[H.A.S.C. No. 94-21] SUBCOMMITTEE ON SEAPOWER AND STRATEGIC AND CRITICAL MATERIALS HEARINGS ON H.R. 1287, TO AMEND THE UNITED NATIONS PARTICIPATION ACT OF 1945 TO HALT THE IMPORTATION OF RHODESIAN CHROME HOUSE OF REPRESENTATIVES, COMMITTEE ON ARMED SERVICES, SUBCOMMITTEE ON SEAPOWER AND STRATEGIC AND CRITICAL MATERIALS, Washington, D.C., Monday, July 21, 1975. Chairman BENNETT. The subcommittee will come to order. The purpose of the meeting today by the Subcommittee on Seapower and Strategic and Critical Materials is to hold hearings on H.R. 1287, which proposes to reinstate the embargo on the importation of Rhodesian chrome. This bill was developed and reported in the first instance by the Committee on International Relations. See House Report 94-363, part I, dated July 15, 1975. Sequentially, the bill was referred to the Committee on Armed Services because of the committee's jurisdiction and interest in the stockpiling of strategic and critical materials. The members of the subcommittee will recall that in 1966, and again in 1968, the Security Council of the United Nations passed resolutions imposing mandatory economic sanctions on Rhodesia. President Johnson, acting under the broad authority of the United Nations Participation Act of 1945, issued an executive order on January 5, 1967 implementing the U.N. Security Council resolution No. 232, adopted December 16, 1966. In 1971 Senator Byrd of Virginia proposed, and the Congress accepted, an amendment to the Department of Defense authorization bill for fiscal year 1972 which had the effect of setting aside the economic sanctions on Rhodesia to the extent of permitting the United States to import Rhodesian chrome. The Byrd amendment added a new section 10 to the Strategic and Critical Materials Stock Piling Act. The new section stated in substance that the President cannot prohibit imports of a strategic material from a free world country if importation of such material is permitted from a Communistdominated country. H.R. 1287 would do two things: (1) Set aside the Byrd amendment so far as Rhodesia is concerned, thus reinstating full economic sanctions and forbidding U.S. imports of chrome or other strategic and critical materials from that country. (2) Charge the Secretary of the Treasury with certifying that imports of steel products do not contain Rhodesian chrome in any form, thus preventing indirect imports of the embargoed materials. If H.R. 1287 is enacted, the United States will have to depend on other countries, primarily Soviet Russia, for its chrome ore supplies, other than our national strategic stockpile. We have no domestic source of chrome ores of economic significance in the United States. The U.S.S.R. has been, and probably will continue to be, the major supplier, but the question is whether we want to increase our dependence on the U.S.S.R. for a material vital to our national security as well as our economic welfare. Accordingly, the members of this subcommittee, and of the full committee, will have to determine whether, in the proper exercise of the committee's duties to protect the national security, H.R. 1287 is or is not an acceptable bill, or whether it should be amended to make it more compatible with national security interests. We hope that the witnesses before the subcommittee will enlighten us on these matters. [H.R. 1287 is as follows:] [H.R. 1287, 94th Cong., first sess.] A BILL To amend the United Nations Participation Act of 1945 to halt the importation of Rhodesian chrome Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 5(a) of the United Nations Participation Act of 1945 (22 U.S.C. 287c (a)) is amended by adding at the end thereof the following new sentence: "Section 10 of the Strategic and Critical Materials Stock Piling Act (60 Stat. 596; 50 U.S.C. 98-98h) shall not apply to prohibitions or regulations established under the authority of this section.". Mr. BENNETT. We welcome as our first witness this morning our distinguished colleague, Congressman Richard H. Ichord. Mr. ICHORD. Thank you very much, Mr. Chairman and members of the committee. With your permission, I have filed a statement on the essentiality of chrome for national defense purposes. I would like to include that in the record and proceed if you wish in an informal manner. WRITTEN STATEMENT OF HON. RICHARD H. ICHORD, REPRESENTATIVE Chromium is essential to a modern technological society. The government recognized this in 1939 when it designated chromium as the first mineral to be stockpiled. Since chromium is unique in its corrosion-resistant and alloying qualities, its importance for defense and industrial applications is unlikely to diminish in the foreseeable future. End-uses for metallurgical grade chromium and ferrochrome range from jet engine