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Senator MALONE. And a statement?

Mr. WALSH. Yes, sir.

Senator MALONE. And get that in today?

Mr. WALSH. Yes, sir.

Senator MALONE. I say that because I want to get this transcript tomorrow.

Mr. WALSH. Yes, sir.

(The information is as follows:)

GENERAL SERVICES ADMINISTRATION,

EMERGENCY PROCUREMENT SERVICE, Washington 25, D. C., October 30, 1953.

Hon. GEORGE W. MALONE,

Chairman of the Minerals, Materials, and Fuels Economic Subcommittee, Committee on Interior and Insular Affairs, United States Senate, Washington, D. C.

DEAR SENATOR MALONE: This letter provides information which you requested concerning the procurement of foreign tungsten concentrates which were resold in this country at a loss.

Under the Defense Production Act this Administration was authorized to make purchases or commitments only upon the certificate of the Defense Production Administrator as to the necessity therefor. In addition, purchases involving anticipated loss on resale could be made only upon a determination that the supply of the materials could not be effectively increased at lower prices or on terms more favorable to the Government, or that such purchases were necessary to assure the availability to the United States of overseas supplies. By letter of March 5, 1951, the Deputy Administrator of the Defense Production Administration certified that pursuant to the Defense Production Act of 1950 and the Executive orders thereunder, it was necessary that the Administrator of General Services purchase or make commitments to purchase foreign tungsten for Government use or resale. He further certified that such purchases or commitments to purchase involving higher than the currently prevailing market price or anticipated loss on resale were necessary to assure the availability to the United States of overseas supplies.

On April 6, 1951, the Office of Price Stabilization issued Ceiling Price Regulation 19 which imposed a ceiling price of $65 per short-ton unit for tungsten concentrates ($65 per short-ton unit is equivalent to $72.80 per long-ton unit). This price was applicable both to sales to the Government and to sales by the Government.

On May 1, 1951, General Overriding Regulation 9 was issued by the Office of Price Stabilization. This regulation exempted from the ceiling price restrictions sales of tungsten concentrates to any agency of the United States Government. In the statement of considerations preceding the regulatory provisions, the paragraph entitled "Sales to Agencies of the United States Government of Imported Concentrates" outlines the reason for this exemption and concludes that this action would have little, if any, effect upon the stabilization program "since any sales by the agencies concerned will be governed by the applicable ceiling-price regulation."

Under the Defense Production Act there was no exemption from import duty of materials purchased pursuant to that act. The final cost to the Government, therefore, included duty. Because of the OPS regulations, any cost in excess of $65 per short-ton unit could not be recovered by this Administration upon the resale of the concentrates.

Copies of the letter and the two regulations referred to are enclosed.
Very truly yours,

A. J. WALSH, Commissioner.

DEFENSE PRODUCTION ADMINISTRATION,
Washington 25, March 5, 1951.

Hon. JESS LARSON,

Administrator, General Services Administration, Washington 25, D. C. DEAR MR. LARSON: In order to assure the continued supply of tungsten and the distribution and utilization of such supply in the manner most advantageous

to the national defense, it is necessary that the Government undertake a program of procurement and distribution of this strategic material.

Accordingly, pursuant to the provisions of the Defense Production Act of 1950 (Public Law 774, 81st Cong.), Executive Order 10161, dated September 9, 1950 (15 F. R. 6105), and Executive Order 10200, dated January 3, 1951 (16 F. R. 61), I hereby certify that in the interest of national defense and to carry out the express purposes and policies of said act and Executive orders, it is necessary that the Administrator of General Services purchase and make commitments to purchase tungsten of foreign origin in all its various forms including ores and concentrates for Government use or resale. I further certify with respect to such materials that purchases or commitments to purchase involving higher than currently prevailing market prices or anticipated loss on resale are necessary to assure the availability to the United States of overseas supplies.

It is estimated that the administration of this program will require a revolving fund of $13,950,000 to borrow from the Treasury of the United States for this purpose in accordance with section 304 of the Defense Production Act of 1950. I concur in this estimate. Sincerely yours,

EDWIN T. GIBSON, Deputy Administrator.

Senator MALONE. That will include all of the basic laws upon which these two orders are based, and any other orders that you can locate. I have located only the one. I did not know about the Treasury order. Mr. WALSH. Yes, sir.

FINANCING COPPER CONTRACTS

Senator MALONE. Now, we were talking about copper yesterday. Mr. WALSH. Yes, sir.

Senator MALONE. Do you have with you today or can you give the committee a list of the projects that have been financed through your department or copper projects that have been financed in the United States and abroad?

Mr. WALSH. Yes, sir: we do have that information here.
Senator MALONE. Will you read them into the record, please?

Mr. WALSH. I do not have it completely. May Mr. Ford read it, please?

Senator MALONE. Yes. How many projects are there roughly in the United States that have been financed through your department? Mr. FORD. There are 12 copper projects in domestic United States. Senator MALONE. How many outside of the United States? Mr. FORD. There are five in Canada.

Mr. FREDELL. We have copper projects under the MSA counterpart funds abroad.

Senator MALONE. You have the projects now in Canada?

Mr. FORD. Yes, sir.

Senator MALONE. You have none other than in Canada and the United States?

Mr. FORD. That is correct, sir.

Senator MALONE. Will you briefly outline the ones in Canada, the amount that has been loaned to these companies, or a description of the assistance given the companies, either in personnel or money or guaranteed prices? I would like just a brief description, and then you can submit any data that you might have for the record.

Mr. FORD. Yes, sir. You wanted the Canadian ones?

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Mr. FORD. Campbell-Chibougamou Mines, Ltd. The assistance given them was a floor-price contract which covered 31,600 tons of copper to be produced over a 2-year period. The floor price was 2412 cents. They obtained a loan of approximately $7 million from the Export-Import Bank.

