(d) Imediate domestic benefit The use of these processes would provide an outlet for domestic ores and serve as a stimulus for the domestic mining industry, seriously needed at the present time. The long-range minerals program of the Department of the Interior reached Congress in 1957 as S. 2375. At the hearings before the Subcommittee of the Senate Committee on Interior and Insular Affairs, Secretary Seaton's statement with reference to proposals for payment of production bonuses, in part reads as follows: "The basically short world supply, coupled with the strategic nature of three of these minerals-namely beryl, columbium-tantalum, and chromite 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 of these commodities from domestic sources." V. WHAT NEEDS TO BE DONE What needs to be done is favorable action leading to a Government contract on either or both proposals. With a contract assured: (a) United Western Minerals Co. will, with private funds, build the facilities required and furnish operating funds to fulfill the contracts. (b) United Western Minerals Co. will provide the patented processes for use in implementing proposal 1. (c) United Western Minerals Co. will provide the know-how obtained from more than 15 years of development, research, and engineering. (d) The Government must provide some sort of incentive; that is, to share the undertaking with United Western Minerals Co. This can be done in a number of ways. Among them are: 1. The Government would contract to take the total production at the proposal prices. 2. United Western Minerals Co. could introduce the products to the commercial market. In the event that the full production could not be marketed commercially, the Government would agree to purchase the unmarketed production. It is estimated that during the initial part of the contract period, the Government would be required to purchase a large part of the production. 3. The Government may desire to enter into a loan-purchase contract. (e) The United Western Minerals Co. would continue research work and pilot operations using its electrolytic chrome patents which show promise of eventually making chromium metal produced from Montana concentrates competitive to present practice of introducing chromium into steels and alloys. VI. EFFORTS MADE TO INTEREST THE GOVERNMENT (a) Prior to 1958 Work on processes to make domestic chrome ores and concentrates usable and eventually competitive with imports was started in 1939, just before our entering World War II. The War Production Board and the Bureau of Mines cooperated generously during this phase. The Advisory Committee of the WPB approved our process for reduction roasting to produce an acid soluble iron which when leached would raise the chromium content and raise the chromium to iron ratio to yield a product suitable for production of ferrochrome by standard practice. Erection of production facilities was suspended along with all domestic chromite mining operations when African shipping lanes were reopened. Private financing and continuation of the project was also rejected at this critical time. Research and development work was resumed at the close of the war by the Pacific Bridge Co. and a pilot operation was run for more than 2 years. Reviews of the results and price analyses were discussed with different Government agencies in 1947 and while interest was expressed nothing positive was accomplished even though private capital was being expended to achieve a method of utilizing our domestic reserves economically. In 1954 the Western Machinery Co. sponsored the project and a proposal was submitted to the Government. The Office of Defense Mobilization, the Department of the Interior, and the General Services Administration exhibited intense interest in the process and proposal. Nothing came out of the negotiations and could not without a directive from Office of Defense Mobilization to purchase 27255-58-pt. 2- 24 high-quality chromic oxide and chromium metal at below market price and made from Government-owned concentrate. Meantime our Government was continuing to pursue its program of developing chrome ore reserves in foreign countries which it is now clear would be quickly cut off in the event of an international conflict. Privately sponsored research, development, and engineering continued and, in January 1957, after encouraging meetings with Department of Interior officials, a proposal was then made to convert part of the Montana chrome concentrate tonnage to chromic oxide and chromium metal at considerably less than market cost of these products. The proposal was submitted to Mr. George Beitzel, Assistant Director, Office of Defense Mobilization on February 22, 1957, and meetings were arranged by ODM with the Department of Interior (Bureau of Mines) and the General Services Administration. Verbal enthusiasm for the product prices was expressed by all three departments and we were again informed a directive from ODM would be required. No acknowledgment or receipt of proposal or rejection was ever received from the Office of Defense Mobilization. (b) Since January 1, 1958 United Western Minerals Co. on January 20, 1958, submitted a proposal for the upgrading of domestic ores