atory work in Labrador-have they not?-so that they might have the availability of large resources and funds, and so on? Mr. FAIRLESS. As I understand the Labrador development, it is a company and it is made up of stockholders, and those stockholders consist of Canadian people as well as American steel producers and iron-ore producers. Mr. MICHENER. In other words, it is a question of competition. You are in Venezuela, and you have your project outlined to get your ore from Venezuela. You are already planning your blast furnaces where you are going to use it, and the people in Labrador are competitors. They are developing the Labrador fields, and they are outlining where they are going to use and blast their steel. It seems to me that is the best illustration of competition, if you own a large part of the reserves. On the one hand, your company is in Venezuela with your goods and wares, and the other companies formed a company in which they own most of the stock, and they are going to Labrador to obtain their commodity. Mr. FAIRLESS. That is right. Mr. MICHENER. And the two commodities are going to meet on the American market in competition, the kind of competition that the members of this committee, I hope, want. Mr. FAIRLESS. That is exactly the story, better stated than I could state it myself. Mr. WILSON. I have a question. You have no great alarm about iron ore running out in this country in the near future, Mr. Fairless, I take it from your statement? Mr. FAIRLESS. No; I have not. Mr. WILSON. There is some great need for more know-how in developing and using some of the ore that is not quite as high in iron content as the best ore? Mr. FAIRLESS. That is right. Mr. WILSON. Another question with regard to your setting the price on iron ore-do others own enough of the iron-ore deposits in the Mesabi Range and over the country so that, if your price on iron ore was too high, they could buy it from others? Mr. FAIRLESS. Definitely. Mr. WILSON. You would call that fairly competitive; would you not? Mr. FAIRLESS. Yes. The iron-ore market is definitely competitive and always has been. The CHAIRMAN. Mr. Fairless, we had testimony here by one whom we deem an expert, Dr. Boyd of the Bureau of Mines, who gave testimony a bit counter to what you state with reference to how long iron ore would last in this country. He said that the iron-ore reserves in this country would only last 15 years. He did not speak of taconites; he spoke of the iron-ore reserves. Would you agree with that? Mr. FAIRLESS. Well, our estimates-you are talking about the highgrade ores in Lake Superior? The CHAIRMAN. Yes; the high-grade ores in Lake Superior. The CHAIRMAN. What I would say is that usable ore, presently usable ore, not taconites, but presently usable ore, would last only 15 years. Mr. FAIRLESS. You must realize-and I assume Mr. Boyd gave you the facts-there is a lot of iron ore used in this country today 35- or 40-percent iron content. You take your ores in Alabama-that is the iron content of those ores. They are being used daily. So, when you say "usable ores," you cannot make the statement that iron ore with an iron content of less than 51 percent is not usable ore. The CHAIRMAN. I remember distinctly Mr. White, one of your conferees, who is head of Republic Steel, sitting at the place you are Occupying now, saying that 35-percent iron content in the ore was "lousy" iron ore and could not be used. He used the word "lousy." Mr. FAIRLESS. They must be using it down in Alabama. We are. I would not call it "lousy" ore. The CHAIRMAN. In any event, we have the testimony of Dr. Boyd of the Bureau of Mines that, taking all the usable iron ore, there would only be 15 years' supply. Now, is it not reasonable to assume- The CHAIRMAN. You do not agree? Mr. FAIRLESS. No; and knowing Mr. Boyd and knowing how thorough the Interior Department have been, I am of the opinion that Mr. Boyd must have been referring to the so-called high-grade ores of Lake Superior-in other words, the ores with an iron content of 51 percent or thereabouts-and was not really referring to all usable ores. The CHAIRMAN. I must respectfully differ; but, however, let's go on. If, for example, there is an inexhaustible suply of iron ore in this country, why do you go to Venezuela? Mr. FAIRLESS. Why? The CHAIRMAN. Yes. Mr. FAIRLESS. Oh, my! The CHAIRMAN. I ask you if the supply is inexhaustible in this country, why do you go to Venezuela? Mr. FAIRLESS. Cost and also preservation of our high-grade ores. The CHAIRMAN. Would the cost of iron ore at shipside after it is brought from Venezuela be cheaper than the ore coming out of the Mesabi Range or down in Alabama and brought to your plants? Mr. FAIRLESS. Oh, yes. We anticipate it. We have not brought it here yet. The CHAIRMAN. Then you anticipate that there will be no rise in the price of iron ore when you tap the reserves in