LONG-RANGE PROGRAM FOR MINERALS INDUSTRY FRIDAY, JUNE 20, 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. Frank Church presiding. Present: Senator Frank Church. Also present: Robert Redwine, staff consultant; George Holderer, staff engineer; and William Broadgate, of Senator Murray's staff. Senator CHURCH. The meeting will come to order. The hearings that have heretofore been held by the Interior Committee on the proposal of the Secretary of the Interior with reference to lead and zinc will continue this morning. I take great pleasure in welcoming to the committee my very good and able friend, the distinguished Senator from Missouri, Mr. Symington. Senator, we are very pleased to have you here and we appreciate very much the benefit of your statement. STATEMENT OF HON. STUART SYMINGTON, A UNITED STATES SENATOR FROM THE STATE OF MISSOURI Senator SYMINGTON. Thank you very much, Mr. Chairman. It is a privilege to appear before an expert on this question of metals and minerals and I thank you for this opportunity. Mr. Chairman, thanks to you and Senator Murray and other members of the committee for giving me this opportunity to appear today. In order to save the committee's time, I would ask that there be inserted in the record at this point a brief statement on the problems of the lead and zinc industry which I made on the Senate floor June 13. It deals with the seriousness of the industry situation and urges prompt action. Senator CHURCH. The statement will be incorporated in the record of the proceedings at this point. (The document referred to follows:) THE CRISIS IN THE LEAD AND ZINC INDUSTRY Mr. SYMINGTON. Mr. President, the lead and zinc mining industry in my State, and also in other States throughout the country, is in a serious depression. In Missouri, employment in this industry is down about 25 percent from what it was only a year ago. Furthermore, those who have retained their jobs have taken severe wage cuts, as well as reductions in their workweek. A substantial number of miners have already exhausted their unemployment benefits, and, unless something is done promptly, the unemployment will increase and the distress of these workers and their families will worsen. As is true in many basic extractive industries, entire communities are adversely affected when the lead and zinc mining business is depressed. No one in these mining communities is untouched by the spread of economic distress. The various proposals which have been made for assisting the lead and zinc industries include renewal of Government purchases for the strategic stockpile, barter agreements under the provisions of Public Law 480, increase in tariff duties, and compensatory payment legislation. Proposals alone, however, do not help the industry, and certainly do not put people back to work. Action is needed-and it is needed now. As long ago as last September 26, the lead and zinc industry appealed to the Tariff Commission for relief; hearings were held in November; and the Tariff Commission made its recommendations to the President on April 24 of this year. So far, the President has taken no action, even though almost 50 of the 60 allowable days have already elapsed. Delay in this decision has not only prolonged the distress of the industry, but also has had the effect of delaying action on other proposals. The proposals which would give the most immediate assistance to the industry would be the stockpiling and barter proposals, which would relieve the market of some of the depressing effect of surpluses. As for longer range assistance, the compensatory payment principle, as embodied in a recent proposal from the administration, appealed to me as being worthy of thoughtful consideration. I understand the chairman of the Committee on Interior and Insular Affairs is moving promptly to hold hearings on this proposal. Action must be taken promptly to assist the lead and zine industry, so that the unemployment can be eliminated and the employed can be allowed a reasonable take-home pay. Senator SYMINGTON. From information just received, it appears that further layoffs of labor in this industry are likely to take place in the near future. Assurance that prompt action will be taken by the Congress would, I believe, prevent the deepening of this hardship and distress. As the members of the committee know, I joined those outstanding metals and minerals experts from Montana, Senators Murray and Mansfield, in the sponsoring of S. 3600, a bill which provided for a Government stockpile purchase program for copper, lead, zinc, and manganese ore, and also for the continuation of the purchase program for several other strategic minerals and metals. This action would have been a temporary but effective solution to permit stabilization of employment, and also a relatively steady flow of income while more long-range programs were being worked out. Therefore, Mr. Chairman, it was very disturbing to me to learn recently that copper was to receive this immediate and direct assistance but that lead and zinc were not. I understand the Secretary of the Interior explained to the committee his reasons for favoring a stockpile program for copper and for withdrawing that important metal from his proposed