APPENDIX 3

AEC'S OCTOBER 1957 ANNOUNCEMENT ON LIMITING URANIUM PROCUREMENT; STATEMENT MADE TO THE JOINT COMMITTEE ON ATOMIC ENERGY BY JESSE C. JOHNSON, DIRECTOR, DIVISION OF RAW MATERIALS, JANUARY 20, 1958

It is my understanding that at this meeting on raw materials, the committee desires a report on the Commission's decision of last October to limit domestic uranium procurement, and the conditions that brought about that decision, and the effects of that decision on the domestic uranium program.

The Commission's action was taken to avoid buying more uranium than was required for the operations of the atomic-energy program as now projected. A review indicated that annual deliveries under existing domestic and foreign commitments would meet annual requirements for the period between now and 1962. Another consideration was that production from existing sources could be expanded substantially in case of increased requirements. The tremendous increase in domestic ore reserves during the last 3 years, and the prospects of further major increases, indicated that there might be serious overproduction under a policy of unlimited purchases.

This was not the first action to limit uranium procurement. Until 1955, the Commission's problem had been to get enough uranium for the expanding military program. We had been buying all that was available from foreign as well as domestic sources and seeking to find new sources everywhere. In 1955, however, we limited foreign commitments because of the important developments in Canada and the United States. Although the domestic outlook had become much more favorable, there was no basis at that time for anticipating the phenomenal expansion just ahead.

Domestic developments since the beginning of 1955 have been most impressive. At the end of 1954 domestic ore reserves were estimated at 10 million tons; at the end of 1955, 25 million tons; at the end of 1956, 60 million tons; and today they are estimated at 75 million tons and may reach 100 million tons as a result of development work now in progress in producing areas.

Domestic concentrate production for the second 6 months of 1955 was 1,600 tons of UsOs but at the end of the period was at an annual rate of 4,000 tons. Production for the calendar year 1957 was 8,600 tons and is now at an annual rate of approximately 10,000 tons. A year from now our annual production rate should be about 15,000 tons of UзO, and before the end of 1959, with all new plants in full production, the rate should reach from 17,000 to 18,000 tons.

This rapid expansion of the domestic uranium industry, plus the possibility of continued rapid expansion unless checked, was the reason for the action taken by the Commission in October. As a result of that action no additional concentrate procurement contracts involving new milling facilities are being negotiated at present.

This change in our procurement policy has brought a flood of protests, particularly from those developing ore reserves with the view of undertaking milling operations. Most of these protests deal with individual problems, or the problems of local areas, but in nearly all cases the following arguments are made in support of the requests for relief:

1. Evidence is offered that the Commission encouraged and urged private industry to find and produce uranium for the national defense. It is therefore argued that under the program established, and the procedures followed in carrying out this program, private investors had reason to believe that they would have a Government market if they could find uranium and produce it at a competitive price.

2. It is argued that the Commission should provide relief for those who have developed ore at substantial expense and now find themselves with no adequate market, and that unless relief is provided by additional contracts for new milling facilities, many prospectors and mining organizations will suffer heavy losses and some uranium companies may face bankruptcy. 3. The domestic buying program should be continued to support further exploration and development in order that this country may be selfsufficient for its long-range uranium requirements.

Since most of the requests for relief are based primarily upon the assumption that the Commission has a responsibility to provide a market for the uranium ore that has been developed, it might be well to review briefly the domestic uranium program and the procedures followed during the past 10 years.

The domestic uranium program established in 1948 was designed to encourage private industry to explore for uranium and to undertake mining and milling operations. At that time, and particularly in 1951, 1952, and 1953, when the Commission's major expansion was planned and undertaken, the availability of adequate supplies of uranium presented a most serious problem. Representatives of the Commission, including Commissioners, made numerous public statements pointing out the need for additonal uranium and the importance of expanding domestic production. Reports issued by the Joint Committee on Atomic Energy in 1951 and 1952 stressed the urgent need for a greater effort to develop uranium production and emphasized particularly the importance of domestic production.

