Now, we are going to pay a subsidy for the domestic producer. I think it would bear quite some investigation.

Mr. ENGLE. Is there a subsidy to foreign producers?

Mr. BUDGE. I think so, it was testified by Mr. Lipkowitz, who went to Europe to develop some of those mines.

Mr. ENGLE. I think in a particular instance that is true, but, as a general proposition, we are not paying a subsidy to the foreign producer, except perhaps indirectly, where we are getting gouged. That has happened a time or two. We were gouged on purchase price of tin and, I believe, one other metal. What was it, tungsten or copper! Dr. BOYD. Tungsten, I think.

Mr. ENGLE. Tungsten. We pulled out of the market and let them sweat for a while, and we brought the price down. What we have experienced there has been some international hijacking operations: they figured we had to have it, so they just ran the price up. That is the world price.

Mr. BUDGE. It could be our tariff agreement, too.

Mr. ENGLE. Our what?

Mr. BUDGE. Our tariff agreements, I think, would have something to do with it.

Mr. ENGLE. It might. I don't see the pertinency, or relevance of the tariff. It is a little hard to determine. But from the standpoint of price control I don't see what they can do about the world market. In other words, if we are going to concede that the world market is going to control our ceilings, we must unhook ourselves from the world market and protect the people in our own country who can't produce at the frozen prices except under a premium program, which in effect, is a subsidy arrangement.

Mr. REGAN. Let me say to the committee that Dr. Boyd just had a call to come before the Appropriation Committee of the Senate at 3:30, and since we are all concerned in seeing this appropriation go through so he can back up this statement, we are going to have this and that program in cooperation the next week or 10 days, we should give him time to get there at 3:30.

Before going, Mr. D'Ewart wanted to ask you something about chrome mines?

Mr. ENGLE. Are you through, Mr. Budge?

Mr. BUDGE. Yes.

Mr. ENGLE. Would you yield to me to make one observation!? I want to know this. If you are willing to pay a premium or a subsidy to a select group of producers, why aren't you willing to pay it to any producer who will produce the material you want within the quantity or quantities you want, and at the quality you want? Dr. BOYD. I think we are. I think we should do that. Mr. REGAN. All right, Mr. D'Ewart.

STILLWATER (MONT.) CHROMIUM DEPOSITS AND MILL

Mr. D'EWART. I would like to know what has happened to the Stillwater chromium deposits, and your efforts to develop the chromium for the needs of the country.

Dr. BOYD. Mr. D'Ewart, as you know, we have been talking about this for some time. We still haven't had demonstrated to us either ourselves or from industry, a means by which we can make the Stillwater deposits into a material than can be used in industry. Therefore, when we presented the program to Defense Production Administration, they felt that we should go ourselves-we should have a very substantial research program in to those ores, to see if we can't solve that particular problem. We have a contract before us today, or a proposal before us today, of an individual who is willing to undertake a research program on his own. If we will assure him that there will be a contract at the end of his research work, if it pans out.

In the meantime, we are doing research work in our own laboratories, and this program will mean a very much stepped up research program. In view of the chrome situation, as it now stands, the balance of supply and demands, and the condition of the stockpile, and this other project out in the West, DPA felt we ought to finish that research work first, and I feel I must agree with them.

Mr. D'EWART. Of course, that research you have been carrying on for, well, since the end of the last war.

Dr. BOYD. On a very small scale, not nearly fast enough.

Mr. D'EWART. During the last war, we spent $20 million putting up the mill, developing the properties and works, and we do have that huge 27-mile long ore deposit out there. We have the roads, we have some of the buildings, the machinery has all been moved out, and this study has been going on through your agency for at least 5 yearssince the last war.

Dr. BOYD. Yes.

Mr. D'EWART. I think it was all agreed that probably there would have to be some kind of an electrolytic process in order to get a concentrate to make it possible to ship it to the seaboard, is that your thought? Dr. BOYD. That is correct; yes.

Mr. D'EWART. You have been shipping ore to Colorado for study. Dr. BOYD. We have shipped that ore to various places, where people have been working on it.

Mr. D'EWART. You are letting a special contract for the study of the processing of this ore at the present time?

