COMMENTS OF EMERGENCY LEAD-ZINC COMMITTEE ON LEAD-ZINC STATISTICS

1. From 1951 through 1957, U.S. industrial consumption of lead and zinc was fairly constant at about 1,100,000 and 1,300,000 tons per year, respectively. During this period, prior to the imposition of quotas in October 1958, the ratio of dutiable lead imports (eliminating duty-free imports for stockpile) to U.S. mine production increased from 49 percent in 1951 to 210 percent in 1958; in the case of zinc, imports increased from 42 to 166 percent.

2. During this same period, imports of lead increased from 192,000 tons a year to 560,000 tons a year (1958); zinc imports from 286,000 tons a year to 687,000 tons a year (882,000 tons in 1957). U.S. mine production has stayed fairly constant during periods of reasonable prices but has been severely curtailed since the excessive imports of 1957.

3. Varying U.S. market prices since 1950 have had very minor, if any, effect on U.S. industrial consumption of lead and zinc.

4. Unneeded imports caused U.S. supply of lead and zinc to greatly exceed industrial requirements. Before barter stopped, in 1957, large amounts of these excessive imports were absorbed by governmental acquisitions.

5. Unneeded imports continued after barter stopped and forced the price of lead to decline from 16 cents in early 1957 to 11 cents in July 1958—a drop of 30 percent. Zinc dropped from 132 cents in April 1957 to 10 cents in August 1957-a decline of 26 percent.

6. A sharp decline in U.S. mine production occurred in the second half of 1957 and early 1958. The annual rate was lower than the depression years of the mid-1930's and has continued at levels below the early 1950's.

7. Employment, in the lead-zinc mining industry by 1961 was 38 percent of the 1952 figure. The total loss of employment by 1961 within this industry since January 1952 was well over 15,000 jobs.

8. U.S. prices improved in 1955 and 1956 under the alternative programs initiated by the President (in lieu of accepting the Commission's recommendations), but employment did not return to the early 1952 level.

9. During Korea, U.S. prices of lead and zinc were frozen by the Government. Import duties were suspended subject to reinstatement if the U.S. price would fall below 18 cents for each metal, which happened early in 1952.

10. Import quotas were established under Executive Order 10401 on October 1, 1958, permitting imports at 80 percent of the base period 1953-57 (Tariff Commission recommendation was 50 percent and increased tariffs). These have proven to be too liberal compared to U.S. needs.

11. Lead mine production has decreased annually since 1956, and in 1962 was 237,386 tons, the lowest output reported since 1900. In 1962 zinc mine production of 505,648 tons was slightly higher than 1958 through 1961, but these 4 years were lower than prior years back to the early 1930's.

12. Stocks of lead and zinc were excessively high at the close of 1962. Zinc stocks were continuing to build in 1962. Lead stocks were reduced as primary lead production was affected by low prices and a lead mine strike.

13. Import levels were controlled by quotas, but lead imports in 1962 were 340,191 tons, or 144 percent of U.S. mine production; zinc imports were 510,121 tons, or 101 percent of mine production.

14. The result of continued excessive imports since 1958 with an accumulation of excessive stocks was low mine production and poor metal prices. When quotas became effective, these prices were 11.5 cent-lead and 10 cent-zinc. Prices during 1962 averaged 9.6 cent-lead and 11.5 cent-zinc-too low to maintain a domestic mining industry. Lead dropped to 9.5 cents in February 1962, the lowest level since price controls of World War II.

15. 1962 zinc production curtailments by domestic producers helped reverse the trend of building excessive stocks; however, levels of stocks again increased during the year. At meetings of the international lead-zine study group the importing nations adopted a policy that zinc is surplus only in the United States, and it is our problem to solve alone. They agreed that the lead surplus was an international problem but looked to the United States for a world solution through barter of approximately 106,000 tons of these foreign stocks; 33,050 tons were acquired for the stockpile during 1961, and 77,971 tons during 1962. While this was being acquired by State Department direction, in opposition to industry opinion, the Congressional Stockpile Investigating Committee was declaring it "surplus."

16. A healthy stable domestic industry should produce an annual minimum of 350,000 tons of lead and 550,000 tons of zinc at a price fair to producer and

consumer.

Mr. EDMONDSON. Our next witness is the vice president of the St. Joseph Lead Co., of New York City, Charles R. Ince.

Mr. Ince?

STATEMENT OF CHARLES R. INCE, VICE PRESIDENT, ST. JOSEPH LEAD CO.

Mr. INCE. Mr. Chairman and members of the committee, while there have been reassuring and even glowing reports (Hearings Before the Committee on Interior and Insular Affairs, House of Representatives, p. 245, McCaskill; also statement by John M. Kelly, Assistant Secretary of Interior for Mineral Resources, before Subcommittee on Minerals, Materials, and Fuels of the Senate Interior and Insular Affairs Committee, May 9, 1963), these have been more generalizations than specifics and, in the case of lead, contrary to the conclusions that can be drawn from the statistics. Although there have been three rises in the price of lead since November of last year-from 9.50 cents per pound to 10.75 cents, the most recent one within the past month-the fact remains that the domestic lead situation is far from a healthy one. The strengthening in the domestic market in the last year and a half has been primarily due to the 8 months' strike at the mines of St. Joseph Lead Co. which resulted in a loss of nearly 10,000 tons a month of domestic lead production and was only settled at the beginning of this quarter.

