Document Znn1rD3RjNZJqGVp7vZz0MMrL

RECfciVED -PALS JUN 25 1974 CHEMICALS R. N. WHEELFR, Jft, Aluminum producers buy time on bauxite The spreading fight over vinyl chlorid With only mild public protests, the ma jor U. S. aluminum companies--Alumi num Co. of America, Reynolds Metals, and Kaiser Aluminum-this week sub mitted to the will of the Jamaican gov ernment. They agreed to increase the tax and royalty payments on their bauxite mining and alumina process ing activities in Jamaica this year from 825-million to 8200-million. The result will be higher prices for aluminum products in the U. S. In effect, they had no choice. The U. S. aluminum companies have a gross capital investment in Jamaica of 8800million -which they could have lost if they had refused to bow to the Jamai can government's order. Even more important, Jamaican bauxite and alu mina supplies today account for a criti cal 40% of the aluminum produced in this country. "We will pay the additonal revenues . . . but will do so under protest," ac knowledges John D. Harper, chairman and chief executive officer of Alcoa. Along with Reynolda and Kaiser, Alcoa has requested that the International Center for Settlement of Investment Disputes (a body formed under the aus pices of the World Bank) rule on the le gality of the Jamaican government's increased tax and royalty action which, the companies claim, breaches long term contract agreements. While the investigation proceeds, however, the increased payments will be made. And this, plus a growing shortage of aluminum in the U. S.. could force the price of aluminum ingot, now running at 3314* per lb., up to 36* to 38* by August and maybe as high as 40* by yearend. Where It hurts. Because they do not de pend equally on Jamaican bauxite and alumina, the big 0. S. aluminum pro ducers will not be equally hurt by the Jamaican tax boosts. Alcoa, for ex ample, will have to pay only an addi tional 821-miilion because it geta only about 16% (or 775,000 short tona) of its alumina from Jamaican bauxite. For Kaiser and Reynolda, the In crease will be a much tougher pill to swallow. Reynolds gets 60% of its baux ite from Jamaica, and its royalty bill "will climb to about 850-million gross before any tax effect, based on esti mated production of about 4.5-million tons this year," says Richard S. Rey nolds, Jr., president and board chair man. Reynolds, the largest U. 3. user of Jamaican bauxite, pays export taxes not only on the 3.4-million tons of Jamaican bauxite it ships to its U. S. plants each year but also on 1.1-miilion tons of ore it sends to the Jamaican alumina plant it owns with Kaiser and Anaconda Copper. The Kaiser bite will be somewhat smaller-an additional 846-million pay ment. But between 70% and 75% of Kaiser's U. 3. alumina requirementa are totally dependent on Jamaican bauxite. So the effect on the company's over-all costs-and thus on its pricescannot fail to be more sweeping. Looking elsewhere. Over the longer haul, though, the Jamaican tax boost could force even more important changes in the U. S. aluminum industry. The outlook is for higher prices for aluminum products In the U. S. "Bauxite may well be pricing itself out of the market," concedes Alcoa's Harper. "This doesn't mean that we are walking away from Jamaica. But it meant that our future expansion will more likely be in the U. S." Aluminum, he continues, is a very common element in the earth's crust. It is contained in anorthosite, in laterite ore, in clay, and there are big amounts in coal mine wastes. "We will not go ahead with domestic ores until we have demonstration plants built," says Harper. "And then it will take two to throe years to get new facilities operating." But implicit in the active interest of U. 3. aluminum producers in developing alternate sources of aluminum is the knowledge that other bauxite-rich countries in the Caribbean and Africa may not be long in following Jamaica's lead in demand ing far higher taxes on bauxite. In May, the federal Occupational Safety & Health Administration issued a proposed standard that would limit the concentration of vinyl chloride in a plant's atmosphere to "no detectable level"-in practice, about one part per million. Next week, producers and users of this chlorinsted hydrocarbon, which is the monomer used to make polyvinyl chloride (pvc), industry's most versatile plaatic, will square off against Osha st public hearings in the hope of squashing the new standard. Already, OSHA has extended the Washington hearings beyond the four days originally scheduled. Some wit nesses have asked for aa much as three hours to testify. Controversy ia hardly new to osha, which has seen moet of its standards hotly contested, but thia, saye an official, "is going to be the big gest show we've ever had." The light is over osha's attempt to protect workers against angiosarcoma, a rare form of liver cancer. Vinyl chlo ride, normally a gat, has long been a suspected carcinogen, and European scientists had previously reported tu mors in rats exposed to heavy doses. Then in January, B. F. Goodrich Chem ical Co. reported that several of its long-time vinyl workers had died of angiosarcoma, osha quickly dropped the previous exposure limit of 500 ppm to 50 ppm as a temporary measure. In April, studies sponsored by the Manu facturing Chemists Assn, showed that 2 of 200 rata exposed seven months to 50 ppm developed tumors. Meanwhile, the number of confirmed deaths due to angiosarcoma among vinyl workers, worldwide, has reached 21. "And we've only begun to look at the problem," says William Lloyd, head of the health surveillance office of the National In stitute of Occupational Safety & Health (NIOSH). Under the proposed standard, work ers exposed to detectable amounts of vinyl chloride would have to wear res pirators. But, as it did in earlier stan dards, OSHA says it will insist, where feasible, on engineering controls and work practices that avoid contamina tion of the air in the first place. Crippling slander*. The vinyl industry's position is, first, that rat tests to date do not prove tha need for a l-ppm limit for