CONTAINED NITROGEN NI

MILLION NET TONS

stockpile for use in national emergencies. Imports of these in 1971 ranged from 100 percent of U. S. demand for such metals as thorium and strontium, to 75 percent of platinum group metals, 64 percent of tin, 54 percent of antimony and so forth. In all but a few, the United States must import a large share of its requirements.

Nonmetallic minerals represent a broad range of materials of vast importance to the economy, including construction materials, such as sand and gravel, clay, cement rock, gypsum; the fertilizer minerals, nitrogen, phosphorous and potassium; and such others as salt, corundum and garnet, sulfur, barium, calcium, quartz, etc. The nonmetallics produced in the United States in 1971 had a value of $5.9 billion and for the most part fulfilled domestic requirements for these materials. A notable exception was potash, which has for seven years been entering the country in increasing amounts.

To summarize, this portion of the report illustrates a widening gap between domestic demand and production over the past 20 years. It also makes clear the increasing dependence upon foreign sources for many primary minerals and fuels. Examples of major mineral imports are shown in the table below:

through 1968. Imports have been a major source of lead supply throughout the past two decades but relatively less so in the past five years as domestic mine production has risen,

Too numerous to elaborate on in the basic report were many other

mineral industry concerns have yielded to more economically attractive foreign sources for minerals as well as for end-products fashioned from minerals because of lower costs, higher grades of ores, and broad incentives to extraction." According to the report, the pitfalls of such reliance include: "Growing nationalism in some foreign areas ... shifting foreign ideologies... growth of the 'value-added' concept in foreign nations price and production controls through national coalitions

worldwide increases in demand harden raw material availabilities and prices shipping strikes compromising of national security

socio-economic and political

shifts..."

Having traced an historical upswing in major fuel and mineral imports, the report examines the question of whether domestic reserves and resources of minerals and fuels are sufficient enough to warrant expanded development, which could help check future rising imports. Despite near or total dependency upon foreign sources for some minerals, the report states that the "resources of the United States generally are such that its position among the family of nations remains enviable." In some instances, we are reaching a state of inadequacy irrespective of how diligently we search for additional sources. In other instances, such as major nonmetallics and coal, domestic reserves are large.

The report emphasizes that one of the stipulations in the Mining and Minerals Policy Act of 1970 calls for an appraisal, by the Secretary of the Interior, of the mineral industries' ability to meet future domestic mineral requirements. This was done by extrapolating to 1985 and 2000 the past 20-year trend of domestic primary production for each commodity by straight line projections (see page 60). Conceding that straight line projection may not be the best indicator, the report states that it gives a common unified base for all commodities, noting also that production histories over the past two decades for many minerals are relatively linear.

The total mineral picture emerges in fig. 10, which stresses the magnitude of projected deficiencies in domestic mineral supply in relation

Percent

45

45

44

Cadmium

100

Asbestos (long-fiber, iron-free)

42

Mercury

100

38

Gypsum

Diamonds (natural, gemstones and industrial)

35

Barium

100

Mica (sheet)

34

Selenium

100

Quartz Crystal (natural, electronic

(grade)

30

Iron

100

Strontium

to demand in the years 1985 and 2000. In 1970 alone, fig. 10 indicates, mineral production fell $8.6 billion short of domestic primary demand. Should this trend continue, a $31 billion deficit is predicted in 1985, and by 2000, the nation will experience a $64 billion deficit.

The report identifies and outlines the following problem areas and recommends opportunities for constructive action:

• Domestic demand for petroleum and natural gas exceeds readily available domestic productive capacity. Reliance upon imports of petroleum and natural gas is increasing at alarming rates. Domestic petroleum demand in 1971 was one-fourth supplied by imports, natural gas imports continue to rise. According to the report, both industries need encouragement to develop reserves estimated to be adequate to supply demands to the year 2000.

