statement of Utah Mining Association to Interior Subcommittee on Minerals and Fuels (Senate), October 21, 1953. "One Utah mine reopened during World War II and recently producing 6,000 tons of lead and 4,000 tons of zinc per year, was asked to estimate the time and cost factors involved in reopening the mine during some possible future emergency. After first making the point that if the mine were now forced to close and the operating plant liquidated they could foresee no economic justification for reopening it. "They estimated 41⁄2 years for dewatering, rehabilitating shafts, etc., and equipment installation before any product would materialize, and 61⁄2 years before normal production could be attained. "The cost during the 42-year period is estimated at $2,575,000. Continuing economics (of reopening) would depend on grade and tonnage of ore and price of metals."-From statement of Miles P. Romney, manager, Utah Mining Association, Salt Lake City, Utah, to the U.S. Tariff Commission lead-zinc hearings, November 3-5, 1953. It was good to see you, even though briefly, in Washington. Very truly yours, MILES P. ROMNEY, Manager. Mr. EDMONDSON. Now, it would be interesting to know whether these have come back into operation in 1962 or 1963, whether they were all operating Mr. ROMNEY. These would include all shipments from all portions of the supplying areas-these are not Utah mines, of course, but they would reflect all shipments received. Mr. EDMONDSON. There are other participants as well as Utah. Mr. ROMNEY. Yes, that is right, and the eligibility could be made applicable to the other areas. Mr. EDMONDSON. In your figures given on page 4 on the allowable cost deductions and the overall losses suffered in 1961-are these seven mines operating under a gross production tax or any tax, ad valorem tax or income tax? Mr. ROMNEY. They are taxed on what they call a net proceeds tax and of these two factors, the gross income is reported by each mine and then the allowable cost deductions are reported by each mine and where these are less than the gross income, which has usually been the case in recent years, then the resulting figure is called net proceeds and that is the base to determine the tax evaluation. Mr. EDMONDSON. Do I get the inference that these mines paid no taxes? Mr. ROMNEY. Actually this is an overall figure and some mines would have some amount of net proceeds. The total amount of net proceeds in the State of Utah was $544,000 and this amount was taxable. In other words, if a mine had more cost deductions than it had gross income it paid no property tax on the production. However, its land and its improvements and equipment were taxed as are other classes of property by the State. Mr. EDMONDSON. But from the Federal tax standpoint, were most of them not paying any taxes? Mr. ROMNEY. I would doubt that more than one or two paid any Federal income tax. Let me make one further explanation. In the case of one of the major properties, the company owned other types of producing properties and therefore it would be impossible to determine whether or not that Utah mine that they owned was subject to any income tax, but from looking at their reports to the State tax commission I would say it is highly improbable. Mr. EDMONDSON. In other words, we are having a loss of tax revenue? Mr. ROMNEY. No question about that. And it represents a very substantial loss. In fact, the net proceeds in Utah have dropped the last 10 years from a figure of $25 million down to, last year, a little over $500,000. Mr. EDMONDSON. And would it be a fair assumption that there would be a decline in the Federal taxes on a par with that decline? Mr. ROMNEY. Yes, and it should be greater because the minesMr. EDMONDSON. And of course the loss in the income tax paid by the employees of the mine, when the employment in the mines is only a fraction of what it was. Mr. ROMNEY. Well, it was 40 percent of what it was 10 years ago. Mr. DUNCAN. Would the gentleman yield? Mr. EDMONDSON. Yes. Mr. DUNCAN. Just to clear this up. Do I understand that the company you represent lost money on their lead and zinc operations over the last 3 years? Mr. ROMNEY. Well, over the last 4 years it has the cost of operation has exceeded the gross income. Mr. DUNCAN. This is in Utah? Mr. ROMNEY. Utah, yes. Mr. DUNCAN. Does that take into consideration the depletion allowance? Mr. ROMNEY. There is no depletion allowance consideration and the cost deductions exclude such things as any Federal taxes or interest or insurance or items of that kind, they are not deductible in determining this figure. Mr. EDMONDSON. Any further questions? Mr. BURTON. Mr. Chairman, no questions, but I know that I speak for all of us on this committee when I say that these gentlemen have made a very interesting and helpful presentation and I want to express gratitude to you for holding these hearings, Mr. Chairman, which have supplied so much information for our record on a problem which I think is very vital and important. Mr. EDMONDSON. I wish to thank you gentlemen. I think that the chairman of the full committee deserves most of the credit but I certainly have been willing to cooperate with him in it. Now, may I ask if there is any representative of the State Department here? (No response.) Mr. EDMONDSON. If there are no representatives of the State Department present here at this time, I certainly want to thank you for appearing and to congratulate you upon the time and the effort you have given to this presentation. I think that you have made a very strong case as to the inadequacy of the present policy. We do want to help maintain a strong domestic mining industry and a strong domestic milling and smelting industry in the United States and I certainly will press every effort that I can bend to see that we do get some improvement in our policies in that direction. Mr. Wilson, I want to thank you in particular for the documentation that you have given us and you, Mr. Schwab, for your part in this effort and I want to wholeheartedly thank all of you gentlemen who have appeared before us today. I think it is