LONG-RANGE PROGRAM FOR MINERALS INDUSTRY

FRIDAY, MARCH 28, 1958

UNITED STATES SENATE,

SUBCOMMITTEE ON MINERALS, MATERIALS, AND FUELS,

OF THE COMMITTEE ON INTERIOR AND INSULAR AFFAIRS,

Washington, D. C. The subcommittee met, pursuant to recess, at 10 a. m., in room 224, Senate Office Building, Hon. Alan Bible (chairman) presiding. Present: Senators Alan Bible, George W. Malone (Nevada), Henry Dworshak (Idaho), and Frank A. Barrett (Wyoming).

Also present: Senators Richard L. Neuberger (Oregon), and Frank Church (Idaho).

Staff members present: Robert F. Redwine, assistant counsel to the committee, and George B. Holderer, staff engineer.

Senator BIBLE. The subcommittee will come to order.

This is a continuance of the mining hearing.

We are very delighted to have with us this morning a distinguished fellow member of our committee, a man who has demonstrated a great deal of interest in the mining problems.

Senator Neuberger, we are happy to welcome you to this subcommittee.

STATEMENT OF HON. RICHARD L. NEUBERGER, A UNITED STATES SENATOR FROM THE STATE OF OREGON

Senator NEUBERGER. Thank you very much, Mr. Chairman.

I, first, want to say that I am extremely grateful to you for permitting me to go on first this morning, ahead of your own distinguished Governor. I realize that that is not protocol, but we here in the Senate have such a tight schedule, and I am supposed to be at another meeting at this time to discuss Pacific-coast orchard problems.

I sometimes think, Mr. Chairman, that people are like the character in Midsummer Night's Dream, that nobody is ever so busy but what he can tell you how busy he is, but I do want to thank you for giving me an opportunity for a brief moment at this time to make an introduction and leave with you my own statement for your record. I understand your leading witness this morning will be the Honorable Charles Russell, Governor of your own State of Nevada, who is here to speak for the western conference of governors. I want to pay my respects to the Governor, who comes from a State which, traditionally, has been associated with the growth and development of the mining industry. No speaker could be heard more appropriately at a minerals hearing than Governor Charles Russell.

Mr. Chairman, I recently had the privilege of writing an introduction to a reissue of an old book about the great Comstock lode, and I visited in your State many times, and I think I have an appreciation of the necessity of the mining industry and development of minerals to all our Western States, in general, but to your own State of Nevada, in particular.

Mr. Chairman, testifying from Oregon later this morning, after Governor Russell appears, will be Mr. Hollis Dole, director of the Department of Geology and Mineral Industries of the State of Oregon. I know that what Mr. Dole will tell the committee will be factual, forthright, and significant. He is a career official who has served our Oregon State Department of Geology and Mineral Industries under both Republican and Democratic governors. He has been with the department he directs for many years, and no man in the State of Oregon is more conversant with the State's mineral situation than Mr. Hollis Dole. In addition, Mr. Dole, I think, will emphasize to you the fact that our own State of Oregon, with its great mineral potential and its power potential to process and develop those minerals, has shared relatively little in the stockpiling program of the National Government.

Mr. Chairman, rather than impose further on your time and on that of your colleagues and my colleagues, I would like to submit my statement for inclusion at this point in the record. I would ask your indulgence that it appear in full in the record, if that is agreeable. Senator BIBLE. Without objection, that will be the order. (The statement referred to follows:)

PREPARED STATEMENT OF SENATOR RICHARD L. NEUBERGER

Mr. Chairman, last year, when I presented a statement before the Subcommittee on Minerals, Materials, and Fuels of the Senate Committee on Interior and Insular Affairs, I stressed the fact that we seem to be arriving at a point where we could very easily immobilize our own domestic mineral industry. I stressed, additionally, that to allow this to happen would be very poor business because any emergency or unanticipated situation shutting off our imports would be doubly serious if our own domestic industry were unable to expand its production quickly. Let me quote directly from my last year's statement: "We should certainly consider, too, the great cost that must be anticipated if a sudden emergency made necessary the immediate revival of any industry allowed to become wholly inoperative. Skilled workers and modern techniques cannot perform their essential tasks unless some semblance of a domestic industry is maintained. The problem of recruitment and retooling is one that we learned much about not many years ago. We should not be indifferent to the lessons we learned at that time. To make sure that our own mines could be brought into full production with minimum delay makes imperative a program that keeps alive the nucleus of our own domestic mining industry. The program that has operated under the authority of the Office of Defense Mobilization had that as one objective."

I then turned to the question of our national responsibility by stating as follows:

"Whether we continue to breathe life into our own domestic mining industry by tariffs or by subsidies, it is evident that assistance through Government action of one sort or another is inescapable.

