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Public Statements

Letter to Vice Admiral Mark D. Harnitchek, Director, Defense Logistics Agency

Letter

By:
Date:
Location: Washington, DC

Today, U.S. Senator Bob Casey (D-PA) announced that following his letter the Defense Logistics Agency Strategic Minerals Office (DLA-SM) will now go forward with a long delayed plan to allow Pennsylvania manufacturers to purchase key materials like Tungsten Ore.

Every year, the DLA-SM must issue rules for the sale of key materials that it has stockpiled for their national security implications. China continues to control more than 70% of world's Tungsten production, and has prohibited the exportation of tungsten concentrates. This year, the DLA-SM delayed the sale, only telling Pennsylvania manufacturers that the process was "under review.' In response, Casey wrote a letter to the agency asking the DLA-SM to provide more clarity to manufacturers who were prevented from purchasing these products that are essential to their businesses. Now, the DLA-SM has announced that an expedited sale of Tungsten will take place between August and September.

"Manufacturing is the lifeblood of Pennsylvania's economy and it's important that federal agencies provide clear and easy to understand rules to our companies," Casey said. "The decision by the Defense Logistics Agency to allow a sale of Tungsten later this summer will give our economy a boost and give Pennsylvania manufacturers the certainty they need."

The full text of Casey's original letter to the DLA-SM is below.

July 10, 2012

Vice Admiral Mark D. Harnitchek
Director
Defense Logistics Agency

Dear Vice Admiral Harnitchek:

We write today regarding the Defense Logistics Agency Strategic Materials (DLA-SM) Office's delay in the sale of tungsten ores and concentrates from the stockpile and its effects on the industrial base. According to the January 2011 Strategic and Critical Materials Operation Report to Congress, DLA-SM's inventory of tungsten ores and concentrates was approximately 34 million pounds. Congress approved the plan to sale a maximum of 8 million pounds of tungsten in the FY'2012 Annual Materials Plan. To date, DLA-SM has not sold any of this FY 2012 material, and has yet to inform industry of its sales plan, including the sales format and frequency. As a result, I am concerned that this delay and lack of transparency, will unduly impact manufacturing in Pennsylvania and across the nation.

The market for tungsten concentrate is heavily dominated by China, which prohibits its export. Most estimates place Chinese control of tungsten concentrate at over 70% of world production. Tungsten is a crucial element in the production of many strategically vital weapons systems used by the Department of Defense, as well as having a number of commercial uses. As you are no doubt aware, the U.S. has no commercial-scale producers of tungsten concentrate at this time. Therefore, U.S. tungsten manufacturers rely on the tungsten concentrate released by the stockpile to maintain production lines and continue equipping the troops. The delay in execution of the FY 2012 Annual Materials Plan threatens the ability of these manufacturers to maintain production levels, and thereby threatens the ability of the U.S. to supply its military forces.

It is our understandings that an interruption in the tungsten concentrate feedstock used by American tungsten manufacturers will force the shutdown of several production lines and may eliminate hundreds of American manufacturing jobs. The loss of this manufacturing capability and intellectual capacity in the U.S. will, most likely, be shifted overseas, potentially increasing the reliance of DoD on non-allied countries for material supply. Any employers who remain in business will likely face the potential loss of millions of dollars as they default on contracts.

Therefore, we respectfully request the answers to the following questions:

1) What is the purpose of the ongoing review, and why was it not completed before now?

2) Has DLA-SM considered the impacts this delay will have on the domestic tungsten industrial base and the military's reliance on their services?

3) What discussions has DLA-SM had with industry to keep them aware of its plans for the stockpile to date?

4) It is my understanding that the sale of tungsten is a major source of revenue for DLA and the Department of Defense's Health Program. What impact will it have on the U.S. budget if DLA fails to move forward with its annual sale of tungsten?

With the end of the fiscal year approaching, the FY'2012 authorization to sale tungsten will soon expire. We believe that DLA-SM should carry out the FY'2012 Annual Materials Plan that Congress approved with speed and decisiveness. We would appreciate your prompt attention to this issue and a response, as supply chain issues for many companies will start to occur mid-July. Again thank you for your work and dedication to our nation.

Sincerely,

Robert P. Casey, Jr.

United States Senate

Cc: Ms. Nancy Heimbaugh

Mr. Ronnie Favors


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