Document 1gQx0wbgenM6wQevwVY12Zwyj

-i%_ .1 f - -# W'A'SWii'.fa . ...St . L BMlwntott LEAD INDUSTRIES ASSOCIATION 420 LEXINGTON AVENUE NEW YORK t7, N. Y. .a. January 25, 1946 To Members of tha Lead Industrie* Asaociationi SUBJECT t THE LEAP SITUATIOr Attaohed plea** find a statement on Tha taad Situation prepared by me, to be road at tha Dearer Con vention of the Colorado Mining Ataooiatlon on January 25, 1946# Secretary# FT I F'W?g^lliSfay-'T"! mm iy iw j >w j Jim** / -* For Release ! January 25, 1246 LIA 2163 4 Hesfe&lS.n.'S&Cai.Ljt- ^ - Ih4vri it sir^tdg imAim. *~t~vV*l^liMifilf^ ij~-<Ml-atii*lii'i^Trii li mtffa Lead Industries At*Delation 420 Lexington Are. Hew York 17, H.Y. 't THK LEAD SITUATION *ir F.E* Hornitr Secretary, Lead Industries Association After World War I lead wat frequently referred to ae the "precious metal*" Ho doubt the title reflected the marked difference between the price of lead before the war of about 4,00/ per lb* and the prloe after tie war, to the order of 7/, 8/ 2/ and even 10/ per lb. In fact, the aver 0 age price for the ten yeeri 1912-1929 wet elote to 7/ per lb* Perhept hlttory is repeating Itself* Today, after World liar II lead 1* precious In that it Isn't freely available but it certainly isn't precious at the OPA celling price of 6.50/ per lb* But that price doesn't give a true ploture of the situation as the metal it being hexvily sub sidised in the Efaitod States. For example, in 1945 about $17,500*000 was paid by the Government to the lead miners to they could maintain their pro duction and lest any one think that this subsidy enabled the mining com panies to profit handsomely they need only look at their balance sheets* Load is already selling abroad at higher price* than in the Unitod States* This Is a most curious situation* I think that In all recorded Aaerioan history* with one exception in 1937-1938, load has always brought more in the United States than in the rest of the world* never less* Per haps oven more curious it the fact that the Oovernaent now will have to sub sidise the produeert of any foreign lead to be imported into, the United States* All of which is a reflection of lead's current strong position* stronger than that of any other'domestically produoed non ferrous motal* The consumption of lead has subsided but little from its wartime rate of over 1*000,000 tons a year and only beoause of strist government oontrols on its use* The demand for lead is not expeoted to decline in the first few postwar years to anything like the rat* of the late 1950's. Whan you in vestigate that rate you will find it averaged about COO,000 tons a year - 0 but that was in a period of business activity below "normal*" In the late '20's it was about 900*000 tons* Paper presented at the Denver meeting of the Colorado ilining Association January 28, 1946* i mwwap1; -9- iUi;'Jil|i|i!mji7llip:'|y,|Uimi>^pL|Wl>li^.VU !u m. \ ) / OTggyjoJIjy LIA21635 m i m in ii 'f -rifr' ' m t --- fj- - fr fi- y u r r iii- .- - - -- -a -- r ' - H . - T T iji^ ^ -trm f^ iilltfirt-iiM iM iiih M iii'ir M i i~m i>h1i r i n --------- ---- *-;'* "" ->. ...- ..jy ,, ; -- - --fr- -.rfri-. to mtm In other word#, we may look for wh a large postwar increase Is the use of lead that w need either new domestic ore supplies or we shall have to import a larger tonnage of lead from Uexioo, Canada, Australia and other foreign eountrles than we have ever Imported before, Tou may ask why Is there suoh a large demand for leadT It Is a metal generally so inconspicuous in its applications that 1,000,000 tona a year may be difficult to visualise* but it is there nevertheless* Sev eral of tho largest uses of lead, suoh as the manufacture of storage battori os (whieh alone consumed about 300,000 tons of load lost yvxr), plus the use of load as onble sheathing and the use of lead in gasoline, axe oseontlally non-ocmpotltivc in that substitutes are either more oostly or not as uffoetive* In the aggregate these three uses ; icne are equivalent in tonnage to more than the entire domostlo prodvr'.ior. of load in any of the last three years. Of course, ono must not isi c j o misleading a de duction from this simplo statement because a !