title: Chromium availability--domestic : a minerals availability system appraisal
text: *°«fc .1 ^ ♦fSm3i« <&> A ♦/ * **d* '. ^^ «*«^iak'<» "^^" y^i^'- ^^ ^«^^ia'- "'^^ ^AqV ^°^ *bv u V ..•^r* ^ o« * - «*o* A v^^ V v3. *• • » * A w < F ^^> " • • • <vj ^c». 6? w e& C>_ # o5°^ - A * «? ^s d1 < v ♦ ^c,^ *>,>* ^ <*\tffc\ ^.^>>o **.&&% 6°*.^i.% </\ \P r; iW * * °- Q* AV * L-n— r * «* V % -W i V^ 1 "%oo \«-y V^V V*V %^/./v^ %,** -,* ♦* ^ v<s. v IC 8895 Bureau of Mines Information Circular/1982 OCT 1 4 198? .COPY SSElcifT* «&} Chromium Availability— Domestic A Minerals Availability System Appraisal By Jim F. Lemons, Jr., Edward H. Boyle, Jr., and Catherine C. Kilgore UNITED STATES DEPARTMENT OF THE INTERIOR Information Circular 8895 Chromium Availability— Domestic A Minerals Availability System Appraisal By Jim F. Lemons, Jr., Edward H. Boyle, Jr., and Catherine C. Kilgore UNITED STATES DEPARTMENT OF THE INTERIOR James G. Watt, Secretary BUREAU OF MINES Robert C. Horton, Director As the Nation's principal conservation agency, the Department of the Interior has responsibility for most of our nationally owned public lands and natural resources. This includes fostering the wisest use of our land and water resources, protecting our fish and wildlife, preserving the environmental and cultural values of our national parks and historical places, and providing for the enjoyment of life through outdoor recreation. The Department assesses our energy and mineral resources and works to assure that their development is in the best interests of all our people. The Department also has a major responsibility for American Indian reserva- tion communities and for people who live in island territories under U.S. administration. _,. i Ai4 ftO ,*MS This publication has been cataloged as follows: Library of Congress Cataloging in Publication Data Lemons, Jim F. Chromium availability — domestic (Information circular; 8895) Bibliography: p. 11 Supt. of Docs, no.: I 28.27: 1. Chromium ores— United States. 2. Chromiun. I. Boyle, Edward H. II. Kilgore. C. C. (Catherine C). III. Title. IV. Series: Information circular (United States. Bureau of Mines): 8895 TN295.U4 [TN490.C4] 622s [553.4'643] 82-600208 4 III V PREFACE The purpose of the Bureau of Mines Minerals Availability Program is to assess the worldwide availability of nonfuel minerals. The program identifies, collects, compiles, and evaluates information on active, developed, and explored mines and deposits, and on mineral processing plants worldwide. Objectives are to classify domestic and foreign resources, to identify by cost evaluation resources that are reserves, and to prepare analyses of mineral availabilities. ^ V) This report is part of a continuing series of Minerals Availability System (MAS) reports that analyze the availability of minerals from domestic and foreign sources and the factors that affect availability. Analyses of other minerals are currently in progress. Questions about the MAS program should be addressed to Director, Division of Minerals Availability, Bureau of Mines, 2401 E Street, N.W., Washington, D.C. 20241. CONTENTS Page Preface iii Abstract 1 Introduction 2 Acknowledgements 2 Estimating chromium resource and cost data 3 Domestic chromite deposits 4 General 4 Geology 4 Extraction methods and costs 5 Availability of chromium from domestic deposits 6 General 6 Chromite concentrate availability 7 Total chromite 8 Annual chromite 8 Ferrochromium concentrate availability 9 Conclusions 10 Bibliography 11 Appendix A. — Ownership and control of domestic chromium properties 12 Appendix B. — Mining methods 13 Appendix C. — Research and development 13 Appendix D. — Cost analysis of an open pit mining and milling operation 14 ILLUSTRATIONS 1 . Classification of mineral resources 2 2. Flow chart of evaluation procedure 3 3. Location of domestic chromite properties 5 4. Chromium total resource availability, 1 5-percent rate of return 8 5. Chromium annual resource availability, 1 5-percent rate of return 8 6. Ferrochromium total resource availability, 1 5-percent rate of return 9 7. Ferrochromium annual resource availability, 15-percent rate of return 10 TABLES 1 . Chromite deposit resource information 4 2. Chromite-laterite deposit resource information 5 3. Chromite deposit status and proposed mining and beneficiation methods 6 4. Estimated costs for mining and beneficiating domestic chromite resources 6 5. Chromite concentrate data 7 6. Potential recoverable Cr 2 3 contained in chromite concentrates at various prices 8 7. Potential recoverable ferrochromium at various ferrochromium prices 9 A-1 . Ownership and control of domestic chromium properties 12 D-1. Estimated capital requirements for a 1 ,900-metric-ton-per-day open pit mining and milling operation 14 D-2. Estimated operating costs for a 1 ,900-metric-ton-per-day open pit mining and milling operation 14 D-3. Deposit operating data required for the economic evaluation of the 1 ,900-metric-ton-per-day open pit mining and milling operation 14 D-4. Cumulative values derived for the economic evaluation of the 1 ,900-metric-ton-per-day open pit mining and milling operation 14 CHROMIUM AVAILABILITY— DOMESTIC A Minerals Availability System Appraisal By Jim F. Lemons, Jr., 1 Edward H. Boyle, Jr., 2 and Catherine C. Kilgore 2 ABSTRACT The Bureau of Mines Minerals Availability System collected and analyzed data for 34 nonlaterite and 9 nickeiiferous laterite domestic chromite deposits in order to assess their viability as sources of chromium under present technologic and economic conditions. These 43 deposits, none currently in production, contain approximately 6.3 and 22.3 million metric tons of Cr 2 3 at the demonstrated and identified resource levels, respectively. Approximately 4.6 and 15.6 million metric tons of Cr 2 3 are recoverable at the demonstrated and identified levels, respectively, for the 34 nonlaterite deposits. None of these resources are economically recoverable at January 1981 market prices. Production of metallurgical-grade chromite (market