stabilization program. It is not my purpose today to debate the merits of that decision, but I do want to emphasize that this argument will carry no weight with me if some prompt and effective action is not also taken to assist the lead and zinc industry. The executive branch of the Government has long been in a position to take administrative action under the provisions of the escape clause, and thereby give some assistance to the lead and zinc industry without any action on the part of the Congress. I do not say that such action would solve the problems of the industry, but I do say that failure to take such action places a heavy burden of responsibility upon this administration, for much of the deepening difficulties in which the lead and zinc industry now finds itself. Since the administration seems to have turned down the tariff possibilities and has refused to act effectively through the barter provisions of Public Law 480, and seems unwilling to extend the stockpiling program for lead and zinc, it would appear that the compensatory payments method as proposed in the stabilization program is the practical alternative available. The principles of this program have merit, as does the adoption of Senator Allott's proposal for the small operators. I am not ready to say that the stabilization prices proposed by the Secretary for lead and zinc are sufficient to bring a reasonable degree of prosperity into the industry as a whole. In any case it does appear, however, both sound and fair that action be taken to draw off the market a significant portion of the surplus which is currently holding prices below an economic level. Such action would not only tend to have a stabilizing effect upon the industry at this time, but would also give the longer range compensatory payments program an opportunity to start out with some reasonable anticipation of success. For those individuals and those communities whose livelihood is at stake, action on lead and zinc now is just as important as action on copper. To us in Missouri, frankly, it is even more important. In conclusion, therefore, may I emphasize that the favorable decision already taken on copper is in my opinion indefensible unless there is likewise prompt and effective action taken for lead and zinc. I thank the Chair for allowing me to make my presentation this morning. Senator CHURCH. I certainly want to thank you, Senator Symington. I concur heartily in the sentiments you have expressed here this morning. My State, too, is primarily concerned with the lead and zinc problem, and it seems to me that if it is necessary, even though on a temporary basis, to stockpile additional quantities of copper, then equal consideration should be given to the lead and zinc industry which is faced with an equally serious depression, and also with large quantities of lead and zinc available that need to be taken off the present market. I just want you to know that we appreciate your coming here and that your statement will certainly be helpful to the committee in trying to find an adequate solution to this dilemma that now confronts the domestic mining industry. Senator SYMINGTON. I thank you, Mr. Chairman. Some years ago it was my privilege to be in charge of the overall stockpile program, and I think I know something about it. There is no difference between the stockpile problems of copper and the stockpile problems on lead and zinc. A few miles from one of our great metropolitan centers, St. Louis, especially in that now that their unemployment insurance is running out, you have tens of thousands of people who are getting in very serious trouble from the standpoint of employment, because as you know where there are lead and zinc mines in general the land is not such as to produce on a favorable comparative basis of the average crop. That is our situation. What worries me is that we have so many plans and programs for helping people in other countries, none of which do I object to, and all of which I think should be considered carefully from the standpoint of our future security as well as their future prosperity. But on the other hand, it becomes increasingly difficult for me to swallow some of these programs when I see what I consider the callous approach that is now prevalent in at least some categories to this increasing problem of our own citizens and our own country and our own States. Senator CHURCH. I want to again express the appreciation of the committee, Senator Symington for your statement. Senator SYMINGTON. Thank you. Mr. REDWINE. Mr. Chairman, may the record show that the hearings on the stabilization are now closed? Senator CHURCH. The record may so show. The hearing is now closed. Mr. REDWINE. Mr. Chairman, I would like to have printed at the close of the hearings a number of statements and letters from Senators, individuals, and corporations pertaining to the long-range minerals program. Preceding those, however, I would like the staff memorandum entitled "Stocks of Refined Copper, April 30, 1958," inserted. Senator CHURCH. It is so ordered. (The staff memo and the other exhibits referred to by Mr. Redwine are as follows:) [STAFF MEMORANDUM] STOCKS OF REFINED COPPER, APRIL 30, 1958 Although total stocks of