<PAGE>   1

                                                                   Exhibit 10.17

                            Metallurg Holdings, Inc.
                      Intercompany Tax Allocation Agreement

            The purpose of this agreement (the "Agreement") is to determine the
amount of federal and (where applicable) state, local and foreign income tax
allocated to members of the affiliated Group (as described below) and the amount
each member will pay to or receive from Metallurg Holdings, Inc., a Delaware
corporation ("Parent"). This Agreement is between Parent and the undersigned
subsidiary corporations (hereinafter collectively referred to as the
"Subsidiaries" or each individually as a "Subsidiary"). Parent and the
Subsidiaries are sometimes hereinafter collectively referred to as the "Group".

            1. The members of the Group are affiliated corporations and will
elect to file a consolidated federal income tax return under the provisions of
Section 1 501, et seq., of the Internal Revenue Code of 1 986, as amended, (the
"Code") for the tax year ending December 31, 1 998 and for each subsequent tax
year for which this Agreement is in effect. Parent will compute and timely pay
the consolidated federal income tax liability for the Group in accordance with
the Code and the regulations promulgated thereunder and will prepare, or cause
to be prepared, and will timely file the consolidated federal income tax return
for the Group. Parent and the Subsidiaries shall each review the consolidated
federal income tax return and make any necessary adjustments no later than
fifteen (15) days before the filing of the return, and Parent will provide a
draft of each such return to each Subsidiary sufficiently before that deadline
to permit the Subsidiary to make its review.

            2. Each Subsidiary shall compute and pay in cash to Parent (in the
manner provided for in paragraph 8 of this Agreement) an amount equal to the
federal income tax liability 

<PAGE>   2

that would have been payable for such year determined as if each Subsidiary had
filed a separate federal income tax return for the taxable year ended December
31, 1998, and all taxable years thereafter, including any accrued interest
thereon ("Separate Return Tax Liability").

            3. If a Subsidiary, other than a Metallurg Subsidiary (defined
below), would not have a Separate Return Tax Liability but instead would have a
claim for refund of federal income taxes, Parent will pay in cash to such
Subsidiary (in the manner provided for in paragraph 8 of this Agreement) an
amount equal to the refund such Subsidiary would have been entitled to obtain
from the Internal Revenue Service, determined as if such Subsidiary had filed a
separate federal income tax return for the taxable year ended December 31, 1998
and all taxable years thereafter, including any accrued interest thereon
("Separate Return Tax Refund").

            4. Parent shall pay in cash to Metallurg, Inc. ("Metallurg") (in the
manner provided for in paragraph 8 of this Agreement) an amount (not less than
zero) equal to (i) the sum of (a) the Separate Return Tax Liability of Metallurg
paid to Parent and (b) the Separate Return Tax Liability of each Subsidiary
owned, directly or indirectly, by Metallurg (each a "Metallurg Subsidiary" and
collectively, the Metallurg Subsidiaries") paid to Parent, minus (ii) the amount
of federal income tax that Metallurg and the Metallurg Subsidiaries
(collectively, the "Metallurg SubGroup") would have been required to pay (the
"Metallurg Consolidated Amount") if (a) Metallurg was never owned by Parent, (b)
Metallurg continued to be the common parent of the Metallurg Sub-Group, and (c)
the Metallurg Sub-Group filed a consolidated federal income tax return (the
"Metallurg Sub-Group Excess Payment"). An additional payment (the "Metallurg
Sub-Group Refund Payment") shall be made by Parent to Metallurg (in the manner
provided for in paragraph 8 of this Agreement) equal to the amount of any refund
of federal income tax that the Metallurg Sub-Group would have been entitled to
receive if the Metallurg SubGroup filed a 


                                       2
<PAGE>   3

separate consolidated federal income tax return, provided, however, that the
Metallurg Sub-Group Refund Payment shall be reduced by the amount of any such
refund paid by the Internal Revenue Service directly to any member of the
Metallurg Sub-Group.

            5. If, on a separate return basis, a Metallurg Subsidiary would have
had a claim for refund of federal or state income taxes resulting from a
carryback of any net operating loss, capital loss, tax credit or similar tax
benefit (each a "Separate Company Tax Benefit Item") or would have been entitled
to reduce its federal or state income tax liability as a result of a
carryforward of a Separate Company Tax Benefit then, Metallurg will pay in cash
to such Metallurg Subsidiary (in the manner provided for in paragraph 8 of this
Agreement) an amount equal to such refund or reduction in tax ("Metallurg
Subsidiary Separate Return Tax Refund").

