Followup Report on Domestic Aluminum Resources:

Dilemmas of Development

EMD-81-96: Published: Jun 29, 1981. Publicly Released: Jun 29, 1981.

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Concerns about supply disruptions and price gouging that could endanger aluminum production in this country have spurred Bureau of Mines research on processes to manufacture alumina from nonbauxitic ores. The United States has no large bauxite deposits, but it has plentiful deposits of other aluminum ores if the technology can be developed to use them economically. Bauxite and alumina are scheduled to be added to the critical minerals model of the Office of Minerals Policy Research and Analysis, and the Bureau of Mines program funds for mineral research have been revised. A GAO report was highly critical of both management objectives, overshadowing economics, and the fact that the Department of Interior's patent policy usually required the Secretary to make the results of supported research and development available for licensing without royalty. These two factors, according to the Department, deterred the Bureau's more active consideration of proprietary processes in its nonbauxitic alumina program.

To the extent that strategic objectives can be achieved more cheaply, the Bureau's rationale for refusing to compare the economics of proprietary processes with its preferred process before investing in a demonstration scale pilot plant is questionable. The Secretary, in exceptional cases, is already permitted to certify that the public interest is served by permitting a Federal contractor to retain exclusive rights in any federally assisted process and background patents. The public interest would be served by a cheaper means of fulfilling a strategic reserve objective, thereby permitting the Secretary to certify an exception for supporting proprietary alumina processes. There is no indication that the Bureau ever considered requesting such a secretarial certification, despite its being informed of at least three proprietary processes that aluminum companies consider to be more competitive than the Bureau's and despite the program costs. Further, the Bureau has made no effort to obtain pledges of confidentiality to review proprietary process cost claims, a normal preliminary step to considering a secretarial certification. The Bureau cannot demonstrate that its candidate process is the least costly technology for use in a demonstration scale pilot plant. Accordingly, the Department must consider the consequences of an improper process recommendation to the Federal Emergency Management Agency. Until a summary of cost comparison is published, GAO will oppose consideration of pilot plant appropriations in any form.

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