&-> eri'.rc of tho load used by thi battery industry ocas# frees secondary cr i crap rcuroes and any ap praisal of the American luid situation mast give p'cw.lnenv thought to tho scrap industry whicn hre gxcrvn increasingly inpcrtint rs the years go by snd will grew more .\ni acre important as our mires be -oxc progressively exhausted* But the :act remains that the postwar demand for lead has out stripped the ability of the domestic mine* to meet it alone* Jbu will note that Z have eonfined this analysis so far to only throe uses of lead* 1 have not given any consideration to other large uses such es white lead, which can consume around 75,000 to 100,000 tons of lead a year, red lead, lead for tho chealoal construction industry* lead In ammu nition, foil, bearing metals* collapsible tubes* solder* type motel and a multitude of other uses* It is well to note that lead is in a most-enviable position In that it Is generally indispensable for all these applications* The following table will give you Jtt a glance the prewar and 1945 rate# of consumption and show how the 1 ,000*000 tons of lead a year is ueoounted fort COKSIVPIIOK LEAD iIn Short Tons) / 1940 _1945*# Storage Batteries Cable Covering Chamlealt Ammunition Tetraethyl Sheet and Pipe Solder Bearing Metal foil Collapsible Tubes Brass and Bronte Type Metal Terse Metal heights A Ballast Beat Treating Seals* Ralls, Hasher* Other and Unolasslfied 220,200 107,400 124.900(a) 64,000 44*000 C5,000(b) 24,000 14*000 23*500 w(e; 16,000 (oj (o) (j (o) 04,200 310,000 109,000 135*000 66,000 77,000 75,000 47,000 40*000 19*000 17*000 38,000 27,000 4,000 12,000 3*500 3,600 85,000 Total 762,000 1*068,000 A*V*i>*S* dstineted (a) Exclusive of oxides for storage batteries, (b) Includes lead used in chealoal oonstructi'S (o) Included in "Other and Unclassified'." i "a r>~ If LIA 21636 Ui&tktm*1 ^-Trnn ViT^ '-f*- ^-'~- tfn *4 * >mt imiirat1*rg"iw ! *e sight spend several hour* analysing tho interesting competitive situation in aoh one of these outlet* hut time doe* not permit* Euffloe it to say that each application will probably oontinue to demand large amount* of lead for a long time to ooae oven though some uses stay be displaeed ulti mately by substitute*# how what are the domestic lead reaouroes doing to meet this oontinuod large demand for lead? It 1* no new* to you that lead produotloa ha* deolined in the last year but 1 am afraid a good many pooplc nave re ceived a misleading impression from publicity that has been given to the reason* for the falling off of produotloa# 1 have aeon it asoribod to a dwindling of our ore supplies whereas the simple faot it that it is mainly duo to a shortage of labor# Tho Uni tod States is far from boiag doploted of its load resources but it is undeniably true thut during the war noraml ex ploration and development work had to be aaorifioed on bclt&lf of production# Now that has to be made up# Current careful ostlmatos indicate that tho load mines in tho United Statoa roqulro about 4,000 additional man and that with title comparatively ' modoit part of tho huge American labor supply they could lncrooeepro-duotion substantially# I should say between 25 to 35, or perhaps another 100,000 tons of load a year, assuming, of oourso, that no restriction"* cr restraints aro put in the way of an incentive to continue operations through prieo control By that 1 mean a complete roturh to a froo market for load. Tho following table shews how our production has dropped off in tho last fow yoarst DOMESTIC PRODUCT ICH OF LEAD* (In #>Ko'rt 1 one) * 1929 1959 1940 1941 1942 1945 1944 1945 547,995 415,979 457,592 451,426 496,289 455,515 416,561 555,000 (estimated) Beecvorablo load - U.S< Buroau of Kino* I look for output to grow slowly from now on# One will be immediate ly struck by the large gap between the 1,000,000 tons a year we need to satis fy the Amerioan demand and tho 400,000-odd tons drawn frets the mines ns cew lead# This gap has to be made up largely by load from scrap and the from Imports. Sorap production should average about 500,000 to 550,000 tons a year leaving 260,000 tons needed from imports if the Amerioan