NO SHORTAGE OF IRON ORE

(By John G. Munson, vice president, raw materials, United States Steel Corp. of Delaware)

There is no shortage of iron ore. Reserves of iron ores in the United States of the kind in use at this time, plus additional usable ores are estimated to total more than 77,000,000,000 gross tons, divided by regional districts as follows: Iron ore in the United States

1 Source: The Iron Ores of the United States, by Dr. C. W. Hayes published in Bulletin 394 of the Department of the Interior, U. S. Geological Survey, reprinted from Report of the National Conservation Commission, February 1909. Production 1903-1949, inclusive, as shown by Minerals Yearbooks, U. s. Department of Interior has been deducted, and 200 million tons have been added in the Western District to recognize recent work in Utah covered by U. S. Bureau of Mines Report of Investigation 4388, November 1948. Excludes 218 million tons of titaniferous magnetite, none of which is owned by U. S. Steel.

The estimated reserves of United States Steel are shown also in the above tabulation.

What is taking place today in the iron-ore industry does not involve a present ore shortage, but rather a reevaluation of various possible future sources of supply. Recent discussion of the subject however may have confused those not familiar with the facts into believing that this Nation is short of iron ore.

The Lake Superior district ores having higher iron content never were expected to supply the steel industry of the United States forever, and various American steel companies have been planning accordingly for a long time past. The current talk of an iron-ore shortage has come solely from the foreseeable exhaustion some years hence of the deposits of higher-iron-content ore in the Lake Superior region.

A twofold solution of this problem is being carried out in ample time by many companies in the steel industry. First, they are seeking through new processes and new beneficiating plants to increase the use of the immense quantities of lower-grade ores in the Lake Superior district, thus husbanding the supply of direct-shipping iron ore of higher grade remaining in that district.

Second, various steel companies are undertaking active and large-scale developments of extensive ore bodies in North and South America and in Africa further to supplement and conserve domestic ore rserves. It is highly probable that the use of such lower grade domestic ores and the importation of such foreign ores will at some time in the future amount to tonnages in excess of those which have come from the Lake Superior district in the past.

United States Steel today is progressing energetically toward the development and utilization of such lower-grade domestic ores and also toward bringing into production its iron-ore deposits in Venezuela. There is no limitation upon any other steel company to prevent it from embarking upon similar programs, if it so desires.

THE ORE SITUATION IN THE LAKE SUPERIOR DISTRICT

Some detailed background with respect to the Lake Superior region is desirable for a better understanding of the iron-ore situation. Ore from the Lake

Superior district originally was able to compete with leaner local ore deposits, such as those found in Pennsylvania and other districts nearer the steel mills because of its higher iron content. In the early years of the steel industry, Lake Superior ores from the Marquette, Menominee, Gogebic, and Vermilion Ranges carried in excess of 60 percent metallic iron as mined. As demand increased, it was necessary to mine lower-grade ores in the Lake Superior district in order to secure the large tonnages needed. Thus, with the advent of production from the Mesabi Range in 1892, the average iron content dropped slowly to 55 percent, and by 1911 it had reached about 51.5 percent which continued until about 1945. Since the war a further decrease has occurred, 1949 shipments averaging only 50.4 percent.

This gradual reduction in the high quality of ore used occurred even though there has been a consistent effort by the ore and steel industry to improve the quality of the ores by beneficiation. In 1910, United States Steel made its first shipments from the Trout Lake concentrator built by it in the western Mesabi area. This was the first large beneficiation plant to make lower-grade ores available for shipment in a form suitable for blast-furnace use. Beneficiation has shown consistent progress since that time. Of the total Lake Superior ore shipped in recent years, more than 25 percent has been been beneficiated. Over the years, United States Steel has shipped more than 65,000,000 tons of concentrated low-grade ores, which represents about 25 percent of the total of such ores produced from the Lake Superior district to date.

Each reduction in the average iron content of the Lake Superior ores and each increase in the proportion of beneficiated ores results in an increase in the volume of usable ore reserves throughout the country. It can be anticipated that this trend will continue as time goes on.

Ore deposits containing as little as 20-percent iron are being profitably worked in Europe today, and such ores have been in common use in England and Germany for many years. Iron ores as low as 30 percent are today in use in some places in the United States. It is not alone the iron content of these ores which determines their usability: it is the broader question of how they can be mined, treated and converted at a cost which permits the steel products resulting therefrom to be sold in competitive markets.

UNITED STATES STEEL'S ORE PROGRAM

In the decade following 1900, the period of major iron-ore exploration in the Lake Superior district occurred. United States Steel played an important part in this study, and it was during this period that much of the present knowledge of these ore deposits, particularly in Minnesota, was gained.

The iron-ore reserves acquired by United States Steel in 1901 were for the purpose of taking care of its ore requirements for many years ahead. Since United States Steel relies almost exclusively upon its own iron-ore deposits for its steel production, a thorough study of the extent of these deposits was essential to the formulation of plans for its future steel-making operations. The assurance of iron ore supply for an extended period of years was necessary before the Gary, Ind., steel plant could be built.

