Mr. SAYLOR. All right, sir. I would appreciate it if you sent it to the chairman in that fashion.

Mr. BRADLEY. All right.

Mr. REGAN (presiding). Mr. D'Ewart had some questions if you have finished.

STATUS OF BUTTE-PHILLIPSBURG (MONT.) MANGANESE CONTRACTS

Mr. D'EWART. Mr. Bradley and Mr. Mittendorf, you discussed under questioning from Mr. Engle the Deming area. Would you in a general way discuss the Butte-Phillipsburg area along the same lines as you discussed the Deming area

To refresh your memory, Mr. Boyd testified last time that there were four contracts ready and available as soon as the money in the supplemental bill was signed by the President. That money has been made available. There was a fifth contract concerning which there were some terms not yet agreed on but I understand you have reached an agreement on the fifth contract having to do with a nodulation mill in Butte.

Just what is the status of the Butte-Phillipsburg manganese program?

Mr. MITTENDORF. Let me say at the outset that this has been one of the most complicated pictures that I have ever been engaged in in all my experience in the Government and in the mining industry. It has been a picture where we have had jurisdictional disputes in the field. It has been rather intangible, if you look at it in any light. I say intangible from the justification of the ore reserves, the ability of the mines to produce, and the individual thinking of the very component parts that go into this over-all program.

As you probably know, Mr. Bradley had all of the mine operators come into Washington to see if they could not agree to a meeting of minds. That was accomplished in the case of the three small independent producers, and we finally did draft a contract, after many, many tries, which satisfied Mr. Cole, operator of the benefication plant, and to justify this program we did rely upon the ores which would be produced from two mines which did not subscribe to the thinking of the other three mines.

Therefore, we set about to treat them on an individual basis. We have set about to discuss all this with GSA and they have been working diligently to whip these contracts into shape.

I was of the opinion that we had most everybody satisfied until yesterday; these gentlemen with me today and I remained into the late evening listening to the protests that have arisen now when we are in the final stages of consummation of the contracts. We have had to call at least I want to call-a very temporary halt-in my own mind I want to listen to everybody; I want to get all the facts before me before we subscribe to any permanent plan.

I don't want to knowingly go into a deal that I don't think is a good deal for both the Government and the producer.

It is my purpose now, as soon as I can get free to my office, to get on the phone to resolves differences. This situation, as I say, arose last night. There has been information reach us from Butte which refutes to a very large extent what we heard yesterday by word of mouth.

Mr. D'EWART. In other words, the contracts that Mr. Boyd said were all signed and all ready to go except that the supplemental appropriation had not been passed are not now even in the signed stage? Mr. MITTENDORF. We only received our appropriations, I believe, the latter part of last week.

Mr. D'ÉWART. I understand the appropriation bill was signed the 30th, or was available the 30th of May, under which the funds were to be available to implement the contracts that, it was testified, were fully agreed to before this committee at the last hearing, with the exception of the one having to do with the nodulation plant.

Those are all voided and you are starting all over again?

Mr. MITTENDORF. No, not by any means. We are not going to start over again.

Mr. D'EWART. What has become of those contracts that were agreed to except that the money wasn't available-and the money was available on the 30th of May-what has happened to those contracts?

Mr. MITTENDORF. Those contracts are in the hands of, I believe, GSA right now.

Mr. GUMBEL. That is right.

Mr. MITTENDORF. They have men engaged in putting them into their final form for signature. Do you wish to carry on?

Mr. GUMBEL. Yes. I will be glad to.

Congressman, you have often thought you have a deal when you haven't got a deal. That is true in Government

to.

Mr. D'EWART. We were told these contracts were completely agreed

Mr. GUMBEL. That was the impression.

Mr. D'EWART. The only thing that was waiting was the money and that was made available on the 30th, so I supposed we were getting our manganese by now.

Mr. GUMBEL. That was our impression and we were very much disturbed to learn that we didn't have a meeting of minds. These contracts, as you know, are all really related to one another. Four of the contracts are for the supply of ore to the beneficiating plant and one of the contracts was with the beneficiating plant to treat the ore.

