. then?

Mr. STRAUSS: Well, because in some cases, due to changes in stockpile policies over the years, we don`t have the quantities in the stockpile that appear to be needed. Secondly, because of the political instability in some of the areas where the materials are produced. That is a relatively new feature in the case of cobalt. I`m not taking issue, now. with independence for Zaire and Zambia, but it is a fact that when those two countries were colonies of Belgium and Great Britain, there was a fairly stable economic and political regime. It may not have been satisfactory but it was stable. Today, there are evidences of instability in both of those countries.

MacNEIL: What are the countries that give us most anxiety that way -- as potentially unstable sources of these minerals?

Mr. STRAUSS: Well, I think the greatest source of anxiety is for the handful of materials which come predominantly either from the Soviet Union or South Africa. I should say southern Africa. It`s an accident of both geology and geography that the bulk of the world`s production of chrome, cobalt, the platinum metals -- which has not been men-tioned but which is very important -- and manganese, without which we can`t make steel, are concentrated in these countries. Now the Soviet Union is our potential adversary. And South Africa is a country which many people feel we ought to stop doing business with.

MacNEIL: How dependent are we on the Soviet Union as things now stand?

Mr. STRAUSS: As things now stand, we do not import very much from the Soviet Union, but that is the alternate source if we cut off trade with South Africa.

MacNEIL: What do you think we should be doing about this vulnerability?

Mr. STRAUSS: Well, I think in the first place that where possible we ought to build up the stockpile to the objectives which have been established, which unfortunately are not --

MacNEIL: -- simply to go out and buy on the market?

Mr. STRAUSS: That`s right. However, there are potentials for production of two of these metals that I`ve mentioned in the United States. One is cobalt and the other is the platinum group metals. Environmental factors may or may not constrain the production of those. I do not think that we ought to be subsidizing the production of these metals, but we oughtn`t to be putting roadblocks in the way of production of these metals if we can develop an industry at home. There is a very substantial deposit in southern Montana of platinum metals, which a former director of the Geological Survey said he thought could supply a very large part of our need. Now, Montana is one of our most environmentally conscious states, and there may be problems about bringing those mines into production. Two or three major exploration efforts are underway. Even if there are no constraints, the chances are that production cannot begin before 1985 or 1986.

MacNEIL: In other words, build up the stockpiles in the meantime?

Mr. STRAUSS: Correct

MacNEIL: Thank you. Jim?

LEHRER: Not everybody thinks our dependence on overseas sources for these important metals makes us that vulnerable. Our one mineral expert who doesn`t is Bruce Netschert, ; vice president of National Economic Research Associates, a private consulting firm here in j Washington. Are we not as vulnerable as Mr. Strauss says we are?

BRUCE NETSCHERT: No, I don`t think we are because I think it`s a mistake to equate dependence in a high degree on vulnerability. And that`s what`s being done. Let me illustrate what I mean. Suppose that we were to have the entire supply of some minerals such as chromium that we import from overseas cut off for an entire year. We could go through that entire year and the average person would never even know it had happened. In contrast to what happens when we get just a small portion of our oil supply cut off. this is an immediate thing.

LEHRER: Now. why is that?

Mr. NETSCHERT: This happens for two reasons, among others. One of them is the nature of the use of the minerals. When we import a gallon of oil. and we put it in our tanks and drive 20 miles, it`s gone. When we import a pound of cobalt, a pound of any of these ferroalloy materials, mix it with steel and other materials, its use takes a long period of time. It may be years. It`s going into durable goods, into structures, into appliances, and we can in effect decide when we have used up those materials. So if we have such an interruption, the main thing would be that we would just continue to use things longer than we otherwise would have. People would be out of work in those industries that couldn`t get the supply, but we would not be threatened to the very fabric of our society.

LEHRER: But. what about the need to build new jet lighter planes if you didn`t have chromium to put in the engines?

Mr, NETSCHERT: That`s the second point.