SUBCOMMITTEE NOTE-The Chromium Mining & Smelting Corp., a Canadian company, produces an exothermic ferrochromium for the steel industry under the trade name of "Chrom-X" from low- and off-grade chrome ores and concentrates. The process used was developed expressly for the purpose of utilizing low- and off-grade chrome ores and concentrates as are produced from the Stillwater chrome deposits in Montana and elsewhere in the world. During World War II the Chromium Mining & Smelting Co. used thousands of tons of low-grade chrome concentrates from Montana in the production of ferrochromium. The company has been planning to construct metallurgical plants in Montana for the production of both ferrochromium and ferromanganese from Montana ores and concentrates with its exothermic processes.

In view of the factual record, the statement made by Dr. Boyd that there is no demonstrated means by which chrome ores in the Montana Stillwater deposits can be made into a material that can be used by industry and similar statements made during the hearings by other witnesses from DMA appear to be grossly misleading.

Committee hearing No. 38. pt. 2, Chromite, hearings held on Strategic and Critical Minerals and Metals before the Subcommittee on Mines and Mining of the Committee on Public Lands, House of Representatives (80th Cong., 2d sess., pp. 610 to 616 and 629 to 631), contains additional information on the Chromium Mining & Smelting Corp. and its exothermic processes.

Dr. BOYD. It isn't a contract. The company is willing to do the work themselves; if they are successful we will give them assurance we will enter a contract with them. I think we can give them that. Mr. D'EWART. There was some ore shipped out of those mines during the last war.

Dr. BOYD. That is right, sir.

Mr. D'EWART. You built a 2,000-ton mill there, as I understand. Dr. BOYD. Yes.

Mr. D'EWART. And then you were in operation for a short time, you blocked out about 2 million tons of ore, and less definitely 2 million more tons.

Dr. BOYD. That is right.

Mr. D'EWART. Your geologists tell you the deposit is of unknown depth, it isn't a question of the ore, it is a question of the treatment of that ore.

Dr. BOYD. Treatment. Incidentally, the work we are doing on these manganese slags, might have some promise that might help on solving that particular problem. We have some hopes, but they haven't been solved, yet.

Mr. D'EWART. During the last war we got out a lot of ore that was usable.

Dr. BOYD. By blending with high-grade ores.

Mr. D'EWART. That could be used, and it will be used again if you can't work out the electrolytic process correctly.

Dr. BOYD. That is correct.

Mr. REGAN. Dr. Boyd, you can leave in a few minutes. Mr. Saylor wants to ask you a question.

BATESVILLE (ARK.) MANGANESE PROJECT

and

Mr. SAYLOR. Doctor, going back to manganese for a moment, the discussion on Batesville. I think you said this morning it was low-grade ore. Now, I gather from that you meant that qualitatively it was low grade, is that right?

Dr. BOYD. That is correct. I would like to straighten that out. if I may, sir. The manganese ore in the Batesville area, is contained in a manganiferous clay, in which the manganese is on the order of 5 or 6 percent in the total mass of the clay. When you wash that clay away, you get left residual lumps of a relatively high-grade ore. The problem has been to handle that in large quantity, and wash the nodules out of the big lumps of ore, which is good, solid manganese. That is being done today. We are negotiating with the company to help them do that thing, and they told me before this meeting they are satisfied with the negotiations.

Mr. SAYLOR. You said you had a report. Would you submit that for the record?

Dr. BOYD. I would be glad to do that. Incidentally, Mr. Chairman, you asked me yesterday for a list of the cost of the manganese program. I have a tabulation of that, you might want for the record. as well as the status of the Batesville project.

Mr. REGAN. I would be glad to have it.

(The information is as follows:)

Manganese program-Estimated costs per budget calculations, May 5, 1951

SURCOMMITTEE NOTE.-The "Expected or contract production" units are contained in finished concen. trates of specification grade ready for shipment and use and represent recovered units. For instance, the announced manganese programs for the Butte, Philipsburg, and Deming districts provide for the purchase of low-grade ores or concentrates containing 12,000,000 long ton units of manganese, from which 8,920,000 units are expected to be recovered as shown above.