The heavy recent drain on its iron-ore reserves in this country has made it advisable for United States Steel to make additional provision for its future iron ore requirements. This involved not only the need for the development of new and better beneficiation methods, but also the formulation of a program to make available foreign ores, in order to supplement and conserve domestic ore reserves.

UNITED STATES STEEL'S ORE HOLDINGS

In 1912, holdings of iron ore by United States Steel in the Lake Superior region were estimated at 922,592,585 tons, on the basis of assessments made by State taxing authorities. The holdings of other owners were estimated at 1,100,570,491 tons. At that time, United States Steel, holding 46 percent of the estimated total deposits of ore, was producing slightly in excess of one-half of the total steel production of the United States.

Except for relatively small acquisitions or exchanges of adjoining ore properties, made from time to time in order to facilitate the mining of ore from its own deposits, United Steel has not acquired any large iron-ore properties in the Lake Superior district since 1912, but, on the contrary, has relinquished some properties containing substantial ore deposits.

Recently, some taconite leases containing a relatively small area have been obtained by United States Steel largely by competitive bidding.

At the present time, United States Steel's ore holdings in the Lake Superior district, as compared with the total ore resources of that district, are as follows:

These resources are held by more than 200 owners; 29 different concerns are mining iron ore in the district, 10 of which are affiliated with steel-producing companies.

Dr. James Boyd, Director of the United States Bureau of Mines, in testimony before this subcommittee, estimated that the Lake Superior district contains 1,600 million tons of ore reserves of the kind presently in use. If this total figure is accepted as more accurate than the one used in the foregoing table, United States Steel's participation in these Lake Superior district deposits becomes closer to 43 percent, than 51 percent.

STEEL-MAKING CANNOT BE MONOPOLIZED BY CONTROL OF IRON ORE

Scrap is an important raw material in the production of steel. It replaces pig iron in the open-hearth furnace, and thus offsets the use of a much larger tonnage of iron ore.

During the last war and for many months after its close, the steel industry was severely plagued by shortages of scrap. Nation-wide drives for scrap to keep the mills operating were sponsored by the steel producers and were supported by Government agencies. But the other principal raw material, iron ore, was delivered by private industry as needed, despite shortages of men and equipment and many other vexatious problems.

Ore reserves and the distribution of their ownership cannot be considered comprehensively without recognizing that, on an average basis, about onehalf of the steel originates in scrap charged into the open hearths. More than that, each ton of scrap is approximately the equivalent of 2 tons of iron ore. Thus no amount of control of ore reserves would constitute control over a large percentage of the metallic iron needed for finished steel products.

United States Steel has never purchased as large a percentage of scrap for use in its furnaces as most of its competitons. And its plants consume proportionately higher percentages of iron ore in their steel-making operations than its competitors. This results in the need for a comparatively larger ore supply than that of most of its competitors.

United States Steel has been consuming about 39 percent of the ore shipped from the Lake Superior region in recent years. To the extent that it has produced ore in excess of this percentage, up to 49 percent in recent years, it has sold this excess ore to those who desired to purchase ore.

It is a matter of common knowledge in the steel industry that several of our competitors have made long-term arrangements for only a portion of their ironore requirements, anticipating that in periods of high steel demand they would increase their use of scrap and buy their additional ore requirements in the open market. As a result of this policy, such competitors have a considerable advantage over the United States Steel during periods of low-level operations, which was the case in the steel industry during the depression.

During such periods of low-level operations, the heavy taxes on their ore deposits paid by United States Steel and other companies holding long-term ore supplies, constituted a greater tax burden than was carried by those competi tors who did not have large reserves. Taxes paid by United States Steel dur

ing past years on ore remaining in the ground in its Lake Superior deposits constitute a very large charge on each ton of remaining "direct shipping" ore.

REAPPRAISING RAW MATERIAL SITUATION IN POSTWAR PERIOD

The wartime demands and the postwar requirements for steel products have created conditions which bear little resemblance to those of the prewar period. United States Steel, like many other companies, has had to reappraise its entire raw material situation.

The competitive position of United States Steel in the steel markets of the future will depend upon its ability to assure continuing dependable sources of iron ore for a long period of time. Investments in new steel mills, improvements and modernization of existing steel plants, can be justified when there is assurance of adequate iron ore supplies.

Investment of capital in new ore properties is of course a financial risk. Only the competitive value of the ore from each district over many years will disclose how extensively each ore deposit can be developed.

Other factors also must be taken into consideration.

Coal, transportation, and plant construction costs have increased to an extent that it is becoming progressively more economical to do a portion of the refining and beneficiation of raw materials before they are shipped. This requires more capital investment at the mines instead of at the furnaces. The coal-beneficiation program of the United States Steel is well started, and the demonstrated efficiency of this operation also will have an effect on the development of the future ore program.

In the light of these circumstances, United States Steel has intensified its exploration and research programs since the war. Its engineers and scientists have sought new methods of processing low-grade ores to make them suitable for economical blast furnace use. Its geologists and prospectors have set out to discover new foreign sources of high-grade ores. Their combined efforts were directed toward assuring economical steel production in the future.

