For Want of a Nuclear Nail

by Paul Collin

March 3, 2004 - The importance of today's strategic, critical, and precious metals may be described in an old homily that goes something like this:

"FOR WANT OF A NAIL

For want of a nail, the shoe was lost,

For want of the shoe, the horse was lost,

For want of the horse, the rider was lost,

For want of the rider, the battle was lost,

For want of the battle, the kingdom was lost,

And all, for the want of a nail.”

-Author Unknown

It would be easy today to modernize this homily by adding the word mineral, metal, aircraft, satellite, warfighter, investor, 'nuclear' or, even high-energy into the text 'above' and perhaps now because of what is to be discovered from the text 'below'.

The U.S. BUREAU OF INDUSTRY AND SECURITY, U.S. National Security Assessment Report reads (in part), as follows:

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) Lightweight; 2) dimensional stability over a wide range of temperatures; 3) the ability to reflect neutrons and ‘transmit x-rays’ [it hides from 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 (3) major forms:

1) Metallic beryllium; 2) beryllium alloys; and, 3) beryllium oxide.

In 1992, metallic beryllium constituted about 15% of the dollar value of the world market, although in prior years when defense spending was higher, it was over 20%. Beryllium alloys (mostly of beryllium copper), were about 75% of the market, up from prior years, while beryllium oxide comprised most of the remaining 10%."

In the official U.S. Government report it states that it “is by far the world's largest producer of beryllium”, however according to the BRUSH-WELLMAN company it isn't. BRUSH-WELLMAN received secret approval from the U.S. government to transfer its high-tech copper beryllium processing technologies to the ULBA METALLURIGICAL WORKS beryllium production facility in Kazakhstan in-exchange for beryllium copper master alloy exports back to the U.S. for use in tactical and strategic nuclear and high-energy weapon productions.

"..., processor and consumer of beryllium related products. In the 11-years from 1981-1991, U.S. production of beryllium ore accounted for over 64% of world production. During the same 11-years, U.S. demand for beryllium related products totaled over 71% of the world total, and over 83% 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%, 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 5-year average demand, 1988-1992, was more than 28% lower than the preceding five-year period, 1983-1987. The downtrend followed declines in defense aerospace, electrical equipment, nuclear applications, and slumping sales in electronics markets, particularly mainframe computers.

BRUSH-WELLMAN INC. (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%) 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% of the market in the United States, and about 70% in the world. BRUSH-WELLMAN is also a significant factor in beryllium product fabrication markets.

U.S. NATIONAL SECURITY CONCERNS

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, making it a ‘critical’ material.

In dollar terms, between 20-25% of beryllium consumption is used for military applications, down from about 35% in the mid-1980s.

Defense buys over 90% of the metallic beryllium, about 10% of the beryllium alloys, and 20-30% of the beryllium oxide.

Since Fiscal Year (FY) 1985, the total military procurement budget (in 1993 U.S. dollars) fell from $127.2-billion, to only $54.1-billion in FY1993, a dramatic drop exceeding 57%. The major decline jeopardizes the continued viability of the metallic beryllium sector, which (in early 1993) reported operating below 30% of production capacity.

BERYL ORE - BERYLLIOSIS HEALTH HAZARDS

The long-term health of the beryllium sector has not been investigated. The major concerns facing the beryllium industrial business sectors 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 Russia; and,

4) the possible sale of ‘metallic beryllium’ and ‘beryllium copper’ master alloy inventories from the U.S. 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 percentage of people exposed to beryllium dust will get this disease; it has been shown that chronic berylliosis has an immunological basis.

Progress has only been made in ‘reducing the occurrence of berylliosis’, but not eliminating it since the disease was first recognized. Compliance with OSHA and EPA regulations is a costly endeavor, and has a major impact on BRUSH-WELLMAN and some other beryllium product fabricators.

