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for this until 1962," and then later "1966." That, to me, is an invitation from the Government for them to change their position and I think we must live up to that commitment to them. That is what it amounted to.

It is not worded just exactly that way, but that was generally the way it was put to everybody in the field.

Chairman DURHAM. The Government did the same thing with gold. The Government was responsible for taking all the gold and all of a sudden it shut off all the gold mining.

Representative THOMSON. Yes, there is another factor, too, that we should not overlook, Mr. Chairman. That is that, because of security reasons, the only one you can sell your uranium to is to the Government. They won't let you take that uranium out and sell it on the free market. That is the day I look forward to when we can.

Chairman DURHAM. I can recall the days when we were negotiating with the Belgians, finally negotiated this agreement between ourselves and Britain, that we were getting from three places only 50 percent of it. We had to go to England and beg them to release the ore they had a claim on because they had no use for it, which we used and which was very helpful at the time.

Then the discoveries came along in the West and everybody felt good. I did, myself, because I feel more secure when we have something in our own continent, but in developing this whole thing we have run into this situation.

Representative THOMSON. Mr. Chairman, I would like to say this too, in furtherance to the question of the gentleman from California, that is simply this:

That if I did not have any confidence in the future development of atomic energy for peacetime uses and the development of a market, I would be the first man to come in here and say to this committee, and to say to this Congress, even if it meant not coming back here, that we ought to cut it off right now before any more development took place, because if I am not in this Congress I am going to be back in Wyoming.

If we were to build up an industry and then have the rug pulled out from under us, it would be bad for the State, bad for the country, and everything else, but I have confidence that we are going to have a peacetime market and I think it is good business for the Government to be looking ahead rather than to have another crash program. Chairman DURHAM. Thank you, Congressman Thomson, for a most excellent statement.

Representative THOMSON. I know all the work this committee has done, and again I congratulate you, Mr. Chiarman.

Chairman DURHAM. Congressman Berry.

STATEMENT OF HON. E. Y. BERRY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF SOUTH DAKOTA

Representative BERRY. Mr. Chairman and gentlemen of the committee, I have a statement which I would ask permission to file, and then add to it a few remarks, if I may.

Chairman DURHAM. Without objection, your formal statement may be included in the record at this point.

23671-58-17

Representative BERRY. Thank you. (The statement referred to follows:)

STATEMENT OF REPRESENTATIVE E. Y. BERRY

About the time AEC made an appeal to Americans for the location of uranium deposits, a search was made and discovery resulted in uranium deposits in the lignite coal deposits in the four-corner area of North and South Dakota, Wyoming, and Montana.

In order that filing could be made in that area, it was necessary to amend the mineral law, since this new uranium strike was in lignite which is classed as a fuel mineral. Congress rushed the law through because of the desire on the part of AEC to obtain greater uranium reserves and because of prospects for obtaining those reserves in this uraniferous area.

It was soon discovered, however, that because of the carboniferous material in the lignite-coal deposits, there was no known process of economically removing the uranium from the lignite.

AEC established a pilot plant at Grand Junction. AEC also encouraged other private organizations to cooperate in the establishing of pilot-plant operations. Among those establishing such pilot-plant operations was the Catalitic Construction Co. and the International Resources Corp.

AEC entered into a contract with Catalitic Construction Co. to negotiate a contract with it, if and when such an economic process could be developed. They worked with the International Resources Corp., but International did not ask for a contract, assuming that with their expenditure of money and their joint cooperation with AEC at Grand Junction that as and when the process was developed they would be given an opportunity to contract for a mill operation.

An economic process has been developed. Catalitic Construction Co. offered to construct a mill and produce the U3O8 at $9.64 per pound until 1962, and $8 per above the $10.50 proposal of AEC. When their minimum offer was rejected by AEC, Catalitic stepped out of the picture and International Resources offered to construct a mill and produce the UзOs at $9.64 per pound until 1962, and $8 per pound subsequent thereto.

AEC POLICY

In the interim, however, the policy of AEC was changed. In October 1957 the Commission issued a directive that no new mill should be constructed and no existing mills expanded until a survey had been completed on known reserves and deposits. The results of the freeze order by AEC has been that although more than $2 million has been spent in development of the uraniferous lignite area, claim holders have no outlet even though a process has now been discovered and even though a company is ready, willing, and anxious to contract with AEC for the construction of a mill in this area and the production of U3O8 at less than the proposed offer of AEC.

SUMMARY

1. AEC admits that had Catalitic Construction Co. submitted an offer to produce UзOs at $10.50 per pound, that they would be obligated today to enter into a contract for construction of a mill in the uraniferous lignite area.