Venezuela? Mr. FAIRLESS. I am not setting the price of iron ore for the future here this morning. The CHAIRMAN. If there is no increase of cost to you and there may be a decrease of cost to you in the use of Venezuelan ore, would that mean there would be no increase in the price of iron ore when brought to the docks from South America? Mr. FAIRLESS. Well, it all depends on many other factors. The CHAIRMAN. You do not care to project so far into the future? Mr. FAIRLESS. I am not wise enough to. The CHAIRMAN. You do not want to be bound at this time by any statement here? Mr. FAIRLESS. The point is, I do not have the facts. Keep in mind we have not yet built a railroad, nor has anyone else; we have not built ships to transport this ore to this country; we do not know what the freight rates from the ports will be at the time that ore is available. Would you expect me now to make a statement to you that there would be no change in the selling price of the ore? The CHAIRMAN. You said that you are going to Venezuela because you felt you could get higher-grade ore in Venezuela and that it would be cheaper for you. Mr. FAIRLESS. Relatively. That is a relative term. The CHAIRMAN. Relatively cheaper for you. Mr. FAIRLESS. Keep in mind there is a limitation on where the Venezuelan ores can be used in this country. I do not, for example, have any idea that Venezuelan ores can be used in the Chicago district in competition with Labrador ores or Lake Superior ores. But, by the same token, if all cost factors remain as they are today, ores from Venezuela, according to our projected costs, will be cheaper laid down on the eastern seaboard of the United States, and to a certain portion inland, perhaps as far west as Pittsburgh, at least competitive, and in some cases with an advantage costwise over existing ores. The CHAIRMAN. Despite the fact that you may have to build an expensive railroad to bring the ore from the Sierra Bolivar mines to the Orinoco River or to the coast of Venezuela? Mr. FAIRLESS. Yes. The CHAIRMAN. Despite the fact that you may have to build steamers with a tonnage of up to 45,000 tons, according to your aide, despite those costs, you feel that the cost of iron ore landed in this country would be cheaper than taking the ore out of, say, the Mesabi Range, because the iron ore in Venezuela would be of a higher-grade content! Mr. FAIRLESS. And the distance, I have tried to make it clear. It all depends on where the ore is used as to whether it is competitive or not. The CHAIRMAN. I understand that completely. Mr. FAIRLESS. Are you talking about Chicago? The answer to your question then is "No." The CHAIRMAN. I take it that there may be differences in the cost of transportation from shipside at the docks. I was mentioning shipside at the docks. I hope, in view of what you have said, that we will not have to be confronted with a situation, say, 5 years from now when you say that the ore from Venezuela costs much more than the ore taken out of the Mesabi Range. I hope; I do not know. Mr. MICHENER. Mr. Chairman, we have just had an argument that is quite akin to this in the Congress, on gas. I come from Michigan, and Michigan has two pipelines from the Texas and Oklahoma fields bringing gas up there. Panhandle Eastern's rate is based largely on the cost of bringing the gas up there. That pipeline was erected a few years ago before we had the high cost of production and before the Big Inch cost so much to manufacture. So that the Wisconsin Western brought in a new pipeline on the other side of the State. Now, Detroit uses gas, and you have to get it from one of these pipelines. The one pipeline can furnish it based on the cost of their plant originally, and the other, if they sell any gas in Michigan, must take into consideration the cost of bringing it to Michigan. Therefore, it costs more. Last week we had quite a discussion over the Kerr gas bill. That was the real heart of the thing. They could not predict when they put in the Eastern pipeline 5, 6, or 7 years ago that the gas would not cost more in the future. Is that not true? Mr. FAIRLESS. That is right. Mr. MICHENER. What I want is to see Labrador developed. Mr. MICHENER. I know if you do get the ore in Michigan and the Great Lakes section, and if your ore all comes in at least three ports on the seaboard where you are contemplating landing it, that the processing plans will be erected near the port of supply. It will leave us out in Chicago, Detroit, and the Great Lakes region, unless Labrador and the St. Lawrence seaway are developed, to make us competitive with you; is that not true? Mr. FAIRLESS. Absolutely true. Mr. MICHENER. Speaking sectionally, I do not like to see your company or any other company control all of the supply on the seaboard in my friends' territory. I would rather see competition. I would rather see Labrador ores come down there, brought