price $128 to $144) would require a minimum chromite market price of $237 per metric ton. Chemical-grade chromite production (market price $74 to $85) would require a chromite market price in excess of $188 per metric ton. From the 34 nonlaterite deposits, roughly 5.4 and 1 7.6 million metric tons of ferrochrome could be produced at the demonstrated and identified resource levels, respectively; however, a minimum market price of $770 per metric ton of ferrochrome would be required to stimulate production. The nine nickeiiferous laterite deposits were not evaluated through production stages because of uncertainties in process technology and cost. 1 Metallurgist, Minerals Availability Field Office, Bureau of Mines, Denver, Colo. 2 Geologist, Minerals Availability Field Office, Bureau of Mines, Denver, Colo INTRODUCTION Although chromium is essential for producing stainless steel superalloys and industrial hard plating, and also has a wide range of usage in other alloy steels, pigments, and plating, the United States is almost entirely dependent upon imported sources for its chromium. Production from domestic sources has been sporadic, occurring during periods of high prices or price support, primarily during national emergen- cies. The last production occurred in 1962. During periods in which international trade is not restrained, production from primary domestic sources has not been economically competitive with foreign sources. Apparent annual domestic consumption of chromium approximates 500.000 metric tons. Net import reliance is reported to be 90 percent, with the remaining 10 percent satisfied by recycled chromium (13). 1 The critical nature of chromium, combined with this high degree of foreign dependence, indicates the need for reliable information on possible sources of domestic supply. Accordingly, this study of the availability of chromium from domestic sources was developed by the Bureau of Mines. Minerals Availability System (MAS), with the intention that this information can contribute to the formation of minerals policy. The following procedure was used in conducting the study: 1. The quantity and quality (grade, iron content, etc.) of domestic chromite resources were evaluated in relation to physical, technological, institutional, and other conditions that affect production from each deposit. 2. The capital investments and operating costs for appropriate mining, concentrating, and processing methods were estimated. 3. An economic evaluation was performed on each deposit. The results of these analyses indicated the unit prices and associated tonnages of contained chromic oxide (Cr 2 3 ) and ferrochromium that could be recovered at specified production levels for each deposit. 4. Price-production relationships were combined and analyzed as contained Cr 2 3 and ferrochromium availability curves to show the domestic chromium production potential at various commodity prices. Results of this study are reported in terms of recoverable Cr 2 3 and ferrochromium at demonstrated and identified resource levels, as these levels are defined in the mineral resource-reserve classification system developed jointly by the Bureau of Mines and the U.S. Geological Survey (14). The demonstrated resource category includes measured and indicated tonnages, and the identified resource category includes inferred as well as demonstrated tonnages (fig. 1). These definitions indicate a greater degree of credibility in the results at the demonstrated resource level. Not all of the deposits that have identified resources will have demon- strated resources, because the classification is dependent upon available geologic and mineralogic data. As additional data become available, deposit resources could be reclas- sified. For comparison with current market requirements, the Cr 2 3 concentrate grade and the chromium-to-iron (Cr:Fe) ratio are also identified. Curves indicate both total and annual potential resource availability for recoverable Cr 2 3 and ferrochromium. ACKNOWLEDGMENTS The authors wish to thank Larry J. Alverson, formerly with the Bureau of Mines, Division of Nonferrous Metals, for his 3 Italicized numbers in parentheses refer to items in the bibliography preceding the appendixes. assistance in establishing the resource tonnages and grades included in this report. Personnel at Bureau of Mines Field Operations Centers in Pittsburgh, Pa., Spokane, Wash.. Denver, Colo., and Juneau, Alaska, supplied production and cost data for the deposits included in this study. Cumulative Production IDENTIFIED RESOURCES Demonstrated Measured Indicated Inferred UNDISCOVERED RESOURCES Hypothetical Probability Range -(or)- Speculative ECONOMIC MARGINALLY ECONOMIC SUB- ECONOMIC Reserve Base Inferred Reserve Base + 4- Other Occurrences Includes nonconventional and low-grade materials Figure 1 . — Classification of mineral resources. ESTIMATING CHROMIUM RESOURCE AND COST DATA The flow of the MAS evaluation process from deposit identification to development of availability curves is illus- trated in figure 2. This flowsheet shows the various evaluation stages used in this study to assess the quantity and economics of the chromium available from a property. Of the 43 domestic deposits investigated (none currently in production), 34 were selected for analysis in this study. Deposits that could share common mills were combined for analysis, resulting in 16 separate evaluations. The nickelifer- ous laterites were not analyzed in terms of potential production because of technological and cost uncertainties. Selection of the deposits for this study was limited to known deposits that have significant demonstrated or identified reserves or resources. Resources are concentra- tions of naturally occurring solid, liquid, or gaseous materials in or on the Earth's crust in such form that extraction of a mineral commodity is currently or potentially feasible. Reserves are resources that can be mined, processed, and marketed at a profit under the economic and technologic conditions prevailing at