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STATEMENT OF J. R. HOLMAN, VICE PRESIDENT, CALIFORNIA
OREGON CHROME PRODUCERS ASSOCIATION Mr. HOLMAN. I am Joseph R. Holman, Pasadena, Calif. I have been a chrome producer since 1951 in Monterey County, Calif.; Fresno County; San Benito County; Curry County, Oreg. I have watched this chrome picture grow during the years, and I can assure this committee that the incentive was the declaration of Congress as included in Public Law 520 that the intention in the strategic stockpile was to eliminate as far as possible the dependency on foreign sources for minerals.
The program has worked. I can assure you today that chrome is just as important to the economy of the United States and possibly more so, that we are in the jet age and space missiles and to back that statement I would like to read from a statement of Dr. Richard M. Foose, chairman of the Department of Earth Sciences, Stanford Resea Institute, in a prepared statement he made before the high temperature materials conference of the American Institutes of Mining and Metallurgical Engineers on May 5:
The high-temperature metals to be treated in this paper are columbium, tantalum, molybdenum, tungsten, and chromium. Although chromium is not in itself one of the high-temperature metals the resources of chromium must be considered because of its important use in connection with the other four metals in developing high-temperature alloys. There are other metals sometimes considered to be of high temperature, such as cobalt, nickel, beryllium, and zirconium, but the resources of these are not considered in this paper because of their secondary importance to the development of high-temperature alloys.
A further paragraph: As mentioned earlier, chromium is not in itself a high-temperature metal, but its use is critical to the formation of many high-temperature alloys as well as being important to the refractory and chemical industries. There are no effective substitutes for it in many of its chemical and metallurgical uses. Its property of imparting oxidation resistance is extremely important in alloying with the other metals. Therefore, it is proper to consider its geology and resources along with the other four metals.
The second point I would like to emphasize before this committee is price in connection with incentive. You may wonder why we are in here talking for chrome 1 year ahead of the period that we expected to be because our program was supposed to have run until June 30, 1959. The statement of the Department of the Interior when they included chrome in their proposal of June of 1957 specifically stated the program would start at this point.
Now, we had a price incentive by virtue of a carload buying program introduced in the fall of 1956. Gentlemen, where it took 63 months to produce 100,000 tons of domestic chromite of metallurgical grade from the small mines on the Pacific coast, the last 17 months found some of these small mines delivering the last 100,000 tons—in 17 monthsand not only did they deliver at this rate but they left developed reserves which we did not have in 1951 of better than 118,000 tons of blocked chromite ore.
We feel that this is a record to be proud of. We feel we have a chance to sustain a segment of domestic mining in the United States in metallurgical chromite if we can be kept alive.
The last point I would like to make is with respect to the incentive price which has been suggested. The incentive price of $46, which was set forth in the Senate bill 3816—I have not read H. R. 13270, but I believe it is similar—is fairly close to being realistic. To analyze this briefly, please note that in H. R. 8258 or Senate bill 2375, the price suggested by the Department of the Interior was $21 a ton in 1957. We call attention to the fact that this just about offsets the increase in labor and material cost above the base under which the chrome mines were opened for stockpiling in 1951.
After testimony before the Senate in 1957 Senator Murray came up with a suggestion of an increased $25 per ton which was set forth in his bill and we find that the $25 per ton additional is not quite the cost of freight from the Pacific coast to the principal refining center in the United States, which is $25.70 a ton on $40 ore.
Now we point out one more thing that certain functions heretofore carried out by the GSA purchase depot, which by the way took care of the small miners in the southern Oregon and northern California district, such as the assay, storage facilities, and distribution expense, is now a factor that will have to be taken over by the chrome producers themselves. Not having any breakdown of Government cost for such overhead we can only hazard a guess that this will approximate $10 a ton of ore handled. We would like to recommend that this $10 figure also be included as a realistic approach to price as far as incentive payments are concerned for chromite.
That is the end of my statement.
Mr. MILLER. S. 3187, which is the domestic DMPA bill, does not mention stockpiling nor does 4036, it deals with copper, lead, zinc, tungsten, et cetera.
The bill that does deal with the price of chrome is 13270 that I introduced for the administration, which places a price on metallurgical chrome.
I note you said in 1957 you were getting $21 a ton; is that right?
