Mr. BRISTOL. Not if there are some limitations on a mine. This paper is practically all on high-grade chrome ore. In Montana the Government has given a 9-year contract instead of 3 years that the high graders have been given, and using the price at the Grants Pass stockpile they are getting 3 cents a ton more. They have a firm 9-year contract to produce a lower-grade chrome ore, which is very valuable for the Nation. It can be used in the chemical industry, in refractories, and in emergencies it can be used as metallurgical ore. And they have been given a mill and all financed and set up by the Government, and with a 9-year contract. They are limited to a thousand tons a day capacity. I feel that there should be some limit on the production per property or mining facilities on the west coast here because you never know how big a mine you are going to find. We are finding some pretty good sized ones.

Mr. McCULLOCH. Do you feel the producers as a whole are willing to accept production controls?

Mr. BRISTOL. To an extent I might say that you might make it a sliding scale. As they produce more the price gets less, or something like that. I mean the price is very good. To be perfectly frank, the price is good. A reasonable operator, with some background and mining experience should be able to make a profit. I mean, he might have to go and open up 4 or 5 or 6 or maybe 25 of these prospects, but he could find 1.

Mr. RIEHLMAN. Mr. Hosmer?

Mr. HOSMER. Is this 28-month figure that you give for the length of time for a purchase program strictly applicable to the chrome industry and may or may not be relative in connection with other types of metals?

Mr. BRISTOL. The specific chrome program at the present time ends June 30, 1953.

Mr. HOSMER. You recommend here a definite program with a 2 year and 4 month cancellation. Is that the length of programs that we should adopt with respect to all other metals, or is this one based upon this particular industry?

Mr. BRISTOL. In my opinion, the way to get development of ore in a strategic mine is to give a considerable time to development of the mine.

Mr. HOSMER. That is it. Some of the other witnesses today have suggested that these programs be something more than a day-to-day basis. We, as a committee, would be interested in knowing what is the period of time in which these programs should function.

Mr. BRISTOL. It is good practice in a mine to try and develop a couple of years ahead in your mine, so you know where you are at and what you are doing. Very rarely does a miner ever develop very much over 2 years ahead. If a program was extended on the basis of cancellation at the end of that time, you would have a chance to pull the ore that you spent your money developing.

Mr. HOSMER. That would apply to any other minerals?

Mr. BRISTOL. That would apply to any other minerals-tungsten or any of them.

Mr. McCULLOCH. Do you think that cancellation clause would protect the Government from a tremendous over-production that might be a burden?

34376-53-17

Mr. BRISTOL. Well, I am the optimist in the chrome business. The Bureau of Mines and the Geological Survey, I have a bet with them that I hope I don't have to pay. They said that we would be lucky to get, by this time, just a few thousand tons, maybe 5 or 6. They did not conceive of the development that has gone on or the grade of ore that has come in. It has been very difficult to keep track of it. It is growing like Topsy right now; so I wouldn't know how far it could go.

Mr. McCULLOCH. But a cancellation clause always is a checkrein. Mr. BRISTOL. It is, definitely.

Mr. REIHLMAN. Thank you, Mr. Bristol for your appearance and your help.

Would you identify yourself, please?

STATEMENT OF DURAND A. HALL, CASTRO MINING CO.,
SAN FRANCISCO, CALIF.

Mr. HALL. My name is Durand Hall, with the Castro Mining Co., this company being the second largest producer during the last war and we are again in production. I would like to shift a little of the emphasis of what Mr. Bristol said, and it is purely a personal opinion. I don't feel at all optimistic about any overproduction coming from Oregon and California. I am sure it can be made a substantial part of our contribution to the chrome consumption of the country, but I don't think we have any worries at all about its being overproduced here to that extent.

The next thing I would like to say is this, and this again, I think, will be borne out by people that know the industry well: I don't think there is anything that Mr. Bristol has not said, but I think the emphasis was perhaps in the wrong place. Most of the inducement made for chrome production by the various governmental departments has been inducement to the high-grade producer; that is, the producer of lump ore. That is the type of ore that the steelmen like. The whole steel business, and ferroalloy, ferrochrome business, was placed on obtaining the highest possible standard of chrome from foreign sources. I assure you that is not definitive. Buying adequate ferrochrome, a good open-hearth alloy steel can be made from the lower grade deposits. It has been definitely shown that is true. It will have to be at a slightly higher price, but I think it is fairly well shown that the price for making these alloys will be far less than the high premium prices on chrome.