LEHRER: Okay

Mr. NETSCHERT: The second point is that most of these materials are intersubstitutable. They all -- -

LEHRER: Intersubstitutable?

Mr. NETSCHERT: They can substitute for each other in varying degrees, and - -

LEHRER: In other words -- let me stop you there for a minute. For instance, let`s say the supply of chromium is cut off: we could make up for it if the titanium supply remained in good shape?

Mr. NETSCHERT: Well, that`s not quite --

LEHRER: That`s not a good example. Okay.

Mr. NETSCHERT: And you did happen to hit one of the worst ones because chromium does happen to be essential in stainless steel. On the other hand, most of these other alloys -- such as tungsten, molybdenum -- impart more or less the same qualities to steels in varying degrees. And you can get varying mixtures. Now it`s true that there`s one ferro-alloy that will do better than the others, but you`re not absolutely crippled if you have to do without it. For example, we have going right now, under government sponsorship, a research project called accelerated solidification in which the formation of the alloy is controlled in a way that may well do away almost entirely with the need for such metals as chromium and nickel in certain applications. It`s this kind of flexibility, you see, that we have that we don`t have in oil.

LEHRER: Do you think that there really is a resource war coming as some have pre-dicted?

Mr. NETSCHERT: No, I think that it`s -- it is, of course, a matter of perception, but I think that I would prefer to look to the simpler explanation. It`s true that the Soviet Union happens to be very interested in those southern African countries, but I think that`s because it`s an area it finds fertile ground for stirring up its own mess to our disadvantage. The fact that they may have minerals in addition which are important to us, I think, is just a plus to them. But you certainly can`t use that argument, for example, for what they may be doing in this hemisphere.

LEHRER: Do you think the situation -- in a nutshell -- requires us to do anything at all?

Mr. NETSCHERT: Yes. I agree with Mr. Strauss that the prime way to deal with this problem is through the stockpile. And if we decide to stockpile as much as we determine gives us essentially 100 percent protection from this vulnerability, we`re home free on it then. We don`t have to do anything else. And we are doing it, in a sense, because the stockpile, don`t forget, was built up for war purposes. Now war is a horrible consumer of materials, and so for many of these materials, the stockpile goal for war purposes -- which is a three-year conventional war -- is far larger than our annual consumption. And so it turns out, for example, that we have in the stockpile right now one full year`s consumption worth of manganese, two full years` consumption worth of cobalt, chromium, and mercury and tantalum, and three years` consumption worth of tungsten. So you see we are to a large extent already insulated in some of these materials. We fill up the stockpile with the others, and we have it.

LEHRER: No problem. Thank you. Robin?

MacNEIL: The leading voice in Congress advocating that more attention be paid to strategic minerals is Democratic Congressman James Santini of Nevada. Mr. Santini is chairman of the House Mines and Mining Subcommittee. Congressman, how vulnerable do you think the United States is in this matter?

Rep. JAMES SANTINI: I think the evidence that our committee has gathered over the last three years, in hundreds of hours of both individual investigation and research and committee hearings, suggest that there is a very, very serious problem there, and that we do a disservice to our national interest and national security concerns by trying to suggest that some sort of simplistic response with filling a hole or two in the stockpile is the answer to it. I really think that the West Germans sort of captured the magnitude of the problem. And I`ll use the mineral that Bruce was referring to -- chromium. The West Germans three years ago did a cabinet-level study, and in that study they took on a thesis: What would happen if 30 percent of the West German import of chromium were curtailed for one year? Thirty percent, one year. As a consequence, they concluded that there would be a loss of three million jobs, and there would be a reduction of 25 percent in the their gross national product. Now, I suppose it depends on what you call "serious," but it seems to me that suggests that there`s a very important problem there that should be addressed.

MacNEIL: Well, now you`ve heard what Mr. Netschert just said, that because of previous war requirements, there are stockpiles of one to two to three years depending on the metal stockpiled already in these strategic metals.

