EXHIBIT E.-Number of producers distributed by range of annual production— Fiscal year 1957

Reference: Speech by Elton A. Youngberg, Assistant Manager for Operations, Grand Junction Operations Office, AEC, Dec. 16, 1957, p. 8.

So that you can see the number of individuals or companies which participated in years prior to 1957, the following table is presented to show the number of mine operators from the year 1954 to 1957:

As you will note from table IV, there has been a gradual increase in numbers of individuals or companies participating in uranium mining through fiscal 1956. In 1957 the trend was reversed when the number of producers decreased by 120. This reversal apparently was in part due to the fact that most surface outcrops had been found from which quick production could be obtained by the individual miners. Table III shows that there were still a large number of small operators active in 1957, when over 40 percent of the operators individually shipped less than 50 tons annually. It is apparent from these figures that participation by operators has not increased proportionately with production, indicating that the major part of the increased production is coming from larger producers. This has not been due to any policy of the Commission but reflects discoveries of multimillion-ton ore bodies which are capable of large production. For this reason, as shown in table III, some 91.2 percent of the ore production was delivered by 10.2 percent of the 727 producers in 1957. With the full development of the large deposits in the Ambrosia Lake and Gas Hills areas, there will be a further increase in the percentage of production by the larger producers. This does not mean that there will be a smaller tonnage produced from the small mines and custom shippers.

To broaden the participation in the industry as much as possible, the Commission has followed a practice of contracting for mill capacity for custom shippers. Table V, below, indicates the 1954 and 1957 percentages of contracted plant capacities which were available to custom shippers. Even though percentagewise participation of custom shippers has decreased from 1954 to 1957, the tonnage delivered by custom shippers to mills substantially increased between 1954 and 1957. I have not been able to show the actual tonnage as the historical data are still classified. Based on reserves held by milling companies and those held by custom shippers, proportionately the custom shippers have been allotted a larger share of the milling capacity based on 1957 data. For economic reasons, it is reasonable that the custom shipper should have a larger percentage because he cannot extend the production of his smaller reserves economically over as long a period of time.

Five areas have been selected for a comparison of costs because of their general interest, and they represent a large segment of the domestic reserves. These areas are:

1. Uravan Mineral Belt.-These deposits are thin, averaging about 3 feet in thickness, and are discontinuous. The depth of present mining operations varies from a few feet to as much as 600 feet. The ground requires occasional support Estimated average grade of mined ore is 0.28 percent U.Os and 1.00-1.25 percent V2O5.

2. White Canyon-Monument Valley.-These deposits are somewhat thicker and more continuous than the Uravan Mineral Belt, averaging about 4 feet in thickness. The depth of present mining operations varies from a few feet to 200 feet. Only occasional ground support is required. Estimated average grade of mined ore is 0.25 percent U3O8.

3. Big Indian Wash.-The thickness of these deposits varies from 4 to 20 feet, with an average of 6 feet. The ore is continuous over considerable distances. The depth of mining operations averages 550 feet. Ground support is required where stoping heights are to a shale parting and stoping widths are beyond ground strengths. Estimated average grade of mined ore is 0.35 percent U3O8. 4, Ambrosia Lake.-The deposits in this district average about 8 feet in thickness, with local thicknesses up to 100 feet. The depth of operations will vary 350 to 800 feet. Openings above the water table will require occasional support. Openings below the water table probably will require considerable ground support. Estimated average grade of mined ore is 0.25 percent U3O8. 5. Gas Hills.-Ores developed in this district to date will largely be mined by open pit. Ground can be broken by rippers and a minium of blasting will be required. Average thickness of ore is 6 feet. Depths of ore, from surface outcrops to 300 feet. Some deeper ores will be mined by underground methods. Estimated grade of mined ore is 0.225 percent UзOs.

The foregoing district descriptions have been presented with the thought of bringing to your attention the variable mining situations from which our domestic ores are being produced. As you can see, domestic mining costs necessarily vary within wide limits. Even within districts, mining costs of individual deposits will differ because of variable geologic conditions, sizes of ore bodies, and the human factor of management.

To help you evaluate the economic picture as related to mining, I have presented in table VI what our mining division considers to be a median mining cost for typical operations in the indicated districts.

It should be remembered costs of individual operations may vary considerably from these figures. In the case of open-pit operations, the cost per ton for stripping is dependent upon several factors. These are the overburden to be removed, the distance it must be hauled, and the amount of drilling and blasting required. A median cost of 40 cents per ton was used in arriving at the stripping costs used in the table above. This figure may vary from 25 cents per ton for unconsolidated overburden to 60 cents per ton for rock requiring extensive drilling and blasting.

These median figures include all costs, as exploration and development costs, direct and indirect operating costs, and depreciation. No costs for property acquisition or royalty are included. These are negotiated amounts and vary considerably.

APPENDIX 3

AEC'S OCTOBER 1957 ANNOUNCEMENT ON LIMITING URANIUM PROCUREMENT; STATEMENT MADE TO THE JOINT COMMITTEE ON ATOMIC ENERGY BY JESSE C. JOHNSON, DIRECTOR, DIVISION OF RAW MATERIALS, JANUARY 20, 1958

It is my understanding that at this meeting on raw materials, the committee desires a report on the Commission's decision of last October to limit domestic uranium procurement, and the conditions that brought about that decision, and the effects of that decision on the domestic uranium program.

The Commission's action was taken to avoid buying more uranium than was required for the operations of the atomic-energy program as now projected. A review indicated that annual deliveries under existing domestic and foreign commitments would meet annual requirements for the period between now and 1962. Another consideration was that production from existing sources could be expanded substantially in case of increased requirements. The tremendous increase in domestic ore reserves during the last 3 years, and the prospects of further major increases, indicated that there might be serious overproduction under a policy of unlimited purchases.