It is too early to say what the situation will be when the full impact of the renewed production hits the market. We hope we will be able to sustain the slight improvement the market has experienced as the 9.50-cent base from which we started was the lowest point since the period of World War II, and even the current 10.75-cent price is about the level which prevailed just prior to the imposition of quotas by the previous administration in an effort to protect and sustain a minimum mobilization base in the industry. Even the improvement in the market abroad has been due primarily to artificial factors in that some 50,000 tons were taken off the market last year in a barter deal by our Government in consideration of a reduction in production by the participating countries. These countries now are operating without restraint, and their current output is the highest since 1958 when quotas were imposed.

Lead is not a dying industry. As a matter of interest, its use is expanding yearly, not only in this country, but abroad, aided by the efforts of our International Lead-Zinc Research Organization, which is industry sponsored, but the fact remains that the expansion in use has not kept pace with the increase in production, and periodically we are confronted with the absorption of this excess supply.

Admittedly, the current balance between supply and demand in this country is not too bad, as evidenced by the recent one-quarter cent increase in price. Consumption is running about 6 percent higher than last year, and since St. Joseph Lead Co., the largest lead producer, has not fully recovered from the effects of its strike, the current pic

ture is not as serious as it was during most of last year when the price was 9.50 cents per pound.

These temporary situations have occurred before, but inevitably we come back to the question of how best to control the unneeded imports when more metal is being produced in the free world than is being consumed. The domestic mines today are providing only 60 percent of the requirements for primary metal due to the increase in imports from abroad, whereas prior to World War II these mines were the source of 85 to 90 percent of refined primary lead production in the United States, and as late as 10 years ago, were furnishing over 80 percent. During these years there have been cycles of good and poor lead consumption, but throughout it all, one fact remains, and that is that the position of the domestic lead miner has steadily deteriorated.

As the U.S. lead price plunged to 9.5 cents, the London Metal Exchange (LME) continued the decline which had been in progress since mid-1960. I doubt that any one would have forseen that this LME price would break through 50 pounds or about 6.25 cents in the world market, but it happened in the late summer of 1962, and despite the strike at the largest lead mine in the United States, low-priced imports put pressure on the U.S. market.

Noteworthy, it was not until LME began to recover that the U.S. prices improved. This is another of the cycles that plague the industry. We have long since learned by bitter experience that each of the downswings takes its toll of domestic operations which are forced out of business.

Mr. EDMONDSON. Thank you, Mr. Ince, for a very fine statement. We will have some questions for you in a few minutes.

The next witness is vice president of the New Jersey Zinc Co., of New York City, Mr. Lindsay F. Johnson. We are pleased to welcome you before the committee, Mr. Johnson.

STATEMENT OF LINDSAY F. JOHNSON, VICE PRESIDENT, THE NEW JERSEY ZINC CO., NEW YORK, N.Y.

Mr. L. F. JOHNSON. Mr. Chairman and members of the committee, I am much obliged for the opportunity to appear today before this distinguished committee, thus becoming one more of a long line of representatives of the lead-zinc mining industry who have come before this and numerous Government councils over the past several years.

The purpose of their repeated representations has been to explain the plight into which the U.S. lead-zinc mining industry has been depressed by excessive and low-priced imports to instill an understanding of the serious effect of this on the current and long-range development within our own borders of these natural resources so vital to our economy, to urge recognition not only of the need to arrest further deterioration of this mining industry, but also the necessity for a constructive policy to encourage continued development and finally to persuade, or if I may say so, to implore the Government to take the action that will accomplish these things.

If one can judge by the results of our efforts to this point, they have been unsuccessful. We believe our explanations have been

thorough and factual but in some important quarters we seem to have failed to instill an understanding of the seriousness of the industry's situation.

In fact, from these same quarters we are told, much to our surprise, that our industry is doing well, and the statement is supported by cold tonnage statistics. To imply at this time that the U.S. lead-zinc mining industry is doing well or has any chance of doing well denotes a complete lack of understanding or a regrettable lack of concern. Neither of these is excusable on the part of anyone who has responsibility for stewardship of our natural resources. But that, gentlemen, is the atmosphere in which today we labor, and it is wholly apparent to us that the only place we find a sympathetic understanding of this problem, which goes beyond the personal or corporate interests of any of us, is here in the Congress and we are certainly grateful for that.

In all cases of appearance in this matter, representatives of the leadzinc mining industry have not only stated the conditions that have been brought about by lack of action, but have forecast the course of events that will lead to further deterioration of the industry in the face of continued apathy about our need as a nation for a strong industry that will keep us free of dependence on others for metals that we need. Unfortunately, these forecasts have gone unheeded.

Among those who have appeared in the past have been other representatives of my company, and they have forecast the course of events that are bound to come in the absence of a constructive policy. Perhaps rather than dealing with the general state of the lead-zinc mining industry and the measure of relief proposed, both of which have been well-covered by my colleagues, I can better add to the record of this hearing by recounting to you some events that have occurred related specifically to my company, which for more than a century has been one of the leading zinc miners not only in the United States but in the world.

Before doing so, permit me to state that business decisions, as you all well know, cannot be made on the basis of sentiment or concern for the national interest or the welfare of an industry. They must be made on the basis of facts and cold analysis of potential and possibilities. What is important is that the business decisions we have made have been made in the face of the facts as we see them. The lack of action by the stewards of the national interest is what has created these facts.

The events I will mention all have transpired since the unwarranted influx of lead and zinc wrecked our market.

The first business decision to which we were forced was the shutting down of one of our large zinc mines in Tennessee. This was not an old and wornout mine but a new one operated with the most modern mechanized methods. But we found we were trading dollars. This shutdown deprived several hundred men of work, and a resource lies idle as well as the money invested in it.

Later came the shutdown of a long-established zinc mine in New Mexico, again idling a natural resource and depriving longtime employees of work.

For some time we have planned development of a zinc mine in Wisconsin; in fact, we were well along the way with development