words of encouragement from Congressman Dempsey, who told a meeting at Albuquerque in December, and I quote: I will insist that the AEC restate its objective and its program of uranium so producers of the United States can operate accordingly. The Atomic Energy Commission should immediately advise the producer what markets and what reimbursement they might expect. I want you to know that there will be a hearing in Washington on this subject and it will be gone into very, very thoroughly, and I am sure that the explorers, the people who are searching for uranium, will not suffer any great loss. I cannot make a promise for the Commission; I cannot make a promise for the Congress, but I do know they will want to see these people treated properly. With these words Congressman Dempsey gave us encouragement in a dark hour and we are grateful to New Mexico's delegation for the part they have had in making it possible for us to participate in your considerations of AEC's procurement policies. As we approach what lies ahead, we do so with confidence for there are many factors on our side. We are a young industry, composed in the main of young men with vision and persistence that is typical of the growth of American industry-Phillips Petroleum, the Atlas Corp., Kerr-McGee Oil Industries, Anaconda, and so on—are industrially diversified in a pattern set by sound and proven corporate philosophies. Accordingly, the small uranium producer will not overlook the values of diversification in contemplating the future. Personally, I take great pride in the interests I serve in the Rocky Mountain area and am pleased with the opportunity of appearing before this distinguished body. If I have brought you nothing more, I have brought sincerity and honesty. The course of this committee on the matter of AEC procurement policies will, I know, come as the result of calm and sober deliberation of the problems brought to you in these hearings. I only hope you will bear in mind that, in the Rocky Mountain area, where uranium has its deep grassroots, the waters are troubled. I would like to read to you one bit of evidence that will help you capture the mood of the industry and its spokesman. These are the first three paragraphs of an editorial appearing in the February issue of the Uranium magazine, an authoritative trade publication. This editorial is entitled "Starvation in the Midst of Plenty," and I quote: Some uranium producers have it good. They have contracts or dependable marketing arrangements for their ore and they couldn't be happier than they are. Then there are large numbers of producers and would-be producers who are bitterly unhappy and demand that the present intolerable conditions be changed. They complain that the market for their ore suddenly has disappeared. The simple truth and this is in italics is that the United States Government, as represented by the Atomic Energy Commission, has gone back on its word. The uranium industry is the victim of the most flagrant case of promise breaking since 1933 when the Government repudiated its history pledge of redeem its paper money with gold upon demand. These words are straws in the wind. In conclusion and by way of summary, I restate the four prime recommendations I bring to you this afternoon. One, that we have a curtailment of purchases of foreign ore. Two that the Government establish cash loan policies on proven ore reserves, as I have outlined earlier. Three, that there be established independent buying stations for groups of small producers based on blocked tonnage and not on guesswork. Four, that we of the uranium-producing industry be given at the earliest possible moment a full and complete clarification. of the AEC's policies on procurement. I thank you. Chairman DURHAM. Thank you very much for an excellent state ment. You say you did not have but 4 Congressmen, but you have 4 good ones. Mr. McMEEN. We figure they do the work of about forty. I would like to just take a moment of your time, Mr. Chairman, and I would like you to ask me questions about this loan policy, because that is very important to the small man, if you think that could possibly be a solution. Chairman DURHAM. I thought that nobody had spoken to that. I think, after all, we should be interested in it because the American investor has taken a chance and taken the Government out of the operation, which of course, we would all like to do, but after all, I think we have a responsibility to people who invest their money in private enterprise, especially when it is used entirely by the Federal Government, which it is. You cannot sell your product anywhere else in the world under the laws and regulations. You have no foreign market, and still we are creating a foreign market in competition with you. Mr. McMEEN. My plan as I propose here-let me go into it just a little bit further. I propose to leave the reserves in the ground. The reason for that is this: National security. If we take our reserves out of the ground, put them into 235 or yellow cake, then it is very easy to have that destroyed. It is very easy to destroy it. Now, if we leave the reserves in the ground and say you would loan a dollar a ton on a certain grade ore-I develop a million tons, you loan me a million dollars-then you can go ahead and develop more reserves. Ten years from now we will have mined 70 million tons according to the AEC, but we will still have 70 million in reserve for what lies ahead. We do not know what lies ahead. The way it