fair to say that your industry has made the best and most bona fide effort to supply the Government with the evidence and the information that is most important in determining whether or not our import policies are injurious to our domestic industry. So again I thank you gentlemen. Mr. WHITE. I just want to join in commending you for your presentation. Mr. WILSON. Mr. Chairman, I would like to say that we do appreciate the interest of yourself and your committee in our problems; we genuinely appreciate that. Mr. EDMONDSON. Thank you very much. We will adjourn until 9:45 in the morning. (Whereupon, at 5:05 p.m., the subcommittee adjourned, to reconvene tomorrow, Friday, June 14, 1963, at 9:45 a.m.) LEAD-ZINC FRIDAY, JUNE 14, 1963 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON MINES AND MINING, COMMITTEE ON INTERIOR AND INSULAR AFFAIRS, Washington, D.C. The subcommittee met, pursuant to adjournment, at 9:45 a.m., in room 1324, Longworth Building, Hon. Ed Edmondson (subcommittee chairman) presiding. Mr. EDMONDSON. The Subcommittee on Mines and Mining will come to order. While we are waiting for the arrival of our first witness, I have a number of letters and telegrams which have been received that should be made part of the record following the exhibits that were put into the record at the conclusion of the hearing yesterday. I have a letter from Mr. Frank P. Knight, director of the Department of Mineral Resources of the State of Arizona, addressed to Chairman Aspinall of the full committee, dated June 11, 1963. If there is no objection, that letter will be made a part of the record at this point. I have a telegram from C. G. Rice, president of the United States Smelting, Refining & Mining Co., addressed to Chairman Aspinall of the full committee. Without objection, that will be made a part of the record at this point. I have a telegram from the United Park City Mines Co., addressed to Congressman Edmondson. If there is no objection, that will be made a part of the record at this point. I have a telegram from Benton Boyd, vice president and general manager of western operations of the United States Smelting, Refining & Mining Co., addressed to Congressman Edmondson, which, if there is no objection, will be made a part of the record at this point. I have a letter from Mr. D. R. Carter, vice president of the EaglePicher Co., addressed to Congressman Edmondson, which, if there is no objection, will be made a part of the record at this point. I have a letter from Mr. William F. Darmitzel, executive director of the New Mexico Mining Association, dated June 6, 1963, addressed to Congressman Edmondson, which will be made a part of the record at this point if there is no objection. I have a letter from Mr. T. J. Watkins, chairman of the Citizens Committee for Stabilization Lead-Zinc Industry, Flat River, Mo., dated June 7, 1963, addressed to Congressman Edmondson, which, if there is no objection, will be made a part of the record at this point. I have a letter from Senator Frank E. Moss of Utah, dated June 12, 1963, addressed to Congressman Edmondson, which, if there is no objection, will be made a part of the record at this point. Mr. WHITE. Mr. Chairman, reserving the right to object, are all these communications in favor of the legislation? Mr. EDMONDSON. All of them are in favor of the legislation or expressing concern about the condition of the industry and expressing the thought that there needs to be action taken to assist the industry at this time. Mr. WHITE. I withdraw my objection, Mr. Chairman. (The letters and telegrams above referred to follow :) Hon. WAYNE N. ASPINALL, STATE OF ARIZONA, DEPARTMENT OF MINERAL RESOURCES, Phoenix, Ariz., June 11, 1963. Chairman, House Committee on Interior and Insular Affairs, DEAR CONGRESSMAN ASPINALL: The situation of the domestic lead and zinc mines and miners and the need of relief from damaging low cost imports of these metals, have been well presented at Washington many times by the emergency lead-zinc committee and others. Your flexible import quota bill, H.R. 6269, and Congressman Edmondson's H.R. 6371 evidence your and his knowl edge of the situation and need of relief of a long-term nature. The emergency lead and zinc committee will again appear before your Subcommittee on Mines and Mining during the hearings on June 13 and 14. The Arizona lead-zinc industry is generally in accord with its voiced opinions. Therefore, this letter will not burden you with repetition of many arguments the emergency lead and zinc committee will present more ably, but will limit itself to the Arizona situation. Without the quotas established in 1958 the Arizona lead-zinc industry would be insignificant. As it is, it is dwindling and depressed. The Lead-Zinc Small Producers Stabilization Act of October 3, 1961, has to date benefited one small, intermittent producer and therefore has been of prac tically no help in Arizona The increase in silver price has stimulated some interest in silver-lead mines in this State, but has resulted in no new producing mines of any consequence. It has of course helped present producers of ores containing silver. Neither the silver price nor the recent helpful but small increases in the price of lead are enough to offset the downtrend of Arizona production of lead-zinc. One of our larger zinc producers closed operations this year. The downtrend of Arizona production is illustrated by the following tabulation: The pickup in 1960-62 zinc production is due to the return to production of two copper-zinc mines, a return influenced by the copper rather than the zinc in the ores. We now have only 4 lead-zinc mines of much consequence. Eight others are small, intermittent producers. Most of the lead and zinc comes from underground mines where deterioration following_shutdown is extraordinary. Shutdowns further deplete our skilled miners. Resumption of mining is costly and time consuming, the amount depending upon the time down. There is no question but that national security has been impaired by the closure of the many lead-zinc mines. Here in Arizona, further closures appear |