the time of the evaluation. Most reserve and resource tonnage and grade calculations presented here were computed partly from specific measure- ments, samples, or production data, and partly from estimations based on geologic evidence. After all deposits were identified for analysis by the Bureau of Mines Division of Minerals Availability, evaluations of these properties were performed at the Bureau's Field Operations Centers. Data on average grades, ore tonnages, and different physical characteristics affecting production from domestic chromite deposits were obtained from numerous sources, including Bureau of Mines and Geologic- al Survey publications, professional journals, State and industry publications, annual reports, company 10K reports filed with the U.S. Securities and Exchange Commission, data made available to the Bureau of Mines by private companies, and estimates made by Bureau personnel based on personal knowledge and judgments. The next step entailed an examination of the physical characteristics of each deposit in order to establish a development plan for each property that would yield a '< I dentification and j Mineral Industries 1 J Location 1 s System 1 1 (MILS) : | data i i MAS computer data base selection of deposits w Tonnage and grade dete rmination P w 1 Enginee ring and cost eva 1 u ation p + f 1 Deposit report preparation MAS per manent deposit files ' 1 r w marketable product. Development requirements and produc- tion capacities were based on current mining engineering and metallurgical principles. Capital requirements were calculated for exploration, acquisition, development, mine plant and equipment, and constructing and equipping the mill plant. Capital expenditures for the different mining and processing facilities include the costs of mobile and stationary equipment, construction, engineering, facilities and utilities, and working capital. The broad category — facilities and utilities (i.e., infrastructure) — includes, among other things, the cost of the water system, fire protection, roads, fences, and fuel and power distribution. Working capital is a revolving cash fund required for operating expenses such as labor, supplies, taxes, and insurance. Mine and mill operating costs were also calculated for each deposit. The total operating cost is a combination of direct and indirect costs; direct operating costs include materials, utilities, direct and maintenance labor, and payroll overhead, while indirect operating costs include technical and clerical labor, administrative costs, facilities maintenance and supplies, and research. Other costs in the analysis are fixed charges such as local taxes, insurance, depreciation, deferred expenses, interest payments (if applicable), and return on investment. When possible, actual company cost data were used. If these were not available, the required capital and operating costs were estimated by standardized costing techniques or through the use of a Cost Estimating System (CES) that was developed for the Bureau of Mines (4). This costing system was designed for preparing capital and operating cost estimates through the use of equations, curves, and factors. The system, based on an average of the costs for existing mining operations in the United States and Canada, covers operations of various sizes. Correct use of the costing system will produce reliable estimates, which historically have fallen within 25 percent of actual costs. Both feasibility and consistency in these mineral property evaluations, development plans, and associated costs were confirmed and verified at the Bureau's Minerals Availability Field Office, where these data were subsequently used to Taxes, royalties, cost indexes, prices, etc.. Data selection and va I idation Variable and parameter adjustments Financial analysis Data I Sensitivity analysis Availabilityi curves Analytical reports J Data Availability curves Analytical reports Figure 2. — Flow chart of evaluation procedure. 387-181* 0-82-2 perform an economic evaluation of each property. This was accomplished through the use of two Bureau-developed computer systems: MINSIM (i.e.. MINe SIMulator) for the economic evaluation of individual mineral properties (2), and the Supply Analysis Model (SAM) that is used to evaluate all properties in a defined mineral commodity study area (e.g., domestic chromium) (6). The output of this economic evaluation process is the primary commodity price needed to provide a stipulated rate of return. The rate of return used in this study is the discounted cash flow rate of return (DCFROR), most commonly defined as the rate of return that makes the present worth of cash flows from an investment equal to the present worth of all after-tax investments (11, p. 232). For this study, a 15-percent DCFROR was considered necessary to cover the opportunity cost of capital plus risk. Individual deposit tonnage price data were then aggre- gated by the SAM to construct the resource availability curves presented in this study. The study was conducted in constant January 1981 dollars. No escalation of either costs or prices was included. DOMESTIC CHROMITE DEPOSITS GENERAL Tables 1 and 2 show resource information for each of the 43 domestic deposits for which data were collected by the Bureau of Mines. The nine laterite deposits (table 2) have potential for future recovery of chromite; however, an evaluation in terms of cost and price of these deposits was not performed at this time because of technological and cost uncertainties. As noted in tables 1 and 2, the deposits contain 6.3 and 22.3 million tons of contained Cr 2 3 at the demonstrated and identified resource levels, respectively." Locations of the chromite deposits are shown on figure. 