RAW MATERIALS: Copper: No. I Problem

Of all the basic raw materials needed for defense, none is more vital than copper—and none is scarcer. Into every B-47 bomber goes a ton of copper; even a 155-mm. howitzer takes more than half a ton of the red metal and its alloys. The U.S. is the world’s biggest producer (960,000tons or 40% of all output), but its crude production is lower now than it was eight years ago. It is also the biggest copper importer, but imports are dropping. Last week the Government took two big steps to boost production.

One step was taken by the RFC. It lent $57 million, its biggest loan since World War II, to the White Pine Copper Co., a subsidiary of Boston’s Copper Range Co. The money will be used to develop its holdings in the Upper Michigan peninsula,* which are estimated to have reserves of 309,660,000 tons of ore and a potential copper output of 35,000 tons a year. Said Copper Range President Morris LaCroix, who has been after an RFC loan for 13 months: “Now this great national asset will be put to work.”

The other step was taken by the Defense Materials Procurement Agency. It made a deal with the giant Anaconda Copper Co. to boost its output more than 30,000 tons a year by putting Nevada’s Yerington mine into production. Chairman Cornelius Kelley will spend $33 million of Anaconda’s money developing the property; for its part, DMPA agreed to buy any copper from the mine that Kelley cannot sell in the first six producing years, for 25½¢ a Ib. (v. the present ceiling price of 24½¢), the first premium price deal for metals to be made by the Government since World War II.

The news was good, but not good enough. None of the new White Pine or Anaconda production will start until 1954. Before mining begins, Anaconda must build a plant to process its low-grade ore; White Pine must build a steam power plant, railroad connections, mill and smelter facilities, and an entire new town to house 2,725.

Old Diggings. Why hasn’t U.S. copper output bounced upward like steel and aluminum? The fact that even a giant like Anaconda needs the promise of a Government subsidy gives part of the answer. Like the rest of the copper industry, Anaconda has mined its richest ores, left little but high-cost ore in the ground. A hundred years ago, mined ore in the U.S. averaged 20% copper; now it averages less than 1%.

Extracting copper from such low-grade ore is enormously expensive. To open his Nevada mine, “Con” Kelley had to buy a sulphur mine 60 miles away, to get sulphuric acid needed for the concentrating process. Because exploration is even more expensive, Kelley and others are now going through old diggings to get out the high-cost ore that had been bypassed. Anaconda alone is spending $27 million to tap 130 million tons of such ore in its famed Butte, Mont, properties and another $100 million to process low-grade ore in Chile.

There is no quick way to boost copper imports, either. The U.S. last May shelved its 2¢-a-lb. tariff, and agreed to pay a premium price of 27½¢ for Chilean copper, which accounts for most U.S. imports. But the U.S. also had to agree to let Chile sell a big chunk of her copper in Europe and elsewhere, where the price has been as high as 50¢ a Ib. Result: imports have dropped 30%.

New Substitutes? While all these factors, plus strikes, labor and scrap shortages, have cut copper supplies, demand has soared. The average annual per capita consumption, only 14 Ibs. between 1935 and 1949, is now 25 Ibs. For 1952’s first quarter, manufacturers have put in requests for 60% more copper than will be available.

Last week NPA’s Manly Fleischmann again cut civilian copper use. “More essential” civilian products (e.g., washing machines, refrigerators) will get only 35% of the pre-Korea figures; “less essential” civilian goods (Christmas decorations, cigarette lighters, etc.) will get only 10%. Unless manufacturers can develop substitutes, the cuts will put a low ceiling on civilian production in the next quarter, no matter how much steel and other metals are allotted.

The long-range outlook is hardly more encouraging. In addition to Anaconda and Copper Range, the Government has made purchase contracts with other producers, notably Phelps Dodge, to boost production; others, like Kennecott (world’s largest producer) are doing it on their own. The total increase is expected to be 246,000 tons a year by 1955, roughly 20% of present output. But by then, production of some of the older mines will be on the decline. Barring a depression, or an unexpected find of rich new copper deposits, the U.S. will never have a copper surplus again. Says DMPA grimly: “Before long, we’ll be using copper only in electrical products.”

-Where Indians produced copper before the white man came.