The lag in development of domestic mineral resources, the report states, leads to increased dependency on imports and this gives rise to three interrelated problems, as follows:

• Expropriations, confiscations,
and forced modifications of agree-
ments in foreign countries already
have severed the flow to the U.S.
of some foreign materials pro-
duced by United States firms
operating abroad and have made
other materials more costly,

• United States industry is en-
countering far greater competition
for foreign mineral supplies, and
• Increasing dependence on for-
eign sources for important mineral
supplies places increasing con-
straints upon the conduct of U. S.
foreign policy and at the same
time threatens stability of the
U. S. economy.

• Investment in development of domestic mineral properties is falling behind. Commenting upon the uniqueness of mining compared to other types of enterprise, the report goes on to note that mine development in the U. S. today generally requires huge investments. Commonly, six or seven years pass between project inception and profitmaking production. Development of domestic mineral resources has fallen behind as investors have become increasingly cautious because of the many uncertainties arising from lack

of firm government policies. Examples include land use limitations, new environmental regulations, severance taxes, real estate taxes, and changes in tax laws covering exploration, development, depreciation and depletion. "Integrity both of the investment and tax bases during project life," the report says, "is an opportunity for federal, state and local governments to foster domestic investment." Suggestions were also made for added tax incentives “. . . to encourage exploration, maintenance of adequate, stable percentage depletion rates and accelerated tax amortization for costs of pollution abatement facilities." Furthermore, the report recommends study of environmental programs "for opportunities to establish better balance between the need for the improvement of our ecology and the need for minerals."

regulations

• Environmental threaten major disruptions of some domestic mineral production. Major segments of the mining industry are threatened with large unanticipated costs resulting from environmental constraints. In fact, environmental regulations have already contributed to the shutdown of some domestic smelters and to reduced operations at others. Also, regulations dealing with sulfur emissions from power plants and steel mills have placed a premium on low sulfur coals. Another problem area has to do with efforts to eliminate or restrict surface mining activity.

The report observes that the need to lessen the impact on the environment by mining and mineral processing operations is recognized by both industry and government and stresses that difficulties in recovering costs involved must be resolved. With a balanced approach to the cost price squeeze, reasonable environmental controls and a viable mining industry will likely result.

Resources research within the Department, the report says, can contribute materially to the delineation of present problems and the advancement of feasible solutions. The report outlines specific opportunities having to do with restoration of mined land, tailings deposits and other dumps, cooperative efforts with the Department of Agriculture in developing land restoration tech

niques, and development of new uses of sulfur.

• Actual and prospective withdrawals of land available for prospecting and exploration may adversely affect domestic mineral development. At the same time that mineral needs are increasing, the amount of land available for prospecting and exploration is being reduced, it is contended. The report says that withdrawals of public lands for establishment of wilderness areas and parks without adequate knowledge of their mineralization is subject to criticism. National interest dictates a need to consider extraction of minerals in such areas.

• Domestic demand for many non-energy minerals has been cyclically lower in the past few years. At the same time, producers have experienced increased import competition. Sharp declines for durable goods in 1970 and 1971 caused lower domestic demand for steel, aluminum, lead and zinc. As a result, metal prices dropped, production was cut back, and profits were down. At the same time there was worldwide over-production of many minerals, forcing domestic producers to base their prices at world market price levels rather than a reasonable mark-up over U. S. production costs. Minerals processors and fabricators have the opportunity to develop new uses and thereby increase demand for their basic products. Maximum efficient use of materials would enhance product value to purchasers, the report contends. The report also suggests the possibility of legislation to deal with disruptions caused by buildups of imports by "establishing a system of temporary orderly marketing mechanisms."

• Trend toward increased importation of processed materials of mineral origin increases balance-ofpayments problems and further reduces employment and investment opportunities in the domestic mining and mineral processing industries. The U. S. is importing more steel, alumina, fuel oil and similar processed materials of mineral origin. Such materials have an adverse effect upon balance of payments, reduce employment possibilities within domestic industries and inhibit mining venture investments. The report

not yet progressed to the point where there is no opportunity to protect domestic industry, a realistic adjustment process should receive serious consideration."