STRATEGIC GLOBAL ECONOMICS

The potential for a surge in supply of beryllium on the world market from Kazakhstan has increased.

This scenario could quite possibly become reality, as in the case of uranium, aluminum and copper from Russia into Western markets, which led to a rapid decline in prices of these commodities and pushed a number of European and American producers into bankruptcy.

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% beryllium to almost 100%, depending on its application. The ‘purest and most expensive grade’ is used for U.S. ‘strategic weapons’.

BERYL ORE BASICS

"Bertrandite" is the principal beryllium mineral mined in the U.S., and "beryl" is the principal mineral produced in the rest of the world.

Beryllium (Be), silver in color and one of the lightest of all metals, has one of the highest melting points (about 1,280 E C) of all light metals. It has physical and chemical properties, such as its stiffness, high resistance to corrosion from acids, and high thermal conductivity, that make it useful for various applications in its alloy, oxide, and metallic forms. Only two beryllium minerals, beryl and bertrandite, are of commercial importance; bertrandite contains less than 1% Be, and beryl contains about 4% Be.

In 1999, U.S. production of beryllium ore and total ore consumption for the production of beryllium alloys, beryllium metal, and beryllium oxide decreased from those of 1998.The Defense National Stockpile Center (DNSC), U.S. Department of Defense (DOD), offered and sold selected beryllium materials from the National Defense Stockpile (NDS). The Generalized System of Preferences (GSP), which expired on June 30, 1999, was renewed on December 17, 1999 (retroactive to July 1, 1999), and extended to September 30,2001. Beryllium price quotations remained unchanged. Overall U.S. exports and imports of beryllium in 1999 were down significantly from those in 1998.

Both "beryl" and "bertrandite" prices may be monitored, at the following website URL: http://minerals.usgs.gov/minerals/pubs/metals_prices

BRUSH-WELLMAN BERYLLIUM

Beryllium is mined and extracted from minerals in Utah by Brush Wellman (a "Western" issue). The ore concentrate is shipped to their primary metals production plant in Ohio (now it becomes an "Eastern" issue). Brush does secondary fabrication of its beryllium products in plants in Arizona, Massachusetts, New York, Pennsylvania, and Rhode Island. They have distribution centers in California, Illinois, Michigan, and New Jersey (really a "Domestic" issue). Brush also has distribution centers globally, serving over 5,000 customers for beryllium products globally.

When beryl ore, a source of beryllium, was found in the Topaz Mountains of Utah, Brush established Beryllium Resources, which bought the rights to explore and later mine in the Utah area.

S K WELLMAN CORPORATION, a manufacturer of metallic friction material used in brakes and clutches for heavy-duty military vehicles, mining vehicles, aircraft, and off-road equipment, had part of its business name absorbed by BRUSH-WELLMAN, INC.

BRUSH-WELLMAN was co-founded as BRUSH LABORATORIES by, Charles Brush Jr. and Charles Baldwin Sawyer in 1921, with the financial assistance of Charles F. Brush Sr. By 1926, Charles Brush Jr. was developing industrial uses for beryllium and in 1931, Brush Laboratories became known as the BRUSH BERYLLIUM COMPANY, which was originally founded by Charles Baldwin Sawyer. It was the Brush Beryllium Company, which contributed to the development of atomic energy for the United States used during World War II and continued thereafter.

The company’s sales of beryllium metal, alloys, oxides and ceramics steadily increased through 1955, then quadrupled by 1960 due to its involvement in the space program.

Brush Beryllium Co. product, the perfect 'Space Age' metal, was used to form the heat shield for the re-entry vehicle of NASA Project Mercury manned space flights. Though its aerospace program slowed, Brush Beryllium Co. still prospered because of an increasing demand for its materials in both defense and commercial aircraft and electronics.

BRUSH ENGINEERED MATERIALS, INC.