"I have one question that always arises when these are the alternatives faced. Isn't it more equitable, since our action is taken in our own self-interest, to spread the burden evenly by payment of a subsidy than to resort to a system of increased tariffs which may jeopardize the program of expanded world trade to which both our parties are fully pledged?

"It just seems to me, Mr. Chairman, that we must answer that question satisfactorily before we pass any legislation designed to operate as a long-range

mineral program. My own State has a small but, nevertheless, significant role to play in supplying certain minerals which would become strategic were the Nation suddenly denied access to foreign markets. Today, Oregon's mining industry faces a most uncertain future. To play its part in the event of a national emergency would be difficult if not impossible unless it is bolstered by a friendly and helpful domestic program."

The uncertainty that faced the mining industry of Oregon last year has now given way to near despair on the part of many Oregonians engaged in mining. This is particularly true in the chrome industry, which is rapidly closing down. The present domestic stockpiling program in metallurgical-grade chrome will grind to a halt in the next 4 or 5 weeks when the quota of 200,000 tons will have been delivered to the Grants Pass chrome depot operated by the General Services Administration.

I am not going to take the time to repeat information that will be presented in the testimony of Mr. Dole. I would like to suggest that Oregon, with one of the highest unemployment rates of any State in the Nation, can ill afford adding further to its unemployed. Yet that is the dark prospect if present mineral policies prevail. Only a long-range minerals program will give the industry the stability that sssures steady employment. A chrome industry in Oregon that in 1956 passed the $2 million mark but slipped to $670,200 in 1957 reflects the lack of confidence in the administration's approach to a longrange mineral policy.

It seems to me, Mr. Chairman, that a paragraph in the January 28, 1958, report of the Special Stockpile Advisory Committee voiced the need for such a policy as it would apply particularly to chrome in these words:

"The committee recommends that a mechanism be established to appraise the possible effects of research and development activities on requirements for hightemperature and other special-property materials. Instead of relying on past use patterns, possible needs 5 to 10 years hence must be surveyed and stockpiles built up as need is indicated."

From the expert testimony gathered at this hearing, let us hope we may find the way to establish, finally, a program that is, in fact, long range. Certainly, the Western States, with their resources of mineral wealth, urgently recommend the development of such a program. But the welfare of the Nation also dictates decisive action in the initiation of a truly long-range mineral program.

Senator NEUBERGER. I also offer for the record an editorial from the January 16, 1958, Illinois Valley News, of Oregon, a March 5 news release from the Oregon Department of Geology and Mineral Industries, and wires that I have received from constituents vitally interested in this hearing.

And I want to thank you for the courtesy and hospitality which I know you will show later on this morning to Mr. Hollis Dole from our State of Oregon.

Senator BIBLE. Thank you very much, Senator Neuberger, and I might add that Hollis Dole is well and favorably known to members of this committee, and has appeared before us on numerous other occasions. He has always been very helpful. We are delighted to have such a fine representative from the State of Oregon.

Senator NEUBERGER. I appreciate that comment, Mr. Chairman. Senator BIBLE. Thank you very much, Senator Neuberger. The material you referred to will be inserted in the record at this point. (The material referred to follows:)

[From the Illinois Valley News, January 16, 1958]

WE NEED TO EXTEND CHROME BUYING

Congress is back in session and the President has submitted his budget. Major emphasis is being placed on national security and a reorganization of our educational system.

While these things are of prime importance, we hope the administration and the Congress will not overlook measures badly needed to bolster the domestic

economy. We cannot place large orders for defense purposes with a few of the big corporations of the country and neglect the rest of the business world. There are two things which are badly needed to keep our local industries producing and to keep money flowing into this part of southern Oregon. They are a major upturn in the home building industry and a mineral policy which will expand our mineral resources development-not only in nickel, but also in chrome.

The chrome purchase depot at Grants Pass is scheduled to close when a total of 200,000 tons has been purchased, or by July 1, 1959. This is the limit of the present authorization and appropriation. This figure is expected to be reached sometime this summer. The report last October showed already bought 158,667 tons, and only 42,333 tons yet to go.

Many of our local miners are wholly dependent on this market. This is the

reason:

The large consumers of chrome, the toolmakers and the automobile manufacturers, are importing all their chrome at much lower prices than is paid for the Government stockpile. If this sales outlet is eliminated, the chrome business will practically close in California and Oregon.

At the time of the First World War the United States depended almost entirely on chrome imports. Some of the ships carrying it here were sunk by the enemy U-boats. When the Second World War came we were again low on domestic production. Luckily we did not lose as much in the ocean shipments.

