Document OJLp0J8K9Zbm8G36Rq8X542X

LI A 16246 M*--. -----------~ - ~ re pzrxsss tm.-^uLs a3CTis t r a t io k as p t l eap nouam* Jo n Boyd, Adiinletritcr, Defenat Minerals AAdnistratioo Ur. Chnlraan and members of the Lead Industrtm Association. Several months have paaced glace jwr oble Secretary, Bob Ziegfeld, extended at an invitation to attend your annual Boating and tell you of the actiTltiea of the Defence Minerals Administration and its relationship to the la ad .Industry, I was honored and pla aaed to receive the imitation to speak for it it always a pleasure to Baet with mashers of your group. At the tine of Bob's Invitation, however, It appeared that lead was oaa of the fmr assontial industrial natals for which there waa no great supply pro blem. It aeemed, therefore, that there would bo very little intoresting information that I could tell you with respect to the Defense Minerals Adil nl stration and the lead Industry. But as you all know the lead supply situation baa beooma increasingly critical in recent weeks and, contrary to ey early expectations, I had no difficulty In assembling material which I believe should be of interest to all In your associa tion. I aa ploasoi, therefore, to hara this opportunity today to tall you something of the lead program and other activities within the Defense Minerals Altainlstratlco as they pertain to tin lead Industry. fba functions and responsibilities of the Defense Minerals Adalnlftrmtieai are winy. Tie are charged with responsibility relating to more than BO adnerala and metals. With respect to lead and other nonferrous settle and dnerals our respon sibilities cover their raw state through the process of smelting and refining. Ome of our principal responsibilities is that of bringing the supply of strategic and critical minerals into balance with requirements. To eocercise this responsibility we must currently analyse and forecast prospective metal and mineral supply and develop programs to put into operation the objectives of tho Defense Production Act of 1950, However, before a program of mineral expansion can function it is nscascary to know mineral requirements during the emergency period. Requirements far lead and ether metals and minerals are assecblod by and made available to us through the Defense Production Administration. It is their job to tell us the requirements for the military services, for civilian use, and for all agencies of the Federal Oovanawent including the strategic stockpile). Brring received these requirements ms must ascertain the sources of supply to meet the established need. In this regard ms feel that our figures on lead supply during the emergency period are the bast obtain able, for after all ouch of our information cornea frem you people. As in the caso of many strategic astale the anticipated requirements for ' lead substantially exoeod the estimated available supply from domestic sines, namnilaij sources, and imports. There is tilts a gap between supply and demand which Bust be flllod by new or Increased production and imports. Creating an lncroaso in the output of minerals and metals in short supply is a mojor function of tho DMA. To fulfill this function the Defense Production Act has provided us with tools in the fora of financial asslstanos such aa accalarated amortization certificates, loons, guarantees of loans, procurement contracts, and incentive payments for new or expanded production. All are designed to enoourags 0 industry to expand mineral and metal output. Praaontod at the 23rd Annual Useting. Laad Industries Association, May 17-18* I95X Mow lark, u, X. M.jjlM If*";1?" 1L5IJWJWBU It Is upon tho reccaaondatire of the Defense Minerals AAairistration that certificate* of necessity for accelerated eaortlxsUon of capital investment for tax purposes era audo, Iwirg the lost war the certification of occelerttod maorti&atlon was either 100 percent or nothing. ('ong.'ees has been critical of this approach ana has Insisted that this tiwa only a percentngs of the total amortisation be granted, i Such a percontcgj will bo industry wlda and based upon tho estimated da^roe of market | obsolosconce occasioned by tho noed to expnd beyond nomal noeds to moot the soar| gency, In arriving at on answer regarding paacetiao potanttalitios of a facility, j wo hero derelcped ieforaatien which projects ths sirxkot for products of that portion lar plant against the total suppliaa, indicating hero long these plants could be ax* ] poctcd to continue in production after the flvo-yosr sosrgency period. Additional ] adjustaor.ta are madu to allow for ralativa also and cost*. Such adjuatauats nay be up or down fro* tho industry average percentage* If the Defense liberals JUhdnietration le satisfied that private enterprise cannot undortalce desired expansion of production in the absence of an assurod market for the output, it nay arrange for procurooent contracts with individual enterprises fur the ourehttjte by tho rminrel Oiwfi*..