In 1926 the Spanish and Italian producers formed a cartel and held the price at approximately $120 until 1930. This period was the most lucrative in the history of quicksilver mining in the United States. That is the span between the selling price and production cost was the greatest. During this period many mines were opened up, reduction plants built, and domestic production was greatly increased.

The cartel selling quota was based on the percent of total production from each member. This created large inventories, and in 1931 the cartel was dissolved, reducing the price to $57 in 1932, and again, for the second time, all of the domestic producers were forced to shut down.

New Idria closed down in 1931, and did not reopen until I started opening up the mine in 1936 when the price had increased to $80. Tunnels had caved in and several years were necessary to open up production areas. When Word War II broke out, new ore bodies had been opened up and New Idria had the highest production in its history.

Again after World War II, for the third time, excessive imports hammered the price down below $100 by 1946. New Idria held on until 1949 by mining available ore and by not developing new areas.

Due to the Korean conflict, the price jumped from $81 in 1950 to $210 in 1951. Like New Idria, most of the domestic mines had exhausted their available ore and had shut down.

Capital remembered the 3 periods the mines were shut down in last 30 years due to dumping by Spanish and Italian producers, and it was difficult to raise money to reopen quicksilver mines. Government help with Defense Minerals Exploration Administration loans for exploration, and the floor price of $225 established in 1954 has been a great help in opening up quicksilver mines and establishing an industry that is now producing at a rate of over half of our domestic consumption.

New Idria has received from the DMEA $333,000 and has paid back from ore developed $200,000. The remaining $133,000 can easily be paid back from ore already blocked out if the price of quicksilver remains over $210, our present break-even point.

Spanish and Italian mines have recently installed modern up-todate reduction plants which will increase their production. They are now producing more than they can sell, and are selling in this country at lower prices than elsewhere in the world. This price is slightly below the Government buying price of $225.

Will Spain and Italy then supply all of our consumers through 1958?

Senator CHURCH. May I ask is the Government buying price of $225 a fixed price or is that the established maximum that the Government can pay?

Mr. LEWIS. It is a fixed price. It was extended from 1957 for 1 year through the end of 1958 to purchase 30,000 flasks in the United States at the fixed price of $225 a flask.

Senator CHURCH. Thank you.

Mr. LEWIS. A major share of the domestic production is currently being sold to the Government, and when this program is completed in December 31, 1958, the price will inevitably go below the domestic

cost of production, and, again, all of the domestic producers will be forced to shut down. This will then make this country fully dependent on foreign sources that may or may not be available, or only available at their own terms and price.

I have mentioned the difficulty of interesting capital in quicksilver mines, and this means that incentives must be given by the Government due to flooding by imports with the resultant fluctuation in price. There is also the question of labor. It is difficult to obtain trained miners. Labor is turning to other occupations because of lack of security within the industry. Many of the men recently laid off due to low prices of copper, lead, zinc, tungsten, and other metals must leave mining camps and look for a livelihood in other industries, usually in cities. Very few of these men return when the mine reopens and the operator must train inexperienced men.

The majority of quicksilver mines in this country occur on or near faults in ground that is mashed and require timber support and continued attention. When New Idria was forced to shut down in 1950, underground maintenance amounted to over $5,000 per month.

I have been in the quicksilver industry since 1928 and have visited many of the operating plants. I have also examined many prospects and mines that have failed due to quicksilver content being too low to make a profit at the current selling price. Higher prices would open up many new mines and give the United States larger reserves to draw on in emergencies.

In regard to the nature of ore bodies, the grade or tenor of the ore is generally not constant. In other words, there are areas of highgrade ore and areas of low-grade ore. A good mine operator tries to blend these to obtain full benefit of the ore body. This also is making full use of our domestic resources.