Senator MALONE. On what date was this loan obtained?

Mr. FORD. The loan was closed in 1952.

We also got some copper in connection with two nickel contracts. Senator MALONE. Stay with this one until you get through with it. You have a base price of 242 cents. What else do you have?

Mr. FORD. The nature of the contract is such that the company agrees to develop the mine and build the mill and have the concentrates smelted, and to produce copper at the rate of 15,800 tons per year for 2 years, commencing July 1, 1955.

Senator MALONE. What else is connected with the price guaranteed them in this regard?

Mr. FORD. The price is subject to escalation either upward or downward, based on costs of supplies and labor.

Senator MALONE. Just how is it tied to the supplies and labor? Is it a definite daily wage?

Mr. FORD. No, sir. The way we did that was that we took part of the 242-cent price which was the estimated labor component, and we tied that in with the publication of the Canadian Bureau of Economic Statistics, which is the equivalent of our Bureau of Labor Statistics here, and as those indexed moved up or down, the price fluctuates to that extent.

Seantor MALONE. In percentage?

Mr. FORD. Yes, sir.

Senator MALONE. The same percentage of increase or decrease in the price per pound that the percentage of increase or decrease in the cost labor.

Mr. FORD. On the labor index.

Senator MALONE. Are you sure of that? Is that the only factor it was tied to?

Mr. FORD. No. It is also tied to the cost of supplies. We similarly took the component of the 24/2-cent price which represented the estimated cost of supplies and tied that into the index, and as it moves up or down the cost of copper fluctuates.

Senator MALONE. How is it weighted? You have two indexes now that you have connected this to. Is it 10 percent one or 90 percent the other or one-half one and one-half the other, how do you weight it?

Mr. FORD. For instance, the estimated cost of labor would be 8 cents per pound, and the estimated cost of supplies would be 3 cents a pound. Senator MALONE. You definitely specified in the contract just to what extent each is applicable?

Mr. FORD. That is spelled out in the contract.

Senator MALONE. How often do you adjust this price?

Mr. FORD. The provisions made for quarterly adjustment.

Senator MALONE. The contract was made in 1952. What date? Mr. FORD. I am sorry, I do not have the dates of the contracts here. The only dates I have are the dates for estimated production. It was in the spring of 1952, I recall.

Senator MALONE. Does June 1952 sound reasonable? I have a penciled notation to that effect.

Mr. FORD. That is correct, I believe.

Senator MALONE. Do you have any information on these indexes as to what has happened or what may happen before they start production?

Mr. FORD. We have not as far as I know tested that index. In the spring of this year, I did have occasion to review them generally, and the labor index had increased, and the wholesale index to which we tied the cost of supplies had shown a decrease.

Senator MALONE. In Canada.

Mr. FORD. In Canada.

Senator MALONE. What interest do they pay on this $7 million that they received from the Export-Import Bank?

Mr. FORD. I am not sure, but I believe it is 5 percent.

Senator MALONE. What provision is there and what collateral is there behind the loan, if they do not produce copper to the extent that it is anticipated?

Mr. FORD. I am not prepared to state that, sir, because the matter of the loan was handled entirely by the Export-Import Bank, and it was made on conditions that were to be satisfactory to them.

Senator MALONE. None of these conditions are sent to you?

Mr. FORD. Yes, they usually send them to us. I am sure we have in the office a copy of the loan instrument. I read it when it was received, but I have no recollection of the details.

Senator MALONE. Do you have the background of this Campbell Chibougamou Mines, Ltd.? Do you know anything about that company?

Mr. FORD. It is a comparatively new venture. The people who were behind it have been in business in other companies up in Canada, that is, other mining ventures.

Senator MALONE. Who are they?

Mr. FORD. They were represented by a consulting engineer from New York. Mr. Arthur Notman.

Senator MALONE. How do you spell it?

Mr. FORD. N-o-t-m-a-n.

Senator MALONE. Do you know his background?

Mr. FORD. Only that he is a consulting engineer of considerable practice. That is all I know about him.

Senator MALONE. Do you know his address?

Mr. FORD. I am informed it is 40 Wall Street, and that he is one of the outstanding copper engineers in the United States.

Senator MALONE. What about the background of this company? Does it have any assets at all?

Mr. FORD. There was some cash paid into it. As I recall it, they had a statement of a couple of million dollars. A good bit of that was development and organization expense.

Senator MALONE. That included a price for the ground.

Mr. FORD. That included the value of the claims that they had. Senator MALONE. There was practically no cash put in, I suppose, or would you give us the setup of this company?

Mr. FORD. Surely.

Senator MALONE. Will you submit that as a part of your testimony? Mr. FORD. Yes, sir.

Senator MALONE. The men who comprise the company, the president, secretary, and board of directors, and just what this 2 million represents.

Mr. FORD. Yes, sir.

(The information is as follows:)

DIRECTORS AND OFFICERS OF CAMPBELL CHIBOUGAMAU MINES, LTD.,
MONTREAL 2, QUEBEC, DMP-3

A. M. Collings Henderson, chairman of the board

John G. Porteous, Q. C., president

C. W. Clark, treasurer

H. R. Cleveland, assistant secretary

Robert Hendricks

Walter Martin, Q. C.

Arthur Notman

Gustave H. Rainville

L. O. Reid

E. O. D. Campbell

Attached is copy of balance sheet as of December 31, 1951, and annual report for year ended May 31, 1952. Note the latter was not issued until September 10, 1952. Contract was executed June 10, 1952.

CAMPBELL CHIBOUGAMAU MINES, LTD.

(No personal liability)

(Incorporated under the Quebec Mining Companies' Act)

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