blades to sterile hypodermic syringes; almost any application demanding corrosion resistance. Among the most important of these are: Environmental control equipment: Almost without exception, pollution abatement equipment includes stainless steel components. Developments of automotive catalytic conversion systems or steam-powered transport would axiomatically require large amounts of high chromium steel. Power generation: Without exception, nuclear power plants utilize stainless steel in reactors, boilers and related equipment. Conventional power generating facilities also employ stainless steel for critical applications. Transportation: Chromium is essential in jet engine production and is critical in most other aerospace requirements. Corrosion-resistant alloys incorporating chromium are also necessary for manufacture of railroad cars, construction equipment and ships. For rail rolling stock alone, demand for stainless steel could raise anticipated demand for chromium by 10 percent by the year 2000. Food Processing: Due to its surface finish and corrosion resistance, stainless steel is ideal for numerous applications in the food processing industry. Uses range from storage tanks for beverages to sanitary production machinery. Chemical and petroleum production: The oil, gas and chemical industries utilize large amounts of chrome-bearing alloys. Pumps, tools and tanks generally include high-chromium stainless steel. Production machinery employs alloys containing chromium in many critical parts. Home appliances and equipment: While important by commercial standards, the home products market (tableware, appliance trim, etc.) accounts for less than 6 percent of the end-use applications of chromium in the United States. Anticipated growth of chrome-bearing metals is strongest in the machinery and equipment area, followed closely by construction and transportation requirements. Transportation applications alone will demand more than 182,000 tons of chromium in the year 2000-double the current level. Overall consumption trends indicate the United States will need over 1.1 million tons of chromium per year to fill the demand by 2000. All of the United States demand is currently met by imports. These estimates could be revised upward, depending upon pollution control requirements and transportation needs. The major end use of chromium ferroalloys is in stainless steels (66% of total) and the secondary major use is in alloy steel, including tool steel (18% of total). It should be emphasized that for its major use-stainless steel-chromium is unique; unlike nickel or molybdenum which have alternates to perform the desired function, there is no other element which can be used as a substitute for chromium. Stainless steel cannot be made without chromium. Most of the chromium consumed annually by the metallurgical industry, 85 to 90% of the total, is used in the production of stainless and alloy steels. The balance is used primarily in heat-and corrosion-resistant materials of which the nickel-base superalloys constitute the largest requirement. Smaller tonnages of chromium are also used in cobalt-base alloys, in high-iron heat-resistant alloys (in addition to those classified by ALSI as stainless steels), and in various surface coatings applied for protection against environmental attack or for wear resistance. In each of these instances, the single most important factor in the selection of chromium as a major alloying constituent is its beneficial effect on oxidation and corrosion resistance. It is in the production of these heat- and corrosion-resistant materials that chromium is critical as a direct defense application material. Of the overall annual consumption of nonferrous high-temperature alloys in the past several years, the largest fraction has been employed in two major industries-aerospace and petrochemical. Other substantial users include the manufacturers of heat-treating equipment, stationary gas turbines, industrial process equipment, and the hydrospace industry which includes the growing field of undersea exploration in addition to the more established categories such as marine transportation. In the latter area, there are indications that many new surface ships to be built for the U.S. Navy in the immediate future may be powered by high-performance gas turbines. If this proves to be the case, such application of gas turbines will undoubtedly result in a greater demand for chromium because of the superior hot-corrosion resistance of high-chromium alloys. At the present time, the aerospace industry continues to be the principal user of heat- and corrosion-resistant structural alloys. Although airframe manufacturers and their subcontractors have employed relatively minor quantities of superalloys, this