In addition, the AEC has been asked to conduct a survey of the effect upon the domestic industry arising from its October decision and to report to the Joint Committee. This report should be submitted by March 15.

Thereafter, later in March or April, the Subcommittee on Raw Materials, of which I am chairman, will hold public hearings on the Commission's ore-procurement policies. After these hearings, our committee will study and evaluate all the information we receive, and consider possible courses of action to deal with the problem.

Two

As some of you may know, I have sponsored for the last 3 years a bill to provide additional Federal funds to accelerate our atomic power program. years ago, in 1956, my bill passed the United States Senate with a comfortable margin, but regrettably was defeated in the House, and by a very narrow margin at that. Last year, in the wake of the economy drive, my bill was not brought up in either House, but this year, I have introduced a new bill, S. 3000, to provide for nuclear-energy development in the amount of $1 billion. This bill would provide funds needed immediately for an expanding atomic-power program, and would also provide funds for research on a long-range program (nuclear propulsion through space) and a very long-range program (controlled thermonuclear power).

Since the rumor is going around that controlled thermonuclear power is just around the corner, I feel that I should say a few words about the fusion program, including the recent January 21, 1958, announcement.

The achievement of a controlled thermonuclear reaction, or releasing sustained energy from the fusion of the nuclei of hydrogen elements, is still far distant. The experiments in both Great Britain and the United States have not yet even reached the stage corresponding to December 2, 1942, when the first self-sustaining fission reaction took place. To create a corresponding self-sustaining hydrogen reaction would require an estimated temperature of 370,000,000° C., or 14 to 18 times the temperature in the interior of the sun. As indicated by the recent reports, British scientists have achieved at Harwell temperatures as high as 5,000,000° C. for about five one-thousandths of a second. The American scientists have reached temperatures of the hydrogen gas of as high as 6,000,000° C., but for shorter periods.

We have thus proceeded only a very short way along the road to achieve a controlled thermonuclear reaction. In my opinion, we have as a minimum the time it has taken us since the Fermi reactor of 1942 to go along this thermonuclear road. When we add to these considerations the fact that we have not yet reached a controlled thermonuclear reaction, and that (as we have learned in fission reactors) many, many years of further developments are needed thereafter, it is clear that we still have a long way to go. I believe we should proceed with vigorous research in this program, but I believe that the immediate need is for an expanding atomic-power program, based upon a sound uranium supply.

I have spoken often before as to the need for an accelerated atomic-power program, and therefore I shall say just a few words on this subject tonight. Last summer I traveled with other members of the Joint Committee on Atomic Energy to the opening meeting of the International Atomic Energy Agency in Vienna, Austria, and also visited various atomic energy facilities and laboratories in Western Europe. I visited Calder Hall in England, the Mol Laboratories in Belgium, and the Risoe Laboratory of Niels Bohr in Denmark. I saw a reactor constructed completely underground in Sweden, and I also spent 5 interesting days in Soviet Russia, where we inspected their much publicized 5,000 kilowatt reactor, and also their expanding nuclear research center at Dubna, north of Moscow.

In reflecting upon what I learned there, I believe we must be prepared to compete with the Soviets, and also with our British friends, in the development of nuclear power. Like the sputniks and the satellites, this is a scientific and difficult field which has caught the imagination of the peoples of the world, and the United States cannot afford to come in second or third best. I believe that we must make greater efforts than the AEC is now making. I think it is possible to help private industry, which now frankly admits that help is needed-and also provide for a program for construction of reactors by the Federal Government.

I do not underestimate the importance of adequate supplies of nuclear weapons material. But our hopes for the future are tied to the peaceful uses of this great source of energy.

Our supplies of conventional fuels, though comparatively abundant, are not inexhaustible, and known reserves are far from sufficient to meet prospective energy requirements. The world looks to uranium to fill the need.

