First, we wrote the letter of June 1, 1955, expressing our interest in evaluating the possibilities of building a mill. Then, we put a crew in the field and spent a year and a half exploring for and proving reserves in the Cave Hills area of Harding County, S. Dak. At the same time our company, under an exclusive contract with the Colorado School of Mines Research Foundation, conducted extensive laboratory work in connection with the testing of processing methods for this type of ore. Applications for patent are pending on some of the discoveries, and improvements were worked out on some of the known methods. Instead of asking the Commission for a letter of intention or commitment, as was done in the case of Ohio Oil Co. and Standard Pipe Line Co., we felt that we were prepared to submit a formal proposal, and such a proposal was filed with the Grand Junction office on August 15, 1956.

In discussing this proposal, at Grand Junction, we were advised by the Manager of the Operations Officer that pilot plant tests seem advisable-both for the benefit of the Commission and for our benefit as well. It was suggested, therefore, that our proposal be held in abeyance until such tests could be made. Steps were immediately taken by Grand Junction for the purchase of ore from our company and from other companies, for pilot plant tests, and such tests were in fact run. These tests were conducted by National Lead Co., Inc., under AEC supervision. They were quite successful, and the reports were made available to use and to other interested parties.

Following the pilot plant tests and an interim report by National Lead Co., Inc., Senator Case from South Dakota interviewed Mr. Jesse Johnson, Director of the Raw Materials Division, and quoted him as saying the "Commission will be glad to receive proposals from International Resources Corp., or any other potential processor for establishment of a mill with a buying program, and their representatives may obtain data for computing cost estimates from the Grand Junction office."

Data was obtained at Grand Junction, and the amended proposal of International Resources Corp. was filed July 2, 1957.

Up to that time the Atomic Energy Commission had indicated that a contract would be allowed for uranium bearing lignite ores, if a price of $10.50 per pound could be met for uranium concentrates. By obtaining the consent of other property owners who had committed ore to our mill, we were able to advise the Grand Junction office by letter and Mr. Johnson by wire that owners had agreed to ship ore to the mill without compensation for the cost of transporting moisture content in excess of 5 percent, and that would enable us to bring the overall cost down to at least $10.50 per pound of U3O8.

From the time our amended proposal was filed on July 1957, we continued to urge the Grand Junction office to negotiate or discuss the cost figures with us at the earliest possible date, but it was November 18, 1957, before such a meeting could be arranged.

In the meantime, we now realize, a change of policy was apparently adopted by the Commission. We appreciate and understand the circumstances which made this change of policy necessary, and we realize that it could not be helped. We do feel, however, that the merits of the case for uraniferous lignites are such that it deserves top priority in the granting of any further domestic contracts.

PRIORITY CLAIMED

When Mr. Johnson, director of raw materials for the Atomic Energy Commission, announced that the United States had arrived at the point where it no longer was in the interest of the Government to expand production of uranium concentrates, and that the Commission was faced with limiting commitments for additional domestic uranium production, he stated that "Proposals for domestic contracts which already have been submitted still will be considered." With respect to new proposals between now and 1962 for additional mill construction or expansion, he also said, "preference will be given to providing a limited market for areas having no present milling facilities."

Of course, our proposal qualifies on both scores. It had been submitted several months prior, and it is for an area having no present milling facilities. Not only is there an absence of milling facilities in the area, but there is in fact no mill at all for lignite or carbonaceous ores.

The AEC we know has had far more than a passing interest in this potential source of uranium. Aside from the extensive fieldwork done by it, laboratory testing was carried on for many months by the National Lead Company, Inc.,

under a contract with the AEC. Later on ore was purchased for pilot plant testing, and months were spent on such tests. No doubt the Commission has done more to prove the feasibility of obtaining uranium from carbonaceous materials such as are present in this area than all of the individuals and companies involved. It would surely be a shame to lose the benefit of all of the AEC expenditures in this field and of all the fine results which were accomplished.

The Four States Uranium Association, through its president Donn Bennett, of Buffalo, S. Dak., has made a survey of expenditures which have been made by various companies and hundreds of individuals in the development of uranium potentials in this area. We understand he has or will be furnishing these figures to the Commission. In a general way, we understand the total figure runs to more than $2 million.

