Chairman DURHAM. Can other mines operate on that basis?

Mr. BRODIE. Some few farsighted, able and fortunate people who have this particular type of ore that treats on an optimum basis at a minimum cost have long-term contracts of various types. But certainly no one in the Front Range has any kind of contract.

We have developed these mines in the thought that uranium was important. We were told it was important, and we have gone all out. Chairman DURHAM. When was it first discovered?

Mr. BRODIE. In the Front Range?

Chairman DURHAM. Yes.

Mr. BRODIE. The first discovery was made by that remarkable man, Fred Schwartzwalder, from whom we bought the mine. He first discovered it in 1949 and I think it took him about 4 years to find out that he had a mine in 1953 and we purchased the property from him in 1955.

Chairman DURHAM. Thank you very much, Mr. Brodie.

Mr. BRODIE. Yes, sir.

Chairman DURHAM. I have a telegram to the chairman of the Joint Committee from Eliot H. Goldstein. I also have a statement here by Mr. Max W. Bowen, which was offered for the record. Without objection they will both be placed in the record.

(The telegram referred to follows:)

I am an independent uranium producer in the Colorado Front Range. We have been selling our ore to Vitro Uranium Co. in Salt Lake City, but in September 1957 we were told by Vitro they could no longer buy our ore. We searched frantically for 3 months for a market and finally found one with Union Carbide at Rifle, Colo.

At present we are selling to them. I am convinced that there is not enough protection for the independent uranium miner if his only market is the private mill. By simply refusing to buy our ore the mill can force us out of busi

ness.

If this is one with enough independent miners a monopoly is sure to develop and only those companies who have mills will be mining ore. The mills are in existence only by virtue of Government contract and yet they have the power of life and death over the independent miner.

If more details are desired by the committee, please refer to my correspondence file with Senator John Carroll. Please make this communication a part of the hearing record. I will appreciate an opportunity to testify before the committee during the April hearings.

(The statement referred to is as follows:)

ELIOT H. GOLDSTEIN.

STATEMENT OF MAX W. BOWEN, REPRESENTING GOLDEN CYCLE CORP., COLORADO SPRINGS, COLO.

Chairman Durham and members of the Joint Committee, may I express my appreciation to you for the privilege of making a few comments upon the problems confronting the producers of uranium ore under the confusing circumstances that exist today.

I will preface my remarks by stating that it is my firm conviction that the Atomic Energy Commission has administered the Atomic Energy Act most admirably and fairly to both the large and small operator.

It is not my intent to find fault nor to criticize either the AEC or the oreprocessing mills, for their record of accomplishments during the few years they have been operating in the raw materials procurement program through the "yellow cake" stage, speaks irrefutably of the success of the program and its administration.

The preceding witnesses have discussed amply the matters of policy, foreign and domestic commitments, lack of sufficient milling capacity, suggested solutions some workable and some decidedly unworkable-consequently I will

refrain from repetitive arguments and confine my statements to a few examples and facts.

The impact of the detrimental effect upon the uranium industry caused by the recent change in the uranium concentrate purchase program, which reflects back upon the ore-purchase program, has affected very seriously the economy of several uranium-producing areas together with the financial predicament in which several of the former prosperous mining companies find themselves today as a result of this change in policy.

I would like to cite the example of our company merely because I have all the facts pertaining to its operation, hence can speak authoritatively about it. However, many other companies have suffered identically with our company as a result of the curtailment policy. The Golden Cycle Corp. that I represent, whose main office is in Colorado Springs, Colo., has been successful in the gold mining and milling business for over 60 years, and I have been with the corporation for the last 30 years.

The corporation has operated gold mines in the Cripple Creek District in Colorado; lead and zinc mines in Colorado; a coal mine near Colorado Springs for over 40 years; mills in Colorado Springs and Cripple Creek District for treatment of gold and silver ores, which also treated a large tonnage of base metal ore during World War II; operated the Midland Terminal Railroad between Colorado Springs and Cripple Creek, Colo., for over 35 years; operated sand and gravel pits and rock quarries for many years.

Golden Cycle Corp., obtained an AEC lease on land at Atkinson Mesa near Uravan, Colo., in 1953 and sank the first deep shaft in the Colorado Plateau area to mine uranium ore at a depth of over 600 feet and has produced over 2 million pounds of U-308 during the past 5 years.

The corporation has engaged in numerous exploration projects and expended considerable money in its search for commercial uranium-ore deposits. In July 1957 the Golden Cycle Corp. helped to form a subsidiary corporation, Giant Cycle Corp., in which it had a 50-percent stock interest and 100-percent management interest.

Giant Cycle Corp. has been very active in the exploration and development of a number of properties in the Edgemont, S. Dak., area. This work resulted in the production of 5,000 tons of ore for each month, October and November, and 6,000 tons in December of 1957, which added greatly to the economy of this area.

