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and Montana. In addition, it has constructed an aluminum plant in Montana producing in excess of 60,000 tons of aluminum per year.
Over several years this company has spent millions of dollars in research and development of a process for securing alumina from clay deposits in our country. Great strides have been achieved in this development. Clays have been discovered in the State of Idaho in the Moscow area guaranteeing over 100 years
app of the necessary materials for processing. A pilot plant costing in excess of a million and a half dollars is now in operation in Anaconda, Mont., to further test the results of this research, all aimed at assuring an ample supply of this most important and essential product, alumina. From tests made to date, indications are that the process is meeting with success, and within a few years we may no longer be dependent upon imports for alumina.
As you can see, it is in the national interest for Congress to alleviate the depressed conditions in the mining industry to assist in keeping it strong and healthy.
Mr. ROGERS. Without objection, all of the statements submitted by the Members of Congress on this subject will be included in the record the same as if read.
Are there any other witnesses who desire to testify?
Mr. BAKER. Mr. Chairman, I appear only as an interested observer. I do not care to make a statement but I appreciate your offer.
Mr. ROGERS. Without objection, the testimony of Mr. Orville Larson, vice president of the International Union of Mine, Mill, and Smelter Workers will be inserted in the record at this point.
(The statement referred to follows:) TESTIMONY OF MR. ORVILLE LARSON, VICE PRESIDENT, INTERNATIONAL UNION OF
MINE, MILL, AND SMELTER WORKERS Recently there has been a further serious deterioration in the economic position of lead, zinc, and copper. Consumption of all three metals has continued to decline. Despite recent fluctuations in the price of copper, deliveries by fabricators have continued to slide lower each month since January. The price of lead fell last month to 1112 cents, and early this month to 11 cents per pound, an 8-year low, while unsold lead stocks held by refiners at the end of April were at the highest point since 1938. Zinc at 10 cents per pound is under the heavy pressure of imports from low-wage areas, and in the opinion of market experts has held steady in recent months only in the hope that a program would shortly be adopted to alleviate some of this pressure. Unsold zinc stocks in the hands of producers in April were at the highest level since 1946. World copper stocks in April exceeded one-half million tons for the first time since the 1930's.
The production workers in mines and mills, and increasingly now in smelting and refining, have suffered seriously during the depression in the nonferrous metals industry. In our presentation before this subcommittee last March, we presented a tabulation of jobs lost and work curtailments in the industry from January 1957 through March 22, 1958. These data indicated a loss in jobs of 8,500 in lead-zinc mining and smelting, and of 7,500 in copper mining and smelting, in addition to widespread curtailment of working schedules, resulting in losses ranging up to 40 percent in weekly take-home pay.
Within the few weeks that have elapsed since these figures were presented, the following major developments, with direct impact on the employment and earnings of production workers in the industry, have occurred : Copper
1. Kennecott Copper Corp., in April, shifted its western division from a 5-day week to a 4-day week, reducing weekly earnings of about 5,000 production workers by 20 percent. The company's United States copper output has been cut about 40 percent in the last 18 months.
2. Phelps Dodge Corp. also went on a 4-day week in May, cutting weekly earnings of about 3,000 mineworkers by 20 percent, and laying off 125 workers at its El Paso refinery, with further layoffs expected. This and earlier pro
duction cutbacks have reduced the corporation's output by 40 percent of previous levels.
3. Anaconda Copper Co. announced a 10 percent cut in its United States copper output and the closing of its Leonard shaft in Butte in May. Net loss of jobs has not been announced. Anaconda's United States production of copper is now about 30 percent below the rate of output in 1956.
4. Miami Copper Corp. in Arizona has announced a 1-month shutdown in July due to the depressed condition of the copper market. Lead and zinc
1. The New Jersey Zinc Co. in April and June announced the following: (a) shutdown of the Hanover, N. Mex., mine—75 laid off; (b) shutdown of the Canyon City, Colo., roasting plant, 40 idled; (c) reduction of output to 50 percent of capacity at the Palmerton, Pa., and Depue, Ill., smelters. The company said several hundred men with seniority in some cases of 20 years and more would be laid off. In addition, a company spokesman was quoted in a news dispatch last month as saying a shutdown of the zinc mine and mill at Gilman, Colo., “seems to be in the cards.” A shutdown at Gilman would affect about 525 workers.