Mr. HOLMAN. I know that in your H. R. 8258, which Congressman Engle sent to me, which is the House version of S. 2375 of 1956
Mr. MILLER. Those bills are not before us.
Mr. HOLMAN. But I only mention them for the price that was stated in them.
Mr. MILLER. What price must you have in order to keep the chromite mines open for a commercial grade of metallurgical chromite? What price must you have?
Mr. HOLMAN. We believe it should not be less than $46 per ton in incentive price and we recommend an additional $10 as being realistic, truly realistic.
Mr. MILLER. What were you getting in 1957?
Mr. HOLMAN. In 1957 we were getting twice the world market price, getting virtually the $56 on top of the normal price for 48.3 to 1 Turkish of $55 to $56 a ton.
Mr. MILLER. You agree $35 a long ton for commercial grade metallurgical chromite, 46-percent basis, is not realistic?
Mr. HOLMAN. No, sír; and it will keep no chrome mines in operation. Mr. MILLER. Thank you.
Mrs. Prost. I would like to ask if you know approximately the amount of money that would be involved at the $56 price.
Mr. HOLMAN. On the 100,000-ton limitation it would run approximately $5.6 million, though I doubt very much, Mrs. Pfost, whether we will be able to come close to a 100,000-ton production by virtue of our sale to industry. Bear in mind that we averaged for the first 5 years from 25,000 to 30,000 tons a year. We had a terrific influx the last 17 months. We have certain developed reserves, but the whole dependency of the success of this program is what we can sell to industry today. Due to the depressed condition of the steel industry we do not feel that industry can absorb 100,000 tons of domestic production of true metallurgical grade chromite. I doubt very much whether there will be involved more than possibly 70,000 to 80,000 tons. I think that would be more realistic.
Mrs. Prost. Thank you very much.
Mr. ULLMAN. I would like to commend the gentlemen for their statements.
Mr. ROGERS. Thank you very much, gentlemen. Do you other gentlemen have separate statements to make?
Mr. HOFFMAN. I am John Hoffman; I will pass in favor of Mr. Hall for the sake of brevity.
STATEMENT OF DURAND A. HALL, PRESIDENT, CASTRO MINING
CO., BERKELEY, CALIF. Mr. HALL. I will be very brief. I am Mr. Durand A. Hall from San Francisco. I have been in the chrome mining and milling business since 1942 so I passed through most of the productive history of chrome mining because before that there was no mining of chromite back to 1918.
I would like to point out that my concern and the concern of the men who mine it around San Luis Obispo is mining and treatment of chromite ores. One of the things that almost every bill states is this; that the metal is indispensable to the economy and welfare of our Nation and reduces the dependence of the United States on foreign sources of supply.
I simply want to point out here that the influence on reduction of foreign sources of supply is the milling ores of chromite which we produce around San Luis Obispo. The largely increased production-I am not minimizing the lump ores at all, but our business is not simply a mining business, it is also a milling business. The closing down of our reserves at San Luis Obispo, closedown of our mines, means the closing down and abandonment of our mills. The reopening of these mines will mean the rebuilding and reconstruction of milling plants again in order to put the mines back into production. One more statement and I am through. I have watched this
. I chrome mining industry develop for many years. When I first came to San Luis Obispo in 1941 there was no chrome mining and no reserves. We have taken out of there since then some $4 million worth of chromite with the investment of a good many dollars worth of capital. In 1951, when mining was resumed, we had 11,000 tons of reserve. We have been actively mining since then and we now have in the San Luis Obispo district 75,000 to 100,000 tons of reserves.
In other words, gentlemen, it takes mining to build reserves. You do not save your ore in the ground by not mining it. I am afraid that is an opinion that a great many nonmining people have, that if we import from foreign sources we are saving our own reserves. We are not only not saving them, we are destroying them, gentlemen. That is all.
Mr. ROGERS. What is the percentage of supply in this country as compared to the requirements of this country each year?
Mr. HALL. I think it is fair to state that about all we can hope for the chrome mining industry is to supply perhaps 10 percent of the United States requirement for metallurgical grade ore.
Mr. ROGERS. You mean if we are producing full strength under present reserves or present known reserves that if we produce at full strength we will only produce 10 percent of the amount this country needs each year?