Although our published ore buying schedules always have been limited in scope, our ore-buying operations have been expanded to cover the purchase of any uranium ore of grades specified in the published circulars provided the uranium could be recovered at costs considered economic. The Commission's published commitment to purchase domestic uranium ores has been limited to deliveries made to its Monticello, Utah, buying station. In practice, however, a number of ore-buying stations have been established in various new districts in order to speed up mine development and production. These stations were closed as private mills were built to provide a local market for ore.

There has been no published commitment to negotiate milling contracts. However, the procedure has been to negoiate a milling contract on the basis of an adequate supply of ore and agreement upon a price for concentrate. For approximately 10 years nearly every milling proposal had led to a contract provided the conditions with respect to price and ore reserves were met and the company making the proposal furnished reasonable evidence of being able to fulfill the contract deliveries. There has been no assurance that this procedure would continue to be followed.

The existence of this procedure has become the basis for individuals and companies undertaking exploration, purchasing, and acquiring mineral rights and developing uranium mines. This program and these procedures have been directly responsible for developing our uranium reserves and making this country the world's leading uranium producer. It is doubtful whether these results could have been obtained with a more limited or more restricted program. It should be remembered that 10 years ago only a few small uranium dposits were known and this country was considered by a number of experts to have relatively poor prospects for substantial uranium production except at high-cost from lowgrade shales.

As a consequence of the manner in which the domestic program has been operated, it is not surprising that the Commission's October decision to limit uranium procurement found a number of companies with substantial ore reserves and plans for mill proposals. In some cases there had been discussions regarding milling plans with our Grand Junction staff.

In Wyoming several companies, each of which claims to have spent approximately $1 million in developing substantial ore reserves, are requesting milling contracts. Probably more than a million dollars has been spent in developing uraniferous lignite deposits in North and South Dakota and we now have a milling proposal with a moderate price for concentrate. A million-ton ore body has been proved by drilling in Texas and a milling contract will be requested. Not only are the prospective milling companies and their stockholders involved, but much of the mining property controlled by these companies was obtained from the original locators or local development companies in return for stock, operating interests, or royalties. Consequently, a large number of people who have invested time or money in discovery and development have a stake in most of the proposed milling operations.

In the light of the circumstances I have just outlined, I am concerned over the problems of those who already have developed ore at substantial expense and who as yet may have no adequate market for their ore. I am having our Grand Junction office make a survey of the problems of the various uranium districts and the problems of the individual operators. The results of this survey, together with information presented by the uranium miners and their local organizations, will be submitted to the Commission for consideration. I hope that some reasonably satisfactory solution can be developed, within established procurement limitations.

One of the results of the October announcement has been a recognition on the part of the uranium industry that some limitation on expansion of uranium production is needed. A major expansion of mining and milling operations is now underway. There has been no cutback in domestic uranium procurement. We have reached the time, however, when the uranium industry must look to the growth of an industrial market for its future expansion, unless there should be a major increase in military requirements.

APPENDIX 4

ATOMIC ENERGY COMMISSION,
Washington, D. C., March 7, 1958.

ADDITIONAL DOMESTIC URANIUM PRODUCTION STATISTICS FOR 1957 ANNOUNCED BY AEC

The Atomic Energy Commission today announced monthly and annual statistics on domestic uranium production for 1957. Included were figures on uranium concentrate, rate of ore processing, domestic ore production, ore fed to process, ore stockpiling, and initial production bonus payments. The data were compiled by the Commission's Grand Junction Operations Office in Grand Junction, Colo. Domestic ore reserves were estimated to total 78 million tons on December 31, 1957. This compares with 60 million tons estimated at the end of 1956. Ore receipts at all private plants and Government-purchase depots in 1957 totaled 3,676,000 dry short tons; ore fed to process totaled 3,575,000 tons, with an average 0.27 percent of U3Os; ore stockpiled as of December 31 was 2,033,000 dry tons; and $2,447,835 was paid during the year in initial production bonus payments.

