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Secretary CHAPMAN. Yes; that is in addition to that.

Dr. BOYD. That is also inferred.

Mr. BLATNIK. Five billion tons of taconite would give you 1.7 billion tons of concentrate.

Secretary CHAPMAN. That is in the category of inferred reserves too, not proven reserves.

Mr. PICKETT. I think we got to the point awhile ago of talking about inferred reserves as changing from time to time to proven reserves as we had to have them, as we got them on the tax rolls. Secretary CHAPMAN. That is right.

Mr. PICKETT. There was some discussion yesterday by Mr. Blatnik and yourself with reference to the plant investment required for a ton of production of ore from taconite being anywhere from $20 to $25 or $35. He went on to discuss the proposition and to say that from a plant that would produce 2.5 million tons of concentrate a year it was fairly reasonable to assume the investment would be approximately $60,000,000. And you are agreed it is somewhere between $50,000,000 to $60,000,000?

Secretary CHAPMAN. That is approximately correct with our figures.

Mr. PICKETT. Now, then, as I recall, there was a statement inserted in the record being in the nature of a report by Mr. Paul M. Zeis, and it was put in the record last year by Secretary Sawyer, showing that an investment of $15 per ton was what was required.

Secretary CHAPMAN. Probably last year that might have been correct.

Mr. PICKETT. You think it has gone up since last year?
Secretary CHAPMAN. It obviously has.

Mr. PICKETT. How much?

Secretary CHAPMAN. I do not know how much, but it has obviously gone up.

Mr. PICKETT. According to the figures you and Mr. Blatnik were using, it would be anything from 33 to 150 percent then?

Secretary CHAPMAN. I do not think it has gone up that much. The figure the company gave us was $20 on that cost.

Mr. PICKETT. And that figure was of what date, Mr. Secretary? Secretary CHAPMAN. About 3 months ago.

Mr. PICKETT. Now, then, one other question I think. Have you or the Department ever made any estimate of how much ore will move over the St. Lawrence in that waterway if constructed?

Secretary CHAPMAN. No. You will have to consider that in the terms of the proven reserves. of the Labrador area. And then, of course, you have to consider which is the cheapest route for the companies to move it and where do they have to have it. Some of it would probably come in the open sea and come down toward Baltimore and Philadelphia and the plants on the coast here. But a great share of it, a lion's share of it, would obviously come through the Great Lakes area.

Mr. PICKETT. Would the construction of the St. Lawrence seaway and the consequent shipment of the Labrador ores in perhaps increased quantities cause any abandonment of the development of taconite. and the exploration and research in reference to it in your opinion?

Secretary CHAPMAN. Congressman, if we are looking at this thing from the point of view that we are going to stop growing when we get this ore from Labrador, I would say "Yes." But we are not. Your

problem is to keep pace with the increased demands for this material. You are going to have an increased demand for ore obviously so great that the use of taconite is a small part of this total picture of what we will need, even if you could utilize it all, and it is such a small amount. It is important, sure. Any amount is important. But it will not affect your total outlook and your total picture.

What I am driving forward in my own thinking always is to keep a little ahead of the demand so that the people can have it available. Mr. PICKETT. Now, these increased facilities that are being constructed in the Great Lakes region that we referred to a moment ago and which you are going to get figures on, do they include the taconite experimentation and operations?

Secretary CHAPMAN. I can add those to it.

Mr. PICKETT. If you would do that.

Secretary CHAPMAN. Yes.

TACONITE PLANTS

The following taconite plants are now operating, under construction or certificates of necessity have been applied for.

It is also rumored that the Oliver Iron Mining Co. and Bethlehem Steel Corp. have both set aside moneys to construct commercial size plants that will each produce 10 million tons of concentrates annually.

Erie Mining Co., Aurora, Minn. Affiliated companies: Pickands Mather & Co., Bethlehem Steel Corp., Youngstown Sheet & Tube Co. at Aurora, Minn. Plant built in 1947, began operations 1948. Capacity, 250,000 tons concentrates annually.

Oliver Iron Mining Co. subsidiary of United States Steel: Plant being built at Virginia, Minn., to be in production in 1952; capacity, 300,000 tons concentrates annually. Plant to be built in 1951 at Mountain Iron, Minn.; capacity, 500,000 tons concentrates annually; necessity certificate applied for.

