Lurking. Liking. Lifted:

Annual Industrial Capabilities Report

to Congress

March 2008

Office of Under Secretary of Defense

Acquisition, Technology & Logistics

Industrial

Beryllium Industrial Base Analysis This report, completed by Air Force Research Laboratory (Defense Production

Act Title III Program), consolidates information on current efforts to re-capitalize the

domestic production base for beryllium. The report also evaluates current and planned

demand in terms of military applications. Beryllium is an essential material for

numerous defense systems and national security applications, including airborne and

space precision electro-optical components and mechanical structures.

The dimensional stability, stiffness-to-weight and other unique characteristics provide

performance capabilities that currently cannot be obtained from other materials. The

sole domestic beryllium production facility was closed in October 2000 for

environmental and economic reasons, which left the National Defense Stockpile (NDS)

as the only source of high-purity beryllium suitable for defense requirements. Efforts to

developed suitable substitutes for beryllium have not been as successful as earlier

predicted. As a result, a 2004 DoD report submitted to Congress recommended

working with industry to re-establish a modern production capability.

Brush Wellman International (BWI) is the sole domestic manufacturer of

beryllium. BWI is the only fully-integrated producer of beryllium, beryllium-containing

alloys, and beryllia ceramic in the world. BWI is financially healthy and rated a low risk

after having produced strong financial results over the last three years. The current

NDS inventory of high purity beryllium will be exhausted by 2012 at current depletion

rates. The only other source of beryllium is in Kazakhstan, which cannot provide the

quality of material required for most DoD/DoE applications.

In November, 2005, preliminary engineering design for a new primary beryllium

facility was initiated. Based on cost estimates developed during this effort, the

Department of Defense programmed over $40M through FY10 to fund a Defense

Production Act Title III project to re-establish domestic production of beryllium. The

DoD funding for the new facility is supplemented by an industry cost share.

Revised cost estimates that include site selection, environmental assessment, and an initial

engineering design have increased by 40 percent. This increase can be attributed to

higher construction material and energy costs. Final engineering design activities are

scheduled to be completed in July 2008. The Department and industry are currently

working to manage cost growth and identify additional funding. Current demand

forecasts for beryllium show the requirement for the new production capacity is still

valid.

This assessment supports investment planning within the Air Force and broader

DoD research and development communities. Specifically, the study validated original

justification for both the scope and costs associated with the development of a domestic

capability for beryllium. The report provides market research, technical information, and

recommendations for investment and acquisition decisions to address the needs of DoD

customers.

Beryllium Production

This project will overcome the lack of a continuing supply of primary (high purity)

beryllium metal available to the United States and its allies for defense and critical

civilian applications.

Imports of beryllium (from Kazakhstan) cannot meet the purity

levels required for many defense applications. Disposals of the current supply of

beryllium ingots from the National Defense Stockpile (NDS) is being monitored and

carefully managed. In accordance with criteria established by the Under Secretary of

Defense (AT&L), sales of high purity beryllium from the NDS are only allowed to US

incorporated firms with a recent history of providing beryllium products for defense and

critical civilian applications.

The rates of disposals are controlled in relation to the progress of the new

beryllium production facility being constructed under this project to ensure

supplies are adequate for defense and essential civilian requirements.

Critical

strategic applications, where there is no suitable substitute for beryllium, include:

airborne forward looking infrared systems for fighter aircraft and attack helicopters;