MINE OPERATORS PROTEST DELAY IN ANNOUNCING CHROME PROGRAM

Mr. ENGLE. What I said was, if you had some high grade you could get it out for $50 a ton, that you could make $100,000. I didn't ask him specifically with regard to these properties, but if the gentleman will yield a minute, I have a telegram here from Fay Bristol, of the Oregon Mining Association. That is the party mentioned by Mr. Bradley. He sends me a telegram under date of April 19, 1951. Fay Bristol is the man. He said:

Boyd promised chrome program within 2 weeks on February 3.

Where is it? One-half this year's production now lost as the few miners in area go to work for lumber industry. Chrome miners need $120 with $2.50 premiums, and penalties for a year program without strikes, strong access road program, stockpiles for truckloads, best milling properties need over $120.

FAY BRISTOL, Oregon Mining Association.

And I have another one. That came from Grants Pass. I have another one from William S. Robertson, who I suppose is the same gentleman you were talking about:

As I have heard nothing to the contrary on chrome program, I am still doing some work on my property. Request that we get something definite very soon. The production will depend largely on base price and specifications.

He doesn't say what he will need.

DISCUSSION OF SOUTHERN OREGON CHROME DEPOSITS

Mr. REGAN. I take it from Mr. Bristol's telegram that he couldn't make a profit that you suggested there of $100,000.

Mr. ENGLE. No; his indication is to the contrary.

Mr. DONOVAN. Who knows about his deposits? Do any of you four gentlemen know about Mr. Bristol's deposits?

Mr. BRADLEY. I never have been on the precise ground but we have pretty good information over there.

Mr. ENGLE. Are they high grade?

Mr. BRADLEY. Parts of them are high grade.

Mr. ENGLE. Do you know how much?

Mr. BRADLEY. I would say that about 20 percent of the chrome, of the typical deposit comes out in the form of pretty high grade rock. The rest grades off, falls off as you approach the wall.

Mr. ENGLE. Well, at $115 or $120 a ton, if it is high-grade ore or rock, they stand to make a pretty profit up there, don't they?

Mr. BRADLEY. Stand to make what?

Mr. ENGLE. A very pretty profit.

Mr. BRADLEY. They would on a bid of high grade.

Mr. ENGLE. You said 20 percent of it was high grade?

Mr. BRADLEY. Yes. Their complaints have been that in order to mine high grade they have to produce a lot of low grade. They are very much worried about that, the amount of stuff they have to handle in order to get the high grade out.

GOVERNMENT ASSISTANCE TO MINING INDUSTRY BASED ON ECONOMIC SOUNDNESS OF PROPOSALS PRECLUDES OPERATION OF THOUSANDS OF MARGINAL DEPOSITS

Mr. BENNETT. If the gentleman will yield; Mr. Lyon, isn't it a fact that, on most of these minerals and metals that you need under this program if you are going to expand it, it has got to come from properties that are not now in operation, and properties that heretofore, in time of peace, are regarded, the operation of which is regarded, more or less uneconomical?

Mr. LYON. In the case of tungsten, chrome, and a number of metals;

yes.

Mr. BENNETT. What about copper, lead, and zinc?

Mr. LYON. Copper, lead, and zinc, we expect our exploration program may discover some new ore bodies but the principal increase in production is going to come from the expansion of the known deposits and the known districts.

Mr. BENNETT. You mean that are owned by companies now operating?

Mr. LYON. That are owned by small or large companies.

Mr. BENNETT. But companies that are not now in operation?

Mr. LYON. In the case of copper, lead, and zinc, in the tri-State field in the zinc mines there are some low-grade zinc properties down there that are not now in operation that will undoubtedly be rehabilitated.

Mr. BENNETT. You have got to loan money to get those in operation, do you not?

Mr. LYON. We either loan the money or give them a procurement contract and they get their own money.

Mr. BENNETT. If you undertake this program as I assume from what you said a few moments ago you were, on the basis that the particular project or particular development must be economical and you have to be sure the Government isn't going to run any risk in getting their money back, how far are you going to be able to expand this program and how much more mineral production are you going to get that you haven't got now?

