If H.R. 1287 is enacted, the United States will have to depend on other countries, primarily Soviet Russia, for its chrome ore supplies, other than our national strategic stockpile. We have no domestic source of chrome ores of economic significance in the United States. The U.S.S.R. has been, and probably will continue to be, the major supplier, but the question is whether we want to increase our dependence on the U.S.S.R. for a material vital to our national security as well as our economic welfare.

Accordingly, the members of this subcommittee, and of the full committee, will have to determine whether, in the proper exercise of the committee's duties to protect the national security, H.R. 1287 is or is not an acceptable bill, or whether it should be amended to make it more compatible with national security interests.

We hope that the witnesses before the subcommittee will enlighten us on these matters.

[H.R. 1287 is as follows:]

[H.R. 1287, 94th Cong., first sess.]

A BILL To amend the United Nations Participation Act of 1945 to halt the importation of Rhodesian chrome

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 5(a) of the United Nations Participation Act of 1945 (22 U.S.C. 287c (a)) is amended by adding at the end thereof the following new sentence: "Section 10 of the Strategic and Critical Materials Stock Piling Act (60 Stat. 596; 50 U.S.C. 98-98h) shall not apply to prohibitions or regulations established under the authority of this section.".

Mr. BENNETT. We welcome as our first witness this morning our distinguished colleague, Congressman Richard H. Ichord.

Mr. ICHORD. Thank you very much, Mr. Chairman and members of the committee.

With your permission, I have filed a statement on the essentiality of chrome for national defense purposes. I would like to include that in the record and proceed if you wish in an informal manner.

WRITTEN STATEMENT OF HON. RICHARD H. ICHORD, REPRESENTATIVE
FROM MISSOURI

Chromium is essential to a modern technological society. The government recognized this in 1939 when it designated chromium as the first mineral to be stockpiled. Since chromium is unique in its corrosion-resistant and alloying qualities, its importance for defense and industrial applications is unlikely to diminish in the foreseeable future.

End-uses for metallurgical grade chromium and ferrochrome range from jet engine blades to sterile hypodermic syringes; almost any application demanding corrosion resistance. Among the most important of these are:

Environmental control equipment: Almost without exception, pollution abatement equipment includes stainless steel components. Developments of automotive catalytic conversion systems or steam-powered transport would axiomatically require large amounts of high chromium steel.

Power generation: Without exception, nuclear power plants utilize stainless steel in reactors, boilers and related equipment. Conventional power generating facilities also employ stainless steel for critical applications.

Transportation: Chromium is essential in jet engine production and is critical in most other aerospace requirements. Corrosion-resistant alloys incorporating chromium are also necessary for manufacture of railroad cars, construction equipment and ships. For rail rolling stock alone, demand for stainless steel could raise anticipated demand for chromium by 10 percent by the year 2000.

Food Processing: Due to its surface finish and corrosion resistance, stainless steel is ideal for numerous applications in the food processing industry. Uses range from storage tanks for beverages to sanitary production machinery.

Chemical and petroleum production: The oil, gas and chemical industries utilize large amounts of chrome-bearing alloys. Pumps, tools and tanks generally include high-chromium stainless steel. Production machinery employs alloys containing chromium in many critical parts.

Home appliances and equipment: While important by commercial standards, the home products market (tableware, appliance trim, etc.) accounts for less than 6 percent of the end-use applications of chromium in the United States.

Anticipated growth of chrome-bearing metals is strongest in the machinery and equipment area, followed closely by construction and transportation requirements. Transportation applications alone will demand more than 182,000 tons of chromium in the year 2000-double the current level. Overall consumption trends indicate the United States will need over 1.1 million tons of chromium per year to fill the demand by 2000. All of the United States demand is currently met by imports. These estimates could be revised upward, depending upon pollution control requirements and transportation needs.

The major end use of chromium ferroalloys is in stainless steels (66% of total) and the secondary major use is in alloy steel, including tool steel (18% of total). It should be emphasized that for its major use-stainless steel-chromium is unique; unlike nickel or molybdenum which have alternates to perform the desired function, there is no other element which can be used as a substitute for chromium. Stainless steel cannot be made without chromium.

Most of the chromium consumed annually by the metallurgical industry, 85 to 90% of the total, is used in the production of stainless and alloy steels. The balance is used primarily in heat-and corrosion-resistant materials of which the nickel-base superalloys constitute the largest requirement. Smaller tonnages of chromium are also used in cobalt-base alloys, in high-iron heat-resistant alloys (in addition to those classified by ALSI as stainless steels), and in various surface coatings applied for protection against environmental attack or for wear resistance. In each of these instances, the single most important factor in the selection of chromium as a major alloying constituent is its beneficial effect on oxidation and corrosion resistance.

It is in the production of these heat- and corrosion-resistant materials that chromium is critical as a direct defense application material.

