on the ore to determine actual recoveries of the various ores which we anticipate will be sold to the depot.

The third step, of course, is a mill to beneficiate the ores.

We could not gather enough data together to justify the completed program. There were differences of opinion with respect to ore reserves, exact metallurgy that should be employed, and we felt that we were going on indefinitely trying to resolve those various matters of judgment. We took the first step to establish a purchase_depot; to get the program started, find out what can be produced, and determine the weaknesses of the schedule, if any.

So we have, as I say, assumed that a certain class of ore will come out which is similar to that which came out during World War II. We base it on the determined recoverability of the ores which have been tested. We have assumed in this payment schedule that a recovery will be made of 70 percent of the contained manganese, based on an average 23 percent grade of ore.

We recognize that this is a first step; it is a tentative schedule that can and will be changed when the sampling plant is in operation.

I think it is a realistic approach. The factors that have entered into it, I feel, could be concurred in by any logical person who has reviewed the background of that district.

INDUCEMENTS INADEQUATE FOR PRIVATE FINANCING OF

MANGANESE

PROCESSING MILLS AT DEMING, N. MEX., AND EL PASO, TEX.

Mr. ENGLE. Is there any contracting process? Do you have any offers on this now to proceed and build the necessary plant?

Mr. MITTENDORF. A mill?

Mr. ENGLE. Yes.

Mr. MITTENDORF. No; we have never had an offer to build a mill. That is, using private funds. I don't believe that in the Deming area, nor in the El Paso area, that the applicants themselves felt that there was enough attraction to the proposed enterprise to go ahead and raise private capital for mill construction.

The mills projects have always been proposed on the basis of a Government loan. When we recommend a Government loan, we must adhere to very definite criteria to justify the expenditure of Government funds.

Of course, one of the first considerations is a divisor. That is to say, is there enough ore indicated to amortize the investment of the mill.

That we do not believe can be done at this time. We are taking this first step to encourage the flow of ore coming to the depot. We realize that some people will complain; and that there will be legitimate operators come in with legitimate claims which will be examined with an open mind.

We feel this first step is a realistic approach. I might comment on the case of one of the largest operations in the New Mexico area, who claimed damage at the termination of the Metals Reserve program during the last war and brought suit against Metals Reserve. Very exhaustive analyses were made of their operation to determine the validity of their claims, and it has been demonstrated, that while the Government was paying around $7 to $7.50 for the ores on a posted schedule, the firm was making a profit of almost $3 a ton.

We are now doubling that schedule of pay. We have no reliable estimates as to what the cost of this particular operation will be, if it does resume, but I believe on the basis of the figures at hand, we have made a very realistic schedule of payments by offering to buy the same grade of ores at twice the former schedule.

Mr. ENGLE. What, precisely, are the steps? Do you intend to buy the ore? Is that it?

Mr. MITTENDORF. We intend to establish an ore purchase depot immediately and all ores delivered to that depot in lots of 5 tons or over will be paid for on this schedule.

Mr. ENGLE. Then what is the next step?

SAMPLING PLANT AND METALLURGICAL TESTING LABORATORY TO BE REHABILITATED BY THE GOVERNMENT

Mr. MITTENDORF. The next step is the rehabilitation of the sampling plant and the metallurgical testing laboratory.

Mr. ENGLE. How is that going to be financed and handled?

Mr. MITTENDORF. Our thinking now is that will be a recommendation for GSA to rehabilitate an existing facility. Under the DPA Act, we feel that this approach is possible, since a similar plant was in operation during World War II. The foundations remain, part of the head house, and other facilities do exist.

We believe that legally we can rehabilitate that plant without DPC authority.

Mr. ENGLE. Are you going to do that on a loan to somebody or is private capital going to do it?

Mr. MITTENDORF. So far we have no proposals to do it by private capital. It will be Government financed as a cost incidental to this program.

Mr. ENGLE. In other words, you will authorize a loan to be made by the Government to build this sampling plant?

Mr. MITTENDORF. No; we won't handle it that way. I might have to call on Mr. Bradley to confirm the breakdown of his budget estimates. In the presentation of the manganese program, the contingent liability of each phase was calculated and in stating the total cost to the Government of some $8 million for the Deming program, the cost of the sampling plant was included in that over-all request for appropriation certification; is that right, Mr. Bradley?