is now, in 10 years we are out. Right now the small producer is out. But if we keep it in the ground, atomic bomb or hydrogen, nothing can destroy those reserves in the ground. We take our programs, we drill our ore, and then we mortgage that ore body to the Government. And the Government has a complete control of all the ore where they know, in case of an emergency, if they have to have a crash program, that they can get 200,000 tons from this deposit or 100,000 tons from this deposit. They have a complete record of all uranium in the country and it is in the ground where it cannot be destroyed. If we were to have an attack today and all of our industrial facilities were destroyed, we still have the knowledge. Now, if we have the key to the power, it would possibly be that it would be much cheaper to build one reactor that would supply a larger area than it would be to try to redo our electrical setup. Chairman DURHAM. That policy has been adopted in some of the thinking of the Interior Department through the years. Of course, it costs a large amount of money. That has been a policy for years. Mr. McMEEN. The main thing is that it would not cost the Government as much money as it would to refine it into yellow cake or 235. In other words, if they buy it from me, they pay me on ten-hundredths, $3 a ton. Whereas, if they loan me money on it, they lend me 50 cents or a dollar. Chairman DURHAM. Your theory there, of course, is the fact that there is a good deal more of it in the ground than we know about at the present time? Mr. McMEEN. My theory is that we will not have to spend as much money. My theory is that it will be in the ground and it will be on call at any time. Chairman DURHAM. You will know where to get it? Mr. McMEEN. Yes, sir, and it cannot be destroyed by any means known to man today if it is under the ground. Now, the other one that I propose there, the second, of course you are all familiar with the curtailment of the foreign purchases after the end of the current buying cycle that there be established independent buying stations for groups of small producers based on their blocked tonnage. If the Government would inspect or go over these ore bodies and say, well, you have 100,000 tons here, you have 100,000 tons, now your economical operation will be 200 tons a day or 500 tons a day, now we will set up an ore-buying station here and you two companies can ship to this ore-buying station at a certain rate, then we can establish our cost and our income to get our investment back. You see, nobody, except the promoter and the people that sold their properties have made any money out of uranium. It is all in the ground right now. We have been working 212 years to get this ore body in position to start shipping. I can start shipping 500 tons a day tomorrow, but I have maybe a 20-ton-a-day allotment, so I cannot operate and expect to get the return of my investment in less than 20 years. Chairman DURHAM. Somewhat like the farm program? Mr. McMEEN. Yes, sir. Mr. TOLL. Why is not a mill a better approach than a buying station, because, with a buying station, you have to stockpile the raw ore. In the mill you can stockpile the concentrate? Mr. McMEEN. What I had in mind was a simple mill operated by all of the independent producers that have blocked ore. The people that have gone and put their money in the raw earth, they are the people that deserve to get the depreciation on the mill. The people that have blocked reserves, we could get together and centrally we could have a mill, and then we could have a buying station close to our properties. Then all of it could be shipped to this 1 mill or maybe 2 mills or 3 mills. Chairman DURHAM. Would there be any way to find out the accurate amount of dollars that has been put into the uranium mining business by all companies as far as stockholders are concerned? Mr. McMEEN. You mean as far as the investments that have been made by the individual public of America? Chairman DURHAM. By the corporation such as you have. You have a corporation? Mr. McMEEN. Yes, sir. Chairman DURHAM. Is there any way we can find out how much you have invested in New Mexico? Mr. McMEEN. I think the best way that you gentleman could find out how many dollars have been invested in the actual forming of companies and the actual development of ore would be through the AEC. That is about the only place I know. They know how much money I have spent. They know how many holes I have drilled. Chairman DURHAM. I was not thinking they had that kind of information. Mr. McMEEN. You see, the AEC, prior to the latter part of last year, would come to your properties and log your holes and keep a complete record of your reserves. Now they do not even do that. They used to sort of half-way share the expense of it, but they quit last December, I believe; that is the last time I had a hole logged by the AEC. Chairman DURHAM. Are there any further questions? Chairman DURHAM. Thank you very much. I will place in the record the following documents: A statement submitted by Richard R. Spurrier, Santa Fe, N. Mex., on behalf of the Santa Fe Oil Co. A letter dated February 15, 1958, from Black Jack Corp., Santa Fe, N. Mex., enclosing a statement submitted by the Black Jack Corp. Á letter from the Wyoming Uranium Corp., addressed to Senator Albert Gore. A telegram dated February 24, from W. Rodney de Villiers, president, Rio de Oro Uranium Mines, Inc., Albuquerque, N. Mex. A letter dated February 20 from Green Mountain