Rep. SANTINI: I think Undersecretary -- or Deputy Secretary -- Perry of the Defense Department last year addressed that when he recognized, "Yes, Congressman," in response to a question I had entailing this issue, "the problem is just about as serious as you`ve described it, and no. Congressman, the stockpiles are not the solution to the free world`s dependency upon certain vulnerable areas of this globe for critical minerals." He said, "Because for example, we have no nickel in our stockpile; for example, we have only 47 percent of our cobalt goal in that stockpile; for example, in chromium metal, we`re 80 -- the inventory is 81 percent short." Now -- and it`s illusory to look to that sort of magical pile of minerals as the panacea when push comes to shove if we found a serious curtailment of those supplies. And I think it`s self-deluding and self-defeating to hope that the stockpiles would be the sole answer.

MacNEIL: Okay, what do you think should be done?

Rep. SANTINI: I have proposed a solution in my National Minerals Security Act, which is a legislative initiative that I`ve offered and been joined in by almost 50 other members of the House of Representatives. I`ve proposed, number one. that we need a policy or a plan to address a worst-case scenario. Number two. I`ve suggested that we need a reassessment of the mineral inventory on the public lands. Number three. I`ve suggested we should bring our stockpiles up to par both in quantity and quality. And number four. I`ve stressed that we need to develop a foreign policy that recognizes the importance of foreign de-pendency on metals and materials. I think if we could bile off those important new directions for this nation, we would go a long way in addressing the fundamental problem of dependency on foreign sources.

MacNEIL: What do you say to those who say this emphasis on opening up the public lands to mineral exploration is that mining interests are just using this concern for strategic metals as a kind of cover to get in there and get the lands opened up?

Rep. SANTINI: I say, "Nonsense." I say that because in the last 15 years, we have seen a situation where one-third of the national land base -- the public lands -- has been systematically excluded, effectively excluded from mineral exploration or recovery. We are now in a situation where 68 percent of the public lands are. in practical terms, off-limits to even looking for what mineral resources we have there. Not all those lands contain mineral resources, nor do I suggest that we have to create an upheaval in terms of the legislative initiatives we`ve seen in the environmental area. I am suggesting that that pendulum has swung much too far in one direction, and it should be brought back to center or balance.

MacNEIL: Well, thank you. Jim?

LEHRER: Opening up more public land to mineral exploration and mining is not an idea that brings unanimous applause. A non-applauder is the man who controlled public lands policy in the Carter administration, Guy Martin, then Assistant Interior Secretary for Land and Water Resources. He`s now a private attorney specializing in energy and resource issues. What do you think of the Congressman`s idea of opening up public lands to mining and exploration?

GUY MARTIN: Well, contrary to your introduction, my position has always been that we ought to continually have a pattern of opening up the public lands on a reasonable basis. And I disagree with the Congressman most precisely on the way in which he sees the trend. I think that his number of 68 percent being closed is too high: I think the figure now is more like 50 percent. I think it`s been as high as 80 percent in the past five years, but I think the trend is running his way and the way I prefer. A number of things are happening that are important. The wilderness review that was ordered by Congress of both the Forest Service and the Bureau of Land Management is being completed, and well over 200 million acres of land were reviewed, and now we`re down to about 40 or 50 million acres that are still excluded from mineral operation. Withdrawals that have -- that have haunted the mining industry for years, which have prevented them from locating or developing minerals are being ended. The settlement of the Alaska lands bill, which look several years, has opened up and will open up tens of millions of acres in Alaska to mineral exploration. So I see the trend going the other way, and frankly, I`m in agreement with that trend. The other place I think I disagree with the Congressman is that I see a stronger --

LEHRER: Wait a minute. Wait a minute. What you`re saying is that what he wants done has already been done. In other words, there`s no need for his legislation?