On January 14, 1958, a telegram was received by Giant Cycle Corp. from the Mines Development Co.-owner and operator of the uranium-ore processing mill located at Edgemont, S. Dak.-advising us to stop all ore shipments to the mill until further notice. We were advised by the mill that as a result of a discussion of a proposed quota-restrictive plan, there was a great increase in shipments of ore to the mill in early January, with which the mill was unable to cope.

Giant Cycle was forced by this action to drastically curtail its exploration, development, and production due to the uncertainty caused by the action of the mill. The Mines Development office called our Edgemont office the latter part of January and gave us permission to ship an additional 200 tons for the remainder of the month.

On February 3, 1958, we were advised that we could ship at the rate of 500 tons per week until further notice and more recently our monthly quota has been set at 2,350 tons of the same grade of ore we shipped during October, November and December during which months we shipped 5,000, 5,000, and 6,000 tons, respectively.

This sudden and abrupt curtailment of our production as well as that of every other mining company or individual shipper that had been shipping to this particular mill, resulted in grave consequences, not only to the mining companies, their employees and families but likewise caused a mild hysteria among the business establishments, supply and machinery distributors and the service companies in the Edgemont area and also in eastern Wyoming.

This curtailment affected each and every one of the other 60 shippers in these areas. Giant Cycle's labor force was reduced overnight by 65 percent, as occurred likewise in other operations in the area. This reduction in employment was almost identical with that in the Gas Hill's area as stated yesterday by Governor Simpson and Senator Barrett, from Wyoming.

Giant Cycle Corp. spent a sizable amount of money in exploratory drilling and the development of these properties, as has other companies in this area, but with the uncertainty of a market for our ore and with a definite reduction in quotas we are hesitant in planning future work. We were operating four drilling rigs but are now operating only one and that one on part-time basis.

23671-58-13

The Golden Cycle Corp. acquired an interest in uranium properties in the Marysvale, Utah, district in August 1957 and invested a substantial amount of money in exploratory and development work but were soon faced with a curtailment program by the Vitro mill in Salt Lake City, which purchased our ore.

Our quota there started at 1,000 tons per month, which was adequate for us during our exploratory phase, but this was soon reduced to 5,000 tons per month and in 2 or 3 weeks further reduced to 300 tons per month, under which we are now operating. This low quota does not provide for much exploration and development work and necessitated a reduction in employment amounting to 80 percent of original working force.

It is evident from the above statements that a great hardship is being invoked upon the uranium-mining industry, which is reflected upon the economy of the entire mining area, through imposition of quotas by the mills which amounted in the above stated examples to less than 30 percent in Marysvale, Utah.

Golden Cycle and Giant Cycle entered into uranium mining in both of these districts, knowing that the ore was low grade but thought that an assured market for the purchase of our ore would be available. It is necessary to work these low-grade ore deposits at a maximum capacity in order to obtain a fair and modest return on our investment, consequently when operating under quotas of 30 percent of our established rate for the last 3 months of 1957, it is most discouraging. We must consider most seriously whether or not to take the additional risk by continuing further exploration and expansion of our mining activities in these districts.

As previously stated, as our companies are affected, so are the other sixty-odd shippers in the Edgemont district and several operators in the Marysvale, Utah, area and other areas which have been shipping to the Vitro mill in Salt Lake City, Utah.

Another problem obtains, in addition to the ones mentioned above where inadequate milling capacity exists in certain areas served by local mills; that is the one facing producers who have no milling facilities within a few hundred miles of their properties such as the Front Range area of Colorado, where highgrade uraninite ores are being produced, in Texas, Arizona, California, and elsewhere, where sizable tonnages of commercial ore have been proven and would be mined if a ready and assured market were available for the purchase of these ores. Mines, prospectors, and producers have been encouraged and requested to continue a vigorous exploration program in their search for additional uranium ore deposits but what individual or company can continue indefinitely to expend large sums of money unless being assured that there will be a ready market for the ores when and if mined?

May we respectfully request that this committee give serious consideration to the following three points as a solution to the present dilemma of the uraniummining industry.

1. A reaffirmation of the raw material procurement program of the Atomic Energy Act.

2. A further clarification of the administration of the act by the Atomic Energy Commission.

3. Congress shall, if necessary, spell out the intent of the act and support the Atomic Energy Commission's administration of same by making sufficient appropriations of money, to supply a ready market for the purchase of all domestically produced commercial ores.

The above should be done at the earliest possible date, for only after this has been accomplished shall we have a return to the healthy and vigorous uranium mining industry which obtained prior to the October 28, 1957, pronouncement of the Atomic Energy Commission.

Again may I thank the Joint Committee for the consideration and support it has afforded the uranium-mining industry and it is our hope that these hearings will help to solve the problems confronting the industry at present. May I also respectfully request that this testimony be entered into the record of this hearing of the Joint Committee on Atomic Energy.