Hugh D. Hanes (FASM) is the “government affairs consultant” to both BRUSH-WELLMAN and the METALS AFFORDABILITY INITIATIVE (MAI) CONSORTIUM, and a retired executive with extensive experience in technology, manufacturing, sales and marketing, media communications, and government relations. His 45-year career has been focused on specialty materials development and manufacturing, including beryllium, titanium, super alloys, and nuclear materials.

Prior to retirement, Hanes served BRUSH-WELLMAN as Vice-President of Government and Environmental Affairs, and Vice-President and General Manager of the Beryllium/Mining Division responsible for the operation of the mining, extraction, and metallic beryllium manufacturing operations of the corporation.

Prior to coming onboard BRUSH-WELLMAN, Hanes was employed by BATTELLE LABORATORIES (Columbus, Ohio) where he developed and managed Projects for the ‘advanced materials’ and ‘specialty manufacturing’ for aerospace, defense, nuclear, and commercial applications.

Hanes served as a member of the Government-Industry Advisory Committee on the Operation and Modernization of the National Defense Stockpile during the mid-1990s and also was Chairman of the Minerals Availability Committee of the American Mining Congress. He has served as a Director of the National Mining Association (NMA), and continues as an active member of the NMA’s Government Affairs Committee.

He was named a Fellow of ASM International in 1993 "for the successful development and commercialization of hot isostatic pressing technology for the net-shape fabrication of particulate materials, including applications in beryllium manufacturing."

HANES REPORT TO U.S. GOVERNMENT

“In his testimony to Congress (2003), Deputy Secretary Paul Wolfowitz stated, ‘The Department of Defense is undergoing a substantial transformation of the Armed Services . . . by pursuing a host of transformations including precision, surveillance, networked communications, robotics and information processing.’ That beryllium is critical to 4 out of 6 of the Secretary’s goals can be demonstrated by examples of both current and developmental systems that use beryllium because of its unique properties.

· HOMELAND SECURITY – ‘U.S. forces must protect critical bases of operations and defeat weapons of mass destruction and their means of delivery.’ Beryllium is a key structural element in both the PAC-3 system and those interceptor systems under development.

· DENY ENEMIES SANCTUARY – ‘Space denial capabilities, such as ground-based lasers . . . require the development and acquisition of robust capabilities to conduct persistent surveillance of vast geographic areas and long-range precision strike.’ Beryllium is used in long-range surveillance systems, guidance, and is in development as seekers in new missile and ground-based lasers systems.

· PROJECTING AND SUSTAINING FORCES – ‘Increasing U.S. advantages in stealth, standoff, hypersonic and unmanned systems for power projection; and developing ground forces that are lighter, more lethal, more versatile, more survivable, more sustainable, and rapidly deployable.’ Beryllium is used extensively in reconnaissance satellites, FLIRs (Forward Looking Infrared Radar), improving stand-off ranges for virtually every new generation targeting device, and battlefield surveillance, including the tank commander’s sight on the M1A2 Abram tanks.

· ENHANCING SPACE CAPABILITIES – ‘become more dependent on space systems for communications, situational awareness, positioning, navigation, and timing.’ Applications of beryllium include instruments and critical structures in reconnaissance and surveillance satellites, defense weather satellites such as NPOESS, and the new generation of military communications satellites.

Wolfowitz goes on to describe systems under development, and in all cases, beryllium plays an enabling role:

· Joint direct attack munitions (JDAM's) and other precision guided munitions

· Stealthy F-22’s

· Development of missiles defenses, including the Airborne Laser program

· Enhanced electro-optical capability for Global Hawk and other UCAV upgrades

· Precision weapons - weapons that are precise in time, space, and in their effects

· Missile defense - pursuing parallel technologies to meet the same objectives; for example, the kinetic kill boost vehicle and a space-based laser (beryllium is critical to both concepts)

Thus, beryllium processing is clearly demonstrating the linkage between mineral resources in the Western US and metals manufacturing in the Domestic industrial base.