refined copper in hands of producers at April 30 were at a postwar high of 501,500 tons, the surplus overhanging the market was not at great as it might appear. Analysis of the Industry's Stock position based on reports to Copper Institute and United States Copper Association shows the following: Stocks of refined copper reported by Copper Institute, Apr. 30, 1958 1 Nonindustry stocks principally held by London Metal Exchange and New York Commodity Exchange totaling 32,546 tons are not included. Estimate based on minimum requirements experienced during periods of copper shortages. Stocks of refined copper in hands of United States fabricators have not increased materially during the buildup period at the refineries. At April 30, the estimated surplus at fabricators' plants amounted to less than 5 percent of their stocks and any upturn in deliveries could put the fabricators in the deficit position that they were in as recently as last December. The principal increase in stocks which has created the surplus at United States refineries has occurred since last December. Prior to that time surplus stocks at the refinery had averaged 60 percent of a month's supply and offset a constant deficit at fabricators' plants where stocks were kept at a constant ratio commensurate with the fabricators' volume of business. The real cutback in copper stocks occurred at the ultimate consumers' plants where stocks were consumed at a high rate as the copper price declined from 46 cents to 25 cents. Surpluses at United States refineries are believed to be the equivalent of inventory reduction by ultimate consumers. Outside the United States, consumption of copper has continued at high levels. Stocks have decreased 26,915 tons from the first of the year and as the above calculation indicates there is, at the most, 17,000 tons of copper in excess of the amount required to keep pipelines full. Purchase of up to 125,000 tons of refined copper from stocks at United States refineries at 27.5 cents per pound would remove a major part of the producers' surplus and have the immediate effect of establishing a 27.5 cents price in domestic markets. As the foreign price is strongly influenced by the domestic price, an increase in domestic price would result in higher prices in foreign markets. To complete this transaction, we believe it will be necessary to purchase 50,000 tons over the balance of the year in addition to regular purchases under contract of General Services Administration. One hundred and seventy-five thousand tons of copper at 27.5 cents per pound would cost the Government $96 million which would be in addition to regular stockpile purchases for 1958. As against this expenditure, the administration's proposal of a subsidy of 32 cents per pound on 1 million tons of domestic output in support of a 27.5 cents price would cost the Government $70 million annually. A subsidy, however, would add nothing to the Government's strategic resources and would result in stimulating production from unneeded marginal properties and be a deterrent to a possible price rise. NATIONAL ASSOCIATION OF WASTE MATERIAL DEALERS, INC., Hon. JAMES E. MURRAY, Chairman, Interior and Insular Affairs Committee, Senate Office Building, Washington, D. C. SIR: Reference is made to the domestic minerals stabilization bill (S. 3892), which is pending before the Subcommittee on Minerals, Raw Materials, and Fuels of the Senate Interior and Insular Affairs Committee. The members of the Metal Dealers Division and Secondary Metal Institute, two commodity divisions of the National Association of Waste Material Dealers, Inc., earnestly request that S. 3892 or similar legislation not be reported to the Senate. The reasons for the above request are contained in the attached short statement. It will be appreciated if you will have the statement made a part of the record at the hearing on S. 3892. Very truly yours, CHARLES RUBENSTEIN, President, Metal Dealers Division. President, Secondary Metal Institute. STATEMENT OF THE METAL DEALERS DIVISION AND SECONDARY METAL INSTITUTE, NATIONAL ASSOCIATION OF WASTE MATERIAL DEALERS, INC. The National Association of Waste Material Dealers, Inc., the oldest trade association actively representing the various branches of the secondary raw materials industry throughout the United States, is now in its 46th consecutive year of service to the waste material industry. The association has eight separate commodity divisions. Two commodity divisions of NAWMD are the Metal Dealers Division and Secondary Metal Institute. The Metal Dealers Division is composed of nonferrous scrap dealers, and the Secondary Metal Institute is composed of firms which produce secondary metal from nonferrous scrap. The 500 members of these 2 divisions represent, in volume and gross tonnages, the largest segment of the waste-material industry. The domestic production of primary copper, lead and zinc is not adequate to supply total United States requirements and the secondary metal industry is an important source of nonferrous metals for thousands of domestic firms. The copper recovered from scrap in the United States is equal to about 85 percent of the copper produced from domestic ore, and lead scrap consumption in the |