As a result of its own research and exploration, United States Steel seeks to provide the ore supply necessary for the production of steel in its plants at a minimum increase in costs.

Its program provides for the development of 25,000,000 tons of annual iron-ore production capacity from new sources during the 20 years from 1950 to 1970. These new sources will be taconite concentrates and Venezuelan high-grade ores. How the total development of 25,000,000 tons will be divided between the two sources of supply will depend on the competitive cost of the ores as the development progresses. These ores will be supplemented with such other available ores as may be necessary to supply its ore requirements for use and sale.

CONTINUING THE POLICY OF OFFERING IRON ORE FOR SALE

In 1939, United States Steel adopted a policy of offering iron ore for sale. It will continue this policy. It will apply this policy not only to the supplies of domestic ores, but also to the supplies of Venezuelan iron ore which it expects to tap in the relatively near future.

The taconite concentrates and new Venezuelan natural ores will contain more iron units per ton than the present average ores used in the United States. Their use will increase blast-furnace capacities, resulting in more pig-iron production per furnace. Much of the increased future steel requirements predicted by many economists will be provided by the use of these higher-grade ores without any material increase in blast-furnace installations. The new ore program will require large capital expenditures in plant and equipment, from the mines to the steel-producing facilities.

The program of United States Steel also requires a number of important considerations beyond the problem of finding and developing new sources of suitable

ore.

The Lake Superior mines can be continued in operation only by an integrated program, starting at the mines which supply the iron-bearing ores, and continuing all the way through to the steel mills. The steel-making process must start at the mines in the form of a refining process that will prepare the metallics from the ore for further treatment at the furnaces.

The communities in the mining districts of the Lake Superior region are dependent upon the working of the mines which for three generations have been the principal source of iron ore in this Nation. The trained organizations and the physical facilities are valuable assets in the Nation's economy.

96347-50-ser. 14, pt. 4a- -44

Thus, during the 1930's United States Steel expended large sums to maintain its mining and transportation facilities and organizations in the Lake Superior district. The mining equipment and personnel were kept occupied by stripping overburden from ore bodies and preparing ore for shipment. This private enterprise and investment, made during adverse times, materially assisted in meeting the subsequent war-created demand for ore.

Similarly, the welfare of many in our Nation depends upon trade with other countries. It has become increasingly important for American industry to increase its purchases of foreign raw materials, if it, in turn, is to sell its products abroad. The development of economic foreign ore sources, supplementing domestic supplies, thus promises greater balance of trade which is so essential to this Nation.

United States Steel's production of iron ores from its proven 415,000,000 tons of recently acquired Venezuelan deposits, as well as likely productions from other deposits in that country not yet explored, should do much to promote this very necessary trade over the future years with this progressive South American country.

UNITED STATES STEEL IS PREPARED FOR THE FUTURE

The security of this Nation, whether in the future we have war or peace, demands an adequate steel industry supported by an ample iron-ore supply with out any subsidy from Government.

United States Steel is prepared to provide basic raw materials for its steel production for the foreseeable future. It has acquired the necessary iron-ore deposits and it has the needed personnel and know-how to mine and deliver these

ores.

MODERN RESEARCH: ITS CONTRIBUTIONS

(By Dr. R. E. Zimmerman, Vice President-Research and Technology, United States Steel Corp. of Delaware)

In the fourth annual report to the President by the Council of Economic Advisers, December 29, 1949, the following statement appears on page 10:

"In a stable and expanding economy there is room both for well conducted big business (with its unique facilities for scientific and developmental experimentation) and for small business with its display of individualism and selfreliance."

United States Steel, in keeping with its policy and its position in industry, is equipped with the “unique facilities” mentioned in the statement, and has been busily engaged in "scientific and developmental experimentation" for many years. A long list of new and improved products, as well as processess, attest the value of its activities in the field of industrial research, with benefits accruing to the producer, the customer, and the ultimate user of steel in the form of consumer goods. These results are made possible by the ready availability and coordination of many kinds of technical skills, which can be brought to bear in sufficient force and number to cope expeditiously with the work projected. A number of typical developments will illustrate how research plays its part in a large basic industry, supplied with a substantial amount of scientific manpower and equipment to handle the extensive problems arising in the sphere of steel.

ON TIN PLATE ALONE: MORE THAN 40 YEARS OF RESEARCH

Tin plate is an important factor in the lives of the American people every day of the year. Relatively few persons have had occasion to give tin plate much serious thought, and many do not know precisely what it is; nevertheless, millions lean heavily upon the service it performs. One channel through which that service comes is the preservation and distribution of foodstuffs. Canned foods in hundreds of varieties are readily available to the consuming public, in season and out, with a degree of reliability which has become proverbial, because tin plate has made possible the production of containers which meet the difficult and diversified requirements of the canning industry. Those requirements have been increasing in difficulty and diversity year by year, and tin plate, by virtue of intensive research and development, has kept in step with them.