STATEMENT OF HON. GLENN ANDERSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Mr. Chairman, the continued high rate of progress of our nation is largely dependent upon the availability of mineral resources.

I support H.R. 9 because it will help to insure the orderly development of necessary hard mineral resources in the deep seabed.

The importance of these resources has already been stressed in testimony during previous hearings by Leigh Ratiner of the Department of the Interior. Mr. Ratiner stated, "Oil, gas, nickel and copper are commodities so basic to the continuous functioning of our society as we know it, that it would be difficult to describe the state of affairs which would exist in our society and in other similarly situated societies were these commodities to be in short supply or obtainable only at substantially higher prices."

Two of the minerals Mr. Ratiner referred to-nickel and copper-are of particular interest to those of us supporting H.R. 9. Nickel and copper are in great abundance on the surface of the deep seabed.

NICKEL

In 1970, the United States imported more than half of our primary requirements of nickel.

Nickel is particularly important to our economy in the production of stainless steel. Yet only one company in the U.S. produces primary nickel.

Because of the rising world demand for nickel, lower grade deposits are presently being mined and developed in many areas of the world.

Increased demand, coupled with the depletion of nickel mines, will force us into importing even more nickel according to the Department of Commerce.

COPPER

Even though the U.S. is the free world's largest consumer and producer of copper, our copper supply is finite and being rapidly consumed.

Today, in fact, we are importing copper.

In our nation, copper is used primarily for building construction—copper tubing and wiring. The nation's communications' systems and industrial machine industries are also big users of copper.

If we don't develop more sources of copper, according to the Department of Commerce, our copper imports will remain larger than our copper exports, thus, continuing to add to our already critical balance of payments deficits.

By the year 2000, the U.S. industrial demand for copper is estimated at 7.1 million tons, representng a 4.2 percent growth rate.

The demand for both copper and nickel in this country is clearly expected to remain large. Now it is up to us to insure there will be as large a domestic supply as possible without harming our environment.

One rational method, to insure that our nation will have the mineral resources it requires for daily life, is to encourage new methods of development and orderly mining of our resources.

One previously untapped area, the ocean floor, promises to be a very lucrative field for nickel, copper and other mineral resources. But, there is presently no federal or international law regulating the development of the deep seabed in the areas outside federal jurisdiction where a great wealth of nickel and copper is deposited.

The 91-member United Nations Seabed Committee has been directed to plan a third Law of the Sea Conference in 1974 to consider mining of the ocean, among other things.

Unfortunately, the U.N. is not moving quickly in planning and executing a viable conference. The conference has already been delayed a year-from 1973 to 1974. It is entirely possible that the conference could be delayed another full year.

International regulation is by far preferable to a more limited law instituted by one country. International direction would provide more environmetal balance and systematic-development among various countries.

But, realistically, an international agreement does not appear to be evolving in the near future.

To spur international agreements, as well as, meet our immediate needs for additional mineral resources and provide mandatory guidelines for ecologically sound development of the deep seabed, I have co-sponsored H.R. 9.

This legislation would authorize the Secretary of the Interior to promote conservation and orderly development of the hard mineral resources of the deep seabed, pending the adoption of an international accord.

The future well-being of our nation depends, to a large extent, on our supply of mineral resources will, indeed, be depleted eventually, and therefore, we must employ a forward-looking policy concerning our mineral resources.

If we wait until international law is instituted, which may be a period of years, the deep seabed development will be chaotic, probably unfair to developers, and damaging to the environment.

In conclusion, Mr. Chairman, it is imperative that we provide the necessary regulation for deep seabed mining by enacting H.R. 9.

Mr. DOWNING. Our next witness is Mr. John E. Flipse, President of Deepsea Ventures, Inc.

Mr. Flipse.

Mr. Flipse, I remind you of the 20-minute rule and you may proceed as you wish.

Mr. FLIPSE. Thank you, Mr. Chairman.

STATEMENT OF JOHN E. FLIPSE, PRESIDENT, DEEPSEA VENTURES,

INC.

Mr. FLIPSE. Mr. Chairman, my name is J. E. Flipse and I am President of Deepsea Ventures, Inc., of Gloucester Point, Va., the ocean mining subsidiary of Tenneco, Inc., of Houston, Tex.

