STATEMENT OF BERKLEY JONES, SECRETARY, MINERVA OIL CO., ST. LOUIS, MO.

Mr. JONES. Mr. Chairman and members of the committee, my name is Berkley Jones. I am the secretary of the Minerva Oil Co., the primary activity of which is the mining and milling of ores containing fluorspar and zinc in Hardin County, Ill. Minerva is a relatively small company as it only produced and shipped 18,000 tons of fluorspar in 1952. I am also appearing on behalf of the Victory Fluorspar Mining Co. of Elizabethtown, Ill., whose operations are adjacent to those of the Minerva Oil Co.

Hardin County and the adjacent area across the Ohio River in Kentucky together produce some 60 percent of the fluorspar produced in the United States. This area is not only the largest producing area in the United States but it is also the first area in which fluorspar was produced in commercial quantities, and today contains the largest known ore reserves of fluorspar in this country.

The ore mined by Minerva Oil Co. is a low grade ore averaging less than 30 percent CaF2 (fluorspar) and slightly less than 5 percent zinc. For a number of years the sales value of the zinc concentrates which Minerva obtained from its ores was equal to the sales value of the fluorspar but with the recent decline of zinc from 191⁄2 cents a pound to 11 cents a pound, Minerva has become much more dependent on the sales of fluorspar.

Minerva is, therefore, adversely affected by the tremendous increase in imports of fluorspar from Mexico. If these imports continue at the present rate, it will be necessary to close the mine and mill and this will throw 165 individuals out of work.

Two factors have afforded the Illinois-Kentucky fluorspar industry some protection: first, the tariff on fluorspar and, second, the high freight rates applying to the hauling of fluorspar from El Paso, Presidio, and Eagles Pass to the eastern markets. We have just been advised that not only have the railroads recently established a milling-intransit rate on fluorspar moving from the border cities to the east (southwestern freight bureau proposal 62916) but that the barge lines have also published a lower rate on fluorspar moving by water from Brownsville, Tex., to Pittsburgh. A a result of these actions, one of our main bulwarks against Mexican fluorspar has been destroyed, and we, therefore, view with alarm any change in tariff rates that would strengthen the competitive position of imported fluorspar.

Attached hereto is a chart which I believe clearly illustrates the tremendous influx of fluorspar. On this chart are shown: Shipments from domestic mines, imports (Mexico supplied 52 percent of the imports in 1952), and industry stocks representing the available supply of fluorspar.

The tremendous increase in industry stocks is an indication that domestic production plus imports have far exceeded the demand. In fact, were Government stockpiles added to industry stocks, the amount on hand would be doubled.

The history of the changes in tariffs on fluorspar is set forth by the United States Tariff Commission in their industry materials series report No. M-5 of August 1952.

At present fluorspar is subject to the following tariffs: Fluorspar containing more than 97 percent calcium fluoride: $1.875 per short ton.

Fluorspar containing not more than 97 percent calcium fluoride: $7.50 per ton.

Some importers are bringing in the higher grade fluorspar and paying the $1.875 tariff and then blending it and in this way avoiding the tariff of $7.50 per ton.

The fluorspar producers need the protection of a tariff of $7.50 per ton on all imported fluorspar, regardless of grade. Without such protection they will be forced to shut down, the mines will be flooded, and the source of this strategic material lost to the country.

I believe the chart on the next page very clearly illustrates the enormous increase in imports that Mr. Cloonan gave you the figures on. You will see that if the imports plus domestic shipments equal consumption, of course stocks would stay the same. But you can see the very large increase in industry stocks showing that fluorspar is very greatly oversupplied.

(The chart referred to follows:)

Data from Minerals| Yearbook" and "Minerals Industry Survey"

Berkley Jones Co.
Minelya

Mr. JONES. Do you want to take the time while I read the Victory Fluorspar Mining Co.'s report?

The CHAIRMAN. Is there anything new in that that has not been mentioned yet?

Mr. JONES. No, but they are simply in a worse position than we

are.

