being stockpiled by the Government will provide materials needed for any sudden emergency. Ore reserves are ample for long-term production. Senator MALONE. Where is that production located? Mr. MELCHER. The production of molybdenum as such comes from Climax, Colo. Senator MALONE. It is mostly a Colorado production. Mr. MELCHER. It is about half and half between that and the molybdenum produced as a byproduct of copper production. Senator MALONE. Where is that produced? Mr. MELCHER. That is largely Utah, Arizona, and New Mexico. Senator MALONE. It is all in the United States? Mr. MELCHER. Yes, sir. Senator MALONE. Has there been any indication in South America or Canada of molybdenum or has any real search or investigation been made? Mr. MELCHER. No indications of any large production. Senator MALONE. Investigation has not been necessary in this field because, according to your testimony, we are supplying almost the entire world? Mr. MELCHER. That is correct. Senator MALONE. And have ample supplies in the foreseeable future? Mr. MELCHER. Large reserves. Senator MALONE. Thank you. Go ahead. NICKEL Mr. MELCHER. Underlying the nickel-supply problem of the United States is the great disparity between peace and war requirements. The industry geared to peacetime requirement is entirely inadequate to meet war needs. On the other hand, an industry expanded to supply war demands would find itself with an enormous burden of excess capacity when peace was reestablished. The presently equipped deposits of nickel ore in the Western Hemisphere can supply the peacetime requirements of the United States. Expansion programs now underway in the United States and Canada will result in an annual capacity of about 200,000 tons of nickel by 1956. Senator MALONE. Annual production? Mr. MELCHER. Yes, sir. Senator MALONE. And that is nickel metal? Mr. MELCHER. As nickel metal. The Cuban deposits appear to offer the best opportunity to further expand the supply of nickel. However, until a process is developed to recover the associated metals of cobalt, chromium, and iron, production costs will be substantially higher than in Canada. Senator MALONE. That is, if the ore is mined and milled for the nickel alone, the costs would be substantially higher than in Canada! Mr. MELCHER. That is the case at the present time. Senator MALONE. Are you encouraged in your investigations to separate the associated metals of chromium and cobalt and what other metal? Mr. MELCHER. We are encouraged. Mr. MELCHER. Cobalt, chromium, nickel, and iron. Senator MALONE. Cobalt, chromium, and nickel are all three strategic. Mr. MELCHER. Very much so. Senator MALONE. Do you think that in the near future your laboratory experiments and investigations will bear fruit, and that you will be able to recover the minerals? Mr. MELCHER. That is what we are working on. We have considerable encouragement already. We have been working on this for some time, but on a greatly expanded scale at the moment. Senator MALONE. I am very happy to have the opportunity to bring out what your Bureau is really doing. I think only men like you who are actually conducting these experiments can make this information available. Certainly no one ever has before. Mr. MELCHER. We certainly are glad to inform you. Senator MALONE. Is nickel a metal that can be stockpiled without deterioration? Mr. MELCHER. Yes, sir; it can. Senator MALONE. In your opinion, is there any reason why within a very reasonable time the United States, Canada, Cuba, and the nations of the Western Hemisphere, very close geographically to the United States, could not be self-sufficient, including a proper stockpile for any foreseeable emergency? Mr. MELCHER. We are always hesitant to forecast the results of our research, particularly on an economic basis. I certainly have every confidence that it will not be too long. Senator MALONE. By an economic basis, you mean commercially competitive? Mr. MELCHER. I believe the Cuban deposits can be made commercially competitive. Senator MALONE. But anticipating a war and the needs of the stockpile, that would not necessarily be the controlling factor, would it? Mr. MELCHER. No. Our more immediate program is to find ways of doing it regardless of cost. Senator MALONE. And you think that will be accomplished within a reasonable time? Mr. MELCHER. On nickel much headway is being made. We are having more difficulty in cobalt and chromium. Senator MALONE. But you see no insurmountable obstacles, if you are allowed to proceed with your investigations? Mr. MELCHER. I do not see any; no. Senator MALONE. That will be a judgment of the Appropriations Committees of Congress, will it not? Mr. MELCHER. We would like to expand that work; yes, sir. Senator MALONE. I want you to understand that you will be asked in each area of minerals wherever a situation arises such as you are describing to estimate for the committee what would be necessary to carry to a logical conclusion your investigations now under way. Go ahead. Mr. MELCHER. Along the same line, the Bureau of Mines is conducting metallurgical studies to develop and improve a lower-cost method of extraction of nickel from Cuban laterite and serpentine, and for recovering the associated cobalt, chromium, and iron. If all of these valuable constituents could be recovered, the gross value of the ore would be about $24 a short ton. Thus, there is quite a bit of latitude for research. Senator MALONE. Roughly, without being pinned to any estimate at all, but for the benefit of the committee, if you are able to separate these materials, which would be valued at $24 a short ton, what would be your estimate as to the cost of treating these ores per ton on a volume basis? Mr. MELCHER. I would say it is impossible to estimate this early. Senator MALONE. It would be well within the value Mr. MELCHER. I am giving the figure as an indication of a ceiling under which we have to work; $24 is quite a valuable ore. Senator MALONE. In other words, your general opinion would be that considering the commercial value of cobalt, nickel, and chromite, that $24 ore could be worked profitably if you develop a successful process of separating. Mr. MELCHER. That is right. Senator MALONE. You think it could be worked within that range? Mr. MELCHER. I am just pointing out that $24 is a fairly high figure to be able to work under. We must find processes first, and secondly to gradually lower the cost of those processes to stay within that ceiling. That is the long-range program on this ore. Senator MALONE. That $24 is based upon the present commercial value of those ores? Mr. MELCHER. That is right. Senator MALONE. And if we needed them for war purposes, the present commercial value would not necessarily be the deciding