This industry consists of companies that smelt copper from ore and refine copper by electrolytic or other processes. Those establishments engaged in rolling, drawing, or extruding copper are classified in SIC 3351: Rolling, Drawing, and Extruding of Copper.
331411 (Primary Smelting and Refining of Copper)
Copper has excellent properties that make it useful to many industries. As a base metal, copper is used both alone and in alloyed combinations with other metals. The electrical, communications, and construction industries use copper in many of their products. Approximately 70 percent of U.S. copper consumption is for electrical and electronic uses, according to the U.S. Geological Survey. Copper faces increasing competition, however, from other materials such as plastics and other highly engineered materials in electronics and electrical applications.
The value of industry shipments declined significantly in the late 1990s, falling from $6.1 billion to $2.4 billion between 1997 and 2000. Employment in the industry followed suit, dropping from 7,360 workers to 2,859 workers over the same time period.
Companies engaged in smelting and refining copper create products for a variety of national and international industries. End-use markets for copper and copper alloy can be categorized into five different functional uses. In 1994, 55 percent of copper products were used for electrical purposes and 25 percent of the products were used because they were corrosion resistant. Another 11 percent of copper products were used in heat transfer functions, while 8 percent went toward structural purposes. The final functional use is the aesthetic use of copper products, which accounted for only 2 percent of the total number.
The end-use markets for copper were primarily building related or industrial machinery and equipment related. For 1994, the 10 largest copper markets in the United States were: heating and plumbing, with 16 percent of the market share; building wire, 14 percent; commercial refrigeration and air conditioning and power utilities; each 8 percent; automotive electrical, telecommunications, and in-plant equipment, each 7 percent; electronics, 5 percent; and industrial valves and fittings and automotive nonelectrical, each 4 percent. The remaining 21 percent of the United States copper market was unspecified.
Copper in the United States went from the mines to the smelters. In some cases, the same company owned both, and in some cases, the mining and smelting were performed at nearby facilities. The mining and smelting companies are the producers of copper materials, while the wire rod mills, brass mills, and foundries work with copper and prepare the metal for delivery to manufacturers in various industries.
Mining companies process copper ores, most of which are retrieved from open-pit mines. These ores are refined and sometimes alloyed with other elements, such as zinc or beryllium. A primary smelting reactor such as a reverberatory furnace produces copper sulfide from concentrated ore. Some reverberatory furnaces were replaced by oxygen/flash smelting, which created less air pollution. The final step in smelting and refining work involves an electrolytic or other refining process. The resulting copper is often close to 100 percent pure.
Copper mining had origins in the Middle East, but reached its zenith in America. In the mid-eighteenth century, miners in the colonies discovered copper ores in what is now the northeastern United States. They mined these ores, but English law prohibited the establishment of smelting works in the colonies, so the ore was sent to England for smelting and refining.
After the American Revolution, miners and smelters moved to the newly created United States and began working in American mines and refineries. Copper sheathing began to be used on wooden ships as early as the 1790s. The copper protected the ships from the pressure and corrosive effects of the ocean. Great demand from the shipping industry helped the budding copper industry, but the United States still depended on copper imports from England and South America. In 1806, U.S. importers of copper asked Congress to exempt copper from customs duty. The protests lodged by copper industry pioneers succeeded in lowering tariffs applied to copper imports.
In the early 1800s U.S. companies began to use blast furnaces for smelting and refining copper. Later, with the rise of American industry, growing copper works created stripping, boiler plates, rivets, and other copper-based items that were used in an increasingly diverse number of industries and products. Copper nails replaced cast iron nails in building, a windfall for the copper industry since towns and cities were being built as fast as possible all across the new nation.
The reserves of copper in the United States have not suffered appreciably during the twentieth century. Although copper has been in use for more than 10,000 years, about three-quarters of all copper consumed has been produced since World War II. In recent years, new deposits have been found and better mining and extracting methods developed by copper companies.
U.S. smelter production of copper reached its peak in the early 1970s at 1.8 million metric tons annually. At that time, the trend in the copper smelting industry was for oil companies to purchase smelters, refining companies, and mines. In the following decade, almost all of these oil companies sold off their copper companies, leaving them independent again, but this time with a renewed sense of the marketplace. Workers in some of these companies learned new technologies that enabled them to compete in the international copper arena. Instead of the pyrometallurgy of the reverberatory furnaces, many smelters introduced hydrometallurgical processing that produced copper whose purity and quality matched that of electrolytically refined copper.