The CHAIRMAN. We will see that it goes into the record. (The material referred to follows:)

Representative WILLIAM S. HILL,

VICTORY FLUORSPAR MINING CO.,
Elizabethtown, Ill., April 18, 1953.

House Small Business Committee, Denver, Colo.

(Attention of members of the committee.)

DEAR SIR: A critical condition now exists in the United States fluorspar markets which will, if not corrected, immediately bring great economic hardships upon the citizens of Hardin County, Ill., and threatens ultimate destruction of an industry which produces over 50 percent of the total domestic production of fluorspar.

The Victory property has produced and shipped over 150,000 tons of metallurgical fluorspar during its 25 years of activity. In 1952 we shipped in excess of 10,000 tons.

Early this year, upon inquiring into the market in preparation for the 1953 season, we were informed by our old customers that they could not commit themselves or advise what their requirements may be for the current year. Later it developed that the reason for their hesitancy to do business as usual with us was that they were being offered fluorspar imported from Mexico at a price which American producers cannot hope to meet. The April edition of the Engineer and Mining Journal quotes metallurgical grade fluorspar at $37 to $40. For several months prior to April the price was quoted at $40 for 60 percent effective units CaF2. I understand Mexican fluorspar has been offered in the United States as low as $28.40 per ton.

We have not sold, as of this late date, that first pound of fluorspar; and unless this ridiculous situation is corrected, or we have some assurance that it will be in the near future, we will be forced to close our business in a very few days. We are operating at this time on our nerve and faith in our Government that the American people will be protected from such unnecessary hardships.

The low tariff on Mexican imports is the cause of this unfair situation. I understand a movement is under consideration to reduce the tariff even more in the Mexican favor. If the Mexicans are allowed to take over the United States markets, the domestic producers will be forced out of business and the task of reviving them will not be an easy one.

The mining and processing of fluorspar requires a considerable number of special trained employees. As stated above, Hardin County produces over 50 percent of the Nation's fluorspar. Perhaps 90 percent of the county's available population is employed by the industry. If the producers are forced to close, these people must find employment elsewhere. Consequently an acute labor situation would exist and all trained personnel would be lost.

An active mine is constantly developing and searching for new ore reserves. If the industry is forced to close, the Nation's fluorspar reserve will be at a standstill. It should be noted, however, that during any long period of inactivity considerable known reserves will be lost due to caving ground.

The situation described herein is without a doubt unfair to American producers and the American people. Obviously it is impossible for American industry, with the American high standard of living, to compete with a Mexican product produced by labor where $1 per day is very high wages. Foreign products must compete with the American markets. If American producers must compete with foreign markets, the present condition of the Victory mine is an excellent example of the bitter fruit of such a policy.

This situation is unreal, unnatural, and unfair to our own people. The United States will consume over 500,000 tons of fluorspar this year, the greatest consumption of any prior year. Unless you gentlemen give us your full support and restore the United States fluorspar markets to their rightful place a very vital

industry shall soon fall by the wayside. We respectfully request, for the good of all concerned, that this not be allowed to happen.

Yours very truly,

VICTORY FLUORSPAR MINING CO.,
A. H. STACY, Partner.

The CHAIRMAN. I notice you say on page 1 that you have a tariff. Do you know what the tariff is at the present time? You say first there is a tariff on fluorspar. What is the tariff?

Mr. JONES. It is the $1.875 per ton on the high-grade imported fluorspar, and $7.50 per ton on the low grade.

The CHAIRMAN. What do you know about that tariff? put on? You are talking about a fairly new industry.

When was it

Mr. JONES. I cannot tell you that exactly. It is set forth in this tariff report. But there was a time when there was very little of this high-grade fluorspar imported into the country. For some reason, the Tariff Commission at that time put a very low tariff on the high-valued property. At that time it made no difference. But now there is a tremendous amount.

The CHAIRMAN. That is the question I wanted to get clear awhile ago. What percentage of all the fluorspar produced in this country is the high grade? In other words, you lead me to believe that your quality of fluorspar is increasing. Is that right?