The next thing I wish to say is this: In my opinion, in order to have a chrome industry in California and Oregon that will contribute a substantial part to the Nation's need, you are depending upon the chrome mills. I do not believe that the small high-grade deposits-I still think they made a wonderful showing in the face of the difficulties they have had to contend with, but it is my considered opinion that the contribution of the small high-grade deposits in California and Oregon are of no great consequence as far as the overall chrome picture of the country is concerned. The difficulty and the failure of the attempts to stimulate chrome and to get a larger production has been a failure to understand the difference between resources and reserves. The chrome resources, especially in low-grade cres, in California, are very considerable, in California and Oregon,

too. The reserves are not very great. Perhaps an illustration of what I want to put across is that, starting from scratch, with a goat pasture on top of a hill, we at Castro, during the last war, produced 100,000 tons of better than 20-percent ore. These were resources. There are no reserves at Castro at this time. Had we not had a realistic program and a price set that we knew we could operate with, most of that development would not have been made. At the present time, we are faced with the same thing at Castro. There has been no inducement, none whatsoever, for us to develop our reserves on the basis of the Grants Pass program. We have never had a realistic approach to a contract from DMPA, because the DMPA point of view has been that "You must have developed reserves; you must come back to Washington, and then we will set a price with you, not a price ahead of time. We will discuss it then with you, and if you will then put up a performance bond" of all things for the mining industry to consider, a performance bond-"we will then consider what price you can have when we have analyzed your costs."

But, of course, if you will get the DME to lend you some money and develop these reserves, then we will sit down and negotiate a price with you. In other words, one department of the Government is suggesting that we borrow money from another department of the Government to develop reserves for which we do not know what the price is and don't even know whether we are going to have a contract or not. The absurdity of that is made quite apparent by the fact that, had we taken that advice and borrowed, say, $25,000 from the taxpayers and put in $25,000 of our own, as this chrome program is a 50-50 program, we would, say on March 1, have had sufficient tonnage developed to be awarded a contract. But on March 11 DMPA announced that there would be no more private contracts because funds were no longer available at the present time to make them, an absurdity on the face of it. But that has gotten so that today we have no program except the Grants Pass program, which ends in 22 months. You may say that is a funny thing when you are producing and you are going to produce. I say it is purely fortuitous that I am producing. Somebody built a mill nearby us, and with limited amount of chrome reserves, and we have an operating contract with them. We don't have to build a mill.

Otherwise, we would still be closed down; we would not have developed this extra tonnage that we have, and we would be looking for ward to a very, very glum future. That is really the status of the chrome-milling situation in California. There is no inducement for a prudent businessman, a prudent mining-business man, to develop chrome ore. I think that will be supported by the owners of very considerable sized milling-grade properties. You can't go to business property and say you have a Grants Pass price that runs 22 and you can't ship more than 5,000 tons a year, which up until a few days ago was the limit. That is about a 50-tons-a-day production on our grade of ore, an extremely inefficient operation: 50 tons a day in an open-pit mine.

So, you see the efforts of the Government today, although they have been very successful in other things, have failed completely to induce any really-well, I don't like to run down any of these operators who have more nerve than I have-and, believe me, some of them have— but I have been through this business and I know a lot of them have

nerve and have come through. I haven't that nerve, and I think, if they have had some of the experiences that I have had, some of them would not have that nerve, either. But that is the situation we are faced with at the present moment in the chrome-mining industry here on the coast.

If you want a figure, I would say it is my belief that we could quite readily produce 10 or 15 percent if we had a couple of years to develop our resources and maintain a 10 or 15 percent of the country's need and maintain it rather consistently of good grade, acceptable material. There is quite a difference between the DMPA being very consistent at the start that never again would they take substandard chrome; never would they accept it. One of their great troubles was in getting rid of some of this trash that they said Metals Reserve Company had purchased. But then they turned around and made a very large contract for 38-percent chrome and a 1.5 chrome-iron ratio in Montana which was entirely justified. But it just shows that they changed their policy in an emergency of that kind.

California and Oregon, what they do produce should be of an excellent grade chromite, although by far the bulk will have to be in concentrates, and that requires large investments in roads, in mills, and in development. And the development exploration of chrome deposits is extremely difficult in many places. It is slow and arduous, and diamond drilling in many places, such as San Luis Obispo, is not effective, and consequently it is not a simple operation.

Mr. RIEHLMAN. I am a bit bothered about your attitude and Mr. Bristol's attitude here with respect to this program.

Mr. HALL. They are almost the same. I think it is a matter of emphasis.