STATUS OF BATESVILLE PROJECT

Present consideration is of a project treating not less than 4,000 tons per day of clay of less than 2 percent manganese content from a very large area in which such ore may occur under a barren cover at Batesville, Ark. The estimated production will be 40,000 tons of ferro-grade ore per year.

A. Applicant's proposals:

1. Revised application asks for overmarket price contract and for loan of about $2,400,000.

2. Applicant has agreed to contract stripping, mining, and hauling, eliminating certain equipment requirements and reducing the loan requirements to above $1,600,000.

B. Within DMA:

3. Price of product is to be negotiated. Obviously it will depend on method of financing. For instance, if a Government loan is made placing the risk on Government the price must be lower. If applicant places the risk elsewhere then the price can be higher. Applicant has indicated his understanding of this principle.

4. There is at present a question of reserves adequate in quantity to support an operation until 1956 and in grade sufficient to keep the cost below $1.50 per unit, including amortization.

5. The United States Bureau of Mines, on April 30 or thereabouts, completed a sampling program of 18 holes in the district. Results not yet available. We are processing exploration loan to applicant to secure further drilling.

6. This sampling will extend the mineralized zone. If the grade is no poorer than that already assumed, the Supply Division will recommend favorably.

7. The decision should be forthcoming within 6 weeks.

MAY 10, 1951.

P. R. BRADLEY, Jr.

Mr. REGAN. Any more questions before Dr. Boyd leaves?

Mr. BUDGE. Doctor, in the light of our discussion on this one particular mine, I would like to just call your attention to this publication of the Department of the Interior, under date of 1950.

In this publication about two-thirds of it is devoted to the particular mine we have been discussing and the mines to which you have sent two or three field crews since the first of the year.

Dr. BOYD. May I have the number of that please, sir?

Mr. BUDGE. This is geological survey, No. 229, complete with pictures, charts, maps, and the whole works of this particular mine. Dr. BOYD. Thank you.

Mr. REGAN. Mr. Bennett, do you have a question?

Mr. Martin?

Mr. MARTIN. No questions.

MEXICAN MANGANESE ORE DEPOSITS

Mr. REGAN. Doctor, you will be excused in a moment.

Before you go off, I want to ask you one last question on my own part.

I referred to the two or three publications on manganese which you said you read and are familiar with, and that aside from satisfying yourself further that that mountain of ore is still there, by sending a man down to the ground to see it, you are ready to start buying Mexican ore, pronto?

Dr. BOYD. That is right.

Mr. REGAN. As soon as you get the money from the Senate this afternoon?

Dr. BOYD. That is right.

Mr. REGAN. I never knew there was any question of an American going to Mexico. They seemed to be coaxing you to go over there. Dr. BOYD. This is a little different question we had to get clearance with the Mexican Government to allow him to examine a deposit. I was told he had not been cleared, and therefore, he couldn't go in. I don't know what the holdup was.

Mr. REGAN. Is that about to be cleared, or don't you know?

Dr. BOYD. I am not convinced we need to do it. I have a feeling that the information is enough."

Mr. REGAN. It seems to me you have all the information necessary, but I wondered if you had to have a last minute inspection to see if

that hill of ore is still there.

Dr. BOYD. I am not convinced we still have to do that.

Mr. REGAN. I hope you have success in having the Senate see you get this money.

Mr. Gumbel, will you proceed?

GROSS CONTINGENT LIABILITY INTERPRETATION BY GENERAL ACCOUNTING OFFICE HAS UPSET FINANCING MINERALS PROGRAMS UNDER DEFENSE PRODUCTION ACT

Mr. GUMBEL. I was just coming to this thorny question of financing these projects. When the Defense Production Act of 1950 was first passed it was the intent of Congress and the Administration that as much of this development would be done by private enterprise with private funds as would be possible, and it was conceived that the Government would simply stand back and make agreements which would to some extent limit the possibility of loss, such as the accelerated amortization, or these contracts, which we have entered into putting a floor price under. In other words, those contracts simply provide that the man will go ahead and expand his facilities, spend his own money, sell his product in the open market, but if the demand disappeared and the market fell that the Government stood ready to buy the product.