mines do not increase their production# The government lead stoekplle has deellnod to a point where it oan eontribute only a modest amount of metal during 1946. On Deomber 51, 1945 the government lead stockpile was 75,000 tons# Cto Maroh 51, 1946 it is expeoted to be 60,000 tons# foreign demand for lead is Just as strong as It Is in the United States# Europe has been starved for lead for many years. Lead is traditionally a pre ferred metal for building oonstruotlon in England. One may anticipate, there fore, a strong continuing bid fra* Europe for available foreign supplies and currently only a comparatively moderate amount 1* coming lnt<> the United Statue WmMRWK HWWIil. ^^ amt ii n&*st***t*>* ;j*i*i>gup<w iHwr/^p^nmij mmirgp-" ^rwwn&S. LU ^63 ? I * -4- by government arrangement from Mexico and other foreign countries, oomp&red with what haa flowed, into the country during wartime, the figures being rough* ly 10,000 ton* per month currently ocopared with 20,000 ton* per month during 1945* This only eaphailcea the need of utilizing our domestic resources to help meet the demand* Available Government atatistio* indicate that the average price of lead reoeived by owners la reoent months ia over 6*6/ per lb* When I spoke to you a year ago I ladloated that the price in 1944 was roughly 7*75/ per lb* I believe that today tho prloe is enrsn higher than the 8*6/. What it would be without any Government ooatrol no one knows, but I feel strongly that the sooner we procure the removal of these Government prioe controls the sooner tho lead eltuatlon will be cured* By taking away from the lead market the one means by which tho amount of lead cooing on to tho market was always earefully adjusted, namely the operation of tho prioo of lead in a free market, a groat many serious distortions are created wh;ch require other regulations to correot. Where Ooreraaaat attempts to do the impossible - to control the dcuestlo Ic-ad economy, whioh is only a fraction of the world lead eoonomy, and to sup plant the operations of a free market, the result* are not likely to be happy. It la quite obvious that the offleal 6*50/ priee is well below the prlee lead would rule today in the general market and although* to be store, minors are receiving A and B quotas which are Intended to compensate for the laok of a free market, these quotas oan be revised at short notice* 1 know of at least ooe mine that is not receiving any quota and Is turning out lead at the offielal prlee* Sow tnat the inoentive of wartime patriotism is gone, and roccgnitlng the Government figures that lead is worth moro than 6.50/, any load ooopany might well quostlon a policy of continuing to turn out tho motel at a fixed oiling prioo without any premium in peacetime when it can procure a higher price for the metal if permitted to sell it abroad* f ' j Lead mining operators face an altogether different situation than la wartime* Under the operations of a free enterprise system in America they must decide hew they oan make the greatest profit from thoir operations* Any other policy is not sound in peacetime* The greater their net inoomc the more they con expend on further explorations, on taxes to help discharge the huge Gcvr- ment debt, or to get in a strong financial position so as to meet the inevitable rainy day and to maintain employment* / go doubt questions of taxation and the offset of the capital gains tax on new ventures in Colorado mining may take up other parte -f this convention* That, too, is a barrier to the resuaption of full-scale mining in the United States and 1 haven't attempted to enlarge upon it here* We might note ia passing that there is no capital gains tax in Canada* Z believe that has a lot to do with the intensive exploration of Canada's mineral resoureea now going on* la oonolusiae, it seems to me that the Colorado lead mining industry would be well advised to work for a oomplote removal ef all Government priee restrictions on lead and its derivatives on June SO, 1946, the expiration date set by Congest. In faot, 1 eon chink ef nothing better ealoulated to our* tho load situation than that single step* " fwy .Mv'e.i 'yyjlit'lwvi