PRECIOUS METALS CRITICAL FUNCTIONS - Civilian Infrastructure

Opponents of hardrock mining often portray ‘precious metals’ as ‘unnecessary metals’, but they perform ‘critically’ enabling functions in the civilian infrastructure. Between 25-55% of these so-called ‘noble metals’ mined and produced domestically are used in critical, high-reliability electronic applications because of their combination of oxidation resistance, electrical and thermal conductivity, and their resistance to corrosive environments.

These high-reliability requirements dictate the selection of precious metals for many applications in a wide variety of industries, including the electrical, electronics, automotive, telecommunications, semiconductor, computer and medical industries.

Because of their high intrinsic cost, ‘precious metals’ are often ‘plated’ or ‘laminated’ onto ‘base metals’ to give added strength [properties] and to lower the cost of the component.

Although ‘gold’ remains the industry standard in many of these applications, gold and gold alloys as a cover over ‘palladium’ and ‘palladium-silver alloys’ are often used.

One of the major uses of high-reliability components containing precious metals can be found in automotive electronics. Under-hood interconnects for computerized ignition systems, mass air flow sensors, automatic transmissions, cruise control devices, anti-lock braking systems, and new generation suspension control systems all are made more reliable by employing precious metal containing components. Society benefits extensively from the use of these electronic components because of the increased safety, increased fleet mileage, and decreased emissions of the modern automobile.”

TACTICAL BERYLLIUM

Beryllium metal is used principally in aerospace and defense applications. Its high level of stiffness, lightweight, and dimensional stability within a wide temperature range make it useful in satellite and space vehicle structures, inertial guidance systems, military aircraft brakes, and space optical system components.

It won’t take a rocket scientist to figure new uses for beryllium. If a weapon was crafted out of 'beryllium' it might just get past airport security ‘X-ray’ detection systems because, beryllium is 'transparent to X-rays' and does ‘not’ refract X-rays, but allows them to pass through. That’s why it’s used in X-ray windows. Beryllium in nuclear reactors, serves as a canning material.

According to BRUSH-WELLMAN, the U.S. GEOLOGICAL SURVEY Minerals Yearbook (1999), Bureau of Export Administration (1999), National Defense Stockpile Market "Impact Committee", U.S. International Trade Commission "Harmonized Tariff Schedule of the U.S." (1999), U.S. Department of Energy (1999) "Chronic Beryllium Disease Prevention Program", and miscellaneous intelligence sources . . .

Beryllium is also used as a neutron moderator, and in nuclear control rods, and has been used as a nuclear warhead-triggering device.

Other applications for metallic beryllium include high-speed computer components, audio components, and mirrors. In the U.S. space shuttles, several structural parts and brake components use beryllium.

Canada, Germany, Kazakhstan, Russia, and Sweden are the major sources for U.S. beryllium imports (contained beryllium), and accounting for more than 80% of the U.S. total used.

KAZAKHSTAN BERYL CONNECTION

In early 1999, the Government of Kazakhstan was reviewing the terms of a 1995 agreement between the country’s ULBA METALURIGICAL WORKS, a major beryllium producer, and Sweden’s SCANBURG AG, under which SCANBURG would provide a $52-million line of credit and ULBA would put up 270 tons of beryllium as collateral. Within 5-years, the credit was to be repaid and the beryllium returned to Kazakhstan. The Kazakhstan Government, however, deemed the deal to be uneconomical in 1997. SCANBURG released some of the credit and about 26 tons of beryllium was shipped to Sweden. ULBA treated the shipped beryllium as sold, not collateral, but the Kazakhstan Government did not sanction the sale and gave SCANBURG until April 1, 1999 to return the beryllium (Interfax International, Ltd., 1999d). KAZATOMPROM, Kazakhstan’s national nuclear industry concern, owns 90% of the common stock in ULBA. In an agreement signed in June 1999, KAZATOMPROM planned to 'swap' 34% of its stock shares of ULBA with members of TVEL, a Russian nuclear fuel concern in-exchange for stock shares in a Russian metallurgical plant during the first quarter 2000 (Interfax International, Ltd., 1999b, e).