and concentrates into chromium metal and chromic oxide to Mr. Gordon Gray, Director, Office of Defense Mobilization. Discussions were held with the ODM and a meeting was arranged by them with the Department of Interior (Bureau of Mines). United Western Minerals Co. then submitted proposal 2 in April 1958. That is the situation at the moment. (c) In conclusion American private enterprise at its expense has endeavored to partially cure a serious deficiency of a strategic domestic material using subgrade domestic resources. Meanwhile, the Government has demonstrated no desire to actively participate in this development work. Our proposals enable the Government to recoup its per ton investment in submarginal material and receive high-grade products at considerably less cost than it can purchase them at market prices. This is the immediate advantage to the Government and one which can be understood by all. The other advantages which I have enumerated have to do with strengthening our domestic industrial base and thereby increasing our national security against the possibility of world conflict. Prices per long dry ton offered by General Services Administration for domestic chromite (base 48 percent Cr2Os, chrome-iron ratio 3:1) delivered to Grants Pass, Oreg., 1951-57 12 1 Fractions appearing on analysis reports are prorated in computing premiums and penalties. * Prices shown are for lump ore; payments for fines and concentrates are $5 a ton lower. Mr. SIMPSON. The Government has contracted for the purchase of 900,000 tons of chromite concentrates within 8 producing years, having a minimum grade of 38 percent chromic oxide content. This contract is over 50 percent completed. Due to the low-grade quality of this concentrate, it is not economically usable in its present form for either metallurgical, chemical, or refractory purposes. It is assumed that the total Government investment in this undertaking will be approximately $75 per ton including transportation costs, or a total of $68,500,000. Unless some action is taken by the Government for the processing of these concentrates into commercially competitive products, the Government stands to lose its original investment. United Western Minerals Co. has made two proposals to the Government which, if accepted, would not only redeem the original investment but return to the Government a substantial dollar savings. By the use of its patented process, United Western Minerals proposed that 55,000 long dry tons of the Montana concentrates be processed into chromium metal and/or chromic oxide, of high purity, inert and easily storable in containers. A series of choices were offered. If the Government elected to contract for both chromium metal and chromic oxide, this would result in a net savings of $6,616,000. In this connection I would like to point out that chromium metal would be delivered at a cost to the Government of $0.83 per pound as against the going market price of $1,29 per pound and chromic oxide at a cost of $0.34 per pound as against the going market price of $0.385-$0.415 per pound. If the Government elected to contract for chromic oxide alone, in the form of easily storable extruded pellets or powder, this would reflect a dollar savings of $3,840,000. This product would be delivered to the Government at $0.32 per pound as against an assumed average market price of $0.40 per pound. If the Government elected to contract for chromium metal (exothermic) alone, this would reflect a net dollar savings of $14,926,000. Finally if the Government elected to contract for carbon reduced chromium metal, a quality product which would meet or better market specifications for same, this would reflect a dollar savings of $17,640,000. This product would be delivered to the Government at $0.65 per pound as against the going market price of $1.25 per pound. All the prices I have given include the Government investment, hauling, and freight charges of delivery to eastern seaboard locations. This series of proposals was submitted to the Office of Defense Mobilization on January 20, 1958. Still another proposal was presented April 3, 1958, to the Department of the Interior. This step was taken in light of testimony given by Secretary Seaton before this committee on S. 2375 during 1957. Secretary Seaton made this cogent observation: The basically short world supply, coupled with the strategic nature of three of these minerals-namely, beryl, columbium-tantalum, and chromite 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 of these commodities from domestic sources. The offer made to the Department of the Interior proposed that United Western Minerals convert the submarginal grade Montana chromite to a metallurgical grade, meeting or bettering Government base metallurgical specifications. The Government would be credited its commitment for concentrate purchasing, hauling, and freight (freight on delivered tonnage of products) and delivery of the finished product to the eastern seaboard at the incentive chrome purchase price. 