3. Ownership and control data for each property are presented in table A-1 of appendix A. GEOLOGY Chromite deposits are formed by primary genesis and secondary reconcentration. Primary genesis occurs by the " Tonnage estimates presented in this study are reported in metric tons. To convert from metric tons to short tons, multiply by 1.10231. crystallization of chromite and other heavy silicates such as olivines and pyroxenes. Secondary chromite deposits are derived from the weathering of chromite-bearing rocks in which the chromite then accumulates either as sedimentary (placer) deposits, or in lateritic soils concentrated in situ by ground water leaching of highly weathered ultramafic rocks. Chromite of primary genesis origin occurs principally in stratiform and podiform (alpine) deposits. Stratiform de- posits, characterized by great lateral extent and uniformity, generally contain low Cr:Fe ratio material. The chromite occurrences of the Stillwater Complex in Montana typify stratiform deposits. Podiform deposits, formed as lenticular or tabular pods, are usually composed of high-chromium or high-aluminum type chromite ore. Deposits of this type include Claim Point and Red Bluff Bay, Alaska, and the Bar Rick and Pilliken Mines in California. The secondary deposits, derived from reworking and concentrating the primary deposition, are composed of placer and laterite deposits. Principal known placer deposits are the Oregon Beach Sands. Laterite deposits occur in northwestern California and southwestern Oregon. Before 1940, all domestic production was from podiform Table 1 . — Chromite deposit resource information Property State Grade, Demonstrated, 1 thousand metric tons Identified, thousand metric tons percent Cr 2 3 Mineralized material Contained Cr 2 3 Mineralized material Contained Cr 2 3 Alaska 17.8 267 30 47.6 3.6 267 30 183 47.6 ..do . .do 12.0 25.8 3.6 47.2 California ..do ..do ..do . .do 7.6 W 11.9 5.0 5.0 5,065 W 4,546 384.9 W 227.3 44,512 W 104 30,975 10,826 3,382.9 W 12.4 1,548.8 541.3 Georgia .4 131 .6 131 .6 Maryland- Pennsylvania. 1.4 729 10.1 729 10.1 Montana . .do w 15.0 w 500 W 75.0 w 854 w 128.1 North Carolina 1.9 108 2.1 178 3.5 Oregon 5.6 10.827 604.1 45,772 2,554.1 Pennsylvania 1.7 209 3.5 209 3.5 Wyoming 2.5 NAp 3,774 92.5 3,774 92.5 NAp 46.604 5.620.6 194.019 19,333.2 Claim Point Red Bluff Bay Red Mountain Bar Rick Mine McGuffy Creek North Elder Creek 2 Pilliken Mine Seiad Creek Emma Bell Louise Chromite West Placer Area 3 Stillwater Complex: Mouat Benbow Gish Mine North Carolina Area 2 Southwest Oregon Beach Sands Renshaw Placer . '. Casper Mountain Total" NAp Not applicable. W Withheld to avoid disclosing individual company proprietary data; included in total. ' Domestic chromite reserve base 2 Includes 3 deposits that have been combined for analysis. 3 Includes 13 deposits that have been combined for analysis. * Includes resources withheld to avoid disclosing individual company proprietary data. Table 2. — Chromite-laterite deposit resource information' Property Stale Grade percent Cr,0, Demonstrated, thousand metric tons Identified, thousand metric tons Mineralized material Contained Mineralized material Contained Cr,0 3 Pine Flat Area: Gasquet Laterite .... Little Rattlesnake . .. Lower Elk Camp .... Pine Flat Mountain .. Red Mountain Eight Dollar Mountain Red Flat Rough and Ready . .. Woodcock Total 2 California. . . do ..do ..do . .do Oregon  NAp 33.813 6400 143.126 2.9954 NAp Not applicable. W Withheld to avoid disclosing individual company proprietary data; included in total. 1 Not included in cost-price analysis because laterite-process technology has not been commercially proven. 2 Includes resources withheld to avoid disclosing individual proprietary data. deposits, but since then production from the stratiform deposits of the Stillwater Complex has predominated. The majority of the podiform deposits have yielded less than 1 ,000 tons each and have been economically insignificant. EXTRACTION METHODS AND COSTS This study includes deposits that have produced in the past as well as deposits that have no recorded production. Each of these deposits has sufficient resource information so that a mining and beneficiation method can be proposed. The mining and beneficiation methods proposed are based on those methods used in past domestic production of chromite ores. Thus, recovery of chromite is based on standard placer, open pit, and underground mining methods. The location, deposit type, status, proposed annual capacity, and mining and benefication methods for the deposits are shown in table 3. A brief description of the mining method of each deposit is given in appendix B. Many of the deposits are small, particularly those in the Eastern United States, requiring use of highly mobile, small-capacity mining equipment and portable process equipment. Beneficiation of mined ore is designed to upgrade the Cr 2 3 content, or increase the Cr:Fe ratio of the chromite; however, most beneficiation of mined ore does not signifi- f*?&5Pln« Flat Area ^AfJSeiad/Emmo Bell Bar Rick Mc6u,f * CrMk ~~ . Q oNorth Elder Creek /Red Mtn. PillikenO Reserve Base-metric tons contained CrJOy o Less than 100,000 • 100,000-1,000,000 ■ More than 1,000,000 Figure 3 — Location of domestic chromite properties. Table 3. — Chromite deposit status and proposed mining and beneficiation methods Property State Type of deposit Status' Minimum lead time, years Annual capacity. metric tons of ore Mining method Beneficiation method Claim Point Red Bluff Bay Red Mountain Alaska do do Podiform do . .. do Ppd Exp Ppd 4 2 2 18,000 9,000 18.000 Bar Rick Mine McGufty Creek California .do do .. do  North Elder Creek-' Pilhken Mine .. ..do . . . .do 25,000 2,100,000 Seiad Creek Emma Bell . . . . do 562,500 Louise Chromite Georgia Placer Exp Ppd Dev 1 25,000 West Placer Area 3 Maryland- do . .. 1 50,000 Pennsylvania Stillwater Complex: Mouat Benbow Montana .. Stratiform . . do . .. Ppd Dev 3 2 525,000 Gish Mine .. ..do 175,000 North Carolina Area 2 North Carolina Placer .. Ppd Dev. 1 25,000 Southwest Oregon Beach Sands, Oregon . . do . .. Ppd 2 1,000.000 Renshaw Placer Pennsylvania. . . do . .. Ppd Exp 1 50,000 Casper Mountain Wyoming Stratiform 3 377,260 Open pit Gravity, . .do Do. Overhand Do. shrinkage. Sublevel stope . . Do. Open pit Do, ..do Do. .do Gravity-magnetic. do Gravity. . .do Gravity- electrostatic. Placer mining . . . Do. Shrink stope .... Gravity. . . do Do. Open pit Gravity- electrostatic. Strip Gravity-magnetic- electrostatic. Open pit Gravity- electrostatic. . . do Gravity. ' Dev — Developing mine; Exp — Explored deposit; Ppd — Past producer. 