When mine operators have no assurance of price, or when prices drop drastically due to flooding of the markets by imports, they are forced to mine only the richer ore and stop development work. This leaves the low-grade ore in the mine, and this ore will not carry itself financially unless the price per flask reaches extremely high levels. Even today, with the price of mercury at $225 per flask, the operators are forced by economics to leave low-grade ore in the ground. If the price of mercury were $300 per flask most of the mineralized ground could be mined with a resultant increase in production and reserves. There are a number of lower grade properties in this country that could be operated if the price per flask were higher and there was some assurance as to the future of the industry.

To illustrate the preceding statement, the following figures, taken from our own production costs, illustrate the break-even point. The break-even point per flask is as follows: for 8-pound-per-ton ore, $276; for 10-pound-per-ton ore, $240; for 12-pound-per-ton ore, $200. For the welfare of the country, which today is practically at a wartime status, the Government should take action to assure the continuance of a healthy domestic industry by taking steps to avoid having a recurrence of the shutdowns caused by foreign imports. In time of emergency this production is the only one on which we can safely depend.

As I have stated previously, it takes time, work, and a lot of money to reopen and develop mining properties, and, as we are all aware,

27255-58-pt. 1—17

time required for production in event of an emergency has been reduced to practically nil.

The present tariff on mercury imports is 25 cents a pound. This tariff has been in effect since 1922 and has not been changed since that date even though the price on which it was originally imposed was $1 per pound and the current price is in excess of $3 per pound. Thus today we have only one-third of the protection afforded us in 1922, and this situation is more difficult since labor and equipment costs have soared and the grade of ore declined.

We believe that if the domestic quicksilver industry is to be maintained in a form readily available to meet the normal needs of our economy and be in shape to rapidly expand in time of national peril that more adequate protection should be provided. We suggest that such protection could take either of the following forms:

1. An increase in the tariff rate from the present 25 cents per pound to 75 cents per pound.

2. Establishment of a quota on imports limited to 40 percent of the United States consumption of quicksilver in 1957.

Senator CHURCH. May I ask how much a flask weighs?

Mr. LEWIS. 76 pounds.

3. Imposition of an excise tax of 75 cents per pound on all quicksilver imports when the average domestic price for any calendar month falls below $250 per flask as reported in industry publications.

Adoption of any of the above-suggested remedies, in my opinion, would create a firm foundation for a domestic quicksilver industry. Since we realize that this facet of a long-range minerals program may take some time to become effective, we earnestly urge that the Congress extend the current domestic mercury program for an additional year on terms no lower than at present.

I do appreciate the opportunity of presenting my views as to the needs of one of our most vital industries to this committee, and sincerely hope that you will give them your favorable consideration. Thank you.

Senator CHURCH. I do not believe I have any questions. Your testimony has been very, very clear and I appreciate it.

Mr. LEWIS. Thank you.

Senator CHURCH. This will conclude the hearing this morning, and the hearing will resume at 2 o'clock this afternoon.

(Whereupon, at 12:10 p. m., the committee recessed until 2 p. m. this same day.)

AFTERNOON SESSION

Senator CHURCH. The hearing will come to order. This is a continuation of the hearings that commenced at 10 o'clock this morning. We have two witnesses scheduled for this afternoon.

Before we call the first witness scheduled Mr. Redwine, of the committee staff, would like to make some preliminary observations.

Mr. REDWINE. Mr. Chairman, I understand the testimony from these two witnesses this afternoon will be rather technical in nature. Mr. Broadgate, who is mineral consultant to Senator Murray, is much more conversant with the technical nature of manganese, the metallurgy of it than I am. I ask Mr. Broadgate to act as consultant in my place. I will be available.

Senator CHURCH. Mr. Redwine, I will miss your good services but I am glad to have Mr. Broadgate's assistance because certainly I am no specialist in this field. I will have to rely on Mr. Broadgate's exper

ience.

The first witness is Mr. John C. Udd. Mr. Udd, would you come forward?

STATEMENTS OF JOHN C. UDD, PRESIDENT, STRATEGIC MATERIALS CORP., AND ROBERT A. BLACKBURN, KOPPERS CO., INC., PITTSBURGH, PA.

Senator CHURCH. Let me welcome you to the committee and the appreciation of the committee to you for coming today. Mr. UDD. Thank you very much.

