naces, and 80 operate only steelmaking furnaces, with electric steelmaking predominating. These 80 companies currently produce less than 10 percent of the nation's steel output, but are a significant outlet for ferrous solid waste.

The type of furnace used in steelmaking has a direct bearing on scrap usage. Three types of furnaces are used; open hearth, which uses approximately a 45 percent scrap charge, basic oxygen (30 percent scrap charge), and electric (100 percent scrap). (These charges are based on standard operating conditions which take into account both technological and economic factors). Basic trends have been: (1) the decline of the open hearth (from 87 percent of steel production in 1960 to 50 percent in 1968); (2) rapid rise of basic oxygen furnaces (from 3.3 percent of production in 1960 to 37.1 percent in 1968); and (3) moderate growth of electric furnace steel production (8.4 percent in 1960 to 12.7 percent in 1968). To date, declines in scrap requirements from decreased open hearth steelmaking have been balanced by increased scrap needs from rising electric furnace production.

In the foundry industry, scrap already accounts for about 85 percent of the metallic input, and product specifications dictate that pig iron be a portion of the charge in some cases. The cupola furnace which uses an 84 percent scrap charge dominates, comprises about 90 percent of the furnaces. Electric furnaces, which make up most of the remainder and use 100 percent scrap have been making inroads, however. Potential for increased scrap consumption by foundries is limited, but factors such as increasing trend toward replacement of cupola facilities with electric furnaces, geographic dispersion of foundries putting them closer to scrap sources, and a growth rate in excess of domestic steel production indicate that use of scrap by foundries should at least hold its own and may increase slightly. However, the foundries do not have potential as major markets for increased scrap consumption.

Exports are a significant market for iron and steel scrap, constituting 24 percent of total purchased steel in 1970. Exports are particularly important for movement of obsolete scrap, since a large portion of the exports are from obsolete sources. Japan is the largest consumer of export scrap, taking 48.8 percent of the market in 1970.

Copper precipitation is the major market for steel can scrap at present, but is quite limited. Only about 300,000 to 400,000 tons of old steel cans and can-making wastes, a small percentage of the estimated 5 million tons of cans produced each year, are consumed annually by this market.12

Issues and Problems

Differential Tax Treatment. Iron ore enjoys a 15 percent depletion allowance, and in addition iron ore producers are allowed to use certain capital costs as current deductions. Both of these policies reduce tax liability and thus the price at which the ore must be sold to maintain a given profit level. For example, the 15 percent depletion allowance permits a 13.5 percent decrease in the selling price without reducing the profit to the producer. The percentage depletion allowance continues as long as income is derived from the property, which is usually long after the capital investment in the property has been recovered. Thus, iron ore producers enjoy a major tax subsidy which is not available for secondary materials processors.

Steel Industry Structure. The integrated portion of the steel industry is iron ore oriented and has significant investment in ore processing equipment. The integrated steel manufacturers generally own virgin raw material sources and are able to exercise control over supply and price. Uncertainties in scrap price and availability are inconsistent with the steel industry practices of long range planning and long term commitments to equipment and raw materials.

Scrap Quality. Rigid steel production specifications require that scrap be processed in order to remove contaminants and impurities. Home and prompt scrap are from known sources and are generally higher quality than obsolete scrap (with the exception of certain obsolete scrap such as rail, ship, and structural). Cans present a special problem because of their contamination with tramp elements-aluminum from tops, lead from the seams and tin. For example, lead can be harmful to furnace refractories and too much tin causes undesirable properties in finished steel. Thus, except in periods of peak demand or hot metal shortages, the availability and low cost of higher quality raw materials tends to reduce the steel maker's incentive to use the lower quality portion of obsolete scrap.

Changing Iron and Steelmaking Technology. Replacement of open hearth furnaces by basic oxygen furnaces has tended to reduce scrap requirements. However, the increase in usage of electric furnaces has kept total scrap consumption roughly constant overall. Future scrap consumption is tied closely to continued increase in electric furnace melting. Investment decisions depend on comparative return on investment from various types of furnaces. The ROI from an electric furnace which uses 100 percent scrap is obviously strongly influenced by scrap prices.

The technical feasibility of using increasing scrap proportions

in other steelmaking furnaces has been demonstrated. The BOF charge, for example, can be increased by preheating the scrap, but since this entails additional costs, it can only be justified if scrap cost decreases relative to ore cost.

