Mr. LAWRENCE. South African material is up to $30, as compared with $21.50 in 1966. Refractory grade chromite has stayed rather steadily around $18 a ton since 1966. The principal use of refactory chromite is in open-hearth furnaces and, as you know, the openhearths are not being rebuilt. We are going to basic oxygen furnaces in manufacturing steel, so refractory will decline somewhat, although it has held up pretty well to date as far as tonnages from the Philippines.

Mr. FRASER. Let me get at the problem this way. I assume there is sort of a trend line on a price increase of metallurgical chromite. Mr. LAWRENCE. Yes, upward.

Mr. FRASER. That will extend up over a 10-year period and one could look at the trend line before and after sanctions began to see if there is a marked change.

The second way of comparing would be, is there some kind of general index for metal costs? Is there some kind of composite index, taking a half dozen of the more commonly used metal, which would give us a base line like a Dow-Jones average?

Mr. LAWRENCE. I think you could say the majority of the materials, particularly in the ferrous field, have been upward in the last 10 years. All of the alloys have gone up, so that I would say that the steel industry index would show an increase in prices and has followed the prices of alloys and other materials that go into the steel.

Mr. FRASER. What you are saying is that, as far as you are concerned, there has not been any extraordinary, exceptional increase in prices of metallurgical quality of chrome?

Mr. LAWRENCE. I think that the prices that have increased in metallurgical chrome is far out of line with increases in other materials. In my estimation, it is nothing but an attempt by producers to take advantage of a shortage of supply, and if you want to put it crudely, the U.S. steel industry is being gouged.

Mr. FRASER. The U.S. steel industry is being gouged. There are other consumers in the world. Aren't they all being gouged?

Mr. LAWRENCE. I think the Russian price is pretty universal the world over. In other words, other steel companies in other areas would see the same price increases. They may have an advantage that they don't have to pay additional transportation costs that the U.S. steel industry does.

Mr. FRASER. What I am trying to get at is the extent to which, by making a series of comparisons, you might factor out the change in the increase in cost of chrome. I recognize that it may be attributable to a shortening of supply by the imposition of sanctions. Could you try to provide a comparison for the committee?

Mr. LAWRENCE. I would say, if Rhodesian chrome were still available, that the price of metallurgical chromite in the United States would not be as high as it is.

Mr. FRASER. But we don't know by what amount.

Mr. LAWRENCE. No, I don't.

Mr. KYLE. If I understand your question, we could make a table showing price trends in a number of ores since the imposition of sanctions and give you some idea whether the price is increasing proportionately or not. We can provide that for the subcommittee. Mr. FRASER. All right. I think that will be helpful. (The information referred to follows:)

SELECTED RAW MATERIALS PRICE TRENDS AS COMPARED WITH VARIOUS GRADES OF FOREIGN CHROMITE, AVERAGE ANNUAL PRICES 1960-70

1 None published.

2 Metal cents per pound. RMM brand, f.o.b., Laredo, Tex.

3 Metallurgical grade ore (not over 97 percent CaF2). Average values per short ton of U.S. domestic production.

4 46 to 48 percent ore, cents per long ton unit. Manganese has experienced a steady fall in price in the period 1960-71 largely due to increased supply in the world.

Mr. FRASER. I am interested in the supply from Turkey. That apparently is expanding.

Mr. KYLE. Tremendously, sir.

Mr. FRASER. Does Turkey have sources of ore that are capable of future development? In other words, is there a plateau or ceiling in terms of their annual production?

Mr. LAWRENCE. They can go still higher, I think, as they have a considerable body of very good chromite on the Black Sea that is not being mined extensively. It could be mined. It is owned by private families who apparently are not interested in mining this area. There may be one factor that should be stated here, that the availability of Turkish ore may be lessened in the United States in future years because of a recent agreement made by the Japanese Government and the Turkish Government whereby they are going to erect a ferrochrome plant in Turkey which will preempt quite a bit of Turkish ore.

Mr. FRASER. You mean the Japanese are going to invest in a plant construction in Turkey?

Mr. LAWRENCE. That is right.

Mr. FRASER. Where they will use the chrome at that plant for treating alloys?

Mr. LAWRENCE. That's right. Instead of our country having chromite, we will probably have additional imports of ferrochrome. Mr. GROSS. Will the gentleman yield?

Mr. FRASER. Yes.

Mr. GROSS. Mr. Lawrence, do you know whether we are spending any money in Turkey on the development of mines or providing mining machinery?

Mr. LAWRENCE. Not to my knowledge, Mr. Gross. I haven't seen any record of this.

Mr. GROSS. Thank you.

Mr. KYLE. Mr. Fraser, to go back to your question, the Bureau of Mines made an estimate regarding free world reserves and potential resources of metallurgical grade chrome for South Africa, which would be 100 million tons. For Southern Rhodesia, 300 million. For Turkey, 9 million. This is an estimate of the Bureau of Mines in "Mineral Facts and Figures of 1965."

Mr. FRASER. I understand that if the price gets high enough, then it becomes feasible to operate these other mines for ore.

Mr. KYLE. And to develop the mines.

Mr. FRASER. In other words, there is other ore with a lower chrome content or with other properties.