human beinga, and second, that such a limit is technologically and eco nomically not feasible. The Society of the Plastics Industry (SPi) has called the proposed standard "excessively and euSNCSSMEEK Jim 21 '!'i ucc 006824  dnrealistically restrictive." Anton Vit- 4 tone, Jr., president of B. F. Goodrich Chemical, states bluntly that the 1-ppm level "cannot be obtained at this time or in the future." A spokesman for Firestone Tire & Rubber Co. puts the case more strongly: The standard, he says, "would literally cripple this in* dustry." The threat, moreover, is not confined to those companies that make the monomer and the polymer. The stan dard, says Vittone, "could displace not only the 6,500 vinyl chloride workers and pvc production workers, but also hundreds of thousands of other em ployees in the companies that use pvc." Some 5-billion lb. of the plastic waa used in the U. S. last year to make such products as pipe, wire insulation, pack aging film, and floor tiles. The danger to pvc processors lies in the small amounts of unreacted vinyl chloride that remain in the polymer. That danger took on added weight last week with reports of deaths due to liver cancer of two Connecticut PVC workers. One had worked on a General Electric Co. wire-coating line in Bridgeport, the other on a fabric-coat ing line at Rosa & Roberts, Inc., in Stratford. "We're afraid the problem extends far out into the plastics indus try," says niosh's Lloyd. Disputed report. No one has had time to calculate fully the economic impact that the new standard could have, but Spi this week released some prelimi nary findings of a study made for it by Arthur D. Little, Inc. adl researchers figure that a shutdown of vinyl produc ers would result in a loss of at least 1.6- million jobs and $35-billion in annual sales. Hardest hit would be the automo tive and construction industries, heavy pvc users, adl is studying the possible use of substitutes for PVC in some ap plications and will present its findings at next week's hearings. Even in advance of the SPI report, however, Sheldon Samuels, director of occupational health, safety, and envi ronmental affairs of the apl-cio, called it "meaningless." The report, he says, assumes that the standard cannot be met. "But we're getting data showing that the standard can, in fact, be mot'' His data show, Samuels says, that plants making less than 100-million lb. a year of vinyl chloride will have to re sort to respirators; plants of 100-mil lion lb. to 200-million lb. can afford to put in engineering controls; and larger plants could be made "airtight" The APL-Cio says it is determined to fight for the tough standard even if it does mean throwing some people out of work. But Peter Bommarito, president1 of the United Rubber Workers' union, echoes Samuels' confidence. Industry, he says, is trying to "scare everybody about losing a job." a MONEY & CREDIT A new set of rules for floating currencies "We hope we have taken a first step back toward more stability in cur rencies," said a central banker fresh back in Europe from last week's Com mittee of 20 monetary reform negotia tions in Washington. That first step was an agreement on some rules for managing today's floating exchange rates, and this week monetary author ities in both the U. S. and abroad were mulling over how to make those rules work. There is no longer a prayer of the sort of full-scale reform that govern money from newly rich oil nations that will help poorer lands pay their oil bills. Most significant, though, was the agreement on rules for floating. Much of the technical side of these rules re mains to be worked out, and there is no guarantee that nations will follow the rules. The IMP will help draft them, but it cannot force a government bent on competitively devaluing to obey them. "The rules simply express a hope," as one central banker sees it. Tinkering. The aim of these rules for floating is to insure that governments avoid competitive devaluations that might damage the exports of other na tions. Technically, the rules went into effect last week. In practice, it will be a while before they are applied, and there probably will be tinkering with the present relationship of rates first In coming months, governments in bilateral talks with the IMP staff will Delegatee from 20 nations conferred on money at a two-day meeting in Washington. ments had in mind when they created the C-20 two years ago: a dramatic re turn to fixed exchange rates. "Well never see the 'big reform'-juat a lot of small steps," says one European. Yet in a world of floating rates, roar ing inflation, and deteriorating, econo mies, even small steps look important. At the least, the negotiators have in sured that international monetary co operation is not dead. Faced with the unpleasant prospect of returning home empty-handed, the officials buckled down in Washington and reached some substantive agreements. Further, the Washington meeting produced a muebBtrengthened International Monetary Fund. The imp haa a new, more attrac tive special drawing right (sdr) to hand out-one that will be of use not only in government but in private transactions as well. And the imp gets to manage a 93-billion "oil fadlity'*- work out confidential "target zones"or ranges of fluctuation-for each cur rency. Thereafter, a government would be obliged to keep its currency trading within these zones-intervening if nec essary to keep it there. If a govern ment wants to change its zone, either to correct s past mistake or to accom modate future economic policy, it will be expected to'consult with the imp. And the fund staff, based on its own models, may suggest when it thinks it is time for a government to move a zone up or down a bit The IMP can only suggest-not order. It does get some muscle from the crea tion of a new, ministerial-level interim consultative committee. This com mittee, including the same 20 ministers who made up the Committee of 20, is to meet yearly to supervise the implemen tation of the rules for floating. The committee per se will have no real 3S SU9NE5S V*EK. Jun* 11. 1974 ucc 006825