We can and we must accelerate our efforts to develop the techniques and processes for the economical conversion of uranium into electric energy. When atomic power in commercial and industrial quantities becomes a reality-and it will become a reality-there will be an expanding market for your product. We are at the threshold of a new era, and you in the uranium industry have every right to look to the future with confidence.

APPENDIX 7

[Press release No. 132, March 17, 1958]

AEC REPORT ON URANIUM MINING AND MILLING PROBLEMS DELAYED 2 WEEKS From the offices of the Joint Committee on Atomic Energy

Senator Albert Gore, chairman of the Subcommittee on Raw Materials, announced today that delivery of the AEC report on problems of the uranium mining and milling industry, originally scheduled for March 15, 1958, had been delayed, at the request of the Atomic Energy Commission.

The AEC has informed the Joint Committee that it anticipates that the report will be submitted within the next 2 weeks, and that it will include the Commission's decision as to recommended action.

In announcing the delay, Senator Gore said:

"The Commission informed me that it has completed its survey of the problems of the uranium mining and milling industry, but it is in the process of reaching a decision as to recommended action. The Commission requested a postponement, and I consented, because I believe that the report will be much more valuable if it includes the Commission's views on what should be done rather than just a survey of the problems of the industry. I am urging the Commission to reach its decision promptly. The recommendation can then be reviewed by the Joint Committee, and appropriate action, including any necessary legislation, can then be undertaken promptly to correct the problems of the industry."

Senator Gore indicated that the report would be made public after received, and that the subcommittee would decide whether or not to hold further public hearings after it has reviewed the report and the recommended AEC action.

Hon. CARL T. DURHAM,

APPENDIX 8

UNITED STATES ATOMIC ENERGY COMMISSION,
Washington, D. C., April 2, 1958.

Chairman, Joint Committee on Atomic Energy,

Congress of the United States.

DEAR MR. DURHAM: As requested by the Subcommittee on Raw Materials, we are transmitting herewith a report by the Division of Raw Materials dated March 31, 1958, which outlines the problems arising from the limitation of domestic uranium procurement announced October 28, 1957.

After study of the report, the Commission has taken action which will expand to a limited extent domestic uranium procurement. This action will provide an additional market for ore reserves developed prior to November 1, 1957. It is anticipated that this expansion will result in additional procurement contracts for mill concentrate increasing milling capacity by about 3,000 tons of ore per day and increasing annual concentrate production by about 2,500 tons of U-308.

It is the view of the Commission that it is in the best interest of the Government and the uranium industry to prevent overexpansion of production facilities and that the new capacity provided through purchase contracts should be held to a minimum. Nevertheless, the action taken in implementation of our procurement goal should provide a market in the vast majority of the cases which have been brought to the attention of the Commission and the committee.

Although the opportunity for industry to make private sales of uranium to foreign industrial users appears limited at this time, the AEC has under active study the question of licensing such sales subject to appropriate safeguards to assure that the material sold would be used for peaceful purposes.

Sincerely yours,

LEWIS L. STRAUSS, Chairman.

APPENDIX 9

A REPORT ON THE DOMESTIC MINING AND MILLING PROBLEMS RESULTING FROM LIMITATION ON ADDITIONAL MILLING CAPACITY BY THE DIVISION OF RAW MaTERIALS, ATOMIC ENERGY COMMISSION

1. The Commission on October 28, 1957, announced a policy of limiting its contracts prior to 1962 for additional domestic uranium concentrate. Its Grand Junction Operations Office was instructed to negotiate no new contracts involving additional milling facilities.

2. This action was taken to keep the Commission's annual uranium purchases in reasonable balance with its currently estimated requirements. Recent rapid expansion of domestic production, and the prospects of continued rapid expansion under an unlimited procurement program, posed a threat of overproduction that in the end might have serious adverse effects on the uranium industry, as well as result in excessive purchases by the Commission.

3. A review of the background of the domestic uranium program will indicate the basis upon which the uranium industry was developed and the reasons for the problems resulting from the limitation announcement.

