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National Security Assessment of the
U.S. Beryllium Industry
The U.S. Department of Commerce, Bureau of Export Administration (BXA), Office of Industrial Resource Administration (OIRA), performed this national security assessment of the U.S. beryllium industry under authority of the Defense Production Act of 1950, as amended, and related Executive Order 12656. The assessment was initiated at the request from the Department of the Navy, Office of the Chief of Naval Operations. The Navy sought to determine the percentage of scrap generated by defense contractors' beryllium operations, as well as the procedures for recycling this scrap. The Navy needed this information to gain oversight of scrap recycling by defense subcontractors.
The request by the Navy evolved from a 1989 technical study by the National Materials Advisory Board titled, "Beryllium Metal Supply Options," which examined the processing technology for metallic beryllium and the scrap cycle. It was revealed by the study that insufficient information was available on beryllium fabricators. Moreover, the Board recommended upgrading Brush Wellman's Elmore, Ohio production plant with near net shape capability and gas atomization powder generation to reduce the generation of internal scrap.
In view of the importance of beryllium to the defense industrial base, the collapse of the Soviet Union and the potential for increased exports to raise hard currency, and sharp declines in the demand for metallic beryllium, OIRA accepted the Navy request, but expanded the scope of the study to include: 1) other key beryllium products (i.e., beryllium alloys and beryllium oxide); 2) a review of economic and trade factors; and, 3) how recent global developments may affect the viability of the U.S. beryllium sector.
The importance of beryllium lies in its unique properties. These properties include: 1) light weight, 2) dimensional stability over a wide range of temperatures, 3) the ability to reflect neutrons and transmit x-rays, 4) the ability to greatly strengthen copper, 5) the ability to absorb and distribute heat, and 6) resistance to deformity. While the material is expensive, these properties enable beryllium to play a central role in our national defense, and have contributed greatly to advances in electronics, optics and telecommunications.
Beryllium is offered on the market in three major forms: metallic beryllium, beryllium alloys, and beryllium oxide. In 1992, metallic beryllium constituted about 15 percent of the dollar value of the world market, although in prior years when defense spending was higher, it was over 20 percent. Beryllium alloys (mostly of beryllium copper), were about 75 percent of the market, up from prior years, while beryllium oxide comprised most of the remaining 10 percent.
The United States is by far the world's largest producer, processor and consumer of beryllium related products. In the 11 years from 1981-1991, U.S. production of beryllium ore accounted for over 64 percent of world production. During the same 11 years, U.S. demand for beryllium related products totaled over 71 percent of the world total, and over 83 percent of the processing of primary beryllium products took place in the United States.
Production of beryllium ore in the United States declined each year since 1986, falling from 237 metric tons that year, to only 174 in 1991, down 27 percent, as demand fell. This resulted in a draw down of industry stock levels, which reached a peak of 255 metric tons in 1983, and then fell steadily to 112 metric tons by the close of 1991. The five-year average demand, 1988-1992, was more than 28 percent lower than the preceding five-year period, 1983-1987. The down trend followed declines in defense/aerospace, electrical equipment, nuclear applications, and slumping sales in electronics markets, particularly mainframe computers.
Brush Wellman Inc., headquartered in Cleveland, Ohio is the only fully integrated producer of metallic beryllium, beryllium alloys, and beryllium oxide powder in the Western world. Between 1981-1992, Brush Wellman averaged $256.5 million in total sales revenues, and $206.2 million (80.5 percent) in beryllium related product sales. The firm has mining and upgrading facilities in Utah, and primary processing facilities in Elmore, Ohio. NGK (Japan) produces beryllium alloys from imported beryl upgraded under a toll-agreement with Brush Wellman in Utah. Through the primary product stage of the beryllium production cycle, OIRA estimates Brush has 85 percent of the market in the United States, and about 70 percent in the world. Brush is also a significant factor in beryllium product fabrication markets.
From a national security perspective, beryllium is a strategic material used in our most sophisticated U.S. weapon systems. Beryllium is used by the military to control reactors on nuclear powered submarines and surface vessels, as a triggering device for nuclear warheads, in precision optical components, inertial guidance systems, and satellite structures, and in air, land and sea borne electronic equipment. Beryllium has no realistic substitutes in its strategic nuclear applications.
In dollar terms, between 20-25 percent of beryllium consumption is used for military applications, down from about 35 percent in the mid-1980s. Defense buys over 90 percent of the metallic beryllium, about 10 percent of the beryllium alloys, and 20-30 percent of the beryllium oxide. Since Fiscal Year (FY) 1985, the total military procurement budget (in 1993 dollars) fell from $127.2 billion, to only $54.1 billion in FY1993, a dramatic drop exceeding 57 percent. The major decline jeopardizes the continued viability of the metallic beryllium sector, which (in early 1993) reported operating below 30 percent of production capacity.
The long-term health of the beryllium sector is uncertain. The major concerns facing the beryllium sector are as follows: 1) rising environmental control costs; 2) declining defense procurement expenditures (particularly affects metallic beryllium); 3) potential surge in supply of metallic beryllium on the world market at low prices by the former Soviet Union; and, 4) the possible sale of metallic beryllium and beryllium copper master alloy inventories from the National Defense Stockpile.