Mr. BRADLEY. That is correct.

Mr. ENGLE. After you get the sampling plant what do you have! Mr. MITTENDORF. We will have a facility which will demonstrate the type and quantity of ores coming in to or that can be mined in the Deming area, and their amenability to commercial and economic beneficiation.

There are many reports on file written by laboratories and the opinions differ widely. I have seen conclusions where it is considered wholly impracticable to beneficiate ores peculiar to the Deming area. I have seen other reports stating that, by some complicated and uneconomic metallurgical tests, commercial recoveries can be made. At the same time we recognize that advances made in the metallurgical field, and the flotation of manganese ores in particular, have been made and our purpose in recommending the sampling plant is to get primary production started, to have a fair schedule which pays the

miner for his ores, to immediately set about to sample the ores and determine their metallurgical tenor, the production potential, and then be able to sit down with an engineering problem and devise what type of mill should be constructed to beneficiate them.

It is a progressive step.

Mr. ENGLE. Then your first step is to get the ores; is that right, and you set up a schedule on which you intend to purchase them? Mr. MITTENDORF. That is right.

Mr. ENGLE. Then the second step, and that is simultaneous with the first, is to set up the sampling plant; is that right?

Mr. MITTENDORF. That is right.

Mr. ENGLE. For the purpose of determining the nature and usability of the ore in a process?

Mr. MITTENDORF. That is right.

Mr. ENGLE. Then on the basis of that you intend to put in a mill; is that right?

Mr. MITTENDORF. When we reach that step, we are going to stop and make a very good appraisal of the justification for a mill; that is, the size of the mill, type, and exactly where it should be located.

MANGANESE PROCESSING MILLS PROPOSED TO BE CONSTRUCTED BY THE GOVERNMENT WITH DEFENSE PRODUCTION ACT FUNDS

Mr. ENGLE. The Government is going to finance the third step, too,, by putting up the capital investment to establish the mill as well as the sampling plant?

Mr. MITTENDORF. That is an unanswerable question at this time.. Perhaps if under proposed revisions of the Defense Production Act there is made authority for defense production plants, then that will serve as one medium.

Mr. ENGLE. At the present time, as I understand, the act is interpreted as not granting that authority; is that right, Dr. Morgan?

Dr. MORGAN. I am not a lawyer, but I understand that is correct.. Such revision has been requested in the proposed modification of the Defense Production Act.

Mr. ELLIOTT. That is correct, but I think it can be done under the existing law, because under the purchase authority in section 303 there is included the power to store and beneficiate, and I think the power to store and beneficiate would include the power to have a mill for that purpose.

Mr. ENGLE. It could be done under the stockpiling program, couldn't it?

Mr. ELLIOTT. Yes, sir; but I think it can be done under the Defense Production Act also.

Mr. ENGLE. The reason you prefer to do that is because it takes: this defense-production money instead of the stockpiling funds; isn't that right?

Mr. ELLIOTT. Yes, sir.

Mr. ENGLE. What I am afraid of is that we are going to run out of time here. The assumption, I take it, is that the Defense Produc-. tion Act will be renewed. Is that the assumption you are proceeding on?

Mr. ELLIOTT. Yes, sir.

Mr. ENGLE. Otherwise you are going to run out of time here in abor 23 days, and I am sure that there is going to be a lot of people aroun! this Congress who will be unhappy if this Production Act goes out (? existence and we haven't formulated or gotten into execution anr kind of a program for manganese, which, at least up here on the Hi currently is regarded as probably the most critical program of the whole business.

Mr. D'EWART. I would like to ask the chairman a question. It only titles IV and V that have to be renewed; the others go on. Isn't that true?

Mr. ENGLE. The contracting authority runs out. That is where the shoe binds. Isn't that right, Mr. Elliott?

Mr. ELLIOTT. Yes, sir.

Mr. ENGLE. That answers your question, Mr. D'Ewart?

Mr. D'EWART. Yes.

What title does that come under, V or IV? I understand IV. V and IV have to be renewed after June 30. The other titles do not have to be renewed before June 30.

