PROBLEMS IN THE METAL-MINING INDUSTRY MONDAY, APRIL 27, 1953 HOUSE OF REPRESENTATIVES, SELECT COMMITTEE TO CONDUCT A STUDY AND INVESTIGATION Spokane, Wash. The committee met at 10 a. m., pursuant to recess in San Francisco, Calif., in the Elizabethan Room of the Davenport Hotel, Hon. R. Walter Riehlman, acting chairman, presiding. Present: Representatives Riehlman, McCulloch, and Hosmer. Also present: Bynum Hinton, committee counsel; and Carl Davis, staff director. Mr. RIEHLMAN. This hearing will come to order. May I say on be half of the members of the Select Small Business Committee of the House of Representatives that we are delighted to be here in Spokane this morning. We are here on a special mission which you are familiar with. I would like to make this statement. I believe that you understand our committee is not a legislative committee. We are a fact-finding committee. It is our duty to secure every bit of information that we possibly can, pro and con, on every important issue affecting small business in this great Nation of ours. We are here today to deal with the mining problems, and the different problems that are affecting the small miners in this Nation of ours. I am sorry that the chairman could not be present. Mr. Hill is a native of this part of the country. He comes from Colorado, and has lived there, I guess practically all his lifetime. He has a deep interest in the problem we are studying here. I would like to have the record also show that we have present this morning the Honorable William McCulloch, from Ohio, a Republican, serving on the Select Small Business Committee, and also Mr. Craig Hosmer, from the State of California, a Republican, serving on this Select Small Business Committee. We had hoped that we would have at least two members of the minority party here. However, they found that it was impossible for them to join us in Spokane. We hope that there will be at least two of them when we arrive back in Phoenix, Ariz., to continue our hearings. We also have our counsel, Mr. Bynum Hinton, and Mr. Carl Davis, staff director. If there are any men present who do not have a prepared statement or who are not prepared today to make a statement with respect to this problem, we invite you to prepare such a statement, and present it to us here before we leave for Washington. If you do not have it prepared, mail it to the Select Small Business Committee at Washington, D. C. It will be inserted in the record, and given the same consideration as oral testimony before this committee. Gentlemen, we will proceed immediately to call the first witness this morning, who will be Mr. Henry L. Day, president of the Idaho Mining Association and president of the Day Mines, Inc. Go ahead, Mr. Day. STATEMENT OF HENRY L. DAY, PRESIDENT, IDAHO MINING ASSOCIATION; PRESIDENT, DAY MINES, INC., WALLACE, IDAHO Mr. DAY. My name is Henry L. Day, and my address is Wallace, Idaho, of which community I have been a lifelong resident. My business is mining, and I have been engaged in it all my adult life. I am president and general manager of Day Mines, Inc., operating several moderate-sized mines in the Coeur d'Alene mining district of northern Idaho. Our employees over a decade might average 500 in number. I am also president of the Idaho Mining Association, whose membership is open to anyone in the State connected with the business of mining. Members include producers and potential producers of gold, silver, lead, zinc, copper, cobalt, antimony, tungsten, phosphate rock, monazite, and certain rare earths. All of these miners, of course, have problems; many of which, however, are parctiular to their own type of business, but some are common to the industry. It is not possible nor perhaps even desirable to discuss all the problems of the area before this committee. Idaho's antimony production, for example, is now very slight, when but a short time ago it produced more than any of the other 48 States. Low price caused a shutdown. A cobalt output, sufficient to make our country almost self-sufficient, is retarded by technical refining difficulties. Phosphate rock mining is related to cheap electric power and the relative prosperity of the farmer requiring fertilizer. None of these concern us primarily at this moment. It is my feeling that several of us are qualified to present to this committee today the pressing problems of American small mines in this immediate area, particularly those concerned with the production of lead and zinc at a reasonable mining profit. I use the adjectives "reasonable" and "mining" in connection with profit, because ours is a wasting asset industry, and not only are we entitled to a sufficient return on our investment in the way of interest or dividends, but we do have to have sufficient funds from our business to perpetuate our very existence. This is done by spending relatively large sums in exploration and development. That is, the search for new ore bodies and the preparation of such ore bodies for commercial production. Mining at a profit is now our chief difficulty, and of it we will treat today. Other speakers representing industry will discuss briefly the continual burden of Federal taxation, again more than necessary upon a wasting asset industry. Speakers will also treat of exploration difficulties which have been solved, in part by the well-conceived program of the Defense Metals Exploration Agency. As far as our section of the industry is concerned, we will deliberately refrain from commenting upon (1) amendments to the TaftHartley Act; (2) the operation of the new amendments to the SEC regulations; and (3) controversies in respect to the application of mining laws to public lands. These three last-mentioned subjects are all part of a much broader situation than that encompassed by United States small mining business. Now I would like to picture for you the lead-zinc situation. I will start first with the world, then with the United States, then come into this particular area, and then tell you something of the