In May 1999, it was reported that ULBA was acting to preserve its beryllium production capacity. Annual profits of $9.4-million could be generated if ULBA could sustain beryllium production at about 200 tons/yr and perhaps if the company could sell a similar amount from its beryllium stockpiles.

ULBA was also setting up a 'Carbothermy' Division to obtain beryllium-alloying additives and to restore its chemicals and metallurgy complex. A new method had been developed for processing about 800 tons of semi-finished toxic materials stockpiled at ULBA, containing about 149 tons of beryllium.

In June 1999, ULBA beryllium production was reported to consist of beryllium-alloying agents containing up to 10% beryllium. Production of ‘beryllium bronze’, an alloy containing less than 2% beryllium, was planned for the year (Interfax International, Ltd., 1999a, c)

BRUSH BERYLLIUM CONNECTION

BRUSH INTERNATIONAL – BRUSH-WELLMAN, INC., a member of the BRUSH ENGINEERED MATERIALS INC. group, entered into a long-term agreement with ULBA METALLURGICAL WORKS plant, UST KAMENGORSK, NAC KAZATOMPROM (Kazakhstan’s national nuclear industry concern), ALMATY and RWE NUKEM, INC. (Danbury, Connecticut) to get additional export supplies of ‘beryllium copper’ master alloy produced by ULBA METALLURGICAL WORKS plant in Kazakhstan to the United States. In-exchange, BRUSH-WELLMAN, which provided the high technology and a furnace for the production of the products, which will be manufactured by ULBA METALLURGICAL WORKS plant that was financed and marketed by RWE NUKEM, INC. (Danbury, Connecticut).

BRUSH-WELLMAN will then use the Kazakhstan beryllium copper master alloy products in the manufacture of finished highly sophisticated U.S. defense technology products at its American-based facilities.

In this project and in future initiatives, BRUSH-WELLMAN continues to collaborate with ULBA and RWE NUKEM to develop additional greater value products, which the ULBA METALLURGICAL WORKS plant will go on to supply to Brush-Wellman for global distribution.

U.S. SECURITY and METALS TRANSMUTATION RECYCLING

The value of the U.S. Geological Survey (USGS) Mineral Resource Program, Mineral Information Team is the only comprehensive source of statistical data on Mining and Mineral Commodities both domestically and internationally and is critical to the mining industry and to the nation as a whole.

As a net ‘importer’ of minerals, including many strategic minerals, the United States’ ability to develop and implement a global mineral-related strategy could be severely compromised without the availability of reports produced by this program.

In addition, the analytical expertise of the program’s mineral commodity and country specialists is vital to answering mineral related questions of a domestic and an international nature.

A loss or reduction in expertise for tracking world 'hot spots' with respect to strategic and critical materials could negatively impact U.S. intelligence and national security.

As a global superpower, the U.S. seeks to continue collaborating in complex manipulations of worldwide commodity markets for its own strategic and critical materials for its own defense and economic outlook.

Another transmutation has taken place at the U.S. National Security Agency, which possesses the world's largest secure recycling production plant facilities where it reclaims precious metals while disintegrating equipment that may contain any record pertaining to U.S. national secrets having been stored within computers, electronic devices and other high technology systems.

One of two (2) top-level managers at this NSA recycling facility claims it possesses a new form of recycling that actually transforms metals into greater amounts. This new form of metal transmutation technology is supposed to enhance the quantity of recovered precious metals from various forms of scrapped electronic equipment producing greater quantities of gold, silver, platinum, palladium, however no mention was ever made about whether it could re-constitute other metals into ‘copper beryllium’ master alloys for high-tech defense programs.

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