Then the Atomic Energy Commission instituted, very properly, a research processing study at their plant at Grand Junction, Colo. Claim holders in the area were encouraged to submit samples of ore there. Groups of persons interested in the possibility of organizing companies to make proposals for a mill were permitted or, you might say, invited to come and get the benefit of the research that the Atomic Energy Commission was doing at Grand Junction. I am sure there was good faith on both sides. The Atomic Energy Commission felt it was desirable to find out the possibilities of this ore, and the people, on the other hand, both the claim holders and associated groups, felt that it was proper for them to look toward the establishment of a buying station and a processing mill. Chairman DURHAM. What year was this discovered out there? Senator CASE. The discovery in the lignites, I think, was made in 1954. Last year, the matter of getting a mill to process the ores took more form as the preliminary reports from the Atomic Energy Commission plant at Grand Junction indicated that a feasible process was in the making. On the 2d of May 1957, Mr. Jesse Johnson, the Director of the Raw Materials Division, wrote me, in part, as follows: As indicated in earlier correspondence, if it is determined that uranium can be economically recovered from lignite, we assume that a private company will be ready to construct a mill and sell uranium concentrate to the Commission on acceptable terms. We would be interested in receiving proposals for the sale from any company interested in processing lignites. Two companies presently are studying the matter, and each has indicated that it may submit a proposal. A commission contract with a milling company would require the company to purchase lignite from independent producers. I think that last sentence had reference either to something I had indicated in my prior letter or in personal conversation with Mr. Johnson when I put the question to him if a contract is given to one of these companies, what about the individual or small-claim holders, will they be able to sell their product. He assured me that they would. On the 8th of July 1957, I had a telephone conversation with Mr. Johnson, on which I wrote a memorandum, which is in my files, as to the matters discussed. From my notes at that time I recall this: Two proposals for mills in the uraniferous-lignite coal area of the Dakotas have been submitted to AEC. The first one was submitted by the Ohio Oil Co., and the second one is by the International Resources Co. Its proposal was submitted through the AEC office at Grand Junction, Colo., where the Commission has been running these lignite ores through pilot-plant processes. My conversation with Mr. Johnson on the 9th of July followed a conversation I had had with representatives of the International Resources people, one of whom happens to live in my hometown, although he is some miles from this area, and with Mr. McIntyre, of Casper, Wyo. They had indicated to me that they were working through the office, the AEC office, at Grant Junction, Colo. The Ohio Oil Co., its headquarters being near Washington, I think made most of its negotiations with the AEC here in Washington. Personally, I attribute the fact that the International Resources Co. did not ask for a commitment in writing to the fact that they were working, as they had been instructed to work or keep in touch with, with the office at Grand Junction, Colo. Their proposal and the terms that they might suggest, was geared more to the development of the process at Grand Junction. Chairman DURHAM. This cutoff order and present policy may mean, of course, that there is no operation whatever. They would have no outlet whatsoever to sell the product to. Senator CASE. That is exactly true. Chairman DURHAM. Do you know what the total investment has been in that area? Does anybody have those figures? Senator CASE. I understand that the Ohio Oil Co. expended something over $1 million. The International Resources has spent many thousands of dollars. The Peter Kewit Co., and others who have blocked up groups of claims, have spent many thousands of dollars. Chairman DURHAM. I suppose the International group approved of that figure, because they, according to Congressman Barrett, offered it at $9.60 per pound delivery, as against about $11.15 that we buy it for offshore. Senator CASE. Yes. And their figures, Mr. Chairman, were developed for them on a flowsheet with Mr. Hazen as their consulting engineer. Mr. Hazen is the mining engineer who designed the mill at Edgemont, S. Dak. I think that the Atomic Energy Commission people will tell you that the Edgemont mill has been one of the most efficient and satisfactory of the mills presently in operation. It was designed for a 200-ton output, per day. It has been operating and actually handling about 350 to 400 tons per day. Chairman DURHAM. Do you not think we have to solve the other problem first, and that is some sale outlet for that somewhere, by the Government, or at least do away with some of our restrictions at the present time and have a foreign market? Senator CASE. I think you are correct, Mr. Chairman. The line of thinking that I was just developing here on the sequence of cooperation between the people in the field