Reserve Mining Co. (affiliate companies): Armco Steel Corp., Republic Steel Corp., Oglebay, Norton & Co., M. A. Hanna Co., to build a plant at Babbitt, Minn. in 1951; capacity, 300,000 tons concentrates annually; certificate of necessity applied for. Plans are now in progress a commercial plant having a capacity of 10 million tons annually.

Mr. PICKETT. And in connection with that, Mr. Secretary, I do not know whether you would include Buffalo as being in the Great Lakes region for the purposes of your figure or not

Secretary CHAPMAN. We do.

Mr. PICKETT. But I understand that Bethlehem is going to go ahead with a $100,000,000 expansion program at Buffalo and that that company has no interest in the Labrador ore.

Secretary CHAPMAN. They probably do not.

Mr. PICKETT. Do you know where they are going to get their ore? Secretary CHAPMAN. I assume they are getting it from the Mesabi Range and the Lake Superior region. That is where they are getting it now.

Mr. PICKETT. The Bethlehem people have no interest in the Steep Rock development?

Secretary CHAPMAN. I do not know. As far as I know, they do not. Mr. PICKETT. Now, there has been considerable discussion here in the last 2 days about the construction of this as a joint venture between our Government and the Canadian Government

Secretary CHAPMAN. That is right.

Mr. PICKETT. Or whether it would be done by Canada alone. Now, then, what figures do you have to show what the cost to the Canadian Government will be for the construction of an over-all project of its own?

Secretary CHAPMAN. May I say again I never pass the buck to the next man, but that is an engineering report that General Pick spent months and years getting, and I think it would be more appropriate for him to answer questions of an engineering nature of that kind. I do not have the figures. I would have to get them from him.

Mr. PICKETT. The reason I asked the question is that I have seen a report that got to the committee here that construction of the St. Lawrence seaway by Canada alone-that is, the project-would be $617,300,000. Now, according to our understanding of the revised figures that General Pick is going to bring to us, it is going to cost the United States Government $590,000,000 just for the United States part if it is a joint venture.

Secretary CHAPMAN. I do not know whether that pamphlet you are talking about there relates to the Canadian project I referred to in Canada where she would only do a small part in that section on her borders alone. It is not the major project that we are talking about. Mr. PICKETT. Of course, the project you talk about carries it all the way through the Sault St. Marie and everything else?

Secretary CHAPMAN. Yes.

Mr. PICKETT. I would suggest Canada is not going to do any construction there because she has not done it before.

Secretary CHAPMAN. That is right.

Mr. PICKETT. But to say the least, we would have a completed seaway for 25-foot bottoms without the investment of any $590,000,000 of the United States money if we let Canada go ahead and build it, would we not?

Secretary CHAPMAN. Yes; and you would be paying quite a price for it every time a ship hauled a ton of ore through it.

Mr. PICKETT. You are going to pay quite a price on a joint venture. Secretary CHAPMAN. No; you will get it back, and when you get it back you will amortize that project.

Mr. PICKETT. You mean we are going to quit paying tolls when we get through paying it back?

Secretary CHAPMAN. No; you let it go into the Treasury so that the taxpayers can get some relief on it.

Mr. PICKETT. You are not going to quit charging tolls just when you amortize the thing?

Secretary CHAPMAN. I would not.

Mr. PICKETT. I would not either, but I do not know what the folks are going to do who operate it.

Secretary CHAPMAN. I would not. Why not keep charging if you are going to pay for the cost of the operation? If it means anything to the private companies that haul ores over the project built by Federal Government money, let them continue to pay the toll and let it go to the Treasury of the United States.

Mr. PICKETT. If they are going to have to continue to pay a toll over a joint project, why is it any more advantageous for us to get into it than just to pay them tolls?

Secretary CHAPMAN. It is very simple. They would not have to pay as much as if they paid it to the Canadian Government.

Mr. PICKETT. Why?

Secretary CHAPMAN. We jointly control the policies of it and the whole program if you have a joint venture.

Mr. PICKETT. If I were on the Canadian side I would not agree to it at all if the United States was going to control this project.

Secretary CHAPMAN. We are not going to control it. It is a joint control.

Mr. PICKETT. I understood that is what you just said a moment ago. Secretary CHAPMAN. It is joint control, but we would at least have joint control and you would not have any if Canada built it on her side

Mr. PICKETT. I sometimes wonder, Mr. Secretary, if we have any business having anything to say about what happens on the inside of the border of any other country of the world.

Secretary CHAPMAN. Maybe 50 or 100 years ago that might have been a sound philosophy, but I think it is a very dangerous one today. I should like to know what is going on in Mexico and Canada every day of the week.