Mr. JONES. No; the quality of the ore mined in this country, I would say, is steadily going down, like it is in practically any metal because the high-grade ore is mined first. But Mexico, which accounts for 52 percent of the fluorspar imported into this country, has some very high-grade deposits. I understand in many cases their ore runs around 90 to 95 percent fluorspar. We feel very fortunate to have 30 percent fluorspar in our ore in Illinois. We just cannot compete with the higher grade ore and the low-cost labor that they enjoy. But the relief we would like to have would be a higher tariff. We are opposed to any kind of premium price plan. We had that under the last war. We had the A and B premium. The idea of having to go to Washington to find out if we are going to be permitted to operate on a certain basis does not appeal to us.

The CHAIRMAN. Of course, that was just an emergency arrangement. Mr. JONES. That is all right as an emergency arrangement.

The CHAIRMAN. You heard the testimony of the gentleman preceding you in regard to this Canadian ore. I would like to ask you this question: What are your plans to appear before the committee when they have the hearing on this section of that bill to tell them about this? That is, the committee that is handling the legislation. As I tried to impress on everybody here, we are not a legislative committee.

I will put it this way: Are you planning to ask for an opportunity to appear before the committee when this section of the bill is discussed?

Mr. JONES. I cannot say that we have given any thought to it. As the other gentleman pointed out, there are very few fluorspar producers. We have not had any kind of organization and we have not given the matter much thought.

The CHAIRMAN. You better do that. It is not much of a trick to ask to be heard. We would be glad as a Small Business Committee to assist you in gathering your testimony. That is as far as we feel the Congress intended us to go, because we are a special committee.

If this is as it appears, you certainly have a reason to ask that you be provided an opportunity to present before this committee, when it considers this section, the information you have. It is what we are expecting to ask on lead and zinc. Then the committee that handles the legislation will be responsible. It is their responsibility as to what they wish to do. We are glad to give you this opportunity, although his is outside the program that we planned. We are glad

to have it.

Mr. JONES. I would like to make one additional remark. Yesterday there was some talk about the need of miners for higher wages. The CHAIRMAN. How did you say that? The need of miners for higher wages?

Mr. JONES. There was some suggestion on the part of union representatives that miners in this country should be given higher pay, if anything. But a 25-percent cut in wages would go a long way to solve the problems of ourselves and a lot of the producers, I imagine, right here.

The CHAIRMAN. How are you going to cut wages when living costs are maintained at the same level? You are talking about the dollar now. You think you are talking about wages but you are not.

Mr. JONES. Wouldn't the New Mexico miners we heard about yesterday who are out of work and who are now getting 5 dollars a day compensation probably be better off working at 10 dollars a day than in not working for 5?

The CHAIRMAN. Unemployment compensation does not go for life; it only lasts a certain length of time.

Mr. JONES. It is all the most important to get a job for 10 dollars instead of holding out for 16.

The CHAIRMAN. Personally, I do not believe cutting wages solves anything, because you get into the value of the dollar.

Mr. JONES. It reduces the cost of living.

The CHAIRMAN. It might.

Mr. JONES. It is the higher wages that have raised the cost of living.

The CHAIRMAN. You see, when prices of food rise, and especially the price of the purchases a laborer has to buy to live. I always mention farmers because that is one thing we have tried to specialize in.

What happens to the farmer? Because he sells his stuff at the market, down goes the price of what he sells, but the price of producing his products still has not come down a cent.

Now, if you think it is any solution to lower the price further on what he has to sell, then you are mistaken. When the laborer receives a fair wage, then he is a better purchaser. You get right into the dollar value entirely, because if you are going to keep the prices of food up, you have to keep the prices of labor up.

Mr. JONES. Maybe we should not keep the price of food up.

The CHAIRMAN. There you pose a question. That is the question the world has to decide, not us, because we are going to have food shipped to this country. It is going on right now. When we were building up this butter, the people from over in certain countries in Europe were sending butter and cheese into this country. What are you going to do about that?

Now we have decided not to let them ship that in. This is the only place where they can send imports and get the dollar value to hold