I. BACKGROUND

4. Private uranium exploration and development have been based largely upon the procedures followed for nearly 10 years under the Commission's domestic uranium program.

5. The objective of the Commission had been to purchase the uranium concentrate it requires from privately financed and operated mills. In addition to providing the Commission with the type of material required for its production chain, this procedure had the advantage of promoting the development of private uranium mining and milling along the established pattern of the mining industry.

6. Under the procedures followed during the period of uranium shortage, any area having developed sufficient commercial ore to support a milling operation was eligible for a concentrate contract. The prospective milling company had to negotiate a concentrate contract with the Atomic Energy Commission and had to provide reasonable evidence of being able to finance the mill construction and operation and carry out the terms of the contract. The independent miners were protected by provisions in the contracts requiring the milling companies to purchase a minimum quantity of custom ore, if offered, and to pay prices for ore not less favorable than those contained in the Commission's published ore buying circular. Because of discoveries after execution of contracts the mill capacity allocated to custom ore has in some cases proved inadequate, and in the past this situation was generally corrected by providing new mills or expansion of existing facilities.

7. It was largely on the basis of these procedures that prospectors, independent miners, and milling organizations engaged in prospecting, exploration, and mine development. Usually the major expenditures for development have been by the prospective milling companies because adequate ore reserves had to be available in order to finance the proposed milling operations and to qualify for an AEC contract. In most areas the prospectors and small miners were the pioneers making the initial discoveries. Many of them transferred their properties to mining or milling companies for cash or stock, or retained royalty rights or a working interest. Others developed and operated their mines and sold thier ore to the mills. Many, including some who as yet have no developed reserves, have continuing expenditures in order to hold their properties because of purchase or lease requirements, or the annual assessment work required under the United States mining laws.

II. SCOPE OF THE STUDY

8. Following the October 1957 announcement, the Grand Junction Operations Office was asked to study the effects of the limitation policy upon the uranium industry, with special reference to those who had spent money prior to the announcement for exploration, acquisition of property, development of ore reserves, mine preparation, or for metallurgical and engineering work in connection with proposed milling operations.

9. The survey concentrated on the areas and on the individual cases which have or may have ore marketing problems. All available information on ore reserves was taken into consideration. In addition, more than 150 individual mining properties were studied in detail to determine operating data. From this study minimum economic mining rates were calculated for individual properties. In the case of some of the smaller deposits, the minimum economic mining rate could exhaust the deposit in a year or two or even in less time. For some properties with large ore reserves, the minimum rate would result in an operating life well beyond 1966.

10. These estimates of ore production rates, taking into consideration the available market at mills now operating or under construction, were the basis of the estimates, by areas, the additional mill facilities required to provide a minimum economic market for presently developed ore reserves. No detailed studies were made of the mines in areas having no marketing problems although the areas as a whole were studied to determine the relationship between existing mill capacity and total ore reserves, and the possibility of future problems. 11. Industry has cooperated in supplying, on a business confidential basis, much of the basic data, such as drilling results and cost information. Much of the detailed information had been gathered earlier in connection with preliminary discussions on new milling proposals. Furthermore, the Grand Junction geological and mining staffs have maintained a continuing study of the various mining districts and most of the deposits since the initial discovery and development. Consequently, the Commission has reasonably complete information on the grade, and tonnage and mining characteristics of developed ore reserves. On the basis of this information we have estimated the rate of ore production required for an economic mining operation for the various types of deposits.

12. It should be emphasized that most of the approximately 700 mines now in operation, together with those being developed to supply mills under construction, are faced with no difficulties in marketing ore. In 1957, 3,676,000 tons of ore were mined and delivered to mills or buying stations. Mill requirements for 1958 are estimated at 5,500,000 tons of ore, and for 1959 at 7,200,000 tons. Thus the problems stemming from the limitation policy affect only a limited part of the domestic uranium industry, but for the areas and the individuals affected, the problems are serious.