Mr. PICKETT. I mean control.

Secretary CHAPMAN. I would like to know what is going on.

Mr. PICKETT. I have a lot of curiosity myself, but I do not want to control.

Secretary CHAPMAN. I do not want to control, but if it is dealing with the commodities and the essentials of the lifeblood of America in the terms of the steel we need, I would certainly negotiate and try to get my hand in on the deal if I could.

Mr. PICKETT. Mr. Secretary, in connection with the power generation I believe there is a total of about one million eight hundred thousand-odd kilowatts to be generated.

Secretary CHAPMAN. A total, yes, sir.

Mr. PICKETT. Half on our side and half on the Canadian side?
Secretary CHAPMAN. That is correct.

Mr. PICKETT. Now, what is the demand at the present time for power to increase our aluminum capacity in this country?

Secretary CHAPMAN. About 1 million kolowatts at the moment, and we have not located them sufficient capacity.

Mr. PICKETT. Some of the companies are going to the Gulf coast where they use gas for fuel?

Secretary CHAPMAN. That is right, and I do not blame them.
Mr. PICKETT. It is pretty cheap operation?

Secretary CHAPMAN. It is cheap operation. I am glad they are locating there. As long as the gas holds out, it is a good place to go. Mr. PICKETT. What is the estimate on how long the gas is supposed to hold out?

Secretary CHAPMAN. I do not have that information. That is supposed to be one of the best gas reserves we know in the world. It is a long-term problem.

Mr. PICKETT. Every time one of these gas transmission lines gets permission to extend its facilities anywhere, it has to show that it has a committed reserve for 30 years to supply the demand there, does it not?

Secretary CHAPMAN. Remember this: Your cost of gas is going up every year. It has been for the last 10 years.

Mr. PICKETT. That is because the costs of exploration and other things have increased? Is that right?

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Secretary CHAPMAN. That is partly it, but there is a great demand for it. You begin to use it more. You are pumping gas from Texas into New York and Massachusetts now that you did not do 10 years ago. And into San Francisco. And when you are beginning to pump your reserves out of Texas and Louisiana into the New England area, you are naturally going to make them pay for it.

Mr. PICKETT. And properly so.

Secretary CHAPMAN. You are, and properly so.

Mr. PICKETT. But to say the least, they come down there because it is a cheaper method of operation?

Secretary CHAPMAN. Sure.

Mr. PICKETT. Now; has the cost of constructing these hydroelectric power generating facilities gone up or down in the last 10 years? Secretary CHAPMAN. It has gone up.

Mr. PICKETT. Gone up?

Secretary CHAPMAN. Yes.

Mr. PICKETT. And, consequently, has there not been some increase necessarily in the cost of the power itself?

Secretary CHAPMAN. Oh, naturally some increase would be neces

sary.

Mr. PICKETT. So what you say in reference to the cost of gas obtains in all phases of development in the country?

Secretary CHAPMAN. That is right. So the increased cost of the hydroelectric project is not out of line at all with the increased cost of gas. But I am for putting them down there to use gas if they can. I would like for them to use that.

Mr. PICKETT. Mr. Secretary, I expect that I could ask you another hour of questions, but I do not think it is fair to you or to this committee to try to detain you any longer at this moment. Thank you, sir.

Secretary CHAPMAN. Thank you, Congressman. Thank you, very much.

The CHAIRMAN. Are there any further questions of the Secretary?
Mr. Smith?

Mr. SMITH. Mr. Secretary, what is the prevailing wholesale rate of electric energy in the area where the St. Lawrence power projects would serve?

Secretary CHAPMAN. I am told it is difficult to give one figure because it varies from State to State and company to company up there. I understand that the Government is paying 8 mills at Massena to get that power to produce aluminum there. That is pretty high. That is right at the site of the project.

Mr. SMITH. Well, that fits in with another question I wanted to ask. What is the present average cost for steam generation in that area?

Secretary CHAPMAN. I do not know. I do not have the figure offhand as to what the average cost would be. But it would run anywhere from 7 to 8 mills. It would vary slightly but would be within that range.

Mr. SMITH. In other words, the power that might be generated from the hydroelectric project of the St. Lawrence would be considerably cheaper than the presently prevailing rate?

Secretary CHAPMAN. Much cheaper.

Mr. SMITH. That is all.

The CHAIRMAN. Mr. Scudder?

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