            6. If requested by Parent, each Subsidiary shall make payments in
cash of estimated tax to Parent three (3) business days before the normal
quarterly due dates for the payment of the applicable tax. The amounts of any
estimated payments shall be determined under the rules in the relevant taxing
jurisdiction to which such Subsidiary would be subject if it filed a separate
return consistent with paragraph 2 of this Agreement. Payments of estimated tax
made under this paragraph shall reduce and offset any payments required to be
made to Parent under paragraph 8 of this Agreement.

            7. Except as otherwise provided in the following sentence, the
calculation of the Separate Return Tax Liability for each Subsidiary shall be
made pursuant to the Code and its regulations as well as applicable cases,
rulings, etc. ("Applicable Law"). The calculation of the Separate Return Tax
Liability for each Subsidiary shall be made without taking into account any
carryforward or carryback of a Separate Company Tax Benefit Item available to
such Subsidiary; provided that Separate Company Tax Benefit Items shall be taken
into account to the fullest extent 


                                       3
<PAGE>   4

permitted by Applicable Law in computing the Metallurg Consolidated Amount and
any Metallurg Sub-Group Refund Payment under paragraph 4 of this Agreement.

            8. Each Subsidiary shall pay in cash its Separate Return Tax
Liability to Parent by no later than the applicable due date or dates that the
consolidated federal income tax liability is due. Parent shall make the payment
in cash to (i) a Subsidiary of a Separate Return Tax Refund and (ii) Metallurg
of a Metallurg Sub-Group Excess Payment and a Metallurg Sub-Group Refund Payment
by no later than 45 days after the filing of the consolidated federal income tax
return. Metallurg shall make the payment in cash to a Metallurg Subsidiary of a
Metallurg Subsidiary Separate Return Tax Refund by no later than 10 days after
the receipt of a Metallurg Sub-Group Excess Payment from Parent.

            9. Notwithstanding the provisions of paragraphs 6 and 8 of this
Agreement, all payments due hereunder from any Metallurg Subsidiary shall be
made by Metallurg on behalf of the applicable Metallurg Subsidiary. Payments of
estimated tax on behalf of the members of the Metallurg Sub-Group under
paragraph 6 of this Agreement shall be based solely on the Metallurg
Consolidated Amount and not based on the separate return liabilities of the
members of the Metallurg Sub-Group, and such payments shall be taken into
account in the same manner as payments of Separate Return Tax Liabilities in
computing any Metallurg Sub-Group Excess Payment under paragraph 4 of this
Agreement.

            10. If all or a portion of the Group is required or has elected to
file a consolidated, unitary or combined state income tax return (each such
Group will hereafter be referred to as a "State Group"), the parent of the
particular State Group will compute, timely report and timely pay the State
Group's state income tax liability in accordance with the applicable state laws
and regulations and will timely file the State Group's required annual return.
No later than 


                                       4
<PAGE>   5

fifteen (15) days prior to the filing of the State Group's annual return, the
parent of the State Group will calculate and assess each member's share of the
State Group's state income tax liability based on each member's tax liability
computed on a separate basis under the tax laws of the applicable jurisdiction.
Not more than ten (10) days after such assessment, each member will pay to the
parent of the particular State Group its agreed share of the state income tax
liability in cash. With respect to any refunds, use of any Separate Company Tax
Benefit Item and the treatment of excess payments to the parent of a sub-group,
the provisions of this Agreement, to the extent relevant, shall similarly apply
to any state, local or foreign consolidated, combined or unitary group and its
members.

            11. If after the filing of a return it is determined that any
liability computed hereunder, or the aggregate amount paid by any party to this
Agreement, is incorrect, whether by reason of an Internal Revenue Service or
state audit, underpayment by any party hereto, discovery of error, the learning
of new information, or otherwise, payment shall be made to other members of the
Group as appropriate so that the net amount paid by all such parties to this
Agreement equals the amount that should have been paid by each such party to
this Agreement if the correct amount of such tax had been paid as provided by
this Agreement when originally due. In addition, any additional expenses
incurred (including, for example, interest, penalties and attorney's fees) shall
be allocable to and payable by the member of the Group that is liable for the
underlying relevant tax liability (or that is responsible for any underpayment
of any amount required to be paid to a tax authority) pursuant to the terms of
this Agreement. In the event that tax liabilities are allocable under this
paragraph to more than one party to this Agreement, expenses related to such tax
liabilities shall be allocated to each such party pro rata in proportion to the
amount of such tax liabilities attributable to each such party in relation to
the aggregate amount of such tax liabilities.


                                       5
<PAGE>   6

            12. Parent agrees to indemnify any member of the Group (and the
parent of a State Group agrees to indemnify any member of its State Group) for
any and all claims, demands and expenses, including interest, penalties and
reasonable attorney's fees, in the event that the Internal Revenue Service (or
State taxing authority, if relevant) levies upon the assets of any such member
for unpaid taxes that Parent (or the parent of a State Group, as applicable) is
required to pay under this Agreement.