The largest expenditures were made by the Ohio Oil Co., in association with Arthur E. Pew, Jr., of Philadelphia. Apparently their expenditures have exceeded $850,000. They have expressed interest in seeing our company build a mill, as they will probably not be able to recoup any of their expenditures otherwise. Representatives of Ohio Oil Co. have offered to assist our proposal in every way possible.

The expenditures of our own group in International Resources Corp. has run around $350,000. Then there are several companies like Peter Kiewit Sons' Co., Farmington Funding Corp., Northgate Mining Co., Rosebud Oil Co., Uranco Mining & Exploration Co., Homestake Mining Co., and Manidon Mining Co. which have spent thousands of dollars, in many cases running close to or over $100,000 each.

Except for the work of Ohio Oil Co., the expenditures of the many individual locators and property owners will total more than the expenditures of the companies. Members of the Commission who heard our oral presentation in Washington will recall the statement of Mr. William S. Haivala, who explained where and how he had personally spent over $53,000. In the Belfield area, a group composed of Tom Landis and Ray Gress of Dickenson, N. Dak., Paul McCann of Bismarck and Roy Getting of Sanborn, Iowa, point out that they have spent in excess of $110,000.

Most of the work done in this area has been done by local residents, and most of the money spent has been local money. With 2 or 3 exceptions, the companies are not large companies. They have been composed of and financed by local people. These people feel that the Commission by its activities and interest in uraniferous lignites has at least impliedly, if not expressly, invited their expenditures and the development of uranium possibilities in the area. If it be true, as expressed by Senator Mundt, that the citizens of the Four States area have missed the bus for the time being, then they want to be first in line for the next bus.

COMPARISONS NOT FAIR

There seems to be somewhat of a tendency to compare the cost of processing lignite ores with the cost of processing carnotite ores, and to compare the proved tonnage of lignite uranium ores with the proved tonnage of carnotite ores in certain areas. Our people feel, however, that these comparisons are not fair. It must be remembered that the earlier costs for processing carnotite ores were about twice as much as they are now. After the experiences of more than a dozen carnotite mills, and with a lot of help and encouragement from the Government, it is inevitable that processing costs in those mills should be brought down. By the same token, there is every reason to believe processing costs will be brought down just as much or more for lignite ores, when there has been an opportunity for actual milling experience in that field.

With respect to the "proved" reserves of different areas also, it must be remembered that no substantial reserves have been proved in any carnotite area before the establishment of an AEC buying station or the awarding of a mill contract. We point for example to Edgemont and to the Gas Hills in Wyoming, where there were practically no known reserves when the buying station was established. Even when the first mill contract was awarded in each area, the reserves were still in doubt. In the Gas Hills, it is understandable that reserves are now developed, after the benefit of a buying station for months and then the announcement of three different mills.

Of course, it has been the history of all of the uranium areas so far that after there has been a market for the ore, ample reserves were developed. In the case of lignites, however, there has never yet been a market of any kind. The fact that reserves have been developed at all, without a market, is quite remarkable.

Property owners in both North Dakota and South Dakota claim enormous ore bodies, amounting to many million of tons. Most of these ore bodies cannot be called "proved" reserves at this time, but a lot of them will become such when a market is assured.

THE PROPOSAL IS COMPETITIVE

It is not intended, in what has been said, to leave the impression that the proposal for a uraniferous lignite mill requires special considerations. The project at this time is quite feasible, and the proposal is for a contract comparable in terms to those being allowed for carnotite mills.

The Operations Office at Grand Junction has already negotiated with representatives of International Resources Corp. on a possible price figure and other contract terms. As a result of these negotiations, it has been agreed that concentrates can be furnished for $9.64 per pound of U2Os until March of 1962, after which the price would be $8 per pound, or the same as it is for any other mill. This means that no appreciable special considerations would be extended to make a lignite mill possible.

As the proponent for this mill, our company feels confident that the figures are right and that the proposal is definitely feasible. In the first place, we have every confidence in our metallurgist, Mr. H. L. Hazen. He has done the figuring for operating costs, has helped to design the mills and checked the construction costs on the uranium mills at Edgemont, Gunnison, Ship Rock, Lake View, and for Fremont Minerals at Riverton. His work in each case has been good, and we consider him tops in his field.