13. In this study, the availability of mill capacity has been used in considering the market for ore. This is the type of market which has been provided in the past under the domestic uranium program. During the period of uranium shortage, the Commission established a number of ore buying stations to assist and speed up development of new areas. These stations usually offered only a limited market for ore pending construction of private mills and most of them now have been closed. At present, more than 95 percent of all ore produced is delivered directly to the private mills.

14. Government stockpiling of crude ore is an alternate method of providing a market for mine production. The purchase of crude ore, instead of concentrate, has the advantage of lower initial cost to the Government, but the final cost of the concentrate may be much higher. Eventually the ore will have to be milled to obtain a usable product and mills will have to be available or constructed near the stockpile sites because crude ore cannot stand high shipping costs. A considerable lead time might be required to convert the ore into concentrate. Stockpiles are subject to wind and erosion losses which are substantial, and for some ores soluble losses may be important.

III. DISCUSSION OF THE PROBLEMS

A. Current ore marketing problems

15. Most seriously affected by the limitation policy are the individuals and organizations who have developed or acquired ore reserves and now find that they do not have a market. If measured by the effort and money expended

prior to the announcement, this group probably would sustain by far the greater part of any losses which could be attributed to the limitation. Consequently, the study by the Grand Junction Operations Office was directed primarily toward determining the extent to which currently planned mill capacity would be inadequate to provide a reasonable market for developed ore.

16. This study shows that in certain uranium areas there are no mills, or that milling capacity at present is inadequate to provide an economic market for all mine operators having developed ore reserves; that in other areas existing mill capacity would be adequate if arrangements could be worked out for prorating mill capacity to the mining properties now producing or in position to produce; and that in some uranium areas there are no ore marketing problems and none are anticipated. A brief review of each of the individual areas is included in this appendix.

a. The areas listed below have either no market or an inadequate market to process presently developed ores at a minimum economic mining rate. These reserves include ores controlled by milling companies and by independent mine operators. Estimated minimum requirements for additional mill capacities to provide such a market are:

Based on the average grade of ore in the several districts, 3,300 tons of new mill capacity would produce an additional 5,300,000 pounds of U2O. per year. Presently authorized milling capacity taken in conjunction with proposed additional mills should provide a minimum market for the independent mine operators and for the mines controlled by the milling companies, provided all existing mines are given a proportion of the market.

b. Six areas have adequate milling capacity in relation to total developed ore reserves, but the portion available for ore from independent miners is or may be insufficient because the ore reserves controlled by independent miners have been increased since the milling contracts were negotiated.

These areas are:

(a) White Canyon-Monument Valley, Utah-Arizona.

(b) Eastern Wyoming-Black Hills, South Dakota.

(c) Salt Lake City, Utah (area tributary to the Salt Lake City mill).

(d) Moab (Big Indian Wash), Utah.

(e) Grants, N. Mex.

(f) Spokane, Wash.

In the case of these areas a reasonable market for all mines with developed ore reserves might be provided without additional mill construction. The problem is one of making equitable provision for production from the various mines. If adequate provision cannot be made, some additional capacity may be required. c. The following areas have an adequate market for ore produced from the known mines:

(a) Uraven mineral belt, Colorado.
(b) Cameron district, Arizona.

(c) Shiprock district, New Mexico.

(d) Lakeview, Oreg.

(e) Baggs-Maybell, Wyo-Colo.

d. In addition to those listed above, there are several areas in which uranium occurrences have been discovered but which do not have sufficient ore reserves to support an economic milling operation. For example, the known deposits in California are generally small and widely scattered. Total reserves, particularly those which might be economic to mine, contain but a small fraction of the quantity needed for even a 5-year milling operation. At present, there is no basis for predicting that sufficient commercial ore could be developed to support an economic milling operation. It may pay the miner to ship selected higher grade ore from some of the deposits to one of the existing mills.