and the Atomic Energy Commission is based upon the fact that shortly after I returned to Washington for this session of Congress, I had a conference with Mr. Jesse Johnson over this stop order, this cutoff order, of October 28 or 29, and he advised me that under the directives of the Commission, under which he was operating at that time, he could not make any new commitments, but that commitments made prior to that cutoff date would be honored. I think, as I recall, he stated that there were 3 commitments which were recognized, 2 of which had been announced and 1 of which had not been announced, but that the Ohio Oil Co. had a commitment in writing, and had they come within the $10.50 figure, per pound, they would have had a contract. And had the International Resources people had a commitment in writing, they would have had a contract. But they made their proposal without securing in advance a commitment in writing on the proposal. The line of thinking I am developing here is that they in good faith, proceeded by the suggestion of working through the AEC office at Grand Junction and in the discussions that I had, at least with Mr. Johnson, during 1957, prior to the cutoff order, I was not aware that they needed a commitment in writing. Everybody was operating in good faith. I am sure Mr. Johnson did. I am not suggesting that he was not. But he found his hands tied when the cutoff order was issued. But he did say to me that had they had a commitment in writing as the Ohio Oil Co. did, that International would also have a contract, the same as Fremont and some place in Oregon, I believe it is. Chairman DURHAM. The oil company had a contract, but because of the price, they did not choose it. Senator CASE. That is correct. Further, on the 4th of September 1957, there was a press release issued by the Atomic Energy Commission in Washington, from which I quote: However, the same pricing formula offered to Ohio Oil Co. was also offered to other prospective producers of uranium from lignite, and the Commission currently is studying a preliminary proposal submitted by International Resources Corp., Custer, S. Dak., involving the construction of a mill to process uraniferous-lignites. That is the press release in which the AEC announced that the Ohio Oil Co. had decided that they could not come under the $10.50 ceiling. But it went on then to say: However, the same pricing formula meaning, I suppose, the $10.50 ceiling— offered to Ohio Oil Co. was also offered to other prospective producers of uranium from lignite, and the Commission currently is studying a preliminary proposal submitted by International Resources Corp., Custer, S. Dak., involving the construction of a mill to process uraniferous lignites. Again, our people there were proceeding in good faith, and there was nothing there to suggest that we ought to get a commitment in writing, that they were being given consideration, because the press release of the Atomic Energy Commission itself said that the Commission was studying their proposal. On September 6, 1957, the Federal Power Commission's News Digest carried this statement, and it was credited to an item from the Wall Street Journal dated September 5: The Ohio Oil-Pew indicated it might build a uranium mill using lignites from the Dakotas if better processing techniques are developed. The AEC said that in the meantime it is studying a preliminary proposal for a similar venture submitted by International Resources Corp., Custer, S. Dak. That is the way the Wall Street Journal and the Federal Power Commission News Digest interpreted the report or press release of the AEC. On the 27th of September 1957, I had a letter from the Atomic Energy Commission replying to a letter I submitted to them. in which I had transmitted an editorial from the Buffalo, S. Dak., Times Herald, on the Ohio Oil-Pew decision to defer mill construction, and this letter from the AEC said: Our Grand Junction Operations Office is expecting further discussions with representatives of International Resources sometime within the next month. So, Mr. Chairman, I submit to you that we feel that the Atomic Energy Commission should make it possible for its Director of Raw Materials, or whoever is the responsible contracting officer, to offer a contract to the International Resources because, in good faith, they seem to have followed the lines indicated for the submission of a proposal. Had they been dealing directly with Washington, probably, rather than with Grand Junction, they would have had it in writing. But these public statements and the correspondence would indicate that there certainly was an intent on the part of the representatives of the Atomic Energy Commission to deal with the International Resources Co. Chairman DURHAM. Thank you very much, Senator. Senator CASE. Thank you very much. Chairman DURHAM. Čongressman Krueger, do you want to come forward now and make a statement? STATEMENT OF HON. OTTO KRUEGER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NORTH DAKOTA Representative KRUEGER. Mr. Chairman, and members of the committee, the story is the same. We are all interested in uranium in the Dakotas. Chairman DURHAM. I did not know as many States were involved in this until these hearings started. Representative KRUEGER. Without duplicating the