Tsurprise! Titanium-rich beaches (After the Tsunami)

Bush Iraq military package boosts titanium makers

Mon Feb 14, 2005 04:17 PM ET
By Steve James
NEW YORK, Feb 14 (Reuters) - Speculation that the U.S. military might soon need more supplies of titanium to armor-plate trucks in Iraq sent stock in producers of the tough, lightweight metal soaring on Monday.

"Any time defense spending is on the rise we ultimately benefit, whether it be through aerospace or land systems," said Richard Leone, a spokesman for RTI International Metals Inc. (RTI.N: Quote, Profile, Research) .

RTI is the biggest North American producer of titanium, and stock in the Niles, Ohio-based company rose as much as 8 percent on Monday. RTI shares ended at $25.43, up $1.58 or 6.6 percent, on the New York Stock Exchange,

"Defense is definitely a big thing for us," Leone said, adding that military sales account for one-third of RTI's business.

Titanium Metals Corp. (TIE.N: Quote, Profile, Research) saw its stock rise 42 cents or 1.5 percent to $29.13.

One Wall Street analyst who declined to be named said investors appeared to be betting that Congress would approve President Bush's $82 billion package to fund U.S. military operations in Iraq and Afghanistan.

Among other things, the package, being sent to Congress on Monday, is to pay for training Iraqi forces to assume greater responsibility for security and provide an exit strategy for U.S. troops. More specific details were not immediately clear, but armor plating of trucks was believed to be on the list.

The issue won national headlines last October when several members of the Army's 343rd Quartermaster Company disobeyed orders to take their unarmored fuel tankers on a supply run from Tallil in southeastern Iraq to Baghdad. They raised concerns about the safety and the condition of their vehicles and whether the convoy was getting adequate protection.

In December, Defense Secretary Donald Rumsfeld heard from a soldier who asked why military personnel were forced to scavenge for scrap metal to armor-plate their Humvees.

RTI's Leone said the company had provided armor plating for Abrams tanks and the lightweight Howitzer cannon system.

During U.S. military operations in Kosovo in the 1990s, the extreme weight of traditional tanks caused delays in deployment. "They realized weight was an issue, and there has been a big push to lighten them," he said.

Titanium has the same strength and ballistic tolerance of steel but weighs 40 percent to 50 percent less, Leone said.

Another company, Allegheny Technologies Inc. (ATI.N: Quote, Profile, Research) , which makes steel and other specialized metals and alloys, including some titanium, said making armor plating was a small part of its business. Its stock slipped 1.3 percent on Monday.

"We could be part of development for retrofitting efforts," spokesman San Greenfield said.

The Pittsburgh-based company usually works through third parties with military contracts, he said. "It's too early to tell, but certain of our products are used by the military," he said.