Kodak Shakes the Silver Market

Eastman Kodak Co.'s recent announcement of a new non-silver film may well mean bad times ahead for the silver industry. Currently 35 percent of all U.S. silver production is used in the manufacture of photographic film-the single largest use for the precious metal. Were film to be eliminated, the industry would face serious problems of oversupply.

The new film is part of Kodak's effort to develop non-silver imaging technology for commercial, scientific and industrial products. The film was initially intended for geological displays and could be used in oil and gas exploration as well as in computer display work.

Photography now is based almost entirely on silver-containing light-sensitive halides which are derived from silver nitrates and other related compounds. Image definition is unsurpassed with silver salts, and while there are photographic processes that do not require silver, these processes have not been adaptable to color films.

Fifteen percent of all U.S. silver production is used in making silver flatware, while another five percent is consumed, in jewelry. A great deal of the metal also goes into manufacture of batteries and electronic components.

Changes in the international energy industry have accelerated, most recently with the announcement of tin agreement between U.S. Steel and British Petroleum's 53 percent-owned Sohio over coal holdings.

U.S. Steel is not only the largest steel concern in the world, but also is a major coal mining corporation in the U.S. It owns or leases properties estimated to contain 3 billion tons of bituminous coal, of which 34 percent lies in Alabama, 30 percent in Kentucky and West Virginia, and 18 percent in Pennsylvania.

Under the agreement, Sohio has purchased 27 percent of these reserves, or the equivalent of 800 million tons of coal, for $750 million and three mines. Sohio operates in the coal sphere through its subsidiary, Old Ben Coal Company.

The acquisition will double Old Ben's reserves and put the company in a position to become a major coal producer in the U.S.

Sohio's coal purchases, viewed in a wider context, are part of BP's overall strategy for coal investment. BP already is a sizeable producer. The company has 1.2 billion tons of coal reserves-with investments in Australia, South Africa and Canada.