Additional contracts as a result of certification by the Defense Production Administrator as of June 30, 1951

GS-OOP-D-12000.. R. E. Somerhalder..

GS-OOP-D-12001..

Not signed. June-December Tungsten.
Pennsalt International Corp.....do.

Short ton unit. Costa Rica..

27,800-10,400

1951.
Third quarter...do.

do.

Portugal..

21,788

2 66.70

2 $57.00 In bond, New Orleans,

66.00

La.

In bond, New York.

2 65.00 New York.

2 72.00

Ex warehouse, New
York.

257.00 New York.

265.00 Ex foreign trade zone,

New York.

Do.

1951.

Contract number

Mr. BARING. Will the gentleman yield?

Mr. ENGLE. Yes.

Mr. BARING. I have a speech here which was prepared by NPA and brought to my office for me to give over the air. As I glanced over it I saw that it had the following to say about tungsten: "Now it is being produced in veins and placer deposits in Colorado, California, and the historic Black Hills of South Dakota." I asked the man who brought the speech to me, "What about Nevada?", and he told me that there was no tungsten in Nevada. Actually, Nevada is one of the biggest tungsten producing States in the country.

I think we have proved conclusively before this committee that the administration of the Defense Minerals is "NG"-capital "NG”—and I think we ought to ask Secretary Chapman for the dismissal of the Administrator. The defense minerals program cannot work the way it is going.

Mr. ENGLE. You tell me who the Administrator is. In going up and down this totem pole, I have never been able to find who Chief Thunderbird is, perched on the top of it, who is supposed to be able to run this show.

Mr. SAYLOR. We had brought up before us today Mr. Ralston who is chief metallurgist.

Mr. REGAN (presiding). I wanted to finish manganese ore before we got to that.

MANGANESE CONTRACTS FOR BUTTE AND PHILIPSBURG (MONTANA)

OPERATORS

Mr. D'Ewart, do you want to ask any further questions on the Butte project before we get into this slag?

Mr. D'EWART. Mr. Chairman, I would like to read just a paragraph from the testimony of last Thursday, to introduce my subject, and it wouldn't take us very long, and while I am reading it, I would like to have Mr. Sanford R. Knapp, of Butte, come forward. Would you come forward and take a chair, Mr. Knapp? This is Mr. Mittendorf's testimony.

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 individuals thinking of the very component parts that go into this overall 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 beneficiation 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 last evening listening to the protests that have arisen now when we are in the final stage of consummation of the contracts. We have had to call-at least I want to call-a very temporary halt-in my mind, and 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 knowingly to 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 resolve differences. This situation, as I say, arose last night. There has been information reach us from Butte which refutes what we heard yesterday by word of mouth, to a very large extent.

He goes on to say that one or two of these people pulled out and Mr. Mittendorf was going to call these Thursday afternoon and see if they could work out that contract and get the situation.

Since then, Mr. Knapp, who I understand is one of the people to whom you referred, Mr. Mittendorf, is in town and I thought between you and Mr. Knapp making a statement here this morning perhaps we could work out the difficulties in this Butte-Philipsburg area and get a clearer understanding of just what was holding up those contracts in that area.

Both gentlemen are here. The man who Mr. Mittendorf referred to, and Mr. Mittendorf, are before us today. Here is our opportunity. Mr. REGAN. Suppose you give the secretary your full name and initials, your name and address.

STATEMENT OF S. R. KNAPP, PRESIDENT, TAYLOR-KNAPP CO., BUTTE, MONT.

Mr. KNAPP. S. R. Knapp, Taylor-Knapp Co., president, main office, in Butte, operations in Philipsburg.

Mr. D'EWART. Mr. Mittendorf, would you like to comment first, then we will have Mr. Knapp as well.

Mr. MITTENDORF. Yes; I will be glad to. Mr. Knapp has prepared his letter of protest. It was handed to me just as I boarded a taxicab, and I am sorry I haven't had the opportunity of reading it.

I called the other people, as I pledged myself to call, and Mr. McMeekin is very anxious to come down, has offered to come to Washington, and he is quite sure we will get together on an individual-contract basis.

I have a cable in my office received from Mr. Cole. I also talked with Mr. Cole at Seattle last Friday. He confirms that the other three producers are ready to go ahead on the price schedule proposed. I told Mr. Cole it was my purpose to finalize the three immediately, and I hope we can get them out in a day or two.

They believe that these proposed schedules are fair, and fit their particular operation. Those three contracts will be my purpose to consummate. I am glad to have Mr. Knapp back again today, and I will be very glad to sit down with him to discuss further his objection. Mr. D'EWART. Mr. Knapp, since you seem to be the person whom we were commenting on on Thursday, would you like to comment? Mr. KNAPP. Thank you, Mr. Chairman.

I would like to say that I have read the transcript of the meeting on Thursday and there appeared to me an impression that I had kicked over the traces very recently, without good cause. It also refers to this meeting back in January, when the five, instead of four, as was frequently mentioned, operators, met here in Washington, to discuss this combined Butte-Philipsburg program. We all came to Washington with a definite proposal as to ore prices, which was discussed earlier today.