* of their projected o*jtpvt ct minisss price for a specific pare id of years, provided authorisations for the ooaa&taoot of funds for this purpose now pending before congress ere approved* The OoVermont agency *tich makes the actual pruchasos is the Ooneral Services Adtinistratlon; but it acts on the certification at Dofenss Production Adainlstratloo stdeh, in turn* relies on the rwcomondstions of the Dafonss Minerals .rbolnlrtration* As in the ccso of tine, it is proposed to sstsblish procurement contracts for lead based on oaoltor settlement at the current aarkot prioo with s floor prioo and a tins period to be dotominod by negotiation* Such a contract with sn operator of a lead W.no would contain an option for the Ooveraaent to take the production with the provision that unless the Oovomaont exorelsos Its option too material will o o j >tlnuo to bo sold to industry through usual mirk at channels* To date, HU has entered into seas cantracts thereby a floor is guaranteed to tho producer so that be can finance his orxt operation. Tha only caso whoro GoVermont funis are directly iwpendtd is when tho n.-xkct siould fall bolow the established floor price* Than the Qovwra out would have to ctop lr. aid pey tha difference. It Is not anticipated, hciayvor, that tho taxpayer will have to pay additional nancy for this prupoa# during tho per-- iod tho contracts era in force, for if military and dvllicc. roqidrcmants lnereaao as anticipated, there will bo a demand for all the motels and minerals that the domostle industry can practice, under axiating conditions* Loans for expansion of capacity, dovalopntit, and production of minerals are offered in cocos where financial aasistance from priveto sources are unobtainable or available only on unreasonable terms. Tho function of EUA in this rospoct is con fined to rocoawundations that such assistance is necessary to carry out tho objactives of tho Defense Production Act, To dr.to every few loans hera boon grantad for dural expansion. Tho Actrrini stration has adhered to a preferential policy of utilising tax OBortlsstlon certificates and procurement contracts* Loans rsqulrw checking Into credit and detailed estimates of tho possibility of repayment, financial assistance is also given for tho purpose of onoouraadns tbs nrnlosetlon of unknown cr undorclopod oourcos of dnorals and antale. It is anticipated that this typo of assistance, which Is under tho full responsibility of the DMA, will be helpful to lead nlrirvg. Ms faol that this prograi answsrs s noed evident during the past tlirsu to five years for enocurogoment to small minors md oporstors la their work of exploration development. It was not, bowsvor, dcslgnod as s relief program for the minor, but oa a moans of nsslstonos In the sooreh for now ore bodios to im prove our mineral position* for load, tine and oopoer doposits the applicant undar uu MsswnsmpssawwmMiipi-ui p. miu' LIA162A8 - -* ~ **"-** =-< 1 +**>* V-1|- -- * AM lafeft i )- the exploration program wu.it catch foTvrrcvnt funda an on equal basis* Funds advanced Oby tha Qorcrrrwnt aro to bo considered u a grant to bo repaid 1/ the exploration la profitable, but to be cancelled If unsuccessful. It la gratifying to note, In the short tine che axplcration prograa has been In effect, the wUllngnoca on the part of west of the applicants to catch fund* with the Federal Goremeant la shaping up their respective exploration progress* Although there la a current shortage of lead, the information e have obtai!>. ad from Industry concerning praaont expansion progrma indicates that supply and Vewnd will be In substantial balance after 1953, There Is, however, the problem of moetlsg promptly a deficit during tho next t*o or throe years resulting froa the dcplotion of j clocks in the hands of sneltexs and considers and the lead requirement* of our donestio < Indus trlas and our allies* This probloa la complicated by tho uncertainty of luporte* 1 Therefore, *e hive ccmo to the conclusion that It will bo necessary to enter into an incentive prograa for both lead and tine, and these two netals are commonly produced , froa snail Bines, tha administrative burden of entering into Individual snail contracts, i except for very large producers, is naturally Isipossifclo* Therefore, m have been j working diligently to oevolop a aaiiafactorj u*.^utlvp p:vgi<-* usually adaptable fer . email .roducor** In this connection we havo not with the Secretary of the Interior* j Zinc and lead Advisory Cocsltto# which Is made up of representatives of aaall inde pendent, aodiua and large business enterprise* froa various geographical arc.is la the United States* Tho advloc and assistance vc hove received froa nenber* of this com mittee, many of whoa art also nemO.-rs of the Lead Industries Association, hna been extremely gratifying* The general foeling of our advisors la the lead and sine Industry Is as follow*i * As to other metals customarily dooostleally produced rndsr free narkat conditions, the coaelttoo bolicvos that a flat preedvn for excess production, whether froa now or cstab ilehod ainoa, fixed at a rata high enough to bring supply P and pordcoiblo demand in balance, would be the ooet effi cient and economical mothod of solving the problem-* Unfortunately the requirement of in incentive program In lead and aine lnvolves the cccaitaant of substantial runs of Govomaer.t funds* Tha proposal to pay a bonus for new and expanded production as act forth in the advice of tho National Minerals Advisory Council, would require a nlnlnua Cfcvarment ccrwdtmont of $5,000*000 a year for ippngir.jteiy 100,000 tons of recoverable lead and it would h-ve to be committed for tW3 or three yosrs in advance* Budget presentations now before Congress include funds for this propose. 