Mr. PRICE. We will supply that for the record.

(See AEC letter, dated March 20, 1957, pt. 1, p. 320.)

Representative HOLIFIELD. This brings up the question of the whole problem of the field of responsibility that will be on the Commission in the field of licensing, inspection, and regulating for industrial purposes.

I am just wondering how much of the time of the Commission is going to be taken in this field and how much diversion you are going to have from your primary role or mission which in my opinion is the production of this material and the development of weapons and the research and development, and of course for peaceful application.

As this art expands there is going to be need, it seems to me, for a tremendous number of people to discharge this expanding responsibility in the fields of industrial use.

Mr. FIELDS. There will be a requirement for expansion; yes, sir. I believe we wrote the Joint Committee on this subject a month or so ago, at some length, stating the Commission's views in that respect. Mr. PRICE. In these cases, Mr. Holifield, to round out the record, I ought to say that every one of these isotope users, before he gets a license gets a thorough evaluation, a prelicensing evaluation of his competence, of his procedures that he is going to use in handling the material, a determination that his equipment is adequate and then, of course, the regulations themselves impose stringent rules about exposure of personnel and control of radiation sources. Over the years as far as istotopes are concerned, I think it will have to be said that the record is good.

The isotopes have been distributed for about 10 years and there have been very, very few instances of the kind that we are talking about. The CHAIRMAN. We will take up raw material next.

We deferred that because Mr. Dempsey had some questions. That is No. III.

Mr. RAMEY. The testimony indicates that the uranium supply is no longer a limiting factor in either the civilian or atomic weapons program.

Does that mean that we have a surplus of ore or that we can foresee a surplus?

Mr. FIELDS. Mr. Chairman, I would like Mr. Johnson, the Director of Raw Materials Division, to answer the question.

The CHAIRMAN. Mr. Johnson.

Mr. JOHNSON. Mr. Chairman, in the interest of brevity and I hope clarity, I wonder if I might read the answers I have prepared and then expand as the committee might wish.

The CHAIRMAN. You may proceed.

Mr. JOHNSON. The Commission's contractual arrangements including the publicly announced domestic procurement program should enable it to limit its purchase of uranium to its established procurement goal.

Consequently, we do not anticipate a surplus. However, the Commission is in a position to expand substantially its uranium procurement if requirements are increased, or if a stockpiling program is undertaken.

Therefore, we should not be faced with a uranium shortage for our military or power programs as now established during the next 10

We are studying the advisability of a uranium concentrate stockpiling program. We would not favor stockpiling ore for longer periods. Domestic ore production and milling operations in any area should be in balance and to the extent practical and economic_we would like to see these operations planned for a period not less than that of the extended domestic procurement program.

We anticipate current ore stockpiles will be reduced within the next 2 or 3 years to normal mill inventories.

Present plans call for operating our facilities for the production of fissionable material at the highest practical feed rate through 1966.

If necessary, fissionable material production could be slightly in creased by feeding more uranium concentrate, but this would not be an economic procedure.

The question of stockpiling fissionable material involves a consider ation of our weapons program and we suggest that a discussion of this matter be reserved for executive session.

I might say by way of explanation that the last question on fission able material production is out of my field and this answer was pre pared in collaboration with the management in charge of fissionable material.

The other answers I have responsibility for..

The CHAIRMAN. Where does that place the small producing mines Mr. Johnson, since I understood from your statement that you d not believe it would be wise to stockpile the ore. What kind of posi tion would that put them in?

Mr. JOHNSON. We anticipate that there will be adequate mill facili ties to take care of scheduled ore production. That has been the aim throughout the program because, as you know, it has been ou objective to get the material that is in the ore into fissionable materia as rapidly as possible.

The only reason for building up stockpiles in the past has bee because of the time lag during the construction of a mill.

First, I might say this, that before facilities for ore buying or mil ing can be installed it is first necessary to discover the ore and the carry out development to determine whether the available ore justifie either of these facilities. Consequently, there always has been som lag between the availability of a local market for ore and the abilit of the miners to produce.

The CHAIRMAN. How many processing plants do you have at th present time?

Mr. JOHNSON. We have 12 mills in operation and the number wi be increased, as far as we can see now, to something like 24, or possibl

more.

The CHAIRMAN. How many of those are Government owned an how many privately owned?