Mr. HALL. If I may be allowed a minute more, I think that statement requires a little expansion. In all the history of our Govern. ment assistance programs there has never been enough time ahead so that a prudent mining investor would invest in the search for, development of, and equipment of, in the way of large low-grade chrome mines. So that it is hard to state what California—I am only talking about California because that is all I know about-might produce from resources which are not reserves. I myself, had there been a program that would have justified it, would have been drilling today on what I believe are potential large low-grade chromite deposits.
When you ask if we could only meet 10 percent of the requirements for chromite, I must qualify it by saying there has not been a real consistent large scale search for low-grade chromite ores which might conceivably increase that a great deal.
Mr. ROGERS. What you mean is this, I take it, that the imports into this country have been like a Damocles sword over the head of the prospective miners and no one wanted to invest his money in it to go out and search and develop reserves because they knew the price the imported product could be sold at would simply pull the underpinning out from under them insofar as their investment is concerned.
Mr. Hall. That is true, sir. I would emphasize that even during the periods when the price was such that we could well operate under it, which has been until recently, the length of the program was so brief that only those mines actually in operation that could expand within their own limitations could be used. I have been in the mining business many years. I would not go to a prudent mining investor and ask him to finance the search for chromite ores on a large scale.
Let me be positive about this. We are probably always going to depend on foreign supplies of chromite in this country. I do not want to be on record for a moment as saying we could be independent.
Mr. ROGERS. What price would be necessary to develop our reserves in this country to 45 or 50 percent? Mr. Hall. I think I would rather not hazard a guess. I think
I that would be too much to expect for many years to come, if at all.
Mr. ROGERS. Are there any questions?
Mr. ULLMAN. In my district in eastern Oregon we have primarily small mines, which is indicative of the whole chrome industry. In the last few months they have produced more chrome than they have ever produced in history. I have a real miner from my district here, a wonderful gentleman-Bill Gardner of John Day. Bill, woul.
you tell the committee your estimate of the chrome ore that might be in ore bodies available there?
STATEMENT OF WILLIAM GARDNER, PRESIDENT, GRANT COUNTY
MINING ASSOCIATION, JOHN DAY, OREG. Mr. GARDNER. Mr. Chairman and gentlemen, we find that the mines we are working around in eastern Oregon now, well, it was determined a long time ago by the State department of the bureau of mines that they were exhausted after the First World War. Came the Second World War and they produced better than ever.
As we go down, the ore bodies get larger. We have shipped more ore at the close of this than has ever been shipped before and we have more in sight. The ore is enlarging and getting better as we go down and explore. It is not, as has been determined several times by the department of mines, worked out. It is getting better.
Mr. ROGERS. What price do you think would have to be maintained to keep that operation going?
Mr. GARDNER. That depends on how big you are. If you are a small chrome miner and have to use a pick and shovel it takes a lot of money to operate. If you are larger, with the machinery, it takes a lot of investment to really go out in a big enough way to get the price down. If you have to go out in a small way mining chrome is very expensive.
Nr. ROGERS. Are there any questions?
Mr. GARDNER. We closed down May 19, when the GSA canceled our last few cars we had permits to load.
Mr. MILLER. What price must you receive for chromite to make a profit, how much a ton?
Mr. GARDNER. I can answer that from my own personal operation, but there are many smaller chrome miners out there and maybe as large as we are, too, that I can't say. Sir, last year we operated on an overall net profit of 14 percent at the price we got which was 110 for concentrates and 115 for ore, 48 and 3. We operated at a net profit of 14 percent at that price.
STATEMENT OF JOHN D. HOFFMAN, SAN LUIS OBISPO, CALIF.
Mr. HOFFMAN. I am John Hoffman, an independent chrome miner and producer. In San Luis Obispo, under the past program, the art and technique of mining has advanced tremendously. Mr. Hall mentioned investment. The investment today is about $14,000 per employee or man employed in the mining business. There are 50 men who were directly employed in chrome mining, not including all the other services that were used. We have been working on mill ores which require a great deal more treatment than lump. Today I believe we are producing as efficiently as any other segment of the mining business. We were operating successfully under the past program.
We are willing to go and to try with any help or assistance we can receive from Congress and will make it a good try. We are equipped, we have personnel, we have reserves. Pricewise I feel we should have something that will bring to us about the equivalent of the past program. We do not know when we can sell our chrome on the open market because of the glut due to the depression of the steel industry.