Mr. BRISTOL. It is a matter of emphasis, entirely. We are almost in agreement on practically every point. What I have tried to say in this paper is if there is still time in the program, starting on the 13th of this month, and if they would accept carload shipments any place in the United States, the chrome program would then be as we recommended it, and would be effective. But to make it effective and get production up into the neighborhood of 200,000 tons-150,000, 175,000, 200,000 tons, which is 15 or 20 percent of our needs-the program has to be extended within the next 3 or 4 months.

Mr. HALL. If this ruling had come up the other day, if that had been made when the stockpile was established, it would have presented a far different production figure. It was just a matter of the pardon coming too late, that is all.

Mr. GILBERT. In connection with that 28-month cancellation clause, I think that would be a very minimum, quite aside from the gold mining and quicksilver and tungsten. By the time the mill is erected and the camp established, 2 years of that would have been exhausted and the other 2 or 3 months would not be long enough to regain your capital. It would be more realistic to have a 4- or 5-year cancellation clause in most of them.

(The following letter was later submitted for the record:)

The HOUSE SMALL BUSINESS COMMITTEE,

SAN FRANCISCo, Calif., April 28, 1953.

Room 129, House Office Building, Washington, D. C.

GENTLEMEN: Pursuant to our conversation in San Francisco at the time of the congressional hearing there, I enclose herewith text of an article just completed by me for the Engineering and Mining Journal. In the light of the recent hear

ing before your committee certain additions will be made to the text as herein submitted. There will, however, be no fundamental changes.

You will note that I am somewhat conservative with respect to resources of chromite ore in the Western States. I do not believe that the market would under any circumstances be flooded by domestic chrome concentrates in the foreseeable future, regardless of any Government support program. I firmly believe, however, that a substantial percentage of the metallurgical chrome requirements of the country, perhaps 20 percent, could be filled from western ores (outside Mouat) by a long-range policy of Government support.

As economic policy, I do not favor Government subsidies (tariffs excepted) for the mining or any other industry except in times of emergency or in anticipation of such. Subsidies tend toward regimentation of industry of which, to our misfortune, we have already had quite enough.

The fact does remain that the mining industry in many respects "is different" from all other industries. Once dormant it cannot spring into active performance at the sound of a bugle call. This I think your committee must now appreciate if it did not do so before the recent hearings.

I will not go into the matter of tariffs as a means of encouraging domestic production of minerals. Your committee is in a far better position than I to appraise their effectiveness. Certainly the international ramifications of tariffs go far beyond the scope of any individual domestic industry.

The writer has been a consulting engineer in San Francisco for many years. He was a special expert for the United States Shipping Board in World War I and consultant in copper, lead, and zinc for the United States Geological Survey during World War II. A graduate of Williams College, his technical training was at the University of Wisconsin and Harvard University. Most of his career has been devoted to exploration and the operation of small mines.

The Castro chrome mine at San Luis Obispo, Calif., of which the writer was part owner and operator during World War II and of which he is now part owner and sole lessee, was the second largest chrome producer, with the exception of Mouat, in the United States during the war.

Very truly yours,

DURAND A. HALL

GOVERNMENT POLICY WITH RESPECT TO DOMESTIC CHROMITE RESOURCES

Durand A. Hall

Inasmuch as DMPA has recently announced that funds are not presently available to that agency under the chrome purchase program, announced in letters to applicants for contracts last summer, to support individual contracts for domestic chrome ore or concentrates, it may be an appropriate time to take stock of the domestic chrome situation. The Republican administration must within a short time, if it has not already done so, formulate a policy with respect to strategic metals of which this country is in short supply, and among which, of course, is chromium.

It is not within the scope of this paper to express an opinion as to whether or not the Government is justified in efforts to encourage domestic production of chromite. The writer does not pretend to know whether the chrome situation is critical or not or under what circumstances it might become so. These are questions for top-rank Government policymakers to answer, men who have available to them all sources of information regarding foreign sources of supply, present stockpile reserves, and so forth, and who likewise are in a position to appraise the imminence of a shooting war and the effect this might have on imports of foreign ores. However, from the standpoint of national security, the position is certainly fundamentally the same as it was in August 1952 when the last DMPA chrome program was formulated. It seems fair to assume that the present Government "economy wave" will influence any policy which involves the spending of Government funds in support of mineral production for any but essential defense purposes, but it is doubtful that the administration will lower its guard because of the recent more conciliatory Russian attitude.

The present article is concerned primarily with the best method of developing and producing a substantial amount of chromite in this country if and when it is required. Government policymakers under the previous administration publicly announced, as far back as 1951, the Government's intention to encourage the production of domestic chromite, as a critical defense measure. This program has, with a single exception proved unsuccessful. It has proved so because a