Mr. JOHNSON. There is only one Government-owned plant and th is at Monticello, Utah, a plant built by the Government during th war period for the production of vanadium.

The CHAIRMAN. At what date do you think you will be able to tal all the uranium that is being produced?

Mr. JOHNSON. At the present time, there are only two areas in t West that are producing ore that have not adequate facilities f

handling all of the ore being produced. These are the Cameron, Ariz. area, and the Gas Hills Crooks area in Wyoming. The CHAIRMAN. That is two out of how many producers?

Mr. JOHNSON. I would say roughly 5 or 6 distinct processing areas. I would have to review that. But some of these areas, like the Uravan area in Colorado, Grand Junction, extend over quite a territory and there are a number of mills in that particular area.

But in the instance of Wyoming field, for example, the first discovery was made in about 1953. It was not until 1954 that there was evidence of much production and we established a buying station at Riverton, Wyo., without knowledge as to whether there would be enough ore for a mill, or not.

During 1955 development progressed rapidly and in 1956 it became evident that 1 or 2 mills would be built. We have since made 2 contracts for 2 milling operations, 1 for 400 tons a day, and 1 for 750. One of the mills will be completed in June or July of this year, the other one probably by the end of the year or early next year.

Now, our ore buying station at Riverton is about 40 miles from the major sources of ore. We established it there because it was on a railroad. If enough ore was not developed in the area for a mill, we could ship the ore at reasonable freight rate to another mill.

When it became evident that two mills were going into the area and production was increasing, we did not expand our ore-buying facilities at Riverton. We endeavored to furnish a limited market to all the producers and keep production down until facilities could be established at the mill sites and thus avoid the haulage of ore.

We have just started to buy ore at the site of one of the mills on a provisional basis. The sampling facilities are not yet completed. We are doing this to assist the producers in the area.

When the mill starts the mill operator will then take over the ore buying responsibilities.

In the Cameron area the problem has been twofold. One, the mill which went into operation during 1956 had some metallurgical problems; it did not operate at full capacity.

Another problem that is inherent in the Cameron area as well as in the Crooks Gap area is that the deposits in these areas are shallow; they are mined by open-pit methods, the surface, sand, and rock is stripped by bulldozers and scrapers.

When the ore is exposed, it is merely a matter of loading it into trucks and it is possible for a small deposit, say 5,000 tons, to be able to be mined at a daily rate of equivalent to a large underground mine in another area.

As a matter of fact, many of the miners do not even carry on stripping or mining operations, but contract it all. So that it will not be possible, it is not practical to permit every mine as soon as it is opened up to load the ore on the trucks as fast as possible and for a month or two and to pour the ore into a buying station or mill.

The CHAIRMAN. What is the chief objection to stockpiling the ore? Mr. JOHNSON. Stockpiled ore in the open is subject to erosion and wind losses. It cannot be used except after milling. It must eventually be milled near the stock pile site and it would be far better immediately to produce a semifinished product so that it would be available

for any refinery where it might be needed. It would not be necessary to maintain milling facilities in the stockpile areas indefinitely.

It would be, and I believe it has been, the practice of the national stockpiling program to only buy materials in a finished or semifinished form unless chrome ore or manganese ore that moves into the furnaces in the crude state.

The CHAIRMAN. That requires a whole lot less storage space after reduce it to usable material?

you

Mr. JOHNSON. That is correct.

Mr. VAN ZANDT. What about the concentrate? Does storage have any effect on it?

Mr. JOHNSON. No; the concentrate is in a form that is reasonably compact. It can be stored without difficulty. It is then in a condition to be converted either into the metal or salts, or any of the materials required in the atomic energy program.

Mr. VAN ZANDT. No deterioration at all?

Mr. JOHNSON. No deterioration; no, sir.

The CHAIRMAN. Did you give us the date as to when we can expect the processing plant to take all of the ore?

Mr. JOHNSON. I want to qualify that by the statement I just made, that I believe that the ore production in the area should be scheduled according to the mill capacity. For instance, let me give you an example:

Suppose in an individual area 350,000 tons of ore are discovered That is all the ore found. It is a shallow deposit.

Now, the most economical mill operation, certainly the largest size, would be about 200 tons a day. The mill would have a 5-year opera tion. It obviously would be uneconomic to put in a thousand-ton mill for a 1-year operation and then close it down. No private commercial business would operate that way.