2. The International Resources Corp. proceeded on at least a quasi-contract, spending many thousands of dollars both in development of a process and in developing reserves. They have made a firm offer with AEC to construct a mill producing concentrates at $9.64 which is 86 cents per pound less than AEC offered to contract with Catalitic Construction Co.

3. It is probable that had International Resources been able to submit their offer for a contract at this rate prior to the AEC October freeze, a contract would have been negotiated.

4. Most of the area is held by small-claim holders. Hundreds of these smallclaim holders face having their properties wiped out unless such a mill is constructed to give them an outlet for their ore.

5. There is no mill in the world today which is equipped to process uranium from the lignites. Under the mining law, they are required to do $100 worth of assessment work prior to July 1. This, is spite of the fact that there is at present no hope for a mill which would give any value whatever to their deposits.

RECOMMENDATIONS

1. By virtue of the statements made and authorized to be made through AEC, by virtue of cooperative work on a removal process, by virtue of the action on the part of AEC in their many statements, there was at least a quasicontract which places the Commission under some obligation to contract for a mill in the lignite uranium area at this time.

2. AEC could and should contract for a mill in that area on an experimental basis, which basis would take it outside of the directive of the Commission issued last October. Such an experimental mill could be designated as a fullscale pilot mill for the purpose of obtaining data and information on cost of processing, improvement of processing methods, and amount of uranium deposits in the area.

3. Such an experimental mill would be beneficial to the national economy through experimental work in developing of power and important chemicals and other byproducts of a uranium mill.

4. Providing such an exception to the October rule permitting an experimental plant, would keep faith with International Resources Corp. which submitted their proposal several months prior to the October freeze, it would give a limited market for an area having no present milling facilities, which would keep faith with hundreds of small-claim holders, as well as larger operators who have invested more than $2 million of their own local funds in the area.

Representative VAN ZANDT. Is your Governor coming this after

noon?

Representative BERRY. He is down at the Pentagon right now. He did not expect to get up here until 3:30. I hope he will be here.

First of all, Mr. Chairman, in response to the question that Congressman Hosmer asked of Congressman Thomson, there is one thing that I believe needs to be taken into consideration when we are thinking about this October cutback order, and that is that in the mill at Edgemont, for instance, which is actually very close to the Wyoming line, and which handles a large share of the uranium that comes out of Wyoming, particularly eastern Wyoming, all of the big outfits have a contract with AEC. There are probably 4 or 5 of the large outfits that have a contract for delivery.

The people that are hurt are the small individuals at the Edgemont mill, the small individuals who have no contract. They have a capacity of probably 550 tons at this Edgemont mill.

The October order cut them back to 400 tons.

Now, the big outfits, with a contract, are safe, but the small operators have to divide up 30 tons a day and it does not even pay the interest on their investment, to say nothing of their operating expenses. That is one of the problems that we have in this October cutback.

If the cutback has to be made, I believe that some way it should be worked out with the contract operator as well as the company that has the mill, too.

Now, I direct my remarks primarily to an area that some of you gentlemen know something about. It is an area in the corner of the four States, Montana, Wyoming, North Dakota, and South Dakota, wherein uranium was found in lignite coal.

The first thing that had to be done, lignite coal being a fuel mineral, and a leasing mineral, we had to change the law and Congress did pass an act providing a change and permitting filing under the hardmineral law in cases where the uranium is found in lignite.

Then they discovered that they had no known process for the removal of the uranium from this carboniferous material.

At Grand Junction they set up a pilot plant. A company known as Catalitic Construction Co., with Arthur E. Pew and Ohio Oil Co. as the principal sponsors, went to the Atomic Energy Commission and obtained a contract.

In that contract they were to work out a process, an economic process, and AEC said that if they could find a process for the removal of UO, from this carboniferous material, lignite coal, that they would pay until 1962, $10.50 per pound.

The result was that Catalitic went in and spent a lot of money as did Ohio Oil and the Pew associates.

Not only did they spend a lot of money, but also the International Resources Co., which is primarily a local company, working with AEC, at Grand Junction, worked out a process. When the process was complete, Catalitic told AEC that they did not think that they could do the job for less than $11, and because they could not the Atomic Energy Commission stepped out of their contract. They had that right, of course.

International Resources, however, have come in and offered to do the job for $9.64 a pound, which is 86 cents less than AEC would have contracted for with Catalitic.

But they said that, in spite of the fact that International Resources had been working with and spent a lot of money in conjunction with the AEC at Grand Junction in working out this process, that they did not have a firm contract and, therefore, they are not under any obligation to contract with them.