This was not the first action to limit uranium procurement. Until 1955, the Commission's problem had been to get enough uranium for the expanding military program. We had been buying all that was available from foreign as well as domestic sources and seeking to find new sources everywhere. In 1955, however, we limited foreign commitments because of the important developments in Canada and the United States. Although the domestic outlook had become much more favorable, there was no basis at that time for anticipating the phenomenal expansion just ahead.

Domestic developments since the beginning of 1955 have been most impressive. At the end of 1954 domestic ore reserves were estimated at 10 million tons; at the end of 1955, 25 million tons; at the end of 1956, 60 million tons; and today they are estimated at 75 million tons and may reach 100 million tons as a result of development work now in progress in producing areas.

Domestic concentrate production for the second 6 months of 1955 was 1,600 tons of UзOs but at the end of the period was at an annual rate of 4,000 tons. Production for the calendar year 1957 was 8,600 tons and is now at an annual rate of approximately 10,000 tons. A year from now our annual production rate should be about 15,000 tons of UзO, and before the end of 1959, with all new plants in full production, the rate should reach from 17,000 to 18,000 tons.

This rapid expansion of the domestic uranium industry, plus the possibility of continued rapid expansion unless checked, was the reason for the action taken by the Commission in October. As a result of that action no additional concentrate procurement contracts involving new milling facilities are being negotiated at present.

This change in our procurement policy has brought a flood of protests, particularly from those developing ore reserves with the view of undertaking milling operations. Most of these protests deal with individual problems, or the problems of local areas, but in nearly all cases the following arguments are made in support of the requests for relief:

1. Evidence is offered that the Commission encouraged and urged private industry to find and produce uranium for the national defense. It is therefore argued that under the program established, and the procedures followed in carrying out this program, private investors had reason to believe that they would have a Government market if they could find uranium and produce it at a competitive price.

2. It is argued that the Commission should provide relief for those who have developed ore at substantial expense and now find themselves with no adequate market, and that unless relief is provided by additional contracts for new milling facilities, many prospectors and mining organizations will suffer heavy losses and some uranium companies may face bankruptcy. 3. The domestic buying program should be continued to support further exploration and development in order that this country may be selfsufficient for its long-range uranium requirements.

Since most of the requests for relief are based primarily upon the assumption that the Commission has a responsibility to provide a market for the uranium ore that has been developed, it might be well to review briefly the domestic uranium program and the procedures followed during the past 10 years.

The domestic uranium program established in 1948 was designed to encourage private industry to explore for uranium and to undertake mining and milling operations. At that time, and particularly in 1951, 1952, and 1953, when the Commission's major expansion was planned and undertaken, the availability of adequate supplies of uranium presented a most serious problem. Representatives of the Commission, including Commissioners, made numerous public statements pointing out the need for additonal uranium and the importance of expanding domestic production. Reports issued by the Joint Committee on Atomic Energy in 1951 and 1952 stressed the urgent need for a greater effort to develop uranium production and emphasized particularly the importance of domestic production.

Although our published ore buying schedules always have been limited in scope, our ore-buying operations have been expanded to cover the purchase of any uranium ore of grades specified in the published circulars provided the uranium could be recovered at costs considered economic. The Commission's published commitment to purchase domestic uranium ores has been limited to deliveries made to its Monticello, Utah, buying station. In practice, however, a number of ore-buying stations have been established in various new districts in order to speed up mine development and production. These stations were closed as private mills were built to provide a local market for ore.

There has been no published commitment to negotiate milling contracts. However, the procedure has been to negoiate a milling contract on the basis of an adequate supply of ore and agreement upon a price for concentrate. For approximately 10 years nearly every milling proposal had led to a contract provided the conditions with respect to price and ore reserves were met and the company making the proposal furnished reasonable evidence of being able to fulfill the contract deliveries. There has been no assurance that this procedure would continue to be followed.

The existence of this procedure has become the basis for individuals and companies undertaking exploration, purchasing, and acquiring mineral rights and developing uranium mines. This program and these procedures have been directly responsible for developing our uranium reserves and making this country the world's leading uranium producer. It is doubtful whether these results could have been obtained with a more limited or more restricted program. It should be remembered that 10 years ago only a few small uranium dposits were known and this country was considered by a number of experts to have relatively poor prospects for substantial uranium production except at high-cost from lowgrade shales.

As a consequence of the manner in which the domestic program has been operated, it is not surprising that the Commission's October decision to limit uranium procurement found a number of companies with substantial ore reserves and plans for mill proposals. In some cases there had been discussions regarding milling plans with our Grand Junction staff.

In Wyoming several companies, each of which claims to have spent approximately $1 million in developing substantial ore reserves, are requesting milling contracts. Probably more than a million dollars has been spent in developing uraniferous lignite deposits in North and South Dakota and we now have a milling proposal with a moderate price for concentrate. A million-ton ore body has been proved by drilling in Texas and a milling contract will be requested. Not only are the prospective milling companies and their stockholders involved, but much of the mining property controlled by these companies was obtained from the original locators or local development companies in return for stock, operating interests, or royalties. Consequently, a large number of people who have invested time or money in discovery and development have a stake in most of the proposed milling operations.

In the light of the circumstances I have just outlined, I am concerned over the problems of those who already have developed ore at substantial expense and who as yet may have no adequate market for their ore. I am having our Grand Junction office make a survey of the problems of the various uranium districts and the problems of the individual operators. The results of this survey, together with information presented by the uranium miners and their local organizations, will be submitted to the Commission for consideration. I hope that some reasonably satisfactory solution can be developed, within established procurement limitations.