The CHAIRMAN. That kind of policy, though, does limit the mine on its production of ore, does it not?

Mr. JOHNSON. But the miners themeselves would limit their produc tion if they were a partner in the milling operation.

If a small miner had found this 350,000 tons of ore, financed a mill he would not consider a thousand-ton mill. He would consider a mill of the size I mentioned, about a 200-ton mill and then he would mine his ore in relation to the mill requirements with only a normal mill inventory.

A stockpile of ore that is sitting on the ground, as I said, is subject to wind losses, erosion losses, and it ties up a large amount of capital A 350,000-ton ore stockpile would represent something on the order of $6 million. It is safe in the ground; it can be left in the ground until fed into the mill.

Now, we do have problems and we try to work them out. Where a small miner has a very limited quantity of ore, you can't spread, say, thousand tons over 5 years. You have to let him get it out in a matter of a few months. We have to meet those problems as best we can by handling the individual hardship cases as they arise.

The CHAIRMAN. This has been one of the brighter spots of this whole program. I hesitate to question your judgement on the matter of securing ore to carry out the program. I do think it is important that we keep these mines in operation and extend the buying of this pro gram, I think we have.

There has been some complaint, as you know, that we are not taking all the ore.

Mr. JOHNSON. I made a talk in Denver on the 9th of February last in which I outlined some of our problems and the need for a long-range solution. I anticipated that there might be some critical remarks on the part of the miners or the press, but up to the present time at least there have been very few and I have talked to the small miners as well as the large miners.

In view of the fact that Mr. Weller, in his testimony, which I think was very good, did refer to my Denver remarks, you might want to consider having this talk placed in the record.

The CHAIRMAN. Without objection, that will be placed in the record. (The information referred to follows:)

REMARKS PREPARED BY JESSE C. JOIINSON, DIRECTOR, DIVISION OF RAW MATERIALS, UNITED STATES ATOMIC ENERGY COMMISSION, FOR PRESENTATION AT THE NATIONAL WESTERN MINING CONFERENCE, DENVER, COLO., FEBRUARY 9, 1957

THE DOMESTIC URANIUM PROGRAM AS IT LOOKS TODAY

We now have reached the position where the uranium supply from existing contracts and from estimated increased domestic production will provide for the Commission's requirements as now established. We no longer are concerned over the possibility of a uranium shortage for the Government's military and power development programs as projected for the next 10 years.

Government requirements, of course, may change. They have been subject to many revisions during the last 9 years—always up. However, it is my opinion that the uranium industry should now study the potential commercial market and look to that market for its main support after 1966. Atomic power for industrial use may become an important market factor much sooner than generally expected.

American manufacturing companies already are prepared to contract for the construction of atomic powerplants designed to be competitive in high-cost power areas. At least one American mining company has received and seriously considered a detailed proposal for a fairly large atomic powerplant for one of its foreign operations. The estimate was reasonably competitive with that for a conventional powerplant considering the fact that the atomic plant would be built at the mine, thus saving transmission costs. However, lack of experience in the operation of a commercial atomic reactor is a serious handicap, especially for an industrial operation with only one source of power.

Once atomic power has been demonstrated to be practical and economic in a commercial operation, this new industry should be headed for rapid growth. Because of the characteristics of atomic energy, I have the impression that the plans for the commercial application of atomic energy, and estimates of operating performance, generally have been conservative, which they should be. For example, all AEC production reactors have given vastly better operating results and better economy than estimated at the time they were designed. The Nautilus has had more than 50,000 miles of cruising duty and the fuel elements have not yet been replaced. Originally, 10,000 miles were estimated as being a satisfactory minimum. Other reactors have also operated at power levels much higher than design specifications. If the performance of industrial power reactors follows this pattern, we may not be far from competitive atomic power.

I recall that only 9 years ago an atomic-powered submarine was only a dream. Many of the experts were skeptical about the success of the project. You have heard the story of the Nautilus. In my opinion the progress made during the past 2 or 3 years in the development of atomic power for industrial use has been equally remarkable. I am judging not by technical advances, for that is not my field, but by the large expenditures being made by governments and private industry for test plants, prototype plants and production plants; and by the fact that most of Europe is planning large atomic power programs on the basis of power costs that can be achieved with present technology. European countries already are considering substantial commitments for uranium.