Mr. MARTIN: That really is the purpose of my second point. It`s not that it has been done; it`s that the trend is toward doing it -- that the trend now is toward opening up those lands, and I think there`s a reasonably good consensus toward doing that. To the extent that they`re not opened up -- and under any circumstances. I think we`re going to see a situation where somewhere between a third to a half of the federal public lands are not opened wide to land -- the question then is. what is the reason they`re not opened? Those are the acres on which we have our national parks or national wildlife refuges: they`re military lands. In some cases, they`re lands that are withdrawn for other purposes in-cluding for oil shale or phosphate or geothermal development. So you have to ask the question whether or not those withdrawals which conflict with mineral development have a purpose? And I say they do.

LEHRER: And that purpose is not to open them to mineral exploration?

Mr. MARTIN: The purpose is everything from recreation and protection of natural values to military purposes and development of other resources, including farming in some cases. The fact is there`s just a number of calls on the land in the United States, and the problem I think we`re running into here is that we`re citing reasons for making mining -- even for strategic minerals -- the dominant reason for using federal lands. And I don`t think it deserves that status, no matter the problem.

LEHRER: What status does it deserve?

Mr. MARTIN: I think it deserves two things that I`d mention very quickly. One. it deserves absolutely equal status in a multiple-use system. And I do think that there`s one thing the Congressman has done that`s very valuable, and that is. in his bill and in all of his requests for the past four years, he has asked for a statement of a coherent national policy on minerals to be given by the federal government. I think that`s crucial.

LEHRER: The Congressman, in response to Robin`s question a moment ago. said. "Nonsense," about this charge that what`s really behind all this business is to open it up to mining companies so they can find even other minerals, knowing that these others may not even be there.

Mr. MARTIN: I think if you took a cross-section of the mining industry, you`d probably find some people who indulge in that motive, but you`d find many more who are genuinely concerned about strategic mineral development. The problem then boils down to whether or not the need for the strategic minerals -- the five, |0 or 25 minerals that you`re after -- whether or not the answer to that problem can truly be found on the public lands.

LEHRER: You don`t think it can?

Mr. MARTIN: I think that it`s doubtful. Those lands have been mostly open for most of our history, and they were subjected to intensive exploration during both World War II and the Korean War. and to the extent they`re open now, are subjected to intensive explora-tion. I think it`s significant that discovery of many of these minerals, which have been necessary for years -- the fact that discoveries haven`t been made really has significance

LEHRER: Meaning--

Mr. MARTIN: That it`s unlikely --

LEHRER: -- it`s not there? No cobalt, chromium, and all these other ones are there anyhow?

Mr. MARTIN: No -- no -- no person can draw that conclusion; in fact, information is one of the problems. But I think that the chances are probably against them being discovered.

LEHRER: Thank you. Robin?

MacNEIL: Mr. Strauss, what`s your comment on that? That the public lands may not hold any significant quantities of these minerals?

Mr. STRAUSS: We don`t know unless we look. And while Secretary Martin is right that there`s no assurance of finding, there have been so many examples of land that has been written off as a source of minerals which later exploration has shown to be present, that I think we need continued work. The techniques of exploration have advanced very greatly in the last 30 years.

MacNEIL: Well, what about his point that so much land is now open, and the trend to opening it is increasing, that there`s plenty to look at right now?

Mr. STRAUSS: Well, there is a good deal to be looked at. In certain cases - - he mentioned Alaska; one of the problems is that some of the areas that are not open block access to some of the areas that are open. I hope that those questions can be resolved. I think this public debate is very useful. But I would like to cite an example -- a specific example -- if I may. The Geological Survey, in the early 1950s concluded that the area south of Tucson was of no value for mineral production. Since they reached that con- clusion, five major copper mines, operated by four companies, producing 300,000 tons of copper a year -- almost 20 percent of the national total -- have been opened in the area that they ruled out. So I emphasize the fact that with modem techniques which have been developed in recent years, the fact that we looked at these areas 40 years ago, 60 years ago, doesn`t rule out the possibility of making discoveries now.