2 Includes 3 deposits combined in the analysis. 3 Includes 13 deposits combined in the analysis. cantly improve the Cr:Fe ratio, but can increase the total Cr 2 3 content by separation of gangue. The ore is typically concentrated in a series of gravity-concentrating steps involving tables, spirals, and jigs, with middlings being reground or reseparated. In limited cases, the concentrate can be further upgraded with electrostatic separation; this method will improve the Cr:Fe ratio, but typically works only for high-iron, fine-ground chromites. The current MAS study is based on gravity and electrostatic beneficiation. Chemical separation methods that use flotation or laterite leach-gravity combinations are being investigated at Bureau of Mines research facilities. These methods are discussed in appendix C. Data in table 4 indicates the range of costs estimated for mining and beneficiating the material of the deposits analyzed in this study. The mining costs have a large variance due to the types and sizes of the operations; there is less variance in the beneficiation costs because the same basic process (gravity separation) is used at all the operations. Accordingly, a future cost reduction in underground mining and/or gravity separation could have a significant impact on the availability of domestic chromium. At the demonstrated resource level, roughly 80 percent of the contained Cr 2 3 would be produced by higher cost, larger underground methods, 8 percent by larger open pit operations, and 1 1 percent by larger placer operations; less than 1 percent of the chromite production would be attributable to smaller operations. Table 4. — Estimated costs for mining and beneficiating domestic chromite resources (January 1981 dollars) Type of operation Ore processed per year, metric tons Typical capital cost per annual metric ton of ore Operating metric tor Mine cost per i of ore 3 Mine 1 Mill 2 Mill Small placer. Large placer. Open pit Underground. . 20,000-50,000 Over 250,000 Over 250,000 Over 250,000 $3-$4 $14-$16 4- 6 13- 14 8-22 9- 18 21-36 16- 21 $2-$3 1- 2 4-11 16-33 $6-$ 10 4- 5 3- 4 4- 6 1 Mine capital costs include exploration, development, acquisition, mine equipment, and mine plant. 2 Mill capital includes plant and equipment. 3 Operating costs include direct and indirect costs, but do not include {fepreciation or interest. AVAILABILITY OF CHROMIUM FROM DOMESTIC DEPOSITS GENERAL One function of the MAS program involves performing an engineering cost study to determine the commodity price required to produce a specified level of output from a mineral deposit. Commodity price is defined as the average total cost (ATC) of production from the deposit. Profit, included in the estimate of ATC, is computed at a 1 5-percent DCFROR. The commodity price can also be defined as the "incentive price" of the deposit, or the price necessary for a firm to be willing to develop the property, including recovery of and return on capital investment (1, pp. 1-25). An illustration of the costing and results of the economic evaluation of a hypothetical chromium operation is included in appendix D. The quantity of chromium that could be produced and the commodity price required to achieve this production are determined based on the following assumptions: 1 . Preproduction for each deposit began in January 1 981. 2. Each operation will produce at full operating capacity throughout its life. 3. Competition and demand conditions are such that each operation will be able to sell all of its output at its ATC. 4. The competing market area for the chromium concen- trates and ferrochrome is in the Eastern United States. 5. Prices for the chromite concentrates and ferrochrome are CIF (i.e., cost, insurance, and freight paid by the shipper) the marketing area in the Eastern United States. 6. For comparative purposes, the price for chromite concentrates is based upon the Cr 2 3 content. 7. Current tax structures and 100-percent equity were used in all simulations. The third assumption implies that the level of demand will support the highest ATC, or that Government subsidies would equal the difference between the market price and the ATC for each submarginal deposit. The fourth assumption states the basis for the established prices with which domestic chromium production would compete. Two market conditions were analyzed: 1 . Chromite concentrates would be transported and sold to existing ferrochromium plants in the Eastern United States. 2. Western chromite concentrates would be processed into a ferrochromium product, with the assumption that ferrochromium plants would be "constructed" at or near the deposits. The ferrochromium product would then be trans- ported to the market in the Eastern United States. The chromite concentrates produced at the deposits in the Eastern United States would be transported to existing ferrochromium plants for further processing. Time lags involved in filing environmental impact state- ments, receiving necessary permits, financing, etc., were considered, but were not included in the analysis since it was felt that such delays would be minimized in consideration of strategic availability. With price and quantity data determined for each deposit, total resource availability curves were constructed for chromium. Total resource curves were constructed forCr 2 3 contained in chromite concentrates, and for ferrochromium. The total resource availability curve is not a supply curve in the traditional sense because it ignores the parameter of time, nor is it the industry's marginal cost curve. Rather, the resource availability curve is an aggregate of total production potential from the industry at a stipulated commodity price that covers the full cost of