The 1980s were not boom years for many players in the various copper-related industries. The three largest U.S. producers of copper—Asarco, Phelps Dodge Corporation, and AMAX, Inc.—lost almost $2.5 billion from 1982 through 1985. These companies, however, remained leaders in the field despite their difficulties. Many other companies in the copper industry went out of business, though. Those that remained made drastic changes to cut operating costs and improve efficiency. These cost-cutting measures at times exacerbated difficulties with labor.
The copper smelting business has been growing since the early 1980s. In 1987, shipments were valued at $2.55 billion and the size of the total work force was 3,300. Five years later, shipments had grown to $5.58 billion with total employment at 5,600. By 1994, shipments had grown to $6.18 billion and total employment was at 6,400. The average hourly wage in the industry had grown from $14.34 in 1984 to $18.14 in 1994. The number of establishments dedicated to copper smelting reached a low during the 1980s; approximately 12 establishments existed in 1986. By the mid-1990s, there were approximately 20 establishments.
In 1994, the largest share of the market was refined primary copper, representing 60.4 percent. Noncommercial grade copper smelter products, which are produced for further refining, comprised 39.5 percent of the market. Nonspecific primary copper products filled the remaining tenth of a percent of the industry. Nearing the end of the twentieth century, all of the players in the copper industry were involved in the recyclability of copper. Recycled copper is highly valued, as "high-grade" scrap often retains more than 90 percent of the value of newly mined copper.
In dollars, copper consumption had fallen during the late-1980s and early-1990s. The compound growth rate for copper consumption from 1972 through 1991 was 1.3 percent. In 1991, the value of all shipments of primary copper hit a low of $3.8 billion.
After the declines of the early 1990s, the industry posted modest growth during the mid-1990s. Its 1994 shipments were valued at $5.2 billion; by 1995 shipments had climbed to $7.1 billion in current dollars, although production was actually lower than in 1994. Despite the growth of plastics as a substitute for copper pipe and fittings, industry analysts expect copper markets to grow at approximately 1 percent per year through the year 2000.
The United States maintained its world leadership in copper production during the 1990s. U.S. companies produced 1.8 million metric tons of copper ores and almost 2.7 million tons of refined copper products in 1995. Consumption of copper throughout the world was expected to increase into the twenty-first century. One important factor has been the stabilization of supply levels of copper from mines in Peru, which had begun to solidify by the late-1990s due to the combined efforts of the World Bank, the International Monetary Fund, and various financial organizations. Those groups took important measures to restructure debt in Peru thereby improving mining in that country and thus ensuring a smoother supply of copper to the world.
Total worldwide smelter production of copper in 1993 was 9.5 million short tons, a decrease from the high of 9.7 million in 1989, according to the U.S. Geological Survey. International competition was a factor in the 1990s, as was an increased environmental consciousness in the United States. One copper company declined to build a new smelting facility in Texas after environmental groups protested.
Copper industry executives recognize successful applications of copper in many existing industries and are working to expand the use of copper in other industries. One of the key roles of the Copper Development Association (CDA), a leading representative body for the industry, is to work with manufacturers to develop new uses for copper. The CDA creates programs aimed at increasing copper usage in specific industries. In Europe, for instance, copper was used four times more than in the U.S. for architectural applications.
In the late 1990s, the copper industry suffered from a falling-off of the golden era it experienced in the late 1980s. In copper's heyday between 1986 and 1988, consumption exceeded demand by 1 million tons. As would be expected, the price of copper reached its record high in 1988, averaging $1.15 per pound. In contrast, the industry experienced a reversal of those boom times a decade later when production outstripped demand in the late 1990s. Copper prices plummeted accordingly to 66.8 cents per pound, a few cents shy of a full one-dollar drop in price compared to the closing price a decade earlier. Copper averaged 75 cents per pound in the late 1990s. The industry's 16 establishments shipped $6.12 billion worth of goods in 1997. By 2000, total industry shipments had fallen to $2.44 billion.
Phoenix, Arizona-based Phelps Dodge Corp. led the industry with $3.1 billion in 1999 sales, a 1.7 percent increase from the previous year. Lower copper prices contributed to the sluggish sales growth. New York City-based Arasco Inc. chalked up 1998 sales of $2.2 billion. New Orleans-based Freeport-McMoRan Copper and Gold Inc. generated 1999 sales of $1.9 billion. Southwire Co. of Carrolton, Georgia, garnered an estimated $1.4 billion in sales for 1998.