Mr. ELLIOTT. Section 616 (a) of the act says titles I, II, III—and this is title III we are talking about-and VII of this act, and all authority conferred thereunder shall terminate at the close of June 30, 1952, but such title shall be effective after June 30, 1951, only to the extent necessary to aid in carrying out contracts relating to the National Defense, entered into by the Government prior to July 1,

1951.

Mr. D'EWART. The contracts you have entered into will go on, bat you have to have new authority to enter into new contracts? Mr. ELLIOTT. That is right.

Mr. D'EWART. Thank you. I have no more questions.

DISCUSSION OF DOMESTIC MANGANESE PROGRAM

Mr. ENGLE. It looks to me as though this egg hasn't been laid, much less in the process of being hatched; the whole program is a very nebulous thing so far, is it not?

Mr. MITTENDORF. I wouldn't say that. Of course, we have had a manganese program just 2 weeks now. It was approved by the DPA, I believe, on the 25th of May.

Mr. ENGLE. You say you have one?

Mr. MITTENDORF. We do. The Government now has a manganese program-a domestic manganese program-which we did not have prior to May 25.

Mr. ENGLE. That is what Mr. Bradley was talking about, isn't it! Mr. BRADLEY. Yes. That program that I described is one that grew and was set up during the 3 or 4 months preceding the date that Mr. Mittendorf gives you, which was submitted to DPA and under which we are now authorized to operate by DPA.

Mr. ENGLE. What happened, as I understand it, is that your shop, Mr. Bradley, recommended this program, which operates on the prin ciple of making a selective contract, or selective arrangement of some type with reference to particular areas in the United States.

Mr. BRADLEY. That is correct.

Mr. ENGLE. And you defined those.

Now you sent those over to Dr. Morgan; is that right?

Mr. BRADLEY. Yes.

Mr. ENGLE. And he cleared it and sent it back and said, "Go ahead ad work out something on it."

Mr. BRADLEY. Yes. The fact is Mr. Mittendorf's office has been bing a great deal of ground work. We got the wheels and the gears nd the axles all set up so as soon as permission came for them to arn we were able to at least do that, and begin grinding out contracts. Mr. ENGLE. This then is the process of putting the program, which general has been outlined and approved, into execution on a specific asis, and you are talking about Deming, and you set up a purchase hedule. You know, Mr. Mittendorf, that there is serious objection o that purchase schedule from some of the people out there, isn't here?

Mr. MITTENDORF. None have reached me. Nobody has come into y shop and asked for a hearing or came in with figures to show where hey would be damaged under that schedule. Nobody came in to how me what they have to invest, how long it will take them to prouce, what their rate of production is going to be, which is based on prior operating experience or a complete study.

FASTER ACTION URGED ON DEMING DISTRICT (NEW MEXICO)

MANGANESE PROGRAM

Mr. ENGLE. This program for Deming that you are working up now, you have your purchase schedule set up. Now that applies in somewhat the same manner as the program suggested for tungsten, doesn't it, except that you have a sliding scale?

Mr. MITTENDORF. And except that it relates to a specific district. Mr. ENGLE. That is right, and anybody in that area who can produce under that schedule can sell to the purchase depot?

Mr. MITTENDORF. That is correct.

Mr. ENGLE. Then you are going to set up the sampling plant?

Mr. MITTENDORF. That is right.

Mr. ENGLE. Are you negotiating with anybody to do that?

Mr. BRADLEY. It is not necessary to negotiate, because that will be a Government owned sampling plant.

Mr. ENGLE. Do you intend to do that yourselves?

Mr. BRADLEY. That is correct, or get the GSA to do it, because they own the existing plants there already, such as they are, that will be expanded into this sampling plant.

Mr. ENGLE. How long is it going to be after this thing gets perking along here before you will know whether or not you are going to have a mill?

Mr. MITTENDORF. I think that is based to a very large degree on the performance of the people within the district, the flow of ore that comes out. There are several X's in this equation as to the mill, as I pointed out. It depends upon the miner and his performance.

Mr. ENGLE. We could be in a war, be whipped, have a peace treaty, and be occupied by a foreign power before you would get anything done on that, it seems to me. It is too long.

Can't you think of some way to move faster?

Mr. BRADLEY. I think Mr. Mittendorf is merely expressing the most conservative attitude he can take and it doesn't necessarily represent the action which he will take.

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