Of the overall annual consumption of nonferrous high-temperature alloys in the past several years, the largest fraction has been employed in two major industries-aerospace and petrochemical. Other substantial users include the manufacturers of heat-treating equipment, stationary gas turbines, industrial process equipment, and the hydrospace industry which includes the growing field of undersea exploration in addition to the more established categories such as marine transportation. In the latter area, there are indications that many new surface ships to be built for the U.S. Navy in the immediate future may be powered by high-performance gas turbines. If this proves to be the case, such application of gas turbines will undoubtedly result in a greater demand for chromium because of the superior hot-corrosion resistance of high-chromium alloys.

At the present time, the aerospace industry continues to be the principal user of heat- and corrosion-resistant structural alloys. Although airframe manufacturers and their subcontractors have employed relatively minor quantities of superalloys, this trend will grow as the SST and advanced manned strategic aircraft reach production in 1975 and beyond. Most of the superalloy consumption in this field has been, and will throughout the projection period continue to be, in the production of aircraft gas turbines. Chromium is uniquely required in such alloys, and an effective substitute is neither known nor foreseen.

In the case of stainless steels, in an emergency, substitutes, in general, could be used for such applications as decorative trim, architectural, certain cookware, cutlery, etc. However, where corrosion resistance in chemical processing and/or elevated-temperature applications is required, economical non-chronium containing substitutes are scarce. Furthermore, copper-base and nickel-base alloys that might be substituted are themselves subject to serious scarcities and are produced in only limited quantities, about 5% of stainless steel.

Chromium, then, is an essential material. About 3% of our metallurgical chromium goes into direct defense use. The remaining resources are indirectly related to defense applications through energy source production-oil, gas,

chemical and nuclear power-and various necessary elements used in the transportation industry. The Defense Department estimates that total defense industry needs for metallurgical grade chromite total between eight and ten percent of total industrial consumption. Neither the domestic defense industry, nor other stainless steel producers can afford to lose access to their critical material.

The availability of high quality metallurgical grade chromite is complicated by our historical dependence upon the Soviet Union as a source of supply. During the sanctions period and immediately thereafter, over half of U.S. imports of metallurgical grade chromite ore came from the Soviet Union. Russian chrome dealers exploited this virtual monopoly in two ways:

1. The physical quality of the Russian lump ore exported to U.S. consumers steadily deteriorated when Rhodesian chromite was unavailable to the U.S. market. The increase in Russian shipments since 1964 has been largely run-ofmine ore, some of which contains excessive "fines," drastically limiting its utility for the production of high carbon ferrochrome.

2. Russian prices dramatically accelerated during the sanctions period as the following figures indicate:

Average Price/Ton Soviet Metallurgical Grade Chromite Ore
(Price/Chromite Contained)

Source: Bureau of Mines Mineral Industry Surveys.

When the Byrd amendment was enacted, Russian prices stabilized; then fell as Soviet chrome dealers felt the impact of stiff Rhodesian competition. The price history of Soviet chrome is particularly noteworthly in view of the economic conditions of the time. Russian prices reached their peak in 1971, the last year of the Rhodesian embargo, despite the fact chrome demand in the United States reached a 10-year low. In 1973, Russian chrome prices continued to decline despite an all-time high in chrome demand. The Soviet Union became increasingly noncompetitive as high-quality Rhodesian chrome reached American markets. It was not until late 1974 when legislation to reimpose the Rhodesian embargo appeared headed for passage did the Russians rebound. Soviet chromite prices soared in the fourth quarter.

Temporarily set back by the stagnant death of S. 1868 in December 1974, the Russians reacted to the reintroduction of this legislation in January with an economic squeeze play.

First, they informed their exclusive U.S. distributor, Airco Alloys Ltd., that shipments would be cut back 35 percent immediately.

Second, they more than doubled their price to $160/ton.

The Soviets have everything to gain and little to lose by this maneuver. As chromite must be ordered months in advance, Soviet price hikes capitalize on the uncertainty regarding the availability of Rhodesian chromium to American consumers. Thus, whether the Byrd amendment is repealed or not, Russian chrome merchants will have made enormous profits at American expense.

Further, the fact that chromite demand exceed imports, gives Russian chrome dealers considerable leverage in creating shortages in this country. A 35 percent cutback in exports to the U.S. would have significant impact in making their price hikes stick should American consumers be denied access to Rhodesian ore. In another instance, in an attempt to shore up rapidly deteriorating prices in the United States, the Soviet Union placed an embargo on shipments of chromite for 5 months in 1973. Imports of metallurgical grade chromite from the U.S.S.R. in 1973 decreased approximately 50 percent below 1972 levels. Although the Soviet chrome traders were successful in their attempt to stem the rapidly falling price trend, they sacrificed a large share of the American market to Rhodesian competition.

Aside from raising serious questions as to their reliability as a supplier, the Russian embargo also had the effect of further injuring an already weak American ferrochrome industry. Several American ferrochrome facilities were closed due to the unavailability of Russian ore.

With the development of an indigenous ferrochrome industry, the Soviet Union will inevitably become less willing to sell chromite to the United States at any price.