Uranium Corp., Douglas, Ariz. A letter dated February 18 from Minor, Mee & Co., Sante Fe, N. Mex. (The material referred to follows:) My name is Richard R. Spurrier. My residence is in Santa Fe, N. Mex. I am here representing Santa Fe Oil Co. My experience in uranium has been as a consulting engineer and geologist making evaluation reports. I have done a limited amount of prospecting, but have seen tens of prospects. I was, for nearly 9 years, State geologist and director of the Oil Conservation Commission of New Mexico. I resigned in 1954 to consult in uranium, oil, and gas. My attitude is that this committee is looking for constructive criticism of the Atomic Energy Commission and its methods of operating and policy. I believe that the Atomic Energy Commission made a very serious error in the October announcement by making the policy known out of a blue sky, without notice or hearing. As a suggestion to this committee, I recommend that the Atomic Energy Commission should be required by statute to give notice and allow hearing before making policy decisions of such far-reaching effect. The most unfortunate aspect of the October declaration was its effect upon the individual prospector and operator. He was, in many cases, forced out of business. The major companies with proven ore and mill contracts can weather the storm. I do not intend to pit the so-called little man against the mighty majors; rather, I aim to suggest to the committee methods of maintaining a healthy situation in exploration, financing, and production of uranium. For nearly 25 years the oil industry has been policed by State regulatory bodies, and the effect has been to (1) avoid Federal control, (2) give every oil producer an opportunity to produce and market his fair share, (3) avoid waste both above and underground. If the Atomic Energy Commission continues to negotiate every contract lower than the previous one, and give foreign producers a better price, none of the above can be accomplished. The Atomic Energy Commission now claims about 100 million tons of commercial uranium proven; this I doubt. This reserve is calculated to last beyond 10 years at the present rate of consumption. This is fine, but what will happen at the end of the 10- to 12-year period if there is no encouragement for exploration in the meantime? It is not my recommendation that existing contracts within the Nation be cut, rather that a system be employed to provide for milling and marketing new ore and thereby maintain the incentive to explore. BLACK JACK CORP., Santa Fe, N. Mex., February 15, 1958. Mr. JAMES T. RAMEY, Executive Director, Joint Committee on Atomic Energy, Congress of the United States, Washington, D. C. DEAR MR. RAMEY: I am enclosing a copy of the statement prepared by me for Black Jack Corp. which will be submitted by one of the witnesses in triplicate for the record during the 202 hearings February 24 and 25, 1958, to be held by the Joint Committee on Atomic Energy. I want to take this opportunity to thank you for your cooperation on behalf of the uranium industry. I cannot see how the picture of this industry can be changed any way but for the better. Sincerely yours, LYLE E. TEUTSCH, Jr., STATEMENT PREPARED BY BLACK JACK CORP. TO BE SUBMITTED DURING THE 202 HEARINGS OF THE JOINT COMMITTEE ON ATOMIC ENERGY Black Jack Corp., a Delaware corporation, was formed by the private subscription of $350,000 during September 1957. The corporation was the successful bidder on 15,436.14 acres of Indian lands at a Navaho alloted land sale. The total bonus bid on this acreage was $270,118.24, of which 25 percent was paid at the sale and the remaining 75 percent was to be paid 30 days after approval by the Bureau of Indian Affairs. This acreage is the sole asset of Black Jack Corp. and was acquired just prior to the speech on October 28, 1957, of Mr. Jesse C. Johnson, Director, Raw Materials Division of the Atomic Energy Commission. Under the terms of the Indian leases it is necessary to spend $10 per acre per year to explore for uranium, and if uranium in commercial grade is found, it must be diligently mined. However, under the policy stated by Mr. Johnson, there are to be no additional commitments on mill capacity, and therefore there would be no market for any ore found on the Indian allotted lands. It would be impossible to operate under the terms of the Indian leases in the light of Mr Johnson's statements. Black Jack Corp., therefore, requested and was granted an extension until March 5, 1958, for paying the $218,509.82 which represents the 75 percent balance due on the bid at the Navaho allotted land sale. The reason for the Department of Interior granting this extension was the hope that Congress would take such action to insure a market for Indian ores as they are developed. It is well known that the aim of the Department of Interior through the Indian Commissioner is to make the Indian a citizen of equal standing as soon as possible. This can only be accomplished by the development of their natural resources. It is the hope of Black Jack Corp. that a policy can be established which would insure the corporation the sale of any uranium discovered on Indian land over a period of 10 years. In other words, if the corporation through exploration and development defines a commercial grade ore body, it would be granted the right by the Atomic Energy Commission for milling capacity which would insure the mining of the ore discovered over a 10-year period. This milling |