INSTRUCTIONS

1. Note carefully that gross value is calculated by multiplying the ceiling price by the pounds by rule 13 not the zinc-equivalent pounds.

Tri-State margin scale-Recoverable grade versus operating margin (rock ton)

NOTE: 20 cents per rock ton is to be added to the operating margin when the operator owns his mill. In converting PbS to ZnS equivalent use factor of 1.4.

TAILINGS OPERATIONS

Margin: One cent per pound of recoverable zinc metal plus 1⁄2 cent per pound of recoverable zine metal for ownership of milling and hauling equipment. Recoverable metal: Percent recoverable grade X percent concentrate grade X 90 percent (smelter factor) X2,000 pounds.

82354-52-8

2.0

1 "Cents per pound" of premium metal determined by rule 13,

17

SAN MANUEL COPPER COMPANY CONTRACT

Mr. D'EWART. Speaking of the testimony of Dr. Boyd, yesterday, regarding the proposed contract with the San Manuel Copper Co., he stated:

No, sir, that is not correct.

The contract is not cost plus 7 cents. It is only a floor price. The Government does not buy unless the price of copper falls below that price.

Would you indicate a little more clearly what you meant by the floor price and not below that price?

Dr. BOYD. It really means, Mr. D'Ewart, that the company can expect to produce copper for the period of the contract and will never during that period get a price less than that indicated in the contract. In other words, if the market for copper disappeared or went down materially, the Government would then be required to buy the output of that mine at that price, but the Government would not come into the picture at all until the price of copper went down to that point. That was a contingent undertaking.

Mr. D'EWART. With an escalator clause?

Dr. BOYD. Yes, there is an escalator clause.

Mr. D'EWART. And the price that you will get for copper, as I understand it, is 7 cents over the market?

Dr. BOYD. No, sir.

Mr. D'EWART. Unless it hits the floor?

Dr. BOYD. No. The price is well below the market, some 6 or 7 cents below the market. In other words, he can go and sell his copper at the market when he gets into production, at the market price, and retire his debt.

Mr. D'EWART. On today's market what would he get for copper under this contract?

Dr. BOYD. Twenty-four and one-half cents.

Is there any floor

Mr. D'EWART. Twenty-four and one-half cents. Is there under that at all?

Dr. BOYD. No. There is a ceiling, but no floor.

Mr. D'EWART. No floor under it whatsoever, no minimum price! Dr. BOYD. That is right.

Mr. D'EWART. In other words, he has to follow that market as it goes down?

Dr. BOYD. That is correct.

Mr. D'EWART. Regardless of whether he makes a profit or not? Dr. BOYD. That is correct. Unless the market price gets down to the level specified in the contract and then the Government will be required to buy the metal.

Mr. D'EWART. What is that?

Dr. BOYD. There have been some negotiations since I have seen the contract. It is about 17 cents, as I remember.

Mr. D'EWART. About 17 cents. Isn't that for all practical purposes the floor?

Dr. BOYD. That is right.

Mr. D'EWART. The minimum price?

Dr. BOYD. Yes.

Mr. D'EWART. That is what it seems like to me.

Seventeen cents is

the minimum under the contract for all practical purposes.

Dr. BOYD. That is correct.

Mr. D'EWART. That is what I wanted to get.

MEANS OF PROCESSING MONTANA CHROME DEPOSITS BEING STUDIED

One more subject, chromium: As you know, we have quite large deposits in my district and we are very much interested in developing that chromium deposit.

What is the status of the contracts with regard to those chromium deposits?

Dr. BOYD. They are just in the initial stages of working out the procedures I mean the kind of contract that the company will have to enter into in order to get its chrome projects into operation. The company must do a lot more work on that before they can really give us a firm proposal.

Mr. D'EWART. You have an application?

Dr. BOYD. As I understand it, yes, I think we have.

I

Mr. D'EWART. And it is in your agency at the present moment? Dr. BOYD. I am not sure that it is or not. I can't remember. don't see them all come through my desk, but we have been discussing it with the company. Whether they filed a formal application on it, I don't know.

Mr. D'EWART. It is your opinion that you have quite a ways to go before they get a firm contract on chromium deposits?

Dr. BOYD. Yes. They haven't solved finally the metallurgical problem yet.

Mr. D'EWART. You are not going to try to solve that before you get out our chromium ore, are you?

Dr. BOYD. It would be useful if we could. I think we are on the

way.

Mr. D'EWART. I agree with you, but you have been working on that ever since the last war, taking out some ores and shipping them down to Colorado and making a study.

Dr. BOYD. Yes.

Mr. D'EWART. And since chromium is vital to the war effort, you may have to make some contracts, I would think, before you get the final answer for processing that particular ore.

Dr. BOYD. Yes, sir.

Mr. D'EWART. I would think it would be necessary, since chromium is so short, is such a strategic material, that you make some effort to immediately get out some of that ore.

Dr. BOYD. I think so, too, sir. The timing is a serious question. You have a substantial stockpile of chromium in this country which gives you time, if you are forced today to go into this hurriedly, to go out and set that plant up. It is much better for Montana, for the country, to be able to develop that thing into a going economic operation, which can survive after the emergency is over. If we rush into these things before we have to, we don't do ourselves a service. Mr. D'EWART. I agree with you, but I am very much afraid that if we have to have the final word on processing that ore it won't be available for this war.

Dr. BOYD. We are looking for security for longer range. I assume we are not going to have a war. We are looking for our long range security rather than a war that might be in existence right now.