National Defense Stockpile

In disposing of excess government-owned zinc, the Defense National Stockpile Center has tried not to disrupt unduly the zinc market. GAO found no evidence that zinc disposals from the stockpile had so far caused undue market disruption. In GAO's view, cautious disposal, in concert with Market Impact Committee review of market conditions, should result in continued zinc disposal without undue market disruption. The Treasury Department, the Pentagon, and industry representatives have expressed interest in and support for noncompetitive sales of stockpile zinc to the Treasury. The Defense National Stockpile Center believes that no legislative change would be necessary for sales of excess stockpile materials to other government agencies.

GAO found that: (1) the Department of Defense (DOD) has reported in 1992 and 1993 that it has no strategic or critical material requirements for zinc and that there was a total of 378,768-short tons of slab zinc in the stockpile; (2) Congress enacted legislation in October 1992 that authorized the disposal of stockpiled zinc over a 5-year period and established an interagency Market Impact Committee to make recommendations on disposal quantities; (3) the United States exports more than half of its slab zinc at prices that tend to be slightly higher than world prices, although zinc market inventories have steadily increased and prices have decreased; (4) an analysis of the amount of zinc sold and the prices received from March 1993 through July 1993 indicate that disposal sales do not appear to have had an undue impact on the zinc market; (5) DOD and the Market Impact Committee adjusted zinc disposal plans after considering the comments of foreign embassy, industry, and association officials; and (6) the Defense National Stockpile Center, which manages the zinc stockpile, and industry representatives are interested in reducing stockpiled zinc by providing it to the U.S. Mint for coinage.