Logistics. As with most materials occurring in solid waste, logistics is a significant deterrent to recycling. Collection and transport from diverse sources is costly. Recycling of large appliances, steel cans, and other ferrous materials in mixed municipal waste is strongly inhibited by high transport costs relative to scrap value. Low Growth Rate of Consuming Industries. The domestic iron and steel industries are not growing as rapidly as the rest of the American economy, primarily due to increased imports, replacement of steel by other materials, and increased use of lighter, high strength steels. Over the past decade, while the United States economy has grown at an annual rate of over 5 percent, iron and steel production has grown at about 3 percent.

Economics

Most of the above issues add up to an unfavorable economic picture for scrap use in the steel industry, though their individual impact is difficult to measure. The total costs to an integrated steel producer of using scrap vs. ore in a BOF were estimated by Midwest Research Institute, in a study for the Council on Environmental Quality.13 The comparative costs are difficult to determine, since the steel industry does not maintain or at least does not report such figures. Estimates have been made, however, which indicate that the cost of using scrap is slightly higher than the cost of using ore.

The chosen point of equivalency in the production process was the point where either hot molten pig iron or melted scrap could be used to charge a BOF furnace. The total cost of scrap at this point was estimated to be $44.00 per ton, including $33.50 purchase price of the scrap, $6.00 melting cost, $3.50 for scrap handling, and $1.00 for increased refractory wear caused by scrap usage. Molten pig iron cost was estimated at $37.50 per ton including $28.50 for the ore and associated raw materials, and $9.00 for melting costs. Thus, the cost of scrap ready for charging to a BOF is about $6.50 greater than the cost of hot metal derived from ore at the same point.

The mill operator may actually perceive an even higher relative cost of scrap usage since there will be a tendency for him to associate a loss with letting ore reduction facilities which are already in place sit idle. The mill operator will also associate a cost (in

this case a real one) with the possibility that end products made from scrap may be rejected because they do not meet product specifications.

Thus, without a reduction in scrap cost of at least $6.00 to $7.00 per ton, it is unlikely that there will be any increased utilization of scrap in BOF furnaces by existing steel mills.

Usage Considerations

The reluctance of integrated steel industry to risk contamination in situations where specifications are demanding is understandable. However, for the small electric furnace operator serving the crude steel rebar market—and not participating in specification steel at all-there is no particular quality problem.

Table A-6 shows how well various steel products are suited for input of lower grades of scrap, and it shows their tonnage figures and percentages of total output in 1970. Rebars and hot rolled light shapes can be produced from miscellaneous waste scrap with no significant sacrifice in properties. In plants producing a considerable variety of products, including high specification items, low grade scrap would be unattractive even at low prices, since the trend is to produce steel furnace output which can meet a wide range of product specifications, and since low grade scrap could result in lower quality home scrap.

The total market for rebars and light shape raw material would be sufficient to handle the gatherable supply of low grade ferrous scrap if all of these products were produced by electric mini-mills. There is in fact a reasonably good fit between the ferrous solid waste problem and the mini-mill requirements—in price, material, and geography. However, the large integrated steel producers also share in the rebar and shape markets and as stated above they are reluctant to use the lower scrap grades.

NONFERROUS METALS RECYCLING

In 1969, a total of 10.5 million tons of aluminum, copper, zinc, and lead were consumed in the United States, and 3.2 million tons were recycled, an average of 30 percent of consumption. Figures A-5 through A-8 show consumption and amount of these materials recycled from 1960 to 1969. For 1969, recycling as a percent of consumption for each was 23 percent for aluminum, 46 percent for copper, 42 percent for lead, and 10 percent for zinc.14

Approximately 24 percent of the aluminum, and only about 4 percent of all the other major non-ferrous metals consumed occur

Source: Midwest Research Institute. Economic studies in support of policy formation on resource recovery. Unpublished data, 1972.

in municipal waste. These four metals constituted less than one percent or roughly 1.2 million tons of collected municipal solid waste in 1968. Aluminum accounted for 83 percent of this total.15

Sources and Markets

Table A-7 shows the amounts of each of the nonferrous metals recovered from prompt and obsolete sources. Copper and lead recovery from obsolete sources is a very important part of the recovery, while for aluminum and zinc little of the recovered scrap comes from obsolete sources. In all cases virtually all of the available prompt scrap from industrial fabrication is recovered. Recovery of the metals from obsolete sources is directly related to the form in which the scrap occurs and to its location. Thus, large quantities of lead are recovered from worn out batteries returned to dealers by consumers. Obsolete zinc which is widely scattered and usually appears in small quantities and in combination with other materials is largely unrecovered.

The aluminum can recycling programs of aluminum producers