3 The price under the chrome incentive program is $115 per ton for ores and concentrates with 48 percent Cr2O, and a chromium to iron ratio of 3:1 with established premiums and penalties for variations from the base. It appears that the Department of Interior will be unable to take any action on this proposal without a directive from the Office of Defense Mobilization. It also appears that under current policy, the Office of Defense Mobilization lacks interest in the utilization of domestic submarginal ores and minerals even though the proposals made reflect a substantial dollar saving to the Government. There are other values to the Government in the proposals which we have made. Among those are the following: (1) An in-being plant would be available to produce from domestic submarginal Montana concentrates the high-grade product and byproducts which I have listed, as future contingencies and a national emergency may require. (2) The high-grade products that would be produced with the submarginal grade concentrates could be conveniently stored in strategic places throughout the country ready for immediate use. There would be no loss or dissipation of these byproducts in storage. (3) In the event of an international conflict, foreign sources for chromite now amounting to well over 90 percent of our annual requirements would be cut off immediately. Nine months or longer would be required to construct plant facilities to use domestic ores and concentrates under such emergency conditions. The cost of construction would be high and material priorities highly involved. The probability exists that the increased demand for chrome-bearing steels would exhaust our stockpile before the conflict was over even though restrictions on chrome uses were applied. This would almost certainly be the case in the event of a prolonged conflict. (4) There is little likelihood that present stockpiles of chrome of grade presently desired would carry over into a period of rehabilitation following an international conflict. The need for metallurgical chrome products would be increased during the period of rehabilitation. (5) Utilization of the patented processes held by United Western Minerals would provide a much-needed outlet for domestic ores and thus serve as a stimulus for the domestic mining industry. Mr. Chairman, that is all I have to say at this time. The CHAIRMAN. Are there any questions? Mr. REDWINE. Just what is the history of this patented process? 1 Mr. SIMPSON. Mr. Redwine, the processes that the company has been working on for the past 3 years actually started in 1940 with experimental work done by various companies on the Pacific coast, in conjunction with Dr. A. W. Patterson. Engineering has been done by some companies such as Western Knapp, Monsanto Chemical, and there has been some economic work done by Arthur D. Little & Co. Mr. REDWINE. Is it economically proved? Have the metallurgicals and the economics been worked out? Mr. SIMPSON. The economics have been completely worked out and the pilot plant tested over a period of 4 years. Mr. REDWINE. How large a capacity does the pilot plant have? Mr. PATTERSON. The pilot plant was run while I was with Pacific Bridge and Pan American Engineering, and we had a split plant. The furnacing had to be done batchwise, 25 tons a day furnacing operation, and the rest of the plant was running at 10 tons a day. Mr. REDWINE. What kind of ores did you put through there? Mr. SIMPSON. We were using the Montana concentrate, the Oregon concentrate, and the Phillipine concentrate, all of low-grade quality of less than 40 percent. Mr. REDWINE. Did you have equal success with the three types of ores? Mr. SIMPSON. Very much identical. Mr. REDWINE. Mr. Simpson, perhaps you might want to refer this to your attorney: The proposal that you made some time ago to ODMGSA, just what is the status of that? Mr. SHEA. There has been no action taken of any character what soever. Mr. REDWINE. Did you have an extended conversation or conference with them, in respect to the process or anything like that? Mr. SHEA. Yes, sir. Dr. Patterson and I appeared before Mr. Gray and Mr. Hughes of ODM and we also appeared before Mr. Shannon, Mr. Mold, and Mr. Hayes, of Interior. That was back in January of this year, January 21 and 22 of this year. That refers to our first proposal. That, in turn, refers to our patents. We have had no action of any character whatsoever in respect of those patents or growing out of those hearings. Mr. REDWINE. Let me ask you this: Did you file your second proposal because you were discouraged with the lack of action on the first one, or would you prefer the second proposal? Mr. SHEA. We made it very clear when we filed our second proposal, which was on April 3 of this year, that we wanted both proposals considered, not one in lieu of the other but we wanted to have both approved. I personally presented that proposal to Mr. Hardy and to Mr. Shannon, of the Department of the Interior. We have not heard anything concerning that second proposal any more than we heard anything concerning the first proposal. Mr. REDWINE. Mr. Simpson and Dr. Patterson, I will address this question to both of you: Assuming that you received approval and the ODM was ready to enter into a contract with you on either one or both of the proposals, how soon could you start? Mr. PATTERSON. Both plants could be in operation within 8 months. |