MacNEIL: What do you say to that, Mr. Martin? They just may not have found it during previous wars?

Mr. MARTIN: Well, I acknowledge that, and I think it`s important, and that`s why I think exploration should go on. Let me give you an example that demonstrates what I meant. Only in 1977, 174 million acres of BLM land were withdrawn for purposes of wilderness study. That withdrawal lasted, however, only about three and a half years, and has now been reduced to only 23 million acres. All of the land that has fallen out of that process is land that can be explored -- or much of it is. The same is true in Alaska. So I think that while it may be found, I still think that there is an adequate and growing supply of land for exploration.

MacNEIL: Back to you. Congressman, for a moment, just to elaborate on this. The charge has been raised that what the mining industry is really after is not the strategic minerals, which they assume will be scarce in these lands, but those much more common minerals they`d like to get at: metals like copper, for example. What is your response to that?

Rep, SANTINI: I think copper is in the category of a strategic mineral, and I think that we mustn`t disregard the fact that the minerals -- whether it`s tungsten, copper, lead, zinc, or manganese or chromium, are the building blocks of our society, its industry, and the basis for almost all production and almost the basis for so many things that we use day in and day out in this nation from national defense tanks and airplanes to the glasses that I wear tonight, or a pacemaker or an operating room or an oil refinery. It`s incredible how little is understood or appreciated about the contributions of these strategic minerals. And unfor-tunately, there haven`t been in this nation any "Teens for Tungsten," any "Moms for Manganese." It`s had no particular political appeal or pitch. As a consequence, the mineral resource dependency issue has gotten lost in other priority and shuffled commit-ments that are part of the political process back here. But I think also, as a negative consequence, minerals have not had their fair day in court either before the legislative bodies of this nation or before the executive agencies of this nation.

MacNEIL: What would be your comment on that, Mr. Netschert?

Mr. NETSCHERT: Well, I think that there`s nothing wrong, certainly, with developing the public lands for the minerals that are in them in a way that is compatible with environmental preservation. I don`t think they should be absolutely ruled out. But I do think it`s wrong to consider these lands as part of the solution to the strategic minerals problem -- ? our dependence on things overseas. For example, if you want to talk about four of the important strategic materials -- manganese, nickel, cobalt and copper -- there are at the bottom of the ocean in nodules on the seabed off both our coasts -- well, off the southeast Atlantic coast, and especially off the coast of Hawaii -- more of these materials than we could use up in centuries. And the only thing that is holding up the exploitation of those materials is agreement on this law of the sea, because a lot of this stuff is out in what is called the high seas, beyond anybody`s territory. Now, here we do have an alternative supply which could totally take care of our needs and make us independent. And I would say that this is a better thing to emphasize from a strategic point of view than the public lands, because I agree with the previous speakers who have said that you can`t solve the problem; the most you can do is ameliorate it. and even so, you may at the same time have to pay more for it because the experience has been that when we do find these materials we`re short of, they tend to be in low-grade deposits and high cost.

MacNEIL: Congressman, what about the undersea possibilities?

Rep. SANTINI: I think that might be very helpful about the year 2010 in terms of addressing the very serious problem that most people concede exists here. The difficulty you have is, the law of the sea treaty negotiation has been ongoing, what, 12. 13. 14 years in New York City, and may come to a resolution, probably, not in your lifetime or mine but by the year 2000.

MacNEIL: It`s just not -- Cm sorry to cut in. But we`re just out of time, now. You`re saying it`s just not fast enough?

Rep. SANTINI: That`s a solution that could come on line, realistically, about 1992 at the earliest, and probably 2010 in all rational projections.

MacNEIL: We have to end it there tonight. Congressman. Thank you very much Mr. Netschert, Mr. Martin, for joining us. Good night, Jim.

LEHRER: Good night, Robin.

MacNEIL: Mr. Strauss. That`s all for tonight. We will be back tomorrow night. I`m Robert MacNeil. Good night.