From that time, which I believe was January 30, until April 25, I personally had no knowledge of the price schedule that now appears in these draft contracts. The entire basis is changed. I would go

along on the price schedule which all the operators agreed to back in January.

The present schedule is unworkable in my opinion, and I believe also in the opinion of the other operator that Mr. Mittendorf referred to. It involves the same considerations that were discussed earlier here today.

My second point is that, when we had this meeting in January, it was announced at the meeting that the policy would be to concentrate Philipsburg ores in Philipsburg.

We have a concentrating mill ready to concentrate such ores.

This draft contract that was submitted to me, I believe, May 15, provides for concentrating only 1,500 tons of concentrates. Last November, we offered to concentrate over a 5-year period some 37,000 to 40,000 tons. It wouldn't be worth setting up for 1,500 tons.

There are a number of other objections I have to the draft contract that was submitted, as I say, on May 15. They are less important. I am sure we can work them out, but there are those two basic points that we qbject to in this program.

Mr. D'EWART. Are you speaking for all five producers in the area? Mr. KNAPP. No.

Mr. D'EWART. Just for yourselves?

Mr. KNAPP. I am speaking now just for our own company. We are considered, I believe, generally the second-largest potential producer of manganese in the combined Butte-Philipsburg district, excluding, of course, Anaconda.

Mr. ENGLE. What are your basic objections?

Mr. KNAPP. The ore purchase-price schedule, whether we sell the ore direct or whether it is reflected in the price of a concentrate we would produce; that is the first objection.

The second major objection is the limitation in our case to produce only 1,500 tons of concentrates where we have offered and are in a position to produce a very much larger tonnage; we say 500 to 1,000 tons a month.

Mr. ENGLE. What you have is exactly the same thing we have on Deming?

Mr. KNAPP. Exactly.

Mr. ENGLE. DMA started out with so low a price that on the lowgrade you can't deliver and they put a quantity limitation on the high grade; so, you go broke if you put in enough upgrading facilities. Is that what it boils down to?

Mr. KNAPP. Yes. Your remarks earlier might just as well have applied to our particular case in Philipsburg.

Mr. ENGLE. The thing I want to find out is whether anybody down there wants to have a manganese program or not.

CONTINGENT LIABILITIES SET UP FOR MANGANESE-PRODUCING AREAS

Mr. SAYLOR. I would like to ask Dr. Morgan a question in regard to this area.

Doctor, the other day you referred to a contingent liability that you had mentally set up for some of these other areas.

Have you mentally set up a contingent liability for the Butte area? Dr. MORGAN. Yes, sir. That liability was not set up originally by the Defense Production Administration, but was set up by the

Defense Minerals Administration as a part of its submission of the total manganese program to the DPA. In this program there is a contingent liability for this area.

Mr. SAYLOR. Have you also set up contingent liability for the other area that wasn't referred to, and that is for the Batesville, Ark., area?

Dr. MORGAN. Yes, sir. We have taken the sum of all of the contingent liabilities for these areas, established the contingent liability for the whole program, and set aside the funds for the whole program. Mr. ENGLE. Would you like to give your opinion as to what this manganese program amounts to?

Dr. MORGAN. Yes, sir. If you will let me make a little statement on that I do not have a prepared statement-but let me say that this is not a new problem, and I would like to go back several years.

REPORT OF FORTY-NINTH CONGRESS DISCLOSES LONG HISTORY OF UNITED STATES DEPENDENCE UPON FOREIGN MANGANESE

This is the Report of the Select Committee on Ordnance and Warships [Rept. No. 90, 49th Cong., 1st sess.] of the Senate, 1886, and I would just like to read a very short paragraph from that, because at that time the Congress was considering the question of whether we should have a steel Navy or a wooden Navy, and the question came up as to whether we had enough steel capacity and iron ore and manganese, et cetera. Here is what the report of the Congress said at that time:

IMPORTED ORES

Foreign ores are imported in considerable quantities and used in furnaces within easy reach of tidewater. This is partly due to the low prices of the foreign article and partly to the smaller percentage of phosphorous in certain imported ores which are mingled with native ores containing more than the permissible percentage.

There has been more dependence upon foreign sources for manganese and the spiegel made therewith, which are indispensable in the manufacture of steel, but owing to the low price of foreign spiegel, and the fact that it does not form a very large item of the cost of steel, enough attention has not been paid to the development of manganese ores, of which the country has a sufficient supply, nor to the manufacture of spiegeleisen. However, the home production of the latter is rapidly increasing.

So, going back at least to 1886, we can see that question of United State dependence on foreign sources of manganese to make our essential war matériel, as in that case for the Navy, was known, so this is no new problem. We had it in World War I; we had it in World War II; and we have it today.

FOREIGN SOURCES OF MANGANESE ORE

Now, in 1950, the foreign sources of manganese ore with the quantities in short tons after them, in decreasing order, were as follows. I will just give them in round figures:

India, 633,000 short tons; Union of South Africa, 475,000; Gold Coast, 328,000, plus approximately 170,000 short tons ore equivalent of ferromanganese; Brazil, 130,000; Cuba, 97,000; U. S. S. R., 66,000; total imports of ore 1,838,000; United States domestic production 139,000.