1 If these funds are approved* D.M.A. has a plan In advanced stage of pnepar*tloa which mould bo iaaodi ately reooomwnded for adoption. This pilan Is based upon the Industry** recceaendetlon* For obvious reasons of raising possible falso hopes* It 1s not wise to announce aruch plans until they have been finally approved- Thor* aro other factor* <V\ieh have a bearing on future supply of lead and which call for assistance from tho Defense Mineral a Adolnlstration by other Btans than those which I havo witllned for you this nomine* One of t)oo la the - ties of nsriaa prciuOlita at exletlng sines through assistance in obtairmy machinery supplies and equipment* Inasouch as general control orders on mining machinery end equipment havo not yet boon put Into effect, tho activity of OU in this respect has boon of necessity on a caao-by-caao basis and our staff has handled virtually thoueab* of individual expediting actions* GPBSppi mm m LI A162^9 lr--*?W. - v -iiMf---- . -!- SJacpcwsr for the mining Industry his also beon a prelims with which the CUA has had to cope. KUltdry manpower requirement# began to top personnel frets industry fr- alaoat loaodiatoly after tho opening of tho Korean conflict. Ucroovor ^ area# Oi' stringent lober supply, such a# tho Coour d'Alene <!ogion of Idahr, thjro baa boon a notiooablo xlgration of cine labor to eushroceinc dofonso Industrie# in the Pacific i Kortbw.'St and to Oovorrcaent hygro--rleetrlc conaturctlon projects In that arua. DMA entarrl tho B.v.poeer discussions at the very beginning of it# existence lest Pell, end in presenting tho case for the mottl cinlng was ail# to establish with the Deport ment of Labor the acooscity for including tho underground autal ednur on tho list ot critical oceupctionj. Furthermore, a largo rarabor of cases involving tndlTiSual rossrve officer# hire boon proa or.tod to tho rdlitery #uthe ri ties and tho DU hac U f aa.y inataaoo# boon ablo to secure stay# and deferment# for irrcplaooebl# men in hgr position#. I Those sothod# of essistenco to tho leed industry In expanding tho (fcmsstlo lead supply to meot requirements (tiring the national emergency are ty no mem a \ ooeprehonsive rostsao of the full duties of the Defense Klnoralc Armirrintratlon. Thar do. however, serve to Indicate that tho rn ie ready and *M te w.sir with metal industries to provide the strategic minerals which arc tho life blood of our imtietrial ccotxxy end dofonso effort. Da re confident that in tho Defonoo llncrela Atainistratlon m hove a cotietrucU.ro program for tho kad industry, one which will provide the necessary lead to scot essential drllian and nilltary requirmsents and which will provide expansion of tho lo.id eirdng industry through devclojwmt of now deposits. 1 too that wo can oouat on the continued cooperation of tho load IndiaU7 in fulfilling thoao objoctivo*. 9* ( Vo hsrva In tho past ten years boon through two emergmey periods, both made moro difficult in the boginning by scricua ehortagos of ectoriala. dost of tho oa> trole are the result of such deficiencies. :*uch unnocossary dislocation in tho oconotqr during e trsnaitlon period 1: brought about by tho relative inflexibility at [; material supplies. 1 hopo that wo may lotrn from those rxpurisacaa and find a may to solve Kt least pvt of tho problem. i' t ; i In conclusion I wish to mako a frw rumarns concerning tho situation la which tho Defense minerals Atainlstration finda itself with rospoct to its oporstions# Aa you gcntlocen undoubtedly know, we aro short of skilled and qualified portococl. I cannot orphajiao too strongly our need for ooepotont men who era assist ua rith oar work in Washington. Early in the year, Frank Case of Anaconda Copper Cowpary did e splendid job of helping ua staff up for our preliminary task and largely on tho icp> ctus of this original effort w j hem carried on bo far, CnforUinatcly this has Mt been enough end wj cro now curiously lspcdod In our work because of net only 1 short age of manpower but also boctuso wo lack tho typo of canpowur that is most effective in getting a job done in TVashington. Vo nood younger men end wo nocl vigorous men who havo kncwlodgo of nining and who know tholr way around Bashington. I approdetm that it is almost impossible to locate such individuals without drawii* upon mnry who aro In critioal positions in industry, but I do not so# how mo can mako rapid progress in this program under tho present sot-up. X wish to call your attention to thr foot that thj potroletai Industry, iim. aodiatcly upsn passage sf the Dsfanso Production Aot, waetod u0 tisu in coming to tho assistance of the Department of tho Interior in the staffing of the fotrolcw Administration for Defense. They not only furnished to tho Department some of tho tt bust non available but groups from tho Pctrolou* Advisory Council put tholr flavor . on Individuals wd literilly elated, Tcu ars going to tTaehingtoa to do e Job*. ft The putroloum industry recognised thu importance of haring an adoquato staff avuilablo in tho Federal Oovonssont to db this Job. ujj-'g flppCTQBwwfgp b *ss8P9B5??Si!SS?PtWJ - UUjft JtWiiPPWPgg^lS LI A1625 0 . ** ( -5 - It 1* ofton difficult, duo to Civil Service rcculntioni, to put bo s on lanodiately but as a j;oncrcl rulj a havo boon ablo to assign a oas to a position ia Washington within a reason bis period, it tho presont oonent *o do not have Deputy Ad*inistrator -- I aa looking for a aan for this position now. I cannot oror-- nrha sito to you tho iafrjrtanos of having in Washington a eoapotont and knralodjeablo (roup because tho industry will bo profoundly influenced by decisions aado ia tfaa Dafoaao Jiinorale idtainiatrotion possibly for nary years to ooae. 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