2. The Bunker Hill Co., in the Coeur D'Alenes has warned employees that economic conditions will force a shutdown of the company's mine and smelter in August and September unless the Federal Government takes steps to help the industry. About 1,500 workers would be affected. The company's mines are now on a 4-day week.
3. Page Mine, second largest in the Coeur D'Alenes district, laid off 19 men and put the rest of the work force on a 4-day week in May.
4. The St. Joseph Lead Co., largest domestic producer of lead, has laid off 235
These, I repeat, are just some of the major developments in the earnings and employment picture in our industry in the few weeks since we last appeared before this committee. Workweeks have been shortened for about 10,000 workers in this period, the number of employed workers has continued to decline, and additional thousands face the prospect of temporary or permanent layoffs.
However, as you are aware, in the last 2 months 2 departments of the Government have taken action affecting the nonferrous metals industry. The first was the divided report of the United States Tariff Commission on lead and zinc, and the second was the proposed "Domestic Minerals Stabilization Act of 1958,” which the administration put forward as an alternative to either of the recommendations advanced by the two groups within the Tariff Commission.
We have previously indicated to this committee and to the Tariff Commission our view as to the inadequacy_indeed, the probably complete ineffectivenessof tariff increases which could be granted by executive action, and our preference for curtailment of imports through the use of import quotas, with necessary restrictions imposed on countries with substandard wage levels. The Tariff Commissioners who recommended quotas for lead and zinc had in mind a very different sort of plan, which would not differentiate between countries on the basis of wage rates paid to miners and which our union could not support in view of its adverse effects—for example, on Canada, where miners' wages are roughly comparable to those paid in this country.
In our earlier testimony this year before this committee and before the House Ways and Means Committee, we have tried to put our support of import restrictions in perspective, as an emergency measure to meet a problem that threatened, and still threatens, to inactivate, perhaps permanently, large segments of the domestic nonferrous mining industry.
Our longer range program, which we previously outlined, and which requires the cooperation of other congressional committees, covered a wide range of measures in such fields as taxation, public works, welfare, and education to promote economic recovery, and a greatly expanded foreign aid program. We believe that economic recovery at home, and a foreign aid program which would more effectively promote economic development in underdeveloped countries would result in an expansion of world demand for nonferrous metals that would soon remove the present gap between available supply and demand. The underdeveloped areas of the world are a vast and relatively untapped field for expanded use of metals, as they now seek to reconstruct their economies along 20th century lines.
Our union has traditionally supported production bonus payments to producers for the purpose of stabilizing returns, and in periods of national emergency, to increase aggregate output. We proposed the premium price plan for nonferrous metals in 1941—a plan which was adopted by the War Production Board and made an important contribution to the total war effort. We supported the proposed “Domestic Minerals Act of 1953" (S. 1539), introduced by Senator Murray, and last March in our testimony before this committee we endorsed the proposed “Minerals Security Act of 1957" (S. 2395) also introduced by Senator Murray. Both bills provided for production bonus payments to producers. In supporting S. 2395, we suggested that it be extended to cover not only lead and zinc, but copper as well, and that limits be set on the total production of each metal that would be eligible for a production bonus and on the amount to be paid to any one operator.
As we see it, the administration bill in principle conforms in important respects with S. 2395, but goes further in that it covers 5 metals and minerals instead of 2, sets limits on the tonnages on which bonus payments would be made, provides for significantly lower price support levels on lead and zinc than are set forth in S. 2395, and sets maximums on bonus or "stabilization” payments Per pound.
In appraising the administration bill, we must keep in mind that it is proposed as an alternative to tariff or quota restrictions on imports, rather than as a measure complementary to increased protection for the domestic industry. We must bear in mind also that there is as yet no sign of a halt to the decline in the economy as a whole, nor any hope for a quick recovery after it has touched bottom, This pessimistic outlook is reinforced by the expectation that unemployment is reaching a new postwar high this month, and by the absence of congressional action during this session to enact a tax cut for lower bracket taxpayers, large scale public works, an adequate aid-to-education program, or a uniform, nationwide and long overdue overhauling of the outmoded and inadequate unemployment compensation system despite the recently enacted emergency legislation in this field.
Under these conditions, we would expect the administration's minerals stabilization program, if enacted, to operate in the context of continued world oversupply of copper, lead, and zinc, with its resultant pressure on the domestic price of these metals, and of continued low levels of economic activity, and consequent low consumption of nonferrous metals for an indeterminate period.