Mr. D'EWART. That is right. That was a Government-owned plant that was in operation during the war and they simply started it going again this year. It was all built, sittting there in Butte.

Mr. GUMBEL. We were under the impression that the contracts were agreeable to the four mines on the one hand, the concentrating plant operator on the other hand, and to GSA and Defense Minerals. We found out yesterday that one of the mines was not all in agreement with the set-up, so what do you do in a case like that? You have got to go back and try to get an agreement. That happens every day, sir. Mr. D'EWART. Haven't they agreed to those contracts? They had agreed with those people and those people had agreed to the terms at our last meeting.

Mr. GUMBEL. But now comes in a man that doesn't agree to it. Mr. D'EWART. All except the nodulation plant.

Mr. GUMBEL. That is not in dispute any more.

Mr. REGAN. The miners kicked the thing over. That knocks the whole thing out.

Mr. GUMBEL. That is right.

Mr. REGAN. Is it to set up that of the four contracts you have with the miners, three of them could be placed in operation, or are you going to need to hold the whole thing up?

Mr. GUMBEL. I think we will have to hold the thing up because if we don't get enough ore or agreement with the concentrator, it is of no value to us.

Mr. REGAN. So he is a necessary unit?

Mr. GUMBEL. Yes; it is very complicated. I would be glad to explain it in detail to the committee, but I think it might be a waste of time, if you will accept my statement.

Mr. REGAN. This contract with the miner, the one that kicked over the traces, is the one that Mr. Mittendorf wants to get on the phone. Mr. MITTENDORF. That is right. We hope to do that today.

Mr. GUMBEL. These things are often annoying to us as well as to you gentlemen of the committee, but it is a thing that happens when you try to negotiate these contracts-that you often think you have got an agreement and then you find out you haven't.

Mr. D'EWART. It is too bad you didn't sign that on the 30th and have it concluded the day your funds were available and then you wouldn't have had this difficulty.

Mr. ELLIOTT. We would have had to have the miners' signature, too, sir.

Mr. REGAN. Have any of the miners signed?

Mr. MITTENDORF. None of the three have signed.

Mr. REGAN. In other words, you made an agreement with four groups of miners?

Mr. MITTENDORF. There are five.

Mr. REGAN. You have signed. Would any one of the three now kick out?

Mr. MITTENDORF. I don't think they will. I saw a telegram yesterday which indicated that those three miners were willing to stay right with their agreement. They have been submitted drafts of contracts; we have in our files their telegraphic approval of them; they are willing to go right ahead.

This man who kicked over the traces, as you say, negotiated with one of my engineers. We submitted a draft contract to him. I saw him in the hall in front of my office 6 weeks ago and I said, "Are you satisfied; is everything all right?" He said, "Yes."

Much to our amazement he now states, "I am not going to operate.” Well, I said, "We had better sit down and listen to your story," so I arranged for a meeting yesterday in which the GSA men listened to his story. I asked him if he would go ahead and summarize in a letter to me for the record just what was wrong; why he couldn't cooperate; how we could meet his objections and get him into the fold. That he promised to do immediately.

Mr. D'EWART. I would say for the information of the committee that at least some of these manganese mines have been in operation for some time, and the nodulation plant was built during the last war, and it was closed down following the war, and it is hoped to open up this nodulation plant to treat the ores brought in from these four or five mines that we speak of, and as I understand the nodulation plant will probably buy for GSA the ores from the mines; is that about right?

Mr. MITTENDORF. That is right. That is the way the contract was

cast.

Mr. REGAN. Do I understand, Mr. Mittendorf, this Butte area to boil down to this: There are four mines that supply the ore, and if they are all in operation they could supply enough ore to justify the operation of the plant that is already established?

Mr. MITTENDORF. That is right.

Mr. REGAN. And if they are all signed up, the four mines, then you already have the machinery to set this plan in motion to start working on these four mines; is that right?

Mr. MITTENDORF. There are five mines, Congressman, and we hope, of course, some more might come in under this schedule, and it will stimulate prospecting by other producers in the district. That is a very good statement of the problem. We do have a rather large plant to feed. It is an existing facility.