In 2000, the industry employed 2,859 people, 2,222 of whom worked in production. The average hourly wage for production workers was $18.07, down slightly from $18.14 in 1994.
According to Standard and Poor's Industry Surveys, the United States was the world leader in smelter production of copper entering the 1990s. In 1994, 1.7 million short tons of copper were smelted in the U.S. In comparison, 1.4 million short tons were smelted in Chile, which is the second-ranked country in copper smelter production. During that same year, 560,000 short tons were smelted in Canada, 296,000 in Germany, 1.1 million in Japan, and 585,000 in African nations. The Commonwealth of Independent States (CIS) smelted 900,000 short tons of copper in 1993.
That same year, the United States ranked second in mine production of copper at 1.8 million metric tons. In comparison, top-ranked Chile mined 2.2 million metric tons.
The copper industry was becoming increasingly global in its outlook in the 1990s. Smelters and refiners of copper were looking toward developing countries as markets for copper-based products. Those countries that were improving their infrastructures with telecommunications cables, power cables, and other basic building tools needed more copper. The Asian markets of China, Taiwan, and South Korea were expected to provide large new markets.
In 1993, a politically charged topic in the industry was the General Agreement on Tariffs and Trade (GATT). Copper industry leaders met with U.S. trade officials to request a reduction of Japanese and European tariffs under GATT. Their aim was to eliminate global tariffs on copper to gain better access to foreign markets; they argued that the Japanese market was too heavily protected. The U.S. International Trade Commission (ITC) rejected high tariffs on imported metals.
The U.S. formed an International Copper Study Group in the 1990s in conjunction with 17 other countries involved in the copper industry. Their aim was to allow information exchanges between producing and consuming countries and to increase copper production and consumption. The members of the group included Germany, China, Chile, Peru, and France.
A low-cost method of production being used in the 1990s in U.S. copper companies was known as SX-EW, or solvent extraction-electrowinning. Solutions of sulfuric acid were applied to dumps of copper-bearing ores, then the dissolved copper was recovered by depositing copper onto electrically charged cathodes. This process was known as electrowinning. SX-EW had fewer steps and caused less pollution at a lower cost than earlier production methods. But only some of the world's ore could be processed by this method. Primary sulfide ore, which is located deeper in mines and is usually found combined with other elements, was not eligible for SXEW. The process was effective for oxide ore and secondary sulfide ore, which are found closer to the mine's surface, where the ore has been oxidized. Unfortunately, the contents of U.S. mines often mainly contain primary sulfide ores rather than oxide ores or secondary sulfide ores. Another process for copper production is known as the Escondida ammonia leach process. This process employs air combined with a solution of ammoniaammonium sulfate, which leaches cuprous salts from chalcocite solutions. Approximately half the copper is leached and the remainder can be recovered by a flotation recycle. This process was developed by and named for the Escondida mine in Chile and has been used successfully to produce cathode copper. An innovative leaching process, piloted at Chatwoods Australia, is known as the Intec process. This method of leaching has the added advantage that gold can be recovered on activated carbon at the same time that copper is being separated as its halogen complex. The metal from the Intec process is used for copper briquettes and wire or strips.
The technical research and market development area of the copper industry has promoted new technologies that use copper materials in a wide array of applications. These new applications include the use of copper radiators in the automobile industry. The copper industry emphasizes copper's positive features, such as its corrosion resistance and strength, and notes that the new radiators are also lighter and more durable than current copper radiators, which they would replace.
Other proposed uses of copper include solar energy systems, nuclear waste disposal canisters, and superconductivity applications. Industrial applications, such as valves, fittings, and power utilities, remain steady users of copper. Until 1982, another copper user was the U.S. mint, which coined pennies using a copper alloy. In 1982, the copper alloy was replaced by zinc. Another loss to the industry was the increasing use of fiber optics products, which began to replace some copper telecommunications equipment.
Recyclability became increasingly important as copper companies faced the next century. Because copper was more easily recycled than many other metals, more copper was recovered from recycled material than was obtained from newly mined ores. This combination of recycled copper materials and healthy U.S. deposits of copper made the country highly self-sufficient in copper. Aluminum, which competed with copper in many areas, was a more difficult metal for the United States to obtain.
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