We also have found that the AEC estimators in Grand Junction are extremely capable men. With the benefit of exact figures on the construction costs and operating costs for every uranium mill thus far built in the United States, it is understandable that these men know more about such costs than anyone else. Therefore, with them and the best engineers of the Stearns-Roger Manufacturing Co. in agreement on construction costs, and with them and Mr. Hazen in agreement on operating costs, we are quite confident that a fair and feasible price has been arrived at.

FINANCING

The financing for the proposed mill has been assured to us by Bosworth, Sullivan & Co. of Denver, who handled financing for the Western Nuclear mill in Wyoming. That firm has expressed a willingness to furnish the Commission with such letters of assurance as may be required when a contract is authorized. In the meantime funds are tentatively arranged for and committed as much as possible at this point. Final commitments are, of course, subject to the final terms of a contract and the ultimate date of a contract. With 1962 drawing closer every day, and the discontinuance of amortization allowances at that time, it can be seen that each month of delay in starting the project makes it that much less feasible.

THE LIGNITES AND DEFENSE

The four States area of North Dakota, South Dakota, Montana, and Wyoming has one of the greatest potential sources of power and energy there is anywhere. It is generally said that this area has the largest known deposits of lignite in the entire world-quite a broad statement. However, suffice it so say, for our purpose, that certainly is an area with some of the most extensive lignite beds in the United States. The beds, too, are generally close to the surface with a light and comparatively soft overburden. The possibilities of power and chemicals from these beds are tremendous, but they have not been developed. Something like the uranium mill now being proposed is necessary to open up these possibilities. Therefore, if uranium on its own proved to be merely a break-even proposition, it is possible that the byproducts in time would become principal products. It is not at all beyond the realm of possibility that such an enterprise could become a case of the tail wagging the dog.

Our company, with limited capital, limited time and no assurance of a contract, has not been able to prove these possibilities to a certainty, but the presence of one or more byproduct contingencies has always been a plus consideration favoring this venture. The proposal, in that sense, offers something that is not offered in any carnotite mill proposal.

The Stearns-Roger engineers who have estimated the construction costs for this mill estimate that the plant could produce 32,000 continuous kilowatts of electrical power from waste-heat boilers. That is heat which will come from

a roasting of the lignite, and which will be wasted away if not utilized for power. The Black Hills Power Co. will have a need for that amount of additional electrical power in the Rapid City area by the end of 1959, and it has expressed a desire to utilize heat energy from our plant, if it can be made a long-term operation.

Also, the lignite ores which contain uranium seem generally to contain about 4 pounds of molybdenum per ton of ore. Apparently it will not be difficult to dissolve the molybdenum from the ore, as it will go into solution incidental to the process of dissolving uranium.

The Government in recent years has spent large sums of money experimenting with the feasibility of making motor fuels from coal products. These experiments, we understand, have been quite successful, but the economics, as far as motor fuel is concerned, are still with the petroleum industry. However, the significant phase of the development of coal products seems to lie in the field of chemistry, and when it comes to a processing of such products, the chemicals appear to be an important byproduct.

We have noticed that several of the oil companies, such as Continental Oil Co. and Phillips Petroleum Co., now have petrochemical subsidiary companies. There seems to be a growing, and in fact a major, emphasis upon this field of development in these companies. Although no efforts have been made as yet, in pilotplant testing, to save the volatiles, oils, and tars in the processing of lignite ores for extraction of uranium, it would seem that no problem would be involved in doing so, if and when a market is established for such substances or for the chemicals contained in them.

Dr. Alex Burr, director of the North Dakota Research Foundation, has done considerable experimenting with the practicability of making a fertilizer from what would be tails in a plant of this kind. Not being a chemist, I can scarcely explain his idea, but it seems that he would use a phosphoric acid instead of sulfuric acid on the ore to be used in making fertilizer. Then, apparently he would ammoniate the tails and use them for the fertilizer. We cannot say whether there is or is not any merit in Dr. Burr's suggestion, but it may be worthy of investigation.

Some of the ore which would be used as feed for this mill has been found to contain germanium. The content is probably not sufficient to justify an operation for the germanium alone, but it has a possibility of becoming a byproduct in certain parts of the area.