Mr. LYON. We have been very successful, and we don't say that they have got to be absolutely a straight banking proposition or we wouldn't be in the business.

Mr. BENNETT. You haven't been successful. You haven't entered into any contracts yet, have you?

Mr. LYON. We have a number of contracts that are awaiting completion.

Mr. BENNETT. But they haven't been completed?

Mr. LYON. They have left our shop.

Mr. BENNETT. Where are they?

Mr. LYON. Well they are over

Mr. BENNETT. Pardon me. How many contracts have left your shop?

Mr. LYON. There are between 20 and 30 I presume.

Mr. BENNETT. Up until 3 weeks ago, two had left your shop? Mr. ENGLE. I think Mr. Bennett, something like 29 have been recommended by the Defense Minerals Administration, and they were stuck over in the Defense Production Administration someplace or other. If I recall Dr. Boyd's testimony, that is the case.

Mr. REGAN. Only two had been finally cleared but there were some 21 or 29 that Defense Minerals sent to the higher echelon for their approval as I recall it.

Mr. ENGLE. May I ask a question?

Mr. BENNETT. Just one observation and I will yield. That is this, as I get it from the testimony of these gentlemen and also the prior witness here from DMA, it is this: First of all, they haven't yet made up their own minds as to how critical or how much these various materials are going to be needed and second and most important, the frustration of the whole thing, they are basing their estimations, these contracts and these loans, on their economic soundness. Now the minute they start doing that, these marginal properties and there are thousands of them all over the country that are capable of producing, haven't produced because they have been uneconomical, are not going to get in operation as long as that thinking prevails in Defense Minerals Administration.

Mr. DONOVAN. That is the whole story.

PROPOSED CHROME CONCENTRATE PRICE OF $110 INADEQUATE FOR DEVELOPMENT OF NORTHERN CALIFORNIA CHROME PROPERTIES

Mr. ENGLE. May I direct a question to Mr. Bradley, who, by the way, I know knows something about the business. He and his family have been in it for years. I think that is also true of Mr. Lyon although I didn't know him so well, but Mr. Bradley, is there something that can be done to develop these chrome ores in northern California? Mr. BRADLEY. I am very much concerned about the northern California chrome ores.

Mr. ENGLE. This $110 price for chrome concentrates isn't going to bring them out, is it?

Mr. BRADLEY. It will bring out some. There will be a bunch of poor, hopeful candidates that will get in there and do some digging and they may go broke just like all the rest of the miners, but they may make a little money if they have some luck and the only way you can get production out of the mine is to take that gamble. We think that this $110 will do it.

Mr. ENGLE. Do you think you can go down in that Klamath country and ship it clear to Grants Pass?

Mr. BRADLEY. I am not going to put any of my money into that sort of thing.

Mr. ENGLE. That is what I am saying.

Mr. BRADLEY. There are people up there in business that may. Mr. ENGLE. This is not a realistic program as far as northern Cali fornia is concerned. Now I think there are some operators up there in Oregon who have some high grade who can get by, and maybe make some money, but not very many. According to Fay Bristol, he claims he can't do it. He may shave it pretty close and get in on some, but it seems to me that this business of establishing a stock pile at Grants Pass just kills our northern California folks.

Mr. BRADLEY. Well it doesn't do very much for northern California, I will say that, but there is a great question as to what you would get out of northern California at best.

Mr. ENGLE. Do you think the southern Oregon ores are better than northern California?

Mr. BRADLEY. They are; yes. Unfortunately they are.

Mr. ENGLE. At least there is more high grade there?
Mr. BRADLEY. More high grade, more usable stuff.

Mr. ENGLE. Don't you think it is important that we get out this low grade in northern California and make some agreement to concentrate it?

Mr. BRADLEY. Well, what you are doing then is getting out a few thousand tons of stuff that is not up to standard. If we had started something like this 4 years ago, and had our reserve in, and know what to do with the low grade concentrates, as we don't now, it would be worth while probably going after that stuff, but today, you don't know what you are going to do with it when you get it. Mr. ENGLE. You know for four years I have been trying to get that program going. It has been 5 years.