Environmental costs continue to rise faster than revenues, and at the margin continue to constrain the market potential of beryllium, at both the manufacturing point and among potential customers. The chief health concern associated with the handling of beryllium is chronic beryllium disease, also known as berylliosis. Berylliosis is a disabling lung disease caused by inhaling beryllium dust; handling finished beryllium products does not lead to berylliosis. A small percentage of people exposed to beryllium dust will get this disease; it has been shown that chronic berylliosis has an immunological basis. Progress has been made in reducing the occurrence of berylliosis since the disease was first recognized. However, compliance with OSHA and EPA regulations is a costly endeavor, and has a major impact on Brush Wellman and beryllium product fabricators.
The potential for a surge in supply of beryllium on the world market from the former Soviet Republic of Kazakhstan has increased. This scenario could quite possibly become reality, as in the case of uranium, aluminum and copper from Russia into Western markets. This led to a rapid decline in prices of these commodities and pushed a number of European and American producers toward bankruptcy.
Concerns about the sale of beryllium copper master alloy from the National Defense Stockpile were expressed because of potentially disruptive effects the sale could have on the domestic industry. As a result, beryllium copper master alloy was withdrawn from sale consideration with the signing of the National Defense Authorization Act for Fiscal Year 1993 on October 23, 1992. However, authorization was given to dispose of the entire inventory of beryl ore within a five year period ending October 1, 1997, unless such disposals are found to be disruptive to markets.
International trade in beryllium and beryllium products is difficult to accurately assess because of technical difficulties in measuring the content of beryllium in certain traded categories, and lack of complete coverage by the trade statistics.
Imports - Total reported beryllium related imports reached a peak in 1989 at $3.8 million, and since then have declined to $2.1 million in 1991. Imports are comprised mostly of beryllium ore and beryllium product scrap. Excluding beryllium ore, available statistics show that Japan was the major source of beryllium product imports between 1989-1991, accounting for over 65 percent of the total. China was a distant second at just over 21 percent.
Exports - Official statistics only cover metallic beryllium and the metal's waste and scrap, and greatly understate actual exports. For example, the most traded item is beryllium copper alloys, which are not covered. Reported U.S. exports of metallic beryllium and metallic scrap declined rather sharply since the mid-1980s. During the period 1986-1991, the dollar value of these exports dropped from $7.4 to $2.3 million, in part because the major European economies slipped into recessions. Also, major cuts took place in NATO defense spending, and reductions in the European space program. The major destination during these six years was the United Kingdom, followed by France and Germany. These three countries received over 70 percent of the total reported exports. Exports to Japan accounted for over 10 percent of the total, while Canada accounted for about 9 percent.
Beryllium products scrap is generated by processors (home scrap) and fabricators (new scrap). In each case the most scrap arises from machining or stamping operations, where the material is formed and cut into a variety of shapes in preparation for shipment. The amount of home scrap generated from metallic beryllium ranges from about 60-70 percent, beryllium copper, 25-30 percent, and beryllium oxide almost none. New scrap generation will vary by product and fabricator. New metallic beryllium scrap on average ranges between 50-60 percent, but will often exceed 90 percent. New beryllium copper and beryllium oxide scrap each average between 20-30 percent. Very little beryllium old scrap is reclaimed from finished products, because of the difficulty in getting at it, and usually, the low beryllium content in end-products.
The equipment required to recycle beryllium scrap is expensive. In 1988, Brush Wellman opened a $10 million beryllium copper waste recycling plant at its Elmore, Ohio location. The facility has the capacity to recover 2 million pounds of copper and 90,000 pounds of beryllium annually.
Metallic beryllium scrap is too expensive to mix with beryllium copper or beryllium oxide scrap; it is also made in several grades which have different cost structures. Metallic beryllium will range from about 95 percent beryllium to almost 100 percent, depending on its application. The purest and most expensive grade is used for strategic weapons.
OIRA estimates over 80 percent of new scrap is recovered and returned to the manufacturer for recycling. The estimate will vary with scrap prices, which rise during economic upturns and reduce the amount recycled through primary manufacturers. For example, when the demand for beryllium copper is strong, some dealers may purchase metallic scrap and melt it with copper to sell as beryllium copper master alloy. As for other factors, some scrap is lost or winds up in a landfill. Additional amounts are sometimes lost from overseas that cannot be shipped back to the United States economically. Scrap prices range from $40-$70 per pound (contained beryllium), depending on market conditions. Beryllium copper is by far the major source of new scrap, alone providing more than 70 percent of the total. Brush Wellman and NGK have non-binding agreements with almost all of their customers to take back new scrap.
The reduction of scrap generation in the beryllium industry would greatly lower the product's cost, and make it more attractive in the marketplace. Scrap generation adds to the cost and time of production. As with other metals, beryllium scrap is generated, recycled, and produced a second time, generating still more scrap in an endless cycle. Enlarging the gas atomization powder formation capabilities, and pushing the near-net-shape technology at Brush Wellman's Elmore, Ohio facility are part of the solution.