factor? Mr. MELCHER. That is right. Senator MALONE. Go ahead. Anyway, we are in shooting distance of our Western Hemisphere where we have reasonable basis for believing we can keep our transportation lines open. Mr. MELCHER. It is right in our backyard. Senator MALONE. Go ahead. TUNGSTEN Mr. MELCHER. On tungsten, the present prices of concentrates have extended ore reserves and have led to production that makes the United States virtually self-sufficient in terms of present requirements. However, the United States production is only three-fourths of the peak of World War II and one-half of the wartime consumption rate. Senator MALONE. Right at that point, is there anything in the nature of tungsten ore which would cause it to deteriorate in a stockpile? Mr. MELCHER. No. Senator MALONE. It would be a question, then, of judgment as to what size stockpile would be necessary, taking into consideration domestic production, to meet consumption in this country in case of an all-out emergency? Mr. MELCHER. That is right. Senator MALONE. You are aware that it is only by a special bill, the bill I previously referred to, which extended the purchase program for tungsten, that the tungsten miners are in business now. Mr. MELCHER. That is right. Senator MALONE. In other words, with the direct competition of Burma and southern China always a threat to private investment, very little private money would be put into the development of tungsten, without some special legislation, is that not correct? Mr. MELCHER. Yes; except at least in the higher cost production, sir. Senator MALONE. The higher cost production is brought about by our high wage living standard, is it not? Mr. MELCHER. Also as I pointed out, it extends the reserves. At higher levels we can work lower grade ores. Senator MALONE. Are there more reserves of tungsten available right now, than there were before World War I when everybody thought we were out of tungsten? Mr. MELCHER. I do not have the figures right here, but present reserves would not be very different. Senator MALONE. We always have reserves if it is a profitable enterprise. Is that the history of mining generally in this country? Mr. MELCHER. That is generally true. Senator MALONE. So when they talk about every nation producing what they can produce, they are talking the wage standard of living and lack of the security of the workers in other nations. Mr. MELCHER. To some degree, and also the price governs the reserves. Senator MALONE. Of course it does. I am speaking of $15 a day wages in the United States as compared to 40 cents a day in Burma, where machinery paid for by American taxpayers is being used. We then begin to look at the subject cold-bloodedly as to what we mean by another nation producing what we need. Burma is a long way from here, is it not? Mr. MELCHER. It certainly is. Senator MALONE. It is farther away than the domestic sources of tungsten in this country. Mr. MELCHER. They are right at hand, and we have substantial reserves of the lower grade material. Senator MALONE. I hope you are asked to collaborate in the next article in the Wall Street Journal about the very scarce tungsten. The Wall Street Journal is a great paper. This is no criticism of the Wall Street Journal. It is a criticism of the people who are running these programs and giving them this information. The Journal has accurate reporters. According to the information which has been given out for 20 years in this last administration, their article is entirely correct. Mr. MELCHER. Of course, reserves do not last forever. Senator MALONE. But let us go back to those reserves. How do you find reserves? By making it unprofitable to mine or by making it profitable to mine? Mr. MELCHER. Profitable, of course. Senator MALONE. Do you know of any going-concern mining industry that ever has any more than 2 or 3 years reserves ahead? Mr. MELCHER. In some cases somewhat more than that, but that is a good reserve. Senator MALONE. If the reserves are more than 2- or 3-year reserves, it probably is to the accidental discovery of a very rich area. What country could afford to have more than 2 or 3 or 4 years of reserves? Do you know of any? Mr. MELCHER. No. That is the point. It is related to the price and profit. Senator MALONE. That is what you call a going-concern mining industry, is it not? Mr. MELCHER. That is right. Senator MALONE. For 20 years we were told we must keep our minerals in the ground, and if you keep them in the ground, you do not know where the reserves are and you lose your miners, do you not? Mr. MELCHER. I believe we should be in production of these commodities. Senator MALONE. It is the only way that you can keep yourself in position to speed up a mining operation in time of emergency. Is that correct? Mr. MELCHER. Yes. Senator MALONE. I would like to say at this point-and I am not asking you the direct question because you are working for the Government, and a little bit handicapped in making a free statementthat the policy for the past 20 years of saving materials by keeping them under ground and thereby losing your experienced miners and keeping young men from going into the business because of the lack of stability, has insulted the intelligence of every mining producer and every consulting engineer in the United States of America. I think I can say that without fear of contradiction. I will not ask you to agree with it. Mr. MELCHER. Thank you. Senator MALONE. But you are a practical man. Mr. MELCHER. From the long-term standpoint the known tungsten ore reserves of the Western Hemisphere are not large enough to maintain the present rate for an extended period. Senator MALONE. What metal is this? Mr. MELCHER. Tungsten. However, exploration and development of tungsten deposits was at a virtual standstill during the period from the end of World War II up to the Korean emergency, and exploration and development now under way may disclose new ore deposits at a rate faster than known ores are mined. Do Senator MALONE. Let us have another look at that reserve. you know of any mining company that could just explore indefinitely without mining? Mr. MELCHER, No. Senator MALONE. DO you know any that have over 3 or 4 or 5 years of reserves? Mr. MELCHER. That just explore and not mine? Mr. MELCHER. No. Senator MALONE. Now, such reserves are impossible under a competitive system of mining with private capital. Is that correct? Mr. MELCHER. Of course, assistance now is possible by Government to permit exploration. Senator MALONE. Taxpayers' money. Mr. MELCHER. Yes. Senator MALONE. In other words, you can take taxpayers' money and just keep on exploring, but is it necessary if you have a goingconcern mining industry made possible by conditions established by Congress? 39888-53-pt. 1——5 |