production. Of primary concern to Government policymakers is not only the question of how much total recoverable chromium exists domestically, but also the amount that could be recovered annually. When performing the engineering analysis of each deposit, Bureau of Mines engineering personnel proposed a development, schedule and capacities for each deposit. Such factors as the relative location of the deposit and the necessity for further exploration, develop- ment, and plant construction affect the time required to develop each deposit. Also, the depth of overburden, type of mining method employed, and amount of infrastructure required to develop the deposit are significant factors influencing the time lag between initial development and startup. The annual curves presented in this study are disaggrega- tions of the total resource curves to an annual production basis. These discontinuous functions relate the level of ATC for individual deposits to the cumulative level of produqtion from the deposits over a period of a year. They more closely resemble true supply curves, since they show production on an annual basis, but they also indicate average total cost rather than the marginal cost of production. Constructed annual curves show the Cr 2 3 in concentrate and the ferrochromium potentially recoverable from domestic de- posits. CHROMITE CONCENTRATE AVAILABILITY Chromium ores are classified according to their Cr 2 3 content, the Cr:Fe ratio of the concentrates, and, in the case of refractory-grade ore, the total aluminum plus chromium content. Traditionally, the nonrefractory materials are clas- sified as high-chrome (metallurgical-grade) and high-iron (chemical-grade) concentrates, as follows: Percent Cr 2 3 Cr:Fe ratio Metallurgical grade Chemical grade .. 5= 46 40-46 2:1 .5:1 to 2:1 End use and price of the chrome concentrate is determined by the Cr 2 3 content and Cr:Fe ratio. Tonnage and price-cost relationships in this study are based on either Cr 2 3 content of the concentrate, or ferrochromium. The mill concentrate grade, Cr:Fe ratio, and chromite classification for the material derived from the 34 deposits considered in this study are shown in table 5. Table 5. — Chromite concentrate data Property State Mill concen- Esti- Chromite trate grade, mated classifi- pet Cr 2 3 Cr:Fe ratio cation' Claim Point Alaska Red Bluff Bay do Red Mountain do Bar Rick Mine California McGuffy Creek do North Elder Creek do Pilliken Mine do Seiad Creek/Emma do Bell. Louise Chromite Georgia West Placer Area .... Maryland- Pennsylvania. Stillwater Complex: Mouat/Benbow Montana Gish Mine do North Carolina Area . . North Carolina. Oregon Southwest Oregon Beach Sands. Renshaw Placer Pennsylvania Casper Mountain Wyoming .... 45.0 42.0 44.0 2.7:1 2 1.6:1 3:1 HC HI HC 44.0 41.5 44.0 44.0 41.5 2.4:1 2.5:1 3:1 1.5-2.7:1 1.5-2.4:1 HC HC HC HC HI 31.0 1.9:1 HI 38.7 1.6:1 HI 42.4 41.2 1.7:1 1.7:1 HI HI 55.0 1.9:1 HI 42.0 1.5:1 HI 40.0 2 1.6:1 HI 3 44.7 2.4:1 HC 1 Concentrate grade is based on grade categories as specified in Mineral Facts and Problems (12). High-chromium (HC) concentrates have tradi- tionally been used by the metallurgical industry, while high-iron (HI) has traditionally been used by the chemical industry. The HC grades listed here would be marginal; they show a Cr:Fe ratio of greater than 2:1 but a Cr 2 3 grade greater than or equal to only 44 percent. 2 No Cr:Fe ratio was specified, but the grade "chemical" was given. Such specifications were assumed to give a Cr:Fe ratio of 1.6:1. 3 Concentrate from this deposit may be classified as refractory grade. The ore contains more than 20 percent aluminum oxide (Al 2 3 ) and more than 60 percent Al 2 3 plus Cr 2 3. Since the value of the material is based upon quality, prices shown in the tables and illustrations in this study are based on the Cr 2 3 content of the concentrates. (The concentrates consist of an oxide of iron and chromium — FeCr 2 4 .) Therefore, to permit a comparison of the cost of potential production from domestic sources to imported material used by the U.S. industry, the chromite prices of the imported material were converted to equivalent Cr 2 3 content price by dividing the current market prices by the associated Cr 2 3 grade. According to current industry information, the pricing structure for chemical-grade material having a Cr:Fe ratio ranging from 1.5:1 to 2.0:1, and aCr 2 3 grade ranging from 39 to 46 percent, ranges from $74 to $85 per metric ton CIF the marketing area of the Eastern United States. Similarly, the pricing structure for metallurgical-grade material having a Cr:Fe ratio of from 3.0:1 to 3.9:1 , and a Cr 2 3 grade from 46 to 53 percent, ranges from $128 to $144 per metric ton CIF the marketing area of the Eastern united States. For purposes of deriving a price with which domestic production could compete, the price assumed in this study was $79 per metric ton CIF the United States for chemical-grade chromite with a 40-percent-Cr.-O 3 content. A price of $136 per metric ton CIF the United States was used as the competitive price for a metallurgical-grade chromite with a 46-percent-CnOji content. These prices, converted to metric tons of contained Cr 2 3 , are as follows: Chemical-grade, metric ton Metallurgical-grade, metric ton Chromite market price (CIF United States) $ 79 136 Price of contained Cr 2 Q 3 $198 296 Total Chromite Total chromite availability at the demonstrated and identified resource level is shown in figure 4. Metallurgical- grade chromite is shown with dotted lines and chemical- grade chromite with solid lines. In the analysis, the incentive price and associate tonnage for the identified resource can vary from that for the demonstrated resource. Some properties included in this study have the same tonnage at the demonstrated and identified resource levels (table 1). In these instances, the incentive price remains constant. Other properties have increased tonnage at the identified level, because they have additional inferred tonnage. The incentive price could