by these other companies, and compete with you. Mr. FAIRLESS. That is right. The CHAIRMAN. Are there substantial supplies of taconites presently? Mr. FAIRLESS. Oh, yes. The CHAIRMAN. Have you any idea how long that would last at the rate we are going, without Venezuela or Labrador or Liberia? Mr. FAIRLESS. Certainly, over a hundred years. Mr. MILLER. Five hundred. The CHAIRMAN. It would cost a considerable amount of money for the beneficiation of such taconites? Mr. FAIRLESS. Yes, Mr. Celler. If we just kept on using-I am now referring only to Lake Superior-if we just kept on using our high-grade ores until we reached exhaustion and then changed overin the meantime, of course, developing the methods for concentrating the taconites, and then swung over, just swung over overnight, so to speak, to taconites-you would have a tremendous impact on our economy in this country because you would have a much higher cost iron ore unless our technological improvements-and we are certainly working on it-can come up with something that will alleviate that impact, or at least to some extent. Now, it is our theory that the American steel industry should do three things, and they are being done: that is to develop, make certain that we have developed, all the available iron ores in this country of the highest quality. Likewise, we should move forward with the development of the methods in order to use our taconites; and, in order to supplement both of those measures, we should develop outside sources of iron ore and, obviously, in order to be competitive those outside sources must be high-grade ore. In other words, if you imported or attempted to import 50- or 51percent-iron-content ore from Venezuela into this country, it would not be competitive at all with the same analysis ore from Lake Superior. But, even if that were true, we still cannot wait, if Mr. Boyd's estimate is 15 years and someone else says 25-let's assume it is 30— we cannot afford, this great country of ours, to gamble with that period of time. The CHAIRMAN. We are gradually reaching a danger point if we do not seek other sources of supply? Mr. FAIRLESS. That is what this industry found out years ago, and that is why we are at it, and I think we should be complimented and certainly no one should be critical of it. The CHAIRMAN. I am not critical of your doing what you have done with reference to Venezuela or other places. Mr. FAIRLESS. I join with you. We are absolutely together. The CHAIRMAN. The question of iron ore has a very important impact on our national defense; has it not? Mr. FAIRLESS. Definitely. The CHAIRMAN. As our distinguished colleague from Ohio said the other day with reference to the transportation of ore from Venezuela, that ore might be subject to depredation and attack by enemy submarines crossing the expanse of water from the mouth of the Orinoco to shipside here in the United States; is that not correct? Mr. FAIRLESS. That could be, of course. The Great Lakes are vulnerable also, you know. The CHAIRMAN. I hardly think they are vulnerable from Canada. Mr. FAIRLESS. I hope they are not. The CHAIRMAN. Would you think that we might well stockpile iron ore, commence stockpiling iron ore from the Mesabi Range, a good grade iron ore? Mr. FAIRLESS. No; I think the greatest way to stockpile iron ore internally is the way nature provide it. We will get it out of the ground. The CHAIRMAN. Yes, but if the high-grade ore is going to last 15 or at most 20 to 25 years, unless, of course, there is some processing now developing that will make the taconites reasonable in cost, why, then, we would have to rely upon ore conveyed to us from far-away parts subject to the dangers I have indicated in times of emergency. Mr. FAIRLESS. I think, Mr. Chairman, that the answer to your question-and it is a worthy question for consideration-is being solved. In other words, I agree with you that, just as soon as we can, this industry should begin using taconites. The United States Steel Corp. realized that years ago. We have a concentrator, you know, in operation, and we have been using about a million tons per year since 1910 of this low-grade ore. The reason for doing it was so that we would be in step here and be ready to meet this emergency when it came. Now, what we intend to do-and I hope others--we are not going to hold back our development of taconites because of the discoveries in Venezuela or Labrador. We are not going to do that; we are going to push them forward. The CHAIRMAN. You feel the time has not come when we should do any stockpiling? Mr. FAIRLESS. I still think the best place to stockpile iron ore is in the ground. Mr. McCULLOCH. Mr. Fairless, Bethlehem Steel is now importing ore from South America; is it not? Mr. FAIRLESS. Yes. I say yes; I assume that they have started. They have been importers of ore from Cuba, I believe, and also Chile |