At the end of 1957 there were 16 uranium-processing mills in operation, including the Government-owned mill at Monticello, Utah. Several new plants are scheduled to be completed in early 1958.

Uranium concentrates received at the Commission's depot in Grand Junction totaled 8,494 tons of U2Os, as follows:

An additional 146 tons were produced as a byproduct in the chemical processing of Florida phosphate rock in Florida and Illinois; from the treatment of Idaho euxenite at the St. Louis plant of Mallinckrodt Chemical Co.; and from reprocessing of refinery residues at Vitro Corp.'s Canonsburg, Pa., plant. Total United States production amounted to 8,640 tons.

RATE OF PROCESSING URANIUM ORES

Uranium-processing plants in the Western United States treated uranium ores at the following approximate daily rates during 1957:

DOMESTIC ORE PRODUCTION

Uranium-ore receipts at all private plants and Government-purchase depots during 1957 totaled 3,676,000 dry short tons:

Or stockpiles in the Western United States as of December 31, 1957, were as follows:

Through December 31, 1957, a total of $11,528,577 had been paid on 891 properties as initial production bonus under the terms of Domestic Uranium Program Circular 6. Payments during 1957 were:

Measured, indicated and inferred ore reserves were estimated to total 78 million tons on December 31, 1957. These are determined in accordance with the definitions for measured, indicated and inferred ore reserves as adopted by the United States Geological Survey and the United States Bureau of Mines and include only

material metallurgically amenable to treatment. Distribution of ore reserves by States is approximately as follows:

(NOTE TO EDITORS AND CORRESPONDENTS.-This announcement is being issued simultaneously by the Grand Junction Operations Office, Grand Junction, Colo.)

APPENDIX 5

[Press release No. 114, January 21, 1958]

JOINT COMMITTEE TO HOLD PUBLIC HEARINGS ON AEC URANIUM ORE
PROCUREMENT POLICIES

From the offices of the Joint Committee on Atomic Energy

Senator Albert Gore (Democrat, Tennessee), chairman of the Subcommittee on Raw Materials, announced today that the joint committee would hold public hearings on AEC uranium ore procurement policies, both domestic and foreign, during this session of Congress.

The subcommittee met with AEC Director of the Division of Raw Materials, Jesse Johnson, and AEC Deputy General Manager R. W. Cook on Monday, January 20, 1958. Following the meeting, Senator Gore spoke as follows:

"1. With regard to procurement of uranium from domestic sources, the Commission is undertaking a survey of the hardships and problems caused our domestic uranium miners by the October 28, 1957, AEC announcement limiting further domestic expansion. Copies of the survey will be forwarded to the joint committee on or before March 15, 1958.

"2. After receiving the AEC survey, the joint committee will hold public hearings on AEC uranium ore procurement policies, both domestic and foreign. Members of the public, and representatives of the uranium mining and milling industries, will be invited to testify.

"3. With regard to procurement of uranium from foreign sources, the Commission agreed not to make any new commitments, or to extend existing contracts, until the joint committee has completed its study of AEC uranium ore procurement policies, and has discussed the situation further with the AEC."

APPENDIX 6

ADDRESS BY SENATOR ALBERT GORE BEFORE THE NATIONAL WESTERN MINING CONFERENCE, DENVER, COLO, FEBRUARY 8, 1958

I am very pleased to be here with you this evening. I hope to hear reports from you on your 3-day conference, and to discuss with you some of the problems facing the uranium mining and milling industries today. I also will attempt to comment briefly on some of these problems.

Since 1954, I have been a frequent critic of the Atomic Energy Commission. It is with particular pleasure, then, that I say the Commission is to be commended for having declassified all ore production and reserve figures since June 30, 1955. I think more declassification may be in order.