problem of my company. Primary world production with secondary (or scrap) metal, excluding Russia, makes available to consumers annually something in excess of 2 million tons of each metal. The United States, and this is very important, is both the largest producer and the largest consumer of each metal. Some large uses of lead, and I think you are all familiar with them, are in storage batteries, tetraethyl gasoline Mr. RIEHLMAN. I think this would be most interesting to the committee. Do you have any figures as to the exact amount the United States consumes with respect to the 2 million tons you have said are available through world production? Mr. DAY. I will come to that very shortly, Mr. Chairman. To repeat, some large uses of lead are in storage batteries, tetraethyl gasoline, and cable covering; galvanizing takes the greatest tonnage of zinc but brassmaking and zinc base alloys (including diecastings) also require large amounts. It is axiomatic, in my humble estimation, that large and flourishing industries are vital to the well-being of the United States. I say this advisedly. Let us take a look at the automobile business. You would have great difficulty in starting your automobile without a storage battery to crank it up. Nobody wants to go back to the old armstrong days when we tried to spin the engine, particularly on a cold morning, by hand. In these days of high compression engines, we all like a little premium gasoline, and the so-called premium brand generally sold at 3 cents above standard is not the only gasoline that has tetraethyl lead compound in it. Your ordinary grade has some, too. The very telephones that we use so constantly have conversations transmitted by copper wires enclosed in lead sheathing. We would not get along without lead and zinc. The farmer's tin is galvanized to prevent corrosion. Barbed wire is galvanized, and of course galvanizing means covering with zinc. Zinc base alloys, particularly those used in diecastings, are found in almost every sort of business. The carburetor on your automobile has a number of small parts in which diecastings are utilized. Now I will come to the United States. Our Nation consumes about half of the world's lead supply but its production is only a third of that requirement. The balance of needs is supplied about equally by its own scrap and foreign imports. Our country consumes 45 percent of world supply of zinc, and produces two-thirds of its consumption. The balance must come from imports. Mr. HOSMER. Will you review those zinc figures again, please? Mr. DAY. Our country consumes 45 percent of the world's zinc, and produces two-thirds of this amount, that is, of its own consumption. The balance, or one-third, must come from imports. I would like to add parenthetically that the figures that I am giv. ing you have been rounded off very roughly so that they will be more readily grasped. In addition, the statistics change almost from year to year by 5 or even 10 percent, so that there is no use giving figures and statistics right down to a decimal point. It will be noted that the domestic economy of these two metals is linked to the importation of 300,000 tons of each metal, or thereabouts, each year, which is necessary to keep these two businesses on an even keel. Such importation may slide up 50,000 tons yearly, or slough off by 100,000 tons annually, without causing much harm to either United States producers or consumers. Much change in excess of these increments has price repercussions which become violent, such as the present situation. Lead imports were 511,000 tons in 1952, and 179,000 tons in 1951. Similar figures for zinc were 565,000 and 391,000 tons. The 1952 oversupplies brought drastic price declines. Now, coming to the local area, the Pacific Northwest (excluding Montana, a sizeable producer in its own right) yields more than 20 percent of United States mine production of lead and more than 10 percent of its zinc. So the weak metal markets at present are matters of serious concern to this area embracing north Idaho and northeastern Washington. The Coeur d'Alene mining district of north Idaho, from which I come, is one of the first magnitude in the world, as classified by the economic geologist. That means it has produced more than $1 billion gross value in metals. As a matter of fact, this district is approaching the billion and a half gross production point. Contrast it with a district I believe well known to you all, and that is Butte, lying 25 miles easterly. One can say that that district is approaching $3 billion in gross values of metals. It is about twice the size of our district. While the Coeur d'Alenes have been producing for more than 60 years, technical men of authority and reputation still believe it has great potentialities. Employment in the Coeur d'Alene district of north Idaho has declined by some 600 men in the past 6 months, directly attributable to falling lead and zinc prices. This indicates probably a decrease by one-eighth in the combined tonnage of the two metals from the district. In the case of my company, Day Mines, Inc., we have perhaps a typical one. It is medium in size, operating several small mines. In 1952, the gross income of several million dollars came from three metals in these proportions: Lead, 54 percent; zinc, 37 percent; silver, 9 percent. Our lead output has been in recent years about one-fortieth of the domestic total, and perhaps one-two hundredth of United States zinc. Employment has varied in the past 10 or 12 years in the 400 to 600 range; today it is 274. We are having extreme difficulty in even preserving that much employment. Since last fall our lead output is off one-tenth and zinc output is down one-half. Exploration projects requiring annual expenditures of perhaps half a million dollars have been curtailed insofar as practical. But metal prices continue to drop, and management is faced with almost irresistible pressure to revise operations further downward, unless something is done to improve the situation. |