After the war the Government set a price of $115 per ton for a certain grade of chrome ore, and the purchase depot at Grants Pass was set up. The objective was to stimulate the development of known reserves of chrome in this section, and to bring more into production. The price paid, higher than the world market, did accomplish the purpose to a limited degree. Only recently a large chrome area was located near Happy Camp, Calif., and some of that product is now coming into Grants Pass.

Locally a number of chrome claims were worked and the market outlet has been a great convenience to these operators. They are now faced with not only the loss of this outlet but practically with being forced to discontinue operations, while our own users of chrome continue to buy from abroad.

The Chrome Belt in the United States runs along the coast range from deep in California to the northern part of Oregon. There is also some produced in Alaska.

Are we ever going to learn? Are we always reverting to national mineral policies which freeze out and discourage domestic production?

Locally it will mean the loss of an important source of income, if the Government fails to act to continue measures to stimulate the production of chrome. Under the leadership of the Illinois Valley Chamber of Commerce the civic groups of the chrome producing belt are now being organized to work with the National Minerals Policy Committee with headquarters in Washington, D. C., in an effort to get this purchase program extended and enlarged.

[From Press Release No. 134, State of Oregon, Department of Geology and Mineral Industries, March 5, 1958]

FERROCHROME-PLANT STUDY TO BE MADE

A study on the feasibility of a western plant to make ferrochrome from domestic ores was authorized March 4 in a cooperative arrangement between two organizations within the executive department of the State of Oregon. The two organizations cooperating on the study are the department of geology and mineral industries and the department of planning and development. Purpose of the study is to determine if local processing of domestic ores could sustain mining of chrome in Oregon.

Metallurgical-grade chromite in the United States is found only in Oregon, California, Washington, and Alaska. Domestic mining has been restricted to periods of international stress when chrome shipments from overseas were cut off and incentive prices paid by the Government. At the present time Oregon's chrome mining is for the Government stockpile of strategic materials. The chrome program was established during the Korean crisis. The amount of domestic chrome allocated for stockpile purchase is expected to be obtained within the next few months and as a result chrome mining will cease unless a market can be established.

Both the department of geology and mineral industries and the department of planning and development recognize that loss of this basic industry would be detrimental to the State's economy and hope that some plan can be worked out that will prevent the loss. The ferrochrome-plant-feasibility study is only one of several plans under consideration by the State departments and west-coast chrome miners.

The United States Department of the Interior proposed a plan for subsidization of domestic chrome mining when the national long-range minerals program was presented to Congress last summer. The Secretary of the Interior in presenting the plan, which is considered unrealistic and not workable by the chrome miners, stated, "The basically short world supply coupled with the strategic nature of [chrome] as well as the heavy dependence of the United States on distant overseas sources of supply, underscore the desirability of making every effort to develop and maintain some production from domestic sources." It has been announced that the Department of the Interior is preparing another long-range minerals program for presentation to the Senate Committee on Interior and Insular Affairs.

If it appears that a ferrochrome plant would benefit Oregon chrome mining, the plan will be presented to the Senate committee.

Ivan Bloch & Associates, industrial and economic consultants, Portland, Oreg., have been retained to make the study.

CANYON CITY, OREG., March 24, 1958.

Senator RICHARD NEUBERGER,

Senate Office Building, Washington, D. C.:

Any assistance you can give Mr. Hollis Dole, our department of mining director, who is in Washington, will be greatly appreciate by the Grant County Mining Association.

Sincerely yours,

WM. W. GARDNER, President, Grant County Mining Association.

CANYON CITY, OBEG., March 26, 1958.

Senator RICHARD L. NEUBERGER,

Senate Office Building, Washington, D. C.: Extension of chrome and manganese program would help relieve unemployment needed. As to details would recommend suggestions of Oregon State Department of Geology who have made a study of the situation. Chairman of this board, Hollis M. Dole, is now in Washington to confer with you. I shipped both wars.

I. B. HAZELTINE.

JOHN DAY, OREG., March 26, 1958.

Senator RICHARD L. NEUBERGER,

Senate Office Building, Washington, D. C.: Chrome producers this area urge support of pending legislation for maintaining price support. Will abide by your best judgment.

FRANCIS COLE, Assistant Cashier, Grant County Bank.

Senator BIBLE. Governor Russell, I will welcome you and the distinguished Louis Gordon, the secretary of the Nevada Mining Association, at the head table, if you would like to be seated over here next to Senator Malone.

Senator MALONE. Mr. Chairman, I might suggest that we have Bill Wagner, secretary of the Chamber of Commerce of White Pine County, Nev., and Bob Stopper, who conducts a mining business, here. I wonder if they could sit here.

Senator BIBLE. I have no objection at all; possibly sit right next here to Mr. Gordon.