Mr. KYLE. Yes sir. But, again looking at these figures, for example, Cyprus has an estimate of 100,000 tons of recoverable chromite. I don't think Cyprus is going to develop a mining industry based on 100,000 tons. The figures become marginal down the scale.

Mr. FRASER. That is all for the so-called metallurgical trade. If you go to the next page, which is chemical, is it much wider?

Mr. KYLE. No, sir. All I have here is the metallurgical grade. Mr. LAWRENCE. Here is a table, Mr. Chairman, which was put out in a chromite study made by National Materials Advisory Board which should be introduced for the record, which shows you the essential chrome deposits throughout the world.

Mr. GROSS. Did you set out in your statement the increased imports from Turkey? We were importing before the boycott. Have they increased? What about the price of the Turkish ore?

Mr. KYLE. The Turkish or world price is approximately the same as the Soviet Union price. There is a premium paid on the Soviet's and the Turkish price pretty much follows the Soviet price.

Mr. GROSS. So it has increased?

Mr. KYLE. Yes, sir.

Mr. GROSS. And the American purchasers of automobiles and stainless steel pay the bill, is that correct?

Mr. KYLE. The price increase is reflected in the price to the American consumer; yes, sir.

Mr. GROSS. So they pay the bill.

Mr. FRASER. We are consuming about a million tons a year of the metallurgical grade?

Mr. KYLE. Yes, sir; 900,000.

Mr. FRASER. Are we talking of $70 to $72 a ton?

Mr. KYLE. $70 to $72 a ton. I might add that our statements on prices paid are very nebulous and fuzzy because, if you have had any connection with dealing with commodities imported from the Soviet Union, any commodity, it is most difficult to obtain a price because they don't deal in a price structure as we know it. Our international figures, such as on the consumption of rubber products, usually show from free world sources because of the difficulty of obtaining concrete data from the Soviet Union.

So when I say $70 to $72 a ton, this is a good guesstimate on our part.

Mr. GROSS. Are we sending dollars after this Russian chrome? Mr. KYLE. I don't know how this is being paid for. It is being paid for in dollars.

Mr. GROSS. So this contributes to our deficit in the international balance of payment.

Mr. FRASER. Well, that would be true, I suppose, whether we are paying either Rhodesia or the Soviet Union.

Mr. GROSS. Well, we are not paying Rhodesia and this is what this

is all about.

Mr. FRASER. If we ended the sanctions

Mr. GROSS. I think we would be saving. I don't think we would be spending as much for chromite.

Mr. KYLE. Mr. Farrand, in my office, says the Department of Commerce figures indicated last year we imported $60 million of goods and services from the Soviet Union. Of that $60 million, $9 million was in chrome.

Mr. FRASER. In other words, $51 million.

Mr. KYLE. In other goods and services that we imported.

Mr. FRASER. Maybe, for the record, we ought to include our exports to the Soviet Union for the same year. You can probably get that information.

Mr. KYLE. Yes, sir. 1

(The information referred to follows:)

Mr. FRASER. What about Rhodesian chrome? Do you have knowledge of the extent to which any of that has found its way into the world market?

Mr. LAWRENCE. I can only answer from what I have heard. I have never seen any official record of this, but it is quite evident that the ore which is being mined in Rhodesia from the mines owned by U.S. firms is being sold and is under contract for the next 3 years.

I think one of the backups for this is the fact that, if you will remember several months ago, the Treasury Department granted Union Carbide permission to bring in 150,000 tons of chrome ore that had been paid for prior to the imposition of the sanctions.

To my knowledge, they have only received 23,000 tons, and there appears to be little likelihood that they will get any more of the 150,000 tons any time in the near future because of the chrome coming from the mines is under contract to some other country in the world. Who has it or who it is going to, I have no knowledge.

Mr. FRASER. Do you have any information of any kind to indicate where it may be going?

Mr. LAWRENCE. There have been all kinds of rumors. Maybe the Department of State could answer this one better than I could, but whether this information is available, I don't know.

Mr. CROSBY. There are many rumors, but little evidence.

Mr. KYLE. For example, that Soviet ships call in Africa to pick up Rhodesian chrome and transship it to the Soviet Union and then it appears in the United States. We have no proof of this. We have never been able to check this out.

Mr. FRASER. When ore comes in from outside of the United States, is there a test to identify its origin? Who can describe what the procedures are?

Mr. KYLE. It is done by the Treasury Department. They say it is possible, by a chemical analysis. to determine the origin of the chrome since the chome ore has a definite composition. Mr. Farrand says an expert could tell by looking at it when it comes in, but there are tests by the Treasury Department to determine its point of origin.

Mr. FRASER. Are we finding that the Soviets are sending in any Rhodesian ore?

Mr. KYLE. There is no indication of this whatsoever.

Mr. FRASER. Does Rhodesia process the chrome so that they produce within Rhodesia chrome alloys?

Mr. LAWRENCE. I don't think they have any plants of any size. There are several plants in South Africa which is adjacent to Rhodesia. In fact, I know there are at least three big plants there, all of whom ship to the United States.

Mr. FRASER. What is a ferrochrome plant? What goes in and what comes out?