Mr. BRADLEY. I wish more people would listen to you. The thing is today, we are brought into an emergency position where we have to go after the best there is in order to have anything, where we have to have real production.

ESTIMATED CHROME PRODUCTION UNDER PROPOSED PROGRAM

Mr. ENGLE. In your honest opinion, Mr. Bradley, how much chrome do you think this program that has been mentioned here today will get out?

Mr. BRADLEY. In the period of 2 to 3 years, up toward 200,000 tons, someplace of that magnitude. Five years you might possibly get out 500,000 tons, if they are lucky up there. If they get the patterns, those boys up there now think they are beginning to get the geological patterns and incidentally, because of the assessment moratoriums being taken off last year, they did some digging for the purpose of assessment work and there were some diamond drills, they turned up some information that I think gives them a guide for further discovery. On the basis of past records, the production might be no greater than 200,000 tons in that period. I am hopeful of it myself.

Mr. ENGLE. Very frankly, I think this best illustrates better than any case could possibly do the fallacy of paying a set price and making that the price, rather than working on differential premiums. When You pay the price as you do here, some fellows can make some money. If a fellow has a lot of high grade he can make a lot of money, but a differential premium, which is essentially a cost-plus operation, within limits, would bring out just as much crome as you want. For instance, you would go on a premium to $130 or $140, if you had to, you would bring out more of this, wouldn't you?

if

Mr. BRADLEY. It would bring out more but you wouldn't bring out as much as you want.

Mr. ENGLE. And won't be paying people who had a lot of high grade more money than they actually need to bring it out, would you? Mr. BRADLEY. That is true.

Mr. ENGLE. I know you haven't always figured the premium price program, but you had some misgivings about it. I suspect before we get through that it is going to be recognized as about the only practical method that you can use in this kind of a situation.

I will be very frank to say to you that I am very unhappy about this chrome program.

DEFENSE PRODUCTION ADMINISTRATION DIRECTIVE LIMITS PURCHASES TO HIGH-GRADE CHROMITE

Mr. LYON. Mr. Engle, I would like to read to you an excerpt of a letter which James Boyd received from the Production Administration, signed by Edwin Gibson, regarding our chrome program. He is the Deputy and Manager of this division, under Harrison. He says, "EPS should negotiate long-term contracts with domestic producers at above market price, if necessary to secure additional high grade chromite for the national stockpile.

Now we are limited to high-grade chromite in our directive from this Defense Production Agency.

Mr. ENGLE. Do you think that is sound?

Mr. LYON. I think that we should make some provisions for the low grade too, but as far as I can tell from the information I have received, there is not enough of low grade ore developed to justify any kind of a milling operation and that is what it is going to take to make low grade marketable but we are limited to the purchase of high grade in this letter. That is as far as we can go. We are a recommending agency and when we recommend something they either agree or send something back that we have to live up to.

Mr. REGAN. They limit you to high grade?
Mr. LYON. Yes.

DISCUSSION OF MARGINAL DEPOSITS AND POSSIBLE DEVELOPMENT

Mr. REGAN. I wold like to ask Mr. Bradley a question. I don't come from a hard mineral country but I am very much interested and have been listening to a lot about these marginal mines of all types of minerals, of which there are hundreds all over the country.

Mr. BRADLEY. That is right.

Mr. REGAN. They cannot be operated profitably, and these prices now for instance on tungsten of $63, and on chrome of 115, still leaves those marginal mines where they can't operate and make any money. Now presumably, according to the testimony we have here, if those marginal mines could, through operations, not only recover some of the strategic minerals we need but might lead to the discovery of additional minerals that you indicate the prospectors might find if they wanted to risk their time and capital, they might find some more high-grade chrome in northern California-isn't it going to be necessary to get those marginal mines in operation, to get those oldtime prospectors to get out with a burro, and pick and hammer, and to offer him some premium-price arrangement rather than give a price of $115 that is, according to Mr. Engle, presumably, going to make three miners or men, Bristol, Robertson, and Brown, all rich, but the fellows that we are trying to help at the same time will still not be benefited. How are we going to benefit those marginal miners and get the job done we feel should be in the interest of this country?