If the Soviet Union, then, is an unrealiable source of chromite ore the domestic industry has only one feasible alternative. It must rely on ore in the stockpile as a backup source. Let us now take a look at this alternative source.

Government Stockpile: Since 1962, the national stockpile of metallurgical grade chromite has declined over 60 percent and is currently at the lowest level in 20 years. The apparent size of the stockpile is further diminished by the fact that 20 percent of available inventories are officially classified "nonstockpile grade"these inferior stocks cannot be economically used to produce stainless steel and cannot legitimately be included in total stockpile availability. The Administration has recently proposed further liquidating the chromite stockpile retaining less than 6 months' supply in the national inventory.

1 Includes National Stockpile Defense Production Act Stockpile, and Supplemental Stockpile. Source: Bureau of Mines Minerals Yearbook.

* Includes 1,668,000 tons nonstockpile grade.

Includes 1,482,000 short dry tons nonstockpile grade.

Includes 1,594,000 tons nonstockpile grade.

€ Amount of nonstockpile grade included in these figures is not specified by the Bureau of Mines Minerals Yearbook. 7 Source: GSA.

Includes 1,483,175 tons nonstockpile grade. Includes 1,451,708 tons nonstockpile grade. 10 Includes 551,758 tons nonstockpile.

Industry stocks are practically insignificant that the supply of metallurgical grade chromite ore is sufficient for only about 4 months' consumption at the current rate. The Government stockpile with its inadequacies is, however, a back-up source of ore for a limited period of time. If the domestic industry is placed in such a vulnerable position as it will be if the sanctions against Rhodesia are reimposed, the stockpile may provide some relief if it can be released. I urge the committee to consider an amendment that would make the effectiveness of H.R. 1287 dependent upon the release of moderate amounts from the stockpile.

STATEMENT OF HON. RICHARD H. ICHORD, REPRESENTATIVE

FROM MISSOURI

Mr. ICHORD. I appreciate the opportunity, Mr. Chairman, to testify on H.R. 1287, about which I have strong feelings.

In fact, I would submit that H.R. 1287 should receive the first prize for the most hypocritical piece of legislation to be introduced in this parliamentary body in this century. It is not only hypocritical in its substantive aspects, Mr. Chairman, it is hypocritical procedurally in that it is actually an amendment to the Stock Pile Act under the jurisdiction of this subcommittee, but drafted as an amendment to the United Nations Participation Act in order to obtain referral to the International Relations Committee, rather than the Committee on Armed Services.

The measure, Mr. Chairman, will have an adverse impact upon our defense posture, as conceded by the State Department witness before the International Relations Committee, in that it will have an adverse impact on the stainless steel industry, which is a very critical defense industry.

Military forces, as you know, Mr. Chairman, are not the sole deterrent to war. A nation's industrial capacity, its industrial readiness, is also a national asset which can strengthen or weaken its military capability.

It is estimated by the Department of Defense that our total defense industry needs amount to 8 or 10 percent of our total domestic consumption of metallurgical grade chrome and ferrochrome.

It is used in everything from jet engine blades to sterile hypodermic syringes.

South Africa and Rhodesia, Mr. Chairman, possess 96 percent of the world's chrome reserves; and even more important, Rhodesia alone has 67 percent of the metallurgical chrome reserves, the important type of chrome for defense purposes.

We have no chrome in significant amounts in the United States of America. We haven't mined a pound of chrome since, I believe, the year

1961.

This legislation would transfer an important measure of control over not only chrome, but other strategic minerals to the United Nations, to the President, and to the State Department.

The measure does mention chrome in its title, but you will observe there is no mention of chrome in the bill.

I would emphasize that this measure is not limited to chrome. It concerns other strategic minerals, also, and it would make us primarily reliant upon Russia, the nation which causes us to spend almost $90 billion annually for defense purposes, and which has not proved to be a very reliable source for chrome.

If my memory serves me correctly, Mr. Chairman, the Soviet Union cut us off from chrome during the Korean war. It also, during the occupation of Czechoslovakia, cut us off from chrome. And more recently, when the United Nations sanctions were in force in this country, they substantially raised the price of chrome.

And even more recently, last year, when it looked like this bill might fly, they did it again by raising the price of chrome, this time doubling the price of chrome from about $70 a ton to about $160 a ton.

So you can see why this measure can very easily have a very serious impact upon the defense posture of this Nation.

My attention, Mr. Chairman, was attracted to this measure in the first instance because of its hypocrisy.

I received a letter from the Zambian Ambassador urging me to vote in favor of repeal of the Byrd amendment. This disturbed me somewhat, that a foreign diplomatic official should write me on a measure pending in the U.S. Congress; but I was even more disturbed, very greatly disturbed, when I read a newspaper account that the Zambians were carrying on substantial trade with the nation of Rhodesia.

And I would ask my staff member if he would go back to the office and get some pictures that I would like to show you, pictures of the