Senator CHURCH. Do you have a prepared text, Mr. Udd?
Mr. UDD. No, I do not.

Senator CHURCH. Feel free to proceed as you see fit.

Mr. UDD. Thank you.

express

Mr. Chairman, my understanding of the reason for being here is to explain something with respect to work that has been done by us and our organization in the nature of beneficiation of low-grade minerals

and ores.

First, I might give you a brief explanation of who we are.

Senator CHURCH. May I suggest for the purpose of the record that you identify yourself and your company and give any information that may establish your professional credentials.

Mr. UDD. Firstly, I happen to be president of Strategic Materials Corp., a New York State company created in 1951 by a group of industrialists in the concept and realization that the beneficiation of lowgrade minerals was a matter before us in the near future and in the objective to exploit and develop two basic methods in the processing of low-grade minerals.

The company in pursuance of that quest, acquired the two basic processes in ore beneficiation to which I will refer later, one of them being in the nature of reduction of minerals in a pyrometallurgical process and the other being in the nature of self-cycling leach process for the leaching out of certain soluble minerals.

Without getting into detail the company, during the years, designed and built a prototype production plant, a small production plant around the pyrometallurgical reduction process for the purpose primarily of determining first the technical phase and secondly the economics of the generation or development of ferromanganese from lowgrade manganiferous ores or low-grade manganese ores and further for the utilization of that plant for the same purpose in the treatment of chromite ores and in lateritic ores, offgrade ores of every nature that would lend themselves to pyrometallurgy, and in doing so as I state built this fairly large plant at the cost of some $2 million plus and spent in addition a considerable sum in processing ores from various locations.

Concurrently we acquire a research plant in Niagara Falls, N. Y., in order to carry out the analytical data associated with the general research work.

In the course of our operations, we had acquired a low-grade manganese deposit in New Brunswick, very similar in nature to that in Aroostook, Maine.

We acquired it because in the nature of carrying the process into development if it were successful we wanted an ore body around which to submit the process. That is only incidental to what I have to say here today, incidental because we have the ore from that source to carry through processing at our plant in Niagara Falls.

Now, I might get down to events of today and I am going to leave for the record descriptive information as to the company itself, its background, and the nature of the work we have done so that it is not necessary, I presume, to take your time on that.

Senator CHURCH. Do you have that information handy?
Mr. UDD. Yes.

First, there is a descriptive statement of the company.

By the way, that recites the personnel of the company as well. Secondly, there is a statement of the objectives process wise in typed form as of now.

Senator CHURCH. Rather than include this in the written record, we will accept this information for the committee files where it will be available for the committee if needed.

Mr. Udd, go ahead with your testimony.

Mr. UDD. To bring it up to date with as few words as necessary, our pyrometallurgical plant was completed a year ago in January, leaving a very short interval in which to carry out proof of the basic pyrometallurgical process reduction, direct and selective.

In that time we, of course, had the national problems that go with the development of a plant around a completely new concept which this happens to be.

We did get settled down in the development of the processing along in the spring of last year. Since that time we have carried out successfully, certainly from the technical aspect and quite definitely from the economic aspect, the application of the process for the production of ferromanganese ores dependent, of course, always upon the contaminants within the ore and the availability of power for the purpose since the process is developed around electric energy.

We ran some 2,000 tons of material and I repeat and emphasize that the plant is not a pilot plant in the ordinary sense but it is a small production plant and hence the evidence obtained is in the scale and numbers normally higher than that of the ordinary pilot plant.

We also ran the iron reduction phase, and of course there is a relationship between them, and developed and determined the ability to utilize offgrade iron ores for the direct production and, I might say which may surprise you, the direct production of mild steel rather than pig iron.

We can produce the pig or mild and can use the offmagnitoid ores of which we have much in the West and much in the Adirondacks and many sources on the continent primarily only useful as titanious

sources.

We can develop those ores for the purpose of iron and steel production for the iron content as well as the titanition although our approach has only been in respect to iron recovery as steel.