In this situation, we may very well see further declines in the prices of lead ånd zinc; each metal is quoted in London at 2 to 242 cents under the New York price, and the differential appears to maintain itself with each successive drop in the United States price. The continued existence of the differential tends to further depress the United States price. At present prices, lead and zinc would be eligible for the maximum stabilization payments per pound, but present prices plus the stabilization payments would come to slightly less than the stabilize tion prices of either 1434 cents for lead or 1234 cents for zinc set forth in the bill. The outlook for the immediate future is for further weakness in the prices of both metals. As stabilization payments would not have a restrictive effect upon production, we cannot expect that this program, while increasing returns to producers, would have a similarly firming effect upon the market prices of lead and zinc. Stabilization payments, at present prices of lead and zinc, would not raise producers returns to levels received in the spring of 1957, when curtailments of production were first initiated, nor to peril point price levels proposed in the administration's lead-zinc import tax bill last year. The Secretary of the Interior, in transmitting the import tax bill to the President of the Senate on June 18, 1957, indicated that prices below 17 cents for lead and 1442 cents for zinc would threaten serious injury to domestic producers. These peril points compare with stabilization prices of 18 cents per pound for lead and 15 cents for zinc as set forth in the proposed Minerals Security Act of 1957 (S. 2395) introduced by Senator Murray. We do not know the basis for the relatively low stabilization price levels set forth in the administration bill this year, but the conclusion is inevitable that at these, or possibly lower levels of return to producers, much of the present reduced output of lead and zinc would continue to be produced at a loss. The recent Tariff Commission report cities evidence that in 1956, with average prices of lead over 16 cents and of zinc at about 1342 cents, one-quarter of the mine production of lead, and more than one-half that of zinc was produced at a loss.
We think the evidence is clear that the bill now before this committee, unaccompained by any program for restriction of imports, would fall short of the objective of promoting and preserving a healthy domestic lead and zinc mining industry. We believe that consideration should be given to raising the amounts of the stabilization payments, and of the stabilization prices for lead and zinc, if the objective is to halt the closing of mines, and to restore production and employment in the industry.
The domestic copper industry has succeeded in stabilizing copper prices at much lower levels within a relatively narrow range by instituting cutbacks in mine production to about 80 percent of last year's rate for the country as a whole, and by holding abnormally large stocks, both in producers' and fabricators' warehouses. While use of copper in the United States has dropped dastically, there has been a relatively brisk demand for copper in Europe. Curtailments in output, except at a few high-cost mines, have been dictated in the main by the limited markets for copper, rather than by the unprofitability of operations.
Our union and its membership is pleased to note the action of the administration through Secretary Seaton in announcing the new program to stockpile 150,000 tons of copper in the next year. We wish to compliment those Senators, especially on this committee, whose efforts helped bring about the new copper stockpiling program.
While we support this program wholeheartedly, nevertheless we must indicate that our concern is not only the stabilization of copper prices but that copper miners and muckers, as well as smeltermen, will be put back on the job. We hope that stockpiling will do this. Frankly, without increased employment in copper nothing much will have been gained.
Mr. Chairman, while we are on the subject of stockpiling, we respectfully suggest that this method would be a good way to lead zinc and lead out of the wilderness. Stockpiling of 100,000 tons of lead and about 200,000 tons of zinc, as an immediate step before application of the Seaton stabilization plan to these two metals, seems to us the only way to avert further drastic cutbacks.
In conclusion, we endorse the principle of the proposed Domestic Minerals Stabilization Act of 1958 as sound and desirable. We hope it will become a part of a permanent national minerals program to help maintain continuity of employment and production in periods of severe and sustained market imbalance and to contribute to the preservation and conservation of vital natural resources. We do not think the program is the complete answer to the problems of the domestic nonferrous industry, but it is a needed and valuable component of a national minerals program.
Mr. ROGERS. Without objection, the statement of Mr. Frank N. Hoffmann, legislative director on behalf of Mr. David J. McDonald, president, United Steelworkers of America, AFL-CIO, will be inserted in the record at this point.
(The statement referred to follows:) STATEMENT OF MR. FRANK N. HOFFMANN, LEGISLATIVE DIRECTOR, ON BEHALF OF
MR. DAVID J. McDONALD, PRESIDENT, UNITED STEEL WORKERS OF AMERICA, AFLCIO
The bill S. 4036, as passed by the Senate, is not entirely to our liking. However, we hope that the vote on this bill by the Subcommittee on Mining and Mines will be favorable.