In recent months Mud Control Laboratories, Inc., has started using certain lignites from the four States area as an additive to its oil well drilling mud. Like fertilizer, it would seem that a market for such a use would be quite limited. However, if it could come from the tails out of the plant, there would be an added advantage.

EXPERIMENTAL PLANT

The case for a uranium mill for lignite ores, we feel, is a strong one on its own merits alone, in comparison with other mills. The fact that there is no mill in the four States area; that there is no mill at all for lignite ores; and that the negotiated price and terms for a contract to cover such a mill are competitive should, we suggest, qualify this proposal for priority in the awarding of any additional milling contracts.

Aside from these considerations, however, it seems reasonable to us that the Commission might consider the awarding of a contract in this case for experimental purposes. In no other way, as we see it, can this important potential source of uranium ever be developed. In no better way can the milling processes for uranium ores, other than carnotite, be improved and perfected for possible future use. Moreover, the possibility of unlocking or encouraging the utilization of lignite as a source of power and important chemicals, or other byproducts, would further justify an experimental uranium plant in this area.

It has been suggested by some of the Senators and Congressmen who met recently with Commissioner Libby, Commissioner Floberg, and Mr. Johnson, when a group of property owners and other interested parties from this area were in Washington, that the Commission, if it sees fit to do so, could allow a contract for this mill, on an experimental basis, without prejudice to the revised policy adopted last October. In fact the Commission, we submit, would be justified in considering it an exception to the decision made at that time.

But whether the proposal is or is not considered an exception to the rule, and regardless of whether it is allowed as an experimental plant or otherwise, we urge its consideration and approval at the earliest possible date as (1) a proposal 23671-58-18

which had been submitted several months prior to the decision in October and (2) a proposal entitled to preference as one providing a limited market for an area having no present milling facility. Respectfully submitted.

JOHN J. MCINTYRE,

Secretary, International Resources Corp.

Chairman DURHAM. Proceed, please.

Representative BERRY. Mr. Chairman, Senator Case, Congressman Krueger, Senator Mundt, and Senator Young, are now here.

All of our witnesses are now here, if you wish to call on them.
Governor Foss is also here.

Chairman DURHAM. Senator Case, will you come around, please, sir.
Welcome, Senator Case, to the House side.

STATEMENT OF HON. FRANCIS CASE, UNITED STATES SENATOR FROM THE STATE OF SOUTH DAKOTA

Senator CASE. Mr. Chairman, and members of the committee, it is a pleasure for me to come over, and I count it a privilege to appear before

you.

I regret that the shift in time prevented me from hearing the opening part of Congressman Berry's statement. I hope I do not overlap on what he may have said. If I should, I trust the chairman will so indicate and I will try to confine my remarks to supplementing what he has already said.

First of all, may I say that our interest in getting a development mill in this area is based upon the belief that it is in the interest of the United States to have a mill in being, in place, which will demonstrate and actually produce uranium from these lignite ores. It is a different type of ore than is found anywhere else in the United States, so far as I know. It is a very high grade ore. Until we have a plant in being in the field, it will be difficult for the value of that field ever to be fully realized or appreciated by the United States.

Moreover, should our foreign sources of supply be cut off at any time, and we want the field to get on to a large production scale, it would be altogether important to have had a mill in place in the field doing things under actual production conditions. The second point I should like to make is that the claimholders have proceeded in good faith. The Department of the Interior, through its Minerals Division through its Coal Division, and the Atomic Energy Commission, cooperated with the Representatives and Senators from the area in securing legislation to validate the claims that were filed in this area.

Originally, this lignite area was a part of a great general coal reserve, although the lignite had a very low B. t. u. value, but it was part of a reserve that had been withdrawn from entry. The discovery of the uranium in the lignite ores introduced a new factor. The Čongress, on the direct recommendation of the Department of the Interior, and representatives of the Atomic Energy Commission, took the action necessary to release this area from the coal reserve so that the claims could be located and validated as mineral load claims.

Following that, companies and groups became interested in the possibility of a process to handle the ore. Representatives of the Atomic Energy Commission visited the area in person, and talked with some of the claim holders, talked to the Representatives of Congress from that area.