I would like to thank this subcommittee of the House for calling these hearings to consider H.R. 9, the Deep Seabed Hard Mineral Resources Act.

I intend to use this time mainly to give the members of the subcommittee a clear idea of the commercial restraints that dictated its advocacy by the U.S. marine hard mineral mining industry. The restraints which the legislation seeks to mitigate may be best explained by the statement submitted to this committee by N. W. Freeman, chairman of the board of Tenneco, Inc., last year in hearings on a similar bill, H.R. 13904. I would like at this time to briefly summarize these corporate views.

The Tenneco/Deepsea ocean mining program is now in its 10th year of existence. This program resulted from our identification of an attractive corporate opportunity in the satisfaction of a national need for the constituent metals derived from marine oresmetals from diversified sources which would be free of politically inspired foreign price or distribution manipulation.

Tenneco has invested 10 years and some $20 million in this development effort and has discovered several candidate ocean minesites. It has developed its recovery and ore processing technology to the point now where such technology needs only to be tailored to a particular minesite and individual ore body in order to justify the construction of an operational ocean mining system.

Now, candidate ore bodies differ significantly as to topography and bearing strength of the seabed, depth, current, and weather conditions, distance from support bases, and assay, composition, size,

weight, and concentration of the nodule population. All of these phenomena significantly affect engineering designs, which must be tailored as early as possible to the particular ore body selected.

It is for this reason, Mr. Chairman, that Tenneco feels the critical need for legislation such as the bill before us today. Tenneco must select one minesite now in order to refine its engineering work further. That minesite will be the location of intensive work in the near future and that location will certainly be compromised by the visibility of such work. In addition, once the engineering designs are tailored to that minesite and ore and funds are committed to construct facilities and equipment, a loss or diminution of rights to the selected ore body will be disastrous.

Therefore, the extensive costs associated with the particular minesite must be protected by a preferential right to the selected ore body and that preferential right must vest prior to the time: (a) the minesite location is compromised; (b) the engineering design is finalized, and; (c) the construction costs are incurred.

Deepsea Ventures, Inc., is now prepared to register a claim on its preferred ore body and to immediately begin work thereon. Subsequent to registration of this claim pursuant to terms of legislation in substantial conformity to the bill before us today, Deepsea and Tenneco intend to spend 24 months and $20 million in further defining the specific ore body and in refining engineering designs to conform to minesite requirements. Capital construction and commitment of a further $150 million would begin immediately after this 24-month period, with metals being delivered to market within 36 months of the start of capital construction. This will result in the yearly domestic production of the following approximate quantities of pure metals, with considerable favorable effect on our domestic balance of payments and lessened involvement with the internal mineral and investment policies of foreign nations: Manganese, 500 million lbs.; nickel, 25 million lbs.; copper, 20 million lbs.; Cobalt, 4.500.000 lbs.; others, including molybdenum, vanadium and zinc, 5.500.000 lbs.

Mr. Chairman, in this enterprise Tenneco has assumed the risks normal to private commerical enterprise in the development of pioneering technology and is prepared to continue to assume those risks. But, it is the responsibility of government to minimize the risk imposed on its citizens, including domestic private industry and society in general, by potential conflict in human interaction. The bill under consideration here today is a blueprint for machinery designed to lessen this risk through establishment of rules of conduct and regulation relating to ocean mining.

Tenneco now asks that Government assume, rather than continue to avoid, its share of responsibility by taking the steps necessary to assure the orderly development of ocean resources and protection of investment made by U.S. private enterprise in this development. Your constructive consideration of H.R. 9 will be the first step in that process whereby Government may discharge its duty to assure

secure and diverse supplies of vital metals for the benefit of the American people.

Mr. Chairman, this concludes my summary of Mr. Freeman's testimony.

With your permission, Mr. Chairman, I would like to submit Mr. Freeman's testimony in full form in the record.

Mr. DOWNING. Without objection, it will be inserted at this point in the record.

[The information is as follows:]

STATEMENT OF N. W. FREEMAN, CHAIRMAN OF THE BOARDS OF TENNECO INC., and DEEPSEA VENTURES, INC.

Mr. Chairman, my name is N. W. Freeman. I am Chairman of the Boards of Tenneco Inc. of Houston, Texas, and its ocean mining subsidiary, Deepsea Ventures, Inc. of Gloucester Point, Virginia.