• Instability of government stockpile objectives and potential disposals of government inventories overhang domestic metal and mineral markets and production in periods of lower demand. Government stockpile objectives have risen and fallen over the past 20 years. Present policy relative to the sale of minerals and metals considered in excess of stockpile requirements have been criticized as "posing a constant threat to the stability of domestic producers." Possibilities of sales may tend to discourage exploration and development. The report recommends establishing objectives which assure the mineral industry that holdings have been stabilized and will be used only for the purposes intended.

• Mining suffers from a shortage of manpower. Modern mining systems demand a skilled labor force which can operate sophisticated equipment and observe strict safety standards. However, "an unfortunate public image" plus more attractive opportunities elsewhere and the inherent dangers involved have made it difficult for mining operations to retain skilled workmen. Establishment of vocational training facilities for miners and skilled technicians should be encouraged at the state and federal levels, using federal funds and established educational infrastructures. Steps should be taken to revitalize the college level training of mining engineers and mineral scientists to fulfill the needs of personnel to conduct essential research and development. Legislation (H.R. 6788 and S. 635) to provide assistance has passed both houses and is now in conference.

• Failure of U. S. transportation facilities to keep pace with modern developments is making the movement of mineral commodities in domestic and foreign commerce more difficult and costly. Minerals are major users of the U. S. transportation system, as the following table reveals:

However, canal widths, harbor depths and railroad clearances at times hinder the transportation of mineral commodities or jeopardize exports of them. Moreover, rate structures for moving bulk commodities are sometimes burdensome. The report suggests federal attention to such hindrances and suggests a review of railroad rate structures for minerals and fuels.

• Fundamental research affecting mineral production and use is being cut back when, instead, it should be expanding. The report cites recent closings or redirection of metallurgical and petroleum laboratories away from fundamental research relating to mineral production and use and the general decline in university research in the mineral sciences. These actions come at a time when major research and development efforts are needed, for example, on inadequate high temperature materials, recycling of materials and in the area of conservation in the use of materials and fuels. Cooperative research and development programs between the Bureau of Mines and equipment manufacturers to investigate the development of machinery to probe deeper into the earth and to handle ores more efficiently is recommended. Along these lines, the Interior Department is preparing legislation "to establish a program to promote the development of improved technology for rapid underground excavation." Other research opportunities were enumerated at length in the report.

• U. S government organization and its information base for the implementation of the National Minerals Policy is inadequate. The scope of mineral problems is such that the sum of governmental activities at any one time could produce countercurrents contrary to the intent of P.L. 91-631. There is a need for more centralized management of programs covering natural resources, such as could be achieved by

100% 100%

establishment of a Department of Natural Resources. Furthermore, our capabilities to gather information on domestic and foreign reserves and resources and production requires vast improvement. The report comments that the National Petroleum Council is an effective mechanism for government-industry consultation, but there is nothing comparable covering other segments of the mineral industry. Overseas, more reliable data could be obtained through an expanded corps of mineral attachés stationed in foreign legations.

• The U. S. mineral industry is restricted by government regulations. Domestic mineral producers are restricted from cooperative efforts by antitrust and conflict of interest statutes and regulations. Nevertheless, the report says, problems of the environment, mined-land reclamation, health and safety, mineral beneficiation and recovery, conservation, reclamation, recycling, and exploration for new resources require government-industry-academia operation that has not heretofore been possible in the United States. A way must be found for "Industry Advisory Councils" to meet with government to study and recommend on matters of mutual concern. The report further suggests pursuit of opportunities with foreign countries to assure the availability of minerals needed by the U. S. economy, but which are not available domestically.

CO

As a final recommendation, the report urges that "in view of the present conditions in many sectors of the domestic mining, minerals, metal and mineral reclamation industries, any consideration of new laws and policies affecting them should include a test as to whether the contemplated action will foster and encourage soundness and stability of private enterprise development of our mineral and energy resources."