Mineral Commodity Summaries 2003 - Mineral Resources Program ...

6
SIGNIFICANT EVENTS, TRENDS, AND ISSUES
The Mineral Sector of the U.S. Economy 1
Following the recession of 2001, restrained consumer
spending, declines in domestic manufacturing and
industrial output, and increased unemployment led to an
expansion of only about 2% in the domestic economy
during 2002. Significant production declines in the U.S.
metals industry were registered by copper, lead, and
zinc producers. Steel producers, despite a slight
improvement in output, continued to face strong foreign
competition, higher energy costs, and lower prices for
their products. Homebuilding and other domestic
construction sectors—major consumers of nonmetallic
mineral products, such as cement, brick, glass, and
stone—remained strong enough to help raise the total
output of industrial mineral materials slightly above
previous year levels (table 1). A strong U.S. dollar
relative to other national currencies continued to weaken
the competitive stance of U.S. metal and nonmetal
mineral materials companies in markets at home and
abroad compared with foreign producers.
Overall Performance
The estimated value of all mineral-based products
manufactured in the United States during 2002
increased by less than 1% to $373 billion (page 4). The
estimated total value of U.S. raw nonfuel minerals mine
production alone was $38 billion, a slight decrease
compared with that of 2001. Within the raw nonfuel
minerals category, however, there was a significant
difference between the metal and nonmetal
components: the estimated value of metals output
dropped by 7% to about $8 billion, whereas, the
estimated production value of industrial minerals
increased slightly to $30 billion.
Net imports of raw minerals and processed mineral
materials during 2002 reflected the effect of the 2001
recession, slow economic growth, and a continuing
reliance on other countries for mineral products (page
5). Imports of raw and processed mineral materials fell
by about 8% from previous year levels to a value of $62
billion; aluminum, copper, and steel were among the
largest imports. Exports of raw and processed mineral
materials during 2002 dropped by 14% to a value of $39
billion. Total imports and exports of metal
ores/concentrates and raw industrial minerals were less
than $5 billion.
Two major sectors of the U.S. economy, motor vehicle
manufacturing and the construction industry, exerted
considerable influence on domestic demand for mineralbased
materials in 2002. In a largely successful effort to
maintain sales, domestic motor vehicle manufacturers
offered low- to no-interest loans to purchasers of new
vehicles. Consequently, domestic market sales of U.S.produced
motor vehicles—incorporating large quantities
of steel and other metals as well as significant amounts
1 Staff, U.S. Geological Survey.
of glass and plastics—were maintained at previous year
levels. The construction industry—accounting for most
of the consumption of clay, cement, glass, sand and
gravel, and stone—benefited from low mortgage rates
available to purchasers of residential housing units. In
addition, Federal expenditures for building highways and
mass transit systems helped maintain demand for
cement, sand and gravel, steel, and crushed stone in
some areas (table 2). The indexes in table 2 now reflect
a base year of 1997 compared with 1992, which was
used previously.
In 2002, 15 States produced nonfuel mineral
commodities with total production values of greater than
$1 billion. These States were, in descending order,
California, Nevada, Texas, Florida, Arizona, Michigan,
Georgia, Missouri, Pennsylvania, Utah, Minnesota, Ohio,
Alaska, Wyoming, and New York; they composed 64%
of the U.S. total output value (table 3).
U.S. production of mineral fertilizer nutrients improved
significantly from results posted in 2001, primarily in
response to increased domestic and foreign demand,
especially for finished phosphate fertilizers for export to
China. Domestic demand for phosphate rock, sulfur,
and potash was up slightly. Low ammonia prices and
high inventory levels in the first part of the year led some
ammonia producers to temporarily idle a significant
portion of their ammonia production capacity.
In fiscal year 2002, the Defense Logistics Agency (DLA)
sold $359 million of excess mineral materials from the
National Defense Stockpile (NDS). (More information
can be found in the “Government Stockpile” sections in
the mineral commodity reports that follow.) Under
authority of The Defense Production Act of 1950, the
U.S. Geological Survey advises the DLA on acquisitions
and disposals of NDS mineral materials. At the end of
the fiscal year, mineral materials valued at more than
$1.85 billion remained in the stockpile.
Outlook
At yearend 2002, economists were divided about the
state of the economic recovery from the recession of
2001. Expected holiday consumer spending was less
than anticipated; the stock market did not improve, partly
because corporate scandals had undermined investor
confidence; record new home sales continued as home
mortgage rates reached a 40-year low; productivity
improved significantly; and the unemployment rate
stayed at 6%.
The speed and strength of expansion in the domestic
mineral materials industry will depend to a great extent
on how long consumers will maintain the pace of new
motor vehicle and new home purchases that was
underway in 2002. Overall, the expectation is that
expansion in industrial minerals production and
consumption will outpace that of the metals.