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The Strategic and Critical Materials Stock Piling Act, as amended, provides that strategic and critical materials be stockpiled in the interest of national defense to preclude a costly and dangerous dependence upon foreign sources of supply in times of national emergency.

The President assigned stockpiling activities to the Director of the Federal Emergency Management Agency. The Office of Plans and Preparedness in the Agency is established to carry out the mandate of the Stock Piling Act. This Stockpile Report to the Congress for April-September 1980, together with a statistical supplement under separate cover, is submitted in accordance with Section II of the Act.

Sincerely yours,

John Wiley J

John W. Macy, Jr.
Director

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HIGHLIGHTS

New stockpile goals were announced May 2, 1980, for 61 family groups and individual stockpile materials.

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'Market values are prices at which comparable materials are being traded, or in the absence of trading, values are estimates. They do not necessarily reflect the amount that would be realized at time of sale.

1980 STOCKPILE GOALS

Revised goals for stockpile materials were announced on May 2, 1980. A macroeconomic model is used to project the Gross National Product for a wartime situation. Assumptions about austerity, mobilization characteristics, and Government policies are built into the model variables. Estimates are then made of the raw materials needed to support such a wartime output and of the supplies available. Stockpile goals are the difference between the requirements for materials and the amount likely to be available in wartime. These stockpile goals measure our Nation's vulnerability to supply disruption for strategic and critical materials.

While domestic sources do exist for most strategic materials, imports are an increasing percentage of consumption for many of them. Not only are we import dependent, but this dependence has increased in recent years, and that trend is expected to continue. In some cases-cobalt, chromite, platinum-the material exists in this country, but can be produced overseas less expensively so that domestic sources have not been developed. However, in other cases a potential domestic supply source does not or is not known to exist. Goals for these materials have remained sizeable or increased.

As a part of calculation of the 1980 goals, historical consumption data were revised, and substitution factors were altered to conform with changes in technological trends. Updated and refined information on the availability of foreign and domestic supplies, production capacities, political reliability factors, and defense expenditures was added to reflect changes in international supply conditions and technology advances.

Shellac has been deleted as no longer strategic and critical, and a new material has been added-abrasive grade bauxite.

To improve the accuracy of the goal estimates, each material family group goal was con

sidered both as a group and as individual components. A wide range of forms of these materials is used by different industries. The raw ore is usually the most versatile form. Higher upgraded or processed forms of a material may have only a few uses. A technology change or change in type of military hardware being used could greatly alter the goal for a processed form of a material. On the other hand, if there is limited plant capacity for processing the ore into a higher form for these various uses, then all of the stockpile goal can not be held in the raw ore form. Another limiting factor for some forms of materials is that storage problems may occur when the material is stored for long periods of time.

To account for these problems, a desired inventory mix has been determined by converting the group goal into individual material goals within the family. For example, an aluminum metal group goal of 7,150,000 short tons of aluminum metal has been established. The processing capacity of the domestic aluminum industry was examined, and a goal for bauxite established such that this quantity of ore could be processed. Because of technical and economic problems, alumina is not a suitable form for the long term storage necessary for stockpiled materials. Thus, a zero goal for alumina was set. The quantity required in excess of estimated supply that could not be processed with existing plant capacity should then be held in the form of aluminum. The conversion factors used to reduce all forms of the aluminum metal group to a common denominator are those listed in appendix 2.

This recognition of capacity limitations for processing materials at each stage of the production process results in an accurate picture of our potential materials needs. As new domestic processing capacity is added or older facilities phased out, these inventory mixes within a family group will be adjusted.

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