testimony of other witnesses, I would like to summarize the reasons which make essential the early approval of processing facilities to extract uranium from lignite deposits in the Dakotas. The extensive work already carried out by individuals in this region has established the fact that there is uranium here in great quantity. It would seem that in this period of increasing demand for uranium, every effort should be made to learn the full potential of this region and that will only be possible when processing facilities are available. The price which has been advanced by International Resources Corp. places lignite uranium in a competitive position. It is below the initial goal set by the Atomic Energy Commission and reflects the work which has been done already to lower the cost. In short, there is uranium; individuals have gone to great expense to discover and develop the findings; private industry has gone to considerable expense to develop, in cooperation with the Atomic Energy Commission, a feasible, low-cost process. If we need uranium, then I firmly believe the very highest priority should go toward giving early approval to the proposed contract for development of lignite sources of uranium. I only summarized this, because our story, from the four-State area, is about the same, and I do not want to duplicate the testimony already given, or which probably still will be given. That is the end of my statement. Chairman DURHAM. Thank you very much, Congressman. STATEMENT OF HON. KARL E. MUNDT, UNITED STATES SENATOR FROM THE STATE OF SOUTH DAKOTA Senator MUNDT. Mr. Chairman and members of the committee, it is good to be back over on the House side again. I regret that I am suffering from a pretty severe cold and it may be a little hard to understand me. I will try to speak loudly enough. I want to follow the commendable example established by my friend Otto, and not retrace a lot of the testimony which you have already heard. Suffice it to say that I associate myself completely and emphatically with the presenta tions made by the three preceding witnesses dealing with this particular uranium deposit, and seek to emphasize the fact that while the International Resources Corp. did not have in writing what the three companies who were permitted to qualify after the reduction order went into effect had, they did have, to all intents and purposes, the same type of understanding. They had gone through the same preliminary procedures. They had had the long series of negotiations. They had invested some $2 million in efforts and in plants, so except for the fact that they were not cognizant of the fact that they should have secured in advance, in writing, a statement, they had placed themselves precisely on the same basis as the three other groups that the Atomic Energy Commission, and I think wisely so, decided to exempt from the reduction order. We feel that as a consequence of that fact alone, the International Resources Corp. should be given some consideration now that they have gone to this vast expense and have submitted a competitive bid. I think there perhaps are two other factors which would tend to influence people interested in developing better uranium supplies for this country at cheaper prices. To grant this contract to International Resources Corp., because they are dealing with uranium deposits in lignite, because they are dealing with uranium deposits, therefore, which will be handled by a different procedure, then it seems that some advantage should flow from the experimental work which would come from a corporation actually producing uranium from that kind of a reservoir. It might open up great amounts of potential uranium production for an unpredictable future, when instead of having too much uranium once again we might find ourselves with too little uranium. Not only is that true from the standpoint of volume, but I think, Mr. Chairman, it is also true from the standpoint of price. The more different types of competitive procedures and processes that we can employ to satisfy our uranium needs, the more likely we are in the laboratory of actual experience to develop techniques and processes which will produce this uranium at increasingly lower prices. Chairman DURHAM. We would have been very glad to have had that in 1942, would we not? Senator MUNDT. Most certainly. We do not know when this present rather happy situation will terminate, when we seem to have rather adequate uranium supplies for the moment. But we have to look ahead. We know that in this atomic age it is conceivable that what now seems to be an adequate supply will be a short supply. When that comes, it surely should be in the public interest to have an established commercial procedure for extracting uranium from lignite, and it should be to the public advantage to have the accountancy tables to demonstrate its cost, which, while they may seem to be high at the moment, through the inventing of some procedure might actually be relatively less at such a time. I have here, Mr. Chairman, a statement prepared by Mr. Donald Bennett, the president of the Four States Uranium Association. Mr. Bennett lives in Buffalo, S. Dak. He has prepared this statement especially for this Joint Committee on Atomic Energy. I would ask leave to file it as part of my statement. |