            13. All payments required to be made pursuant to the terms of this
Agreement, including subsequent changes in the amount of a Subsidiary's Separate
Return Tax Liability or Separate Return Tax Refund, or the Metallurg Sub-Group
Excess Payment or Metallurg Sub-Group Refund Payment, shall be considered an
intercompany payable or receivable, as the case may be, until such payment is
made in cash, and shall not be considered a dividend or surplus contribution.
Such intercompany receivables if not timely paid shall bear interest from the
due date at the base rate as announced from time to time by BankBoston, N.A. at
its home office in Boston, Massachusetts.

            14. Parent shall inform each Subsidiary of any audit or other
administrative or judicial proceeding that may affect the Subsidiary's Separate
Return Tax Liability, Separate Return Tax Refund or, in the case of Metallurg,
the Metallurg Sub-Group Excess Payment or any Metallurg Sub-Group Refund
Payment. No such proceeding shall be settled in a manner adverse to a Subsidiary
without the consent of the Subsidiary, such consent not to be unreasonably
withheld.

            15. This Agreement shall be applicable only with respect to periods
for which the parties are members of the same affiliated Group filing a
consolidated federal income tax (or 


                                       6
<PAGE>   7

other relevant) return. No payment hereunder shall be made by or on behalf of a
Subsidiary with respect to periods for which such Subsidiary files a separate
return or is a member of another affiliated Group filing a consolidated federal
income tax (or other relevant) return.

            16. This Agreement shall take effect as of July 1 3, 1 998, and
shall continue until terminated by the mutual written agreement of all of the
parties. In the event any party ceases to be affiliated with the Group or any
State Group, as may be relevant, this Agreement automatically terminates only
with respect to that member and only with respect to such Group or State Group
as may be relevant. Notwithstanding the termination of this Agreement, in whole
or as to any member, its provisions will remain in effect, with respect to any
full or partial tax period, for which the income of the terminating party must
be included in the consolidated federal income tax (or other relevant State
Group) return.

            17. This Agreement may, from time to time, be amended, modified, and
supplemented in such manner as may be mutually agreed upon by the parties,
subject to the approval of any regulatory authorities as required by law. Any
amendment, modification or supplement to this Agreement shall be in writing and
shall be executed by a duly appointed representative of each of the parties.

            18. Every article, term condition and provision of this Agreement is
declared to be independent of and severable from all other articles, terms,
conditions and provisions of the Agreement. Invalidation, whether judicial or
otherwise, of any article, term, condition or provision contained in this
Agreement shall in no way affect any other provision of this Agreement, all of
which shall remain in full force and effect.

            19. The books, accounts, tax returns and records of Parent and each
Subsidiary shall be maintained so as to clearly and adequately disclose the
precise nature and details of the 


                                       7
<PAGE>   8

obligations and liabilities under this Agreement. All materials relating to the
tax returns, including but not limited to the returns, supporting schedules,
work papers, and correspondence, shall be available for inspection at any time
during normal business hours by Parent or any Subsidiary. Each party to this
Agreement shall maintain, at its principal or home office, records of all tax
allocations, and any subsequent Internal Revenue Service or state review or
adjustment. The provisions of this paragraph shall survive termination of this
Agreement. 

            20. This Agreement is not assignable by any party without the prior
written consent of the other parties.


                                       8
<PAGE>   9

            IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by duly authorized officers to be effective July 1 3, 1998.


Metallurg Holdings, Inc.,                    Tantalum Corporation,     
a Delaware corporation                       a New Jersey corporation  
                                             
By: /s/ Douglas A. Fastuca                   By: /s/ Michael A. Banks   
    ------------------------------------         -----------------------------
Name: Douglas A. Fastuca                     Name: Michael A. Banks    
      Chief Financial Officer                      Vice President      
                                                                       

Metallurg, Inc.,                             MIR (China), Inc.,        
a Delaware corporation                       a Delaware corporation    
                                                                       
By: /s/ Barry C. Nuss                        By: /s/ Barry C. Nuss
    ------------------------------------         -----------------------------
Name: Barry C Nuss                           Name: Barry C. Nuss 
      Vice President, Finance                Vice President        


Shieldalloy Metallurgical Corporation,
a Delaware corporation

By: /s/ Barry C. Nuss
    ------------------------------------
Name: Barry C. Nuss
      Secretary


Metallurg Services, Inc.,
a New York corporation

By: /s/ Barry C. Nuss
    ------------------------------------
Name: Barry C. Nuss
      Controller


Metallurg Holdings Corporation,
a New Jersey corporation

By: /s/ Barry C. Nuss
    ------------------------------------
Name: Barry C. Nuss
      Vice President, Treasurer


                                       9