Thank you.

The CHAIRMAN. The next witness is Mr. Romney, manager of the Utah Mining Association.

Mr. Romney, will you come around, please, and have a seat.

STATEMENT OF MILES P. ROMNEY, MANAGER, UTAH MINING ASSOCIATION, SALT LAKE CITY, UTAH

Mr. ROMNEY. Mr. Chairman and gentlemen of the committee, I am Miles P. Romney, manager of the Utah Mining Association.

I have been engaged a number of years in mining activities of all types, exploration, operation. For the last 6 years I have been manager of the Utah Mining Association, an affiliation of companies, operating companies, in the State of Utah, including not only uranium, but lead, zinc, copper, and other types of mining operations.

We appreciate the efforts of the Raw Materials Division of the Atomic Eenergy Commission to develop a strong uranium-mining industry in the United States.

The laudable concept of maximum possible application of free-enterprise principles to exploration, development, and processing phases of the industry has been applied as fully as possible in consideration of the fact that purchase and use of uranium has been under strict Government monopoly.

I would like to record here our particular appreciation to Mr. Jesse Johnson, heading the Raw Materials Division, for his very fine efforts to implement this type of policy and to see that the operator was accorded the greatest amount of fairness and consideration under Government monopoly of purchase and use.

Such a course has been difficult and has not always produced results of a nature to please all parties involved in the private industry phase of uranium production. But we feel that the Raw Materials Division of the Commission has adhered to that concept in meeting the unusual conditions created by free-enterprise production and monopoly of purchase and use.

We further appreciate the fact that, early in the atomic-energy program, the very great need for supplies of uranium dictated the making of commitments for purchases from foreign sources and the establishing of incentives for the discovery and mining of increased quantities in the United States; and, that as a result of those commitments and incentives the Commission now faces a situation of oversupply in view of present and near future estimated requirements.

We feel it is obvious that there must be some adjustment to the oversupply situation. However it is of paramount importance that the Commission recognize the fact that the vital factor in the oversupply is the very great ore reserve which has resulted from the domestic industry's response to the incentives offered for the discovery and production of uranium.

We urge that maximum possible consideration be given to this fact in the policies and practices and regulations adopted to adjust domestic raw material production to present and near future needs.

In view of the available supply of uranium ore exceeding present and near future Government needs, it is to the best interest of both Government and domestic private industry to promote markets other than those now existing as outlets for domestic production. This involves reexamination of acquisitions of uranium for present and future Government use, promotion of free markets, greater cooperation between Government, producers, and potential users and fullest possible

disclosure of information to assist planning in the raw material production and the potential use phases of the industry.

The proposed limitation of uranium purchases threatens to create certain unequitable and undesirable conditions.

First, those property owners who find they have no market for their ore reserves face continuing financial obligations to hold those reserves. Those obligations may consist of minimum work requirements, minimum royalty payments, property purchase payments, assessment work, maintenance of mine workings, etc. Thus lacking a current market these costs must be added to those already made in exploration, development, and equipment. In time such additional costs could offset any anticipated profit in the ore reserve and end in total loss of in

vestment.

Next, oversupply and uncertainty of future domestic markets will severely limit, if not eliminate, exploration work. It is only necessary to check such activity among the other metals which have become available in surplus quantities in recent years. Lead, zinc, and tungsten are prize examples. Thus the domestic uranium-mining industry, under limitation of markets below the level of economic productive capacity can be expected to liquidate its reserves rather than to maintain or increase them.

We wish to respectfully present a few suggestions which we feel will help to promote equitable treatment among those who have, up to the time the uranium-oversupply situation became apparent, made investments which are secured only by the ore developed and the processing facilities constructed with those investments; will reestablish private industry interest in making further risk expenditures in vitally necessary exploration and development; and will provide conditions conducive to continuity of a healthy, going domestic uranium mining industry.

OPEN, COMPETITIVE MARKETS

In view of the surplus of domestic productive capacity, the seeking and developing of open competitive market outlets for disposal of domestic uranium over and above the Commission's requirements should be encouraged by the Commission and their licensing regulations should be expanded or adjusted to permit such marketing.

The lower cost of domestic uranium should place it in a favorable competitive position to supply the rapidly developing reactor, power production business. The Commission staff could give much valuable counsel to producers seeking to develop such markets. Successful development of open-market outlets in foreign and in domestic areas would serve to relieve present surplus productive capacity, to lower the cost of uranium and to stimulate domestic exploration and development.

Senator PASTORE. May I interrupt at this point, sir. I am curious to know this:

Do the licensing regulations prohibit you from exploring the possibilities of an open market on your own?

Mr. ROMNEY. I would say that it does not prohibit one from exploring the possibilities of developing a market, but it would prevent you from fulfilling that market. You would have to have permission to make sure.