trend will grow as the SST and advanced manned strategic aircraft reach production in 1975 and beyond. Most of the superalloy consumption in this field has been, and will throughout the projection period continue to be, in the production of aircraft gas turbines. Chromium is uniquely required in such alloys, and an effective substitute is neither known nor foreseen. In the case of stainless steels, in an emergency, substitutes, in general, could be used for such applications as decorative trim, architectural, certain cookware, cutlery, etc. However, where corrosion resistance in chemical processing and/or elevated-temperature applications is required, economical non-chronium containing substitutes are scarce. Furthermore, copper-base and nickel-base alloys that might be substituted are themselves subject to serious scarcities and are produced in only limited quantities, about 5% of stainless steel. Chromium, then, is an essential material. About 3% of our metallurgical chromium goes into direct defense use. The remaining resources are indirectly related to defense applications through energy source production-oil, gas, chemical and nuclear power-and various necessary elements used in the transportation industry. The Defense Department estimates that total defense industry needs for metallurgical grade chromite total between eight and ten percent of total industrial consumption. Neither the domestic defense industry, nor other stainless steel producers can afford to lose access to their critical material. The availability of high quality metallurgical grade chromite is complicated by our historical dependence upon the Soviet Union as a source of supply. During the sanctions period and immediately thereafter, over half of U.S. imports of metallurgical grade chromite ore came from the Soviet Union. Russian chrome dealers exploited this virtual monopoly in two ways: 1. The physical quality of the Russian lump ore exported to U.S. consumers steadily deteriorated when Rhodesian chromite was unavailable to the U.S. market. The increase in Russian shipments since 1964 has been largely run-ofmine ore, some of which contains excessive "fines," drastically limiting its utility for the production of high carbon ferrochrome. 2. Russian prices dramatically accelerated during the sanctions period as the following figures indicate: Average Price/Ton Soviet Metallurgical Grade Chromite Ore Source: Bureau of Mines Mineral Industry Surveys. When the Byrd amendment was enacted, Russian prices stabilized; then fell as Soviet chrome dealers felt the impact of stiff Rhodesian competition. The price history of Soviet chrome is particularly noteworthly in view of the economic conditions of the time. Russian prices reached their peak in 1971, the last year of the Rhodesian embargo, despite the fact chrome demand in the United States reached a 10-year low. In 1973, Russian chrome prices continued to decline despite an all-time high in chrome demand. The Soviet Union became increasingly noncompetitive as high-quality Rhodesian chrome reached American markets. It was not until late 1974 when legislation to reimpose the Rhodesian embargo appeared headed for passage did the Russians rebound. Soviet chromite prices soared in the fourth quarter. Temporarily set back by the stagnant death of S. 1868 in December 1974, the Russians reacted to the reintroduction of this legislation in January with an economic squeeze play. First, they informed their exclusive U.S. distributor, Airco Alloys Ltd., that shipments would be cut back 35 percent immediately. Second, they more than doubled their price to $160/ton. The Soviets have everything to gain and little to lose by this maneuver. As chromite must be ordered months in advance, Soviet price hikes capitalize on the uncertainty regarding the availability of Rhodesian chromium to American consumers. Thus, whether the Byrd amendment is repealed or not, Russian chrome merchants will have made enormous profits at American expense. Further, the fact that chromite demand exceed imports, gives Russian chrome dealers considerable leverage in creating shortages in this country. A 35 percent cutback in exports to the U.S. would have significant impact in making their price hikes stick should American consumers be denied access to Rhodesian ore. In another instance, in an attempt to shore up rapidly deteriorating prices in the United States, the Soviet Union placed an embargo on shipments of chromite for 5 months in 1973. Imports of metallurgical grade chromite from the U.S.S.R. in 1973 decreased approximately 50 percent below 1972 levels. Although the Soviet chrom aders were successful in their attempt to stem the rapidly falling hey sacrificed a large share of the American market to Rhodesian |