decrease owning to the additional tonnage, which would increase the life of the operation, thus allowing the capital expenditure to be amortized by additional recoverable units. Some properties have only inferred tonnages, thus increas- ing the total identified resource. The incentive price would apply to this inferred tonnage. At the demonstrated resource level, 4.6 million metric tons of Cr 2 3 in chromite concentrates are potentially recoverable over a production period of 48 years. At the identified resource level, potentially recoverable Cr 2 3 increases about 240 percent, to 15.6 million metric tons over a production period of 59 years. Table 6 shows potential recovery of metallurgical- and chemical-grade chromite at various commodity prices. Nearly 90 percent of the resources at the demonstrated level, and over 70 percent at the identified level, would be chemical-grade chromite. Table 6. — Potential recoverable Cr 2 3 contained in chromite concentrates at various prices, thousand metric tons (January 1981 dollars) Cr-,0 Drice' Demonstrated level Identified level per metric ton Chemical Metallurgical Chemical Metallurgical Less than $600 . . . 3,840 10,650 3,850 $600-$900 60 400 110 370 $901-$1200 190 70 460 120 More than $1200 20 30 20 30 Total 4,110 500 11,240 4,370 ' Price based on a metric ton of contained Cr 2 3. At the current market price for chemical-grade chromite, $1 98 per metric ton of contained Cr 2 3 , no domestic chromite is economically available at either the demonstrated or identified resource level. In addition, no metallurgical-grade chromite could be economically produced at the demon- strated level, assuming today's market price of $296 per metric ton of contained Cr 2 3. Annual Chromite Based on Cr 2 3 content, annual domestic consumption of chromite in 1979 was 441 ,000 metric tons. Consumers were the metallurgical industry (high-chrome chromite) — 64 per- cent, the chemical industry (high-iron chromite) — 22 percent, 2,000 n=bose year of analysis, ~ preproduction begins 1,600 1,400 1,200 1,000- 800 600: 400- 200 n + 4 Metallurgical-grade chromite Chemical-grade chromite n+2 Demonstrated resources _l 50 100 200 300 2,400 o" 2,200 CSJ o 2,000 a £ 1,800 * X '.600 <-> -g I.' z _ o a> i,200 v- m Si ? 1,000 !: g 800- 2 -> a: 600 Q. 40C- o £ 200 a. Demonstrated resources Metallurgical-grade chromite Chemical-grade chromite I Identified resources / _L 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 TOTAL RECOVERABLE Cr 2 3 CONTAINED IN CHROMITE CONCENTRATES, thousand metric tons Figure 4. — Chromium total resource availability, 1 5-percent rate off return. 2,000 1,800 1,600 I 1,400 i 1,200 ! 1,000 800 600 400 200 1 1 1 n=bose year of analysis, preproductiort begins Metallurgical-grade chromite Chemical-grade chromite Identified resources J 1 n + IOn+6 J J 200 300 RECOVERABLE Cr 2 3 CONTAINED IN CHROMITE CONCENTRATES, thousand metric tons Figure 5. — Chromium annual resource availability, 1 5-percent rate of return. and the refractory industry — 14 percent. Consumption in 1979 was at the highest level since 1974. Although no chromite is being produced by U.S. mines, potential annual production (based on Cr 2 03 content) is shown in figure 5; metallurgical-grade chromite is shown with dotted lines and chemical-grade with solid lines. As shown in the figure, at the demonstrated resource level and at a price of about $600 per metric ton (significantly above current market price), an estimated 35,000 metric tons could be produced 2 years after preproduction begins. At $600 per metric ton, production could increase to 140,000 metric tons in year 4, but would begin to decrease shortly thereafter. As mentioned earlier, this decrease reflects the static nature of this study. Future technological developments, the discovery of additional ore bodies, and an increase in commodity price would, with time, reduce the effect of scarcity, and shift the curves to the right. Potential annual production would increase at the iden- tified resource level because of the addition of properties that are not defined at the demonstrated resource level, and also because of expanded production at operations located on smaller demonstrated reserves. At a $600 commodity price, nearly 400,000 metric tons could be produced after 2 years. As shown in figure 5, chromite produced from domestic sources would, in most cases, cost significantly more to produce than that currently being imported. At the demon- strated resource level, possible annual production would be small and of short duration, decreasing after the fourth year. At the identified level, production could be significantly greater and could remain fairly constant for at least 1 years. FERROCHROMIUM CONCENTRATE AVAILABILITY Commercial ferrochrome production dates back to the 1860's, when low-grade ferrochrome averaging 7 to 8 percent chromium was produced by direction reduction of chromite and chromiferrous iron ores with coke or coal in a blast furnace. By the 1 870's, ferrochrome containing 30 to 40 percent chromium was produced by using higher blast furnace temperatures and larger quantities of coke. With the development of the electric arc furnace, however, chromite ore can be processed to high-carbon ferrochromium containing 67 to 71 percent chromium. Chromite and coke are fed into the furnace, the ore is reduced, and the ferrochromium collects at the bottom of the furnace. A high-carbon ferrochromium suitable for low-alloy steels is produced. The product, however, is not suitable for high-chromium steels, such as stainless steel, where low-carbon ferrochromium is needed. Low-carbon ferrochro- mium is produced by smelting chromites or high-carbon ferrochromium in the presence of silicon. Development of the argon-oxygen decarburization (AOD) process for making stainless steel made it possible for a lower grade ferrochromium, known as charge chromium, to be marketed. In the AOD process, an adapted converter vessel blows out impurities with a mixture of oxygen and inert argon gas. Additional