TOWANDA, Pa. -- Tungsten makes steel tougher, car engines heat-resistant, golf clubs heftier and light bulbs luminescent. It's a critical ingredient in oil-drill bits and armor-piercing bullets.
In February, however, worldwide supplies of tungsten ore began to dwindle, and the handful of American companies that use the metallic element are arguing over a proposed solution.
Leading the call to action is Osram Sylvania Inc., the nation's largest processor of tungsten ore, which wants Congress to sell the Defense Department's 76 million-pound stockpile of ore to counter prospects of a shortage.
"You need the tungsten to keep the major industries going," said Allen Alper, vice president and general manager of Osram's Towanda factory.
The Defense Department supports the sale, and Congress is expected to authorize bidding on the reserves next year, said Tara Jennings-May, a spokeswoman for the National Defense Stockpile Center, which buys, sells and maintains critical materials to reduce dependence on foreign sources during wartime.
Osram's competitors and tungsten miners oppose opening the stockpile, saying the move would mainly benefit Osram. They said Osram wants to continue to pay depressed-market prices for the ore.
"I guess Osram Sylvania wants the government to provide a handout," said Robert Bunting, president of Avocet Tungsten Inc., a Danbury, Conn.-based competitor.
The fiery furnaces and caldrons of soupy chemicals at Osram Sylvania's 65-acre Towanda factory, its largest in North America, process 8 to 10 million pounds of tungsten ore a year, about two-thirds of American consumption. The factory's 1,300 workers also produce ammunition, gold-plated wire mesh for satellite antennas and hair-thin wire for light-bulb filaments.
Osram dominates the hard metals, lighting and chemicals markets, controlling 50 percent to 75 percent.
And it is one of only three American companies that can process the ore into the manufacturing material ammonium paratungstate, or APT. The other two are Avocet and Kennametal Inc. in Latrobe, Pa.
Osram already has an advantage over some of its competitors: It refines ore to make APT for sale to competitors and noncompetitors, enabling it to supply its own APT at cost when it manufactures tungsten products.
And, its refining process makes better quality APT than the process used in China, a major APT supplier, said Richard Taubar, Osram's purchasing manager.
The tungsten industry as a whole and Osram's competitors are divided over the merits of releasing the national stockpile. Kennametal supports the move, while Avocet and companies like Allegheny Teledyne, which uses Chinese APT, are among the companies urging Congress not to release the ore.
"This would give Osram an unfair advantage over us because this material would probably go at a low price and it would flood the market," said Tom Levi, director of marketing and sales for Allegheny Teledyne in Huntsville, Ala.
Releasing the stockpile could also scuttle plans to reopen tungsten mines around the globe, including the largest U.S. mine in Bishop, Calif., which Avocet and Stratcor operate.
Mr. Alper said Osram wants only to ensure a steady supply of ore. He said the stockpile release would not affect tungsten prices dramatically but would help fill the gap between American consumption and production for up to a decade, providing time to expand mining in the Western Hemisphere and stabilize markets.
In at least a decade, no significant tungsten mining has occurred in the United States because China and Russia -- and to some extent South America and Portugal -- hold the world's principal ore reserves and are able to mine it at much lower labor and production costs, in part because of government subsidies. The world's reserves are expected to last about 100 years.
Of the 92 million pounds of tungsten consumed worldwide in 1997, the United States consumed 18.5 million pounds. The Pentagon sold tungsten from its stockpile between the late 1960s and the late 1980s but stopped when prices fell.
The world's largest supply of tungsten ore comes from China, which once sold it so cheaply that many mines in Portugal and the Western Hemisphere closed, unable to compete.
In 1991, the United States began imposing a 151 percent import tax on the Chinese ore that made it too expensive for U.S. manufacturers. But China continues to export large quantities of APT, which has a slight duty of about 8.2 percent.
Osram and others initially turned to Russia for tungsten ore. But Russian mines have closed because demand for tungsten within Russia evaporated and the government recently decided to keep its stockpile for Russian industries.
With sales of $1.9 billion a year, Osram is one of the nation's major producer of lighting products, including light bulbs. It has five plants in Pennsylvania and many more in 28 other states.
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