Deepsea Ventures, Inc. was organized in 1968 by Tenneco to further an ocean mining project which had been previously developed for six years within another Tenneco subsidiary, Newport News Shipbuilding and Dry Dock Company. It has often been stated that the justification for the existence of private enterprise in commerce is its ability to identify a human need and provide timely and efficient means to satisfy that need through applications of skill, risk capital, and diversity of approach. At Tenneco and Deepsea, we have identified the need of this nation for diversified and assured domestic sources of manganese, copper, nickel, and cobalt which are not sensitive to the policies or actions of unpredictable foreign nations.

We have identified the manganese nodules of the seabeds below international waters as potential resources capable of assuring our nation of such supplies at a price competitive in world markets. We have invested time, talents, and funds in our ocean mining program, willfully assuming certain natural and commercial risks which are the normal burden of private commercial enterprise.

We find, however, that certain risks exist which are of a legal and political nature. It is the responsibility of government to minimize the risk imposed on its citizens, including domestic private industry and society in general, by potential conflict in human interaction. The Bill, H.R. 13904, under discussion today is a blueprint for machinery designed to lessen this risk through establishment of rules of conduct and regulation relating to ocean mining.

In order that you may be informed of industry's actions and needs related to this proposed legislation, I plan to outline the following points today:

(a) The domestic need for the product of Tenneco's commercial ocean mining activities.

(b) The record of achievement of Tenneco's ocean mining program, its technical quality, commercial feasibility, current status and the level of investment therein.

(c) The critical relationship between the development of legal norms assuring the security of Tenneco's investment and the continued progress of the ocean mining program.

(d) And the need for the Administration to assume its responsibility to ocean hard mineral resource development and to implement the legislation under consideration here today in order to advance the objectives of both the ocean and minerals policy of this nation.

Mr. Chairman, Tenneco has observed that the United States imports 19% of its copper and is almost totally dependent upon imports for nickel at 84%, cobalt at 92%, and manganese at 98%. We import these metals, with the possible exception of nickel, mainly from developing countries which are generally unresponsive to U.S. foreign policy or which are increasingly combining among themselves to manipulate prices upward or to control production and distribution to further their economic and political goals.

Some indication of the U.S. sensitivity to these trends can be seen in the following statistics, keeping in mind that Chile, Peru, Zambia and Zaire (Congo

Kinshasa) have combined in the OPEC-like Council of Copper Exporting Countries (CIPEC) to control some 40% of the Free World copper production.

Tenneco believes that ocean mining of manganese nodules, while not presenting the potential of replacing these established sources of supply, can provide a significant alternate source of metals which will allow consumer countries to bargain with exporting countries from a position of more equal relative strength.

Diversity of sources would not be the only benefit to the ocean mining country. Of equal importance are the benefits to be derived by improving the balance of payments, the impetus given to domestic technological capabilities and the resulting spill-over of the new technology and the relative freedom provided the nation's foreign policy makers by lessened dependence on the internal affairs of the mineral exporting nations. Under Secretary of State John N. Irwin II alluded to this posture in testimony on April 10, 1972 to the House Interior Committee. He indicated that under conditions of present dependence on OPEC countries for petroleum products, our response to a confrontation between the Arab Nations and Israel might be dictated by our vital need for oil rather than by the merits of the issues in controversy.

In response to this need and the prospect for significant corporate opportunity, Tenneco and Deepsea have invested a total of 10 years and some $20 million in the effort to develop the resource, technology, and commercial strategy required to convert the potential metal values contained in marine manganese nodules into actual metal values available to the nation.

Over this decade of intense corporate effort, several deposits of nodules have been discovered which hold promise as commercially viable mine sites. Deepsea's identification and period of continuous analysis of its preferred ore body predates the existence of the United Nations Seabeds Committee or its predecessor Ad Hoc Committee by several years. We have operated two research vessels during this period, both vessels being the only privately owned research vessels in the world devoted exclusively to study of manganese nodules. One vessel, the 150-foot R/V PROSPECTOR, has ranged all oceans of the tropical and temperate zones in search of knowledge concerning the distribution, assay, and concentration of these ores. The other, the 320-foot R/V DEEPSEA MINER, was purchased and