At the same time, it is going to require quite a capital outlay to get it going and quite a commitment on the part of the Government. We certainly must have a source of raw materials coming into it in order to justify commencement of the operation.

PRICE SCHEDULE FOR BUTTE-PHILLIPSBURG AREA SAID BY DMA TO BE HIGH ENOUGH TO INSURE PRODUCTION

Mr. REGAN. Could I ask you right there: We are concerned about getting these minerals. You have three mines that are all in accord and going ahead.

Mr. MITTENDORF. That is correct.

Mr. REGAN. Do you think there are five potential producers and maybe others?

Mr. MITTENDORF. That is right.

Mr. REGAN. Is the price that you are going to pay for these ores, in your opinion as mining men, sufficient to profitably operate these three mines as well as the other two that are in prospect, plus the undeveloped mines? Is the incentive going to be there to get these minerals out?

Mr. MITTENDORF. It is my opinion

Mr. REGAN. At the price you are going to pay

Mr. MITTENDORF. Is adequate.

Mr. REGAN. Could I project that a little further? Wouldn't you be justified in starting the operation of the plant on the theory that you have a price schedule and a market for the ores that would be a sufficient inducement that probably you wouldn't operate full blast for the first 3 or 6 months, but in time you would have that plant in full operation and have a surplus of ores beyond the capacity of the plant? Mr. MITTENDORF. That is the problem with which we are faced right

now.

Mr. REGAN. Under the circumstances, in our desire and need for these minerals, isn't it justificable that we take some small element of gamble in getting the plant going?

Mr. MITTENDORF. I believe we must take a risk.

Mr. REGAN. It seems so to me. If you have three miners to go and the fourth is hanging on a fence, if he doesn't come in maybe two others will take his place.

Mr. MITTENDORF. That is true. It so happens in this particular instance that the three miners who are willing to go along are the ones that have the least production potential.

Mr. REGAN. The other fellow thinks he won't play because he owns the bat and the ball?

Mr. MITTENDORF. That is correct.

Mr. REGAN. That does make it bad.

Mr. D'EWART. Mr. Chairman, does this prospect of decontrol have any effect on your negotiating the contracts in that area?

Mr. MITTENDORF. I am sorry, I didn't hear.

Mr. D'EWART. Does the possibility of decontrol have any effect on your negotiating those contracts?

Mr. MITTENDORF. No; I don't see where it would. We had a price that was considerably over the market price. We have approval of that, paying the amount that is necessary to produce ores in that district. We justified in our recommendations that at least this manganese could not be purchased on more favorable terms to the Government, and the price stated is what was required.

Mr. D'EWART. I might say for the benefit of the committee the Bureau of Mines has a wide knowledge of the manganese deposits in this area. They have been studying them for years and are familiar with the ore; they are familiar with the amount of it and treatment. Mr. MITTENDORF. I think that is a fair statement.

Mr. D'EWART. So lack of ore is not hindering them in the processing of the ores. That ore was handled for many years, especially during the last war. In fact, most of the manganese produced in the United States over the last few years has come out of that area so it is not a new process. That isn't the difficulty. The difficulty is the contract with this particular individual.

How long do you think it will be before this manganese is decontrolled?

Mr. REGAN. Mr. Ewing can probably answer that.

MANGANESE PRICE PROVIDED BY DISTRICT PROGRAMS TO BE MAINTAINED REGARDLESS OF FUTURE PRICE DECONTROL BY OPS

Mr. D'EWART. How long will it be before this manganese will be decontrolled?

Mr. EWING. It is a matter of very short time. It is a simple order. Mr. D'EWART. You don't think it will have any effect on domestic production?

Mr. EWING. I feel these gentlemen would have better control over the domestic production than we would.

Mr. D'EWART. And Mr. Bradley and Mr. Mittendorf spoke of control in certain areas after decontrol was put in. Does that mean that you are going to have a controlled price in one of these five areas while the rest of the country is decontrolled?

Mr. BRADLEY. A price standard in each area.

Mr. D'EWART. In other words, you will have a contract with which you will buy in that area?

Mr. BRADLEY. That is right.

Mr. D'EWART. And you will maintain that ceiling regardless of what happens after decontrol, if anything happens?