The record proves that something must be done this year to help our domestic metal mining industry. Shortness of time makes it imperative that S. 4036 be enacted into law.
The United Steelworkers of America support the Domestic Minerals Stabilization Act of 1958 as a step in the right direction.
This proposal would pay domestic producers, for 5 years, the difference between the market price and the stabilization price on annual production not in excess of 1 million tons of copper, 350,000 tons of lead, and 550,000 tons of zinc. (The proposal also covers tungsten and fluorspar.) The stabilization prices for these particular metals would be: copper, 2742 cents per pound; lead, 1434 cents; zinc, 1234 cents.
The proposal would further restrict price cutting by setting limits on payments; the maximum payments would be 342 cents for copper, 338 cents for lead, and 272 cents for zinc, thus-in effect-setting floor prices of, 24 cents, 11%cents, and 1044 cents for copper, lead, and zinc, respectively.
Annual limitations on production would be broken down into quarterly quotas; whenever sales for any quarter exceeded the quota for that period, payments would be equitably distributed among all producers, with no producer getting less than certain fixed minimums. The Secretary could also, when total production exceeded quotas, set limits on the amounts that would be paid to individual producers in succeeeding quarters. Payments would be completeley suspended whenever production for two successive quarters exceeded total quotas by speci: fed amounts until production was again brought within quota limits.
"The net effect of the proposal would be to provide for Government support of production, at levels approximately 1957 production, and within a limited price. range. Secretary Seaton estimates that the plan will cost $161 million the first year and lesser amounts each succeeding year if, as he anticipates, the program brings supply and demand into better balance.
The problem we are confronted with is to tie in the short-range approach of immediate stockpiling and a long-range program wherein the domestic metals mining industry can take its place in the economy on a mature, relatively stable. basis rather than on the boom-or-bust, hand-to-mouth existence it has experienced during the past two decaues.
I would like, therefore, to call the committee's attention to the following:
Since this is a fluctuating industry, continually changing its pattern and direction, this proposal is made up of five points designed to stabilize conditions in the industry. Each blends into the other to provide a suitable overall approach. Nevertheless, the division of the points in the program is appropriate for separa. tion into short-term and long-range action. It is essential that Congress consider simultaneously the immediate and long-run steps in any program it has under consideration. The first two parts could be enacted penuing the consiаeration of the long-run aspects. All five points are designed to stabilize the metal-mining industry.
1. Certain of the more important key minerals should be stockpiled—not necessarily for defense purposes, although that certainly must and should be a consideration. A buffer-stockpile concept should be developed. A Federal Government agency should buy minerals when the market price drops. The agency should sell when the market price rises. This means, of course, that as a general rule purchases for the stockpile would increase as prices decline and, conceivably, would decrease as prices rise.
The agency should not purchase more than 20 percent of any mine's output in any one year.
Certain safeguards must be imposed in the establishment of a buffer stockpile, particularly if the agency is to be authorized to sell from the stockpile when the prices are high. Therefore, appropriate restrictions should be set up to prohibit the use of the stockpile in any way which would interfere with a labor dispute.
2. Any program, whether short- or long-range, will result in certain high-cost inetficient mines being forced to close. In such cases, an adjustment assistance program (such as that contained in the Trade Adjustment Act, S. 2907, introduced by Senators Kennedy, Humphrey, and others) should be put into effect. This would permit aid and assistance to be given to the workers, to the mines, and to the communities in the transition period.
In addition, the area economic development bill, introduced jointly by Senators Douglas and Payne, S. 3683, would offer vitally needed aid to help the adjustment of communities faced with mines having to close because of their hign cost.
These suggested programs—for a domestic buffer stockpile and a readjustment program-are, of course, only immediate palliatives designed to assist the present situation.
The operation and the need for a buffer stockpile program could be greatly minimized if the minerals industry could be stabilized, if prices, production, imports, and consumption could somehow be brought into balance. It is with the hope that the minerals industry can be stabilized that these additional three points are proposed.
3. Exploration and development aid should be continued and extended. The Defense Minerals Emergency Administration should be replaced by a permanent division of an overall defense minerals agency that could give development and exploration aid on a dollar-matching basis.
The need for continued exploration and development of new mineral sites and deposits in the United States needs no elaboration or discussion. This is an