Now, I probably should say that after the law was passed authorizing the filing of claims, more than $2 million has been spent in this four-State area, and it is not a large area, uncoving these lignite beds and getting them ready for operation when a process had been developed.

The process now has been found and this International Resources has offered to put in the mill at $9.64 per pound.

The claim holders have spent a lot of money in getting their ore uncovered and so forth.

And there is no mill in the United States today which can process uranium from lignite.

I think that if they did not have a firm contract, and they did not have principally because they did not ask for it, they at least had a quasi-contract with the Atomic Energy Commission, a contract that is at least morally binding upon AEC.

Secondly, we have no proven process in the lignite field, and I think that it is very necessary that AEC go ahead with their plans for a mill in this area, fulfilling their obligation not only to International Resources, but all of those hundreds of small operators in that area who have put a lot of money into it.

Thirdly, if the mill is to be built, I think it should be done at once. The contract should be let prior to July 1 because under the law these claim holders have got to do their assessment work prior to July 1. Today they have nothing and there is no incentive for them to go in and put another hundred dollars in their claims.

Fourth, I think it wold be well for national defense and for the future welfare of uranimum in this country if we had a plant established there as an experimental plant to determine the cost of removal of uranium from lignite, to develop the process in the event

that if it ever is necessary to have this uranium that is now sealed up in these uranium beds.

I would ask, Mr. Chairman, permission to file with the committee a copy of the proposal of International Resources Corp. with the Atomic Energy Commission, which gives a very good history of their activity, both in the development of the process and in their offer to the Atomic Energy Commission.

Chairman DURHAM. Without objection it may be filed with the committee.

(The material referred to follows:)

THE CASE FOR A URANIUM PROCESSING PLANT IN THE FOUR STATES AREA OF NORTH DAKOTA, SOUTH DAKOTA, Montana, and WYOMING FOR LIGNITE ORES

With particular reference to the proposal of International Resources Corp. (a South Dakota corporation). Submitted August 15, 1956, amended July 2, 1957 2, 1957

GENERAL STATEMENT

International Resources Corp., a South Dakota corporation, first notified the Atomic Energy Commission, by letter, of its wish to evaluate the possibilities of building a processing plant for the treatment of uranium-bearing lignite ores in the four-States area of North Dakota, South Dakota, Montana and Wyoming on June 1, 1955. Since that time it has spent several hundred thousand dollars in the exploration for and proving of suitable ore reserves, and in its own independent experimentations and research relative to the most feasible method of treatment for uraniferous lignite ores.

Interest in the uranium possibilities of this area first became acute in 1954. The fever ran high for many months-in fact for several years-and representatives of the Commission encouraged exploration and development work. An AEC statement read to a House Interior Subcommittee stated that present information indicates "that these deposits offer promise of becoming an important source of uranium." The statement also indicated that the AEC was conducting studies in search of a satisfactory process for recovering uranium from lignite, and said that the Commission was prepared to establish pilot plant facilities at Grand Junction.

At that time the subcommittee was studying a bill introduced by Congressman Berry of South Dakota to clarify existing law so that uranium mining could be facilitated in the lignite beds of the public domain in South Dakota. The AEC statement said it felt Berry's bill would "provide a satisfactory means for the exploration and development by private parties of this important potential source of uranium."

Among other individuals who spent thousands of dollars in this exploration and development work was Mr. Harold R. Eyrich of Custer, S. Dak. He encouraged residents of the area to stake hundreds of claims in the Custer National Forest, in the North Cave Hills and South Cave Hills, within Harding County, S. Dak. In perfecting these claims, with postings, stakings, filings, discovery work and the like, he personally spent $80,000.

Leases were taken on the claims in which Mr. Eyrich had an interest, from the resident owners and locators. It was at this point that International Resources Corp. was organized, and the Eyrich leases were assigned to said corporation. Actually, this corporation was organized primarily for the purpose of mining and milling the uraniferous lignite ores of this area. Its capital was furnished by the organizers of the company, and none of its stock has been sold at public offering. Its incorporators include some of the Buckinghams of Buckingham Transportation, Inc., and Buckingham Wood Products, Inc., of Rapid City, S. Dak.; several bankers in South Dakota; oilmen from Wyoming; brokers from Denver; and the Governor of Colorado.

Realizing that this ore had no value unless a market for it were established, the officers of International Resources Corp. set out early in 1955 to obtain a contract from the Commission. It being our understanding that the proper channels for this were through the operations office at Grand Junction, we visited with the manager and his assistants in Grand Junction on numerous occasions and followed their suggestions and advice as to the procedure to be followed.

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