processing and transportation charges would be incurred in the production of ferrochromium from chromite. However, because ferrochromium is a refined product, it commands a higher price than chromite. Two ferrochromium products examined in this study are a low-chrome ferrochro- mium containing 52 percent chrome and a high-chrome ferrochromium containing 65 percent chrome. Over 91 percent of the resources at the demonstrated level and 84 percent at the identified level could be produced to a low-chrome ferrochromium. Market prices for low-chrome and high-chrome ferrochro- mium are about the same per pound of contained chromium; however, because of the higher chromium content of high-chrome ferrochromium, the price per metric ton is much greater. Prices as of December 1980 are shown below: Cents per pound Dollars per contained metric, ton chromium ferrochromium Low-chrome ferrochromium (50-55 percent chromium).. High-chrome ferrochromium (60-65 percent chromium).. 45.5-47.5 46.0-52.0 502-576 609-745 For this study, the grades selected were 52 and 65 percent for the low-chrome and high-chrome ferrochromium pro- ducts, respectively. The comparative price of imports CIF the United States, with which the domestic ferrochrome products would compete, are as follows: Low-chrome ferrochromium (52 percent chromium) $522 per metric ton. High-chrome ferrochromium (65 percent chromium) $666 per metric ton. Recoverable ferrochromium, at both the demonstrated and identified levels, is illustrated in figure 6. The solid lines on the curve indicate low-chrome ferrochromium, and the dotted lines show high-chrome ferrochromium. At a current market price of $522 per metric ton for low-chrome ferrochromium and $666 for high-chrome ferrochromium, there are no economically recoverable domestic chromium resources. Recoverable quantities of the low- and high chrome products at various ferrochromium prices are shown on table 7. Annual potential availability curves for ferrochromium are illustrated in figure 7. High-chrome ferrochromium is shown with dotted lines and low-chrome with solid lines. Most low-chrome ferrochromium is available at a price below $800 per metric ton, whereas all high-chrome ferrochromium would cost more than $800. 400 200 OOO 800 ,600 400 ,200 ,000  12,000 14,000 16,000 18,000 TOTAL RECOVERABLE FERROCHROMIUM, thousand metric tons Figure 6. — Ferrochromium total resource availability, 1 5-percent rate of return. Table 7 Potential recoverable ferrochromium at various ferrochromium prices, thousand metric tons (January 1981 dollars) Ferrochromium price per metric ton 1 Demonstrated Low- chrome resources High- chrome Identified Low- chrome resources High- chrome Less than $800 . . , $800-$1200 More than $1200. 4,130 760 20 480 12,380 680 20 4,320 150 Total 4,910 480 13,080 4,470 10 i ooo I.800 1,600 1.400 1.200 1.000 800 600 400 ■ 200 2,000 1.800 1,600 1,400 1,200 1,000 8O0- 600 200- n + 9 n + 2 ■I n + r n = base year of analysis, preproductton begins • High-chrome ferrochromium - Low-chrome ferrochromium Demonstrated resources 100 n=bose year of anolysis, preproduction begins High-chrome ferrochromium Low-chrome ferrochromium n + 9n + 5 Identified resources 100 200 300 400 500 600 700 RECOVERABLE FERROCHROMIUM, thousand metric tons Figure 7. — Ferrochromium annual resource availability, 15-percent rate of return. Within the past decade an increasing amount of our chromium imports have been in the form of ferrochrome; our import dependency has shifted from chromium ore to ferrochrome, as chromite-producing countries have built their own ferrochrome plants in an effort to enhance their export revenues. There is understandable concern over the future viability of our domestic ferrochrome industry, since trans- portation costs favor the production of ferrochrome near the source of the ore; and this concern is intensified by the rising costs of domestic labor, capital, energy, and pollution control. This trend could further reduce our domestic ferrochrome capacity, and could have a significant impact on any future plans for the development of domestic chromium resources. It should be noted that any substantial increase in the market price of ferrochromium would probably not be met with a corresponding increase in domestic ferrochromium capacity, since the incentive for increasing domestic ferrochrome capacity would probably be restrained by the limited life of domestic chromium production. CONCLUSIONS In most instances, metallurgical-grade chromium from domestic deposits would cost significantly more to produce (a minimum market price of $237 per metric ton of chromite) than the current market price ($128 to $144). Chemical- grade chromite production would require a market price in excess of S1 88 per metric ton of chromite; the current market price is $74 to $85. Based on current known domestic resources, production would be relatively small and of short duration. At the demonstrated resource level, an estimated 4.6 million metric tons of Cr 2 3 in chromite concentrates could be recovered over a production period of 48 years. Recoverable tonnage increases to 1 5.6 million metric tons at the identified resource level. Most of the chromite would be suitable for use by the chemical and/or metallurgical industries. Analyses of the potential availability of the ferrochromium produced from domestic concentrates, and costs of process- ing, transporting, and producing ferrochromium from chro- mite concentrate resulted in two products: low-chrome and high-chrome ferrochromium. Over 91 percent of the re- sources at the demonstrated level and 84 percent at the identified level could be produced to a low-chrome ferrochro- mium. At the current market prices for low-chrome ($522) and high-chrome ferrochromium ($666), there are no domestic chromium resources that could be economically produced. 11 BIBLIOGRAPHY 1. Arthur D. Little, Inc. Economic Impact of Environmental Regulations on the United States Copper Industry. 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