Comment on paragraph 2: These data show the tremendous importance of lead-zinc in the economy of the United States. It is the belief of the statisticians and economists compiling these data the need for these metals will continue to increase faster than the population. That the 7 percent of the population of the world, represented by the people of this country, should require and continue to require, more than half of the entire available supply of lead and zinc emphasizes the importance of these metals to us, but at the same time it raises doubts of the soundness of a policy that would cause the destruction of our own domestic sources of supply in the hopes that thereby we can temporarily buy these metals for 2 or 3 cents less than they can be produced in this country, even though in so doing we become wholly dependent upon foreign countries. Comment on paragraph 3: It is a fair inference the compilers of these data first estimated the probable production of the United States and the probable consumption of both this country and the free world in 1975, then deducted the production from the consumption and called this the probable production of the free world in 1975. There is nothing improper in this, but in no other way could production and consumption so nicely balance. These figures of an increase of free world production nearly double that of 1950, or an annual increase by 1975 of 2,373,000 tons of lead plus zinc, must have been disturbing to the Commission in preparing their report for certainly there is not that much ore in sight and to make this production possible will require the expenditures of enormous sums of money in foreign mine exploration. The Commission, however, in the text of their report faced up to the problem and frankly stated there is not the money in foreign countries to finance such a tremendous program and that the greater part of such money must come either from American investors or from the United States Government.

The only comment to offer on this paragraph is to ask this question: Is it wise to permit our own domestic lead-zinc industry to go into liquidation and suffer the great losses this will entail as well as become practically wholly dependent upon foreign sources of supply for these essential metals and then, in consequence, be forced to raise much greater sum of capital to be invested in foreign fields where we shall be able to exercise very little, if any, control? Comment of paragraph 4: While it is heartening to note an increased free world consumption estimated for these metals which are so essential to growth and improvement of living standards, nevertheless a large part of the foreign investment we shall be called upon to make will be for the benefit of foreign consumers. Perhaps this has become a habit and we shall cheerfully assume such added burdens, but if in the next short while, we permit the destruction of our domestic lead-zinc industry, the costs of developing a foreign source of supply to replace it will be increased mathematically by more than 43 percent and actually by a much greater percentage. Respectfully submitted.

PAUL H. HUNT.

APPENDIX 2

INVESTIGATION OF THE DOMESTIC LEAD AND ZINC INDUSTRIES UNDER SECTION 332 OF THE TARIFF ACT OF 1930 AND INVESTIGATION OF INJURY TO THE DOMESTIC LEAD AND ZINC INDUSTRIES UNDER SECTION 7, TRADE AGREEMENTS EXTENSION ACT OF 1951, AS AMENDED

NOVEMBER 14, 1953.

Brief of Otto Herres, chairman,' National Lead and Zinc Committee, for the Lead-Zinc Mining Industry of the United States to the United States Tariff Commission

Mines suffering serious injury

Virtually the entire lead-zine mining industry of the United States with the exception of companies engaged in foreign mining activities presented positive and indisputable evidence to the Commission in the hearing held in Washington, D. C., November 3-6, 1953, to show conclusively that the mines of this country have been seriously injured and domestic smelters have been forced to curtail their production, because foreign lead and zinc are flooding our markets at less than the cost of domestic production. That the mines were suffer

Vice president, Combined Metals Reduction Co.

ing serious injury was unquestioned. The facts are clear and were freely acknowledged by all appearing before the Commission. The question for the Commission to decide became not whether the mines were injured but rather what steps should be taken to preserve an industry important to national defense and essential to the civilian economy. Only partial relief is afforded by the limited increase in duties which is possible under the existing law.

John Marshall, president of Zinc Local 401, Chemical Workers Union, CIO, Bartlesville, Okla., in his testimony stated pertinently: "Today we are faced with curtailment at a time when the consumption of zinc and zinc products is at the highest peacetime level ever known in these United States. *** This is a serious situation with our people."

Production curtailed by excessive imports

The trouble that is causing substantial mines to close and smelters to curtail and lay off workers is not shortages of ore. Work of opening new mines and developing large ore reserves is being suspended because production has become unprofitable. Well-qualified witnesses testified that the difficulty is caused by excessive imports of lead and zinc at low prices made possible by concessions granted under the general argument on tariffs and trade.

The National Lead and Zinc Committee speaking for the lead and zinc mining districts of the United States gave testimony to the Commission in support of its petition under section 7 of the Trade Agreements Extension Act of 1951, as amended, for "escape clause" relief. At the same time the committee presented testimony to be considered by the Commission in its investigation of the lead and zinc industries requested by the Committee c Finance of the Senate and the Committee on Ways and Means of the House of Representatives.

Adequate relief requested

Workers and management, mining associations and labor unions, representatives of both mines and smelters from all parts of the country without exception joined with the national committee in requesting the Commission to recommend to the President the withdrawal or suspension of duty concessions on the foreign lead and zinc which is causing heavy losses to the mines of this country and bringing unemployment to many communities. But the maximum benefit obtainable by the limited 50 percent increase on duties over rates "existing in 1945," according to the testimony presented, is inadequate to provide relief from the destructive consequences of the excessive imports to the lead-zinc mines. The Commission, therefore, was urged to recommend further protection by such proper means as are available under existing law, or to report to the committees of Congress the need for legislative action in case sufficient relief cannot be provided otherwise.

Injury unquestioned

No testimony whatever was presented to the Commission that denied the serious injury sustained by the lead-zinc industry and its workers. All who testified recognized the need for relief to the mines but differed in their suggested remedies.

A flood of imports has demoralized the domestic mining industry. Evidence was presented and statements were filed from lead-zinc mining districts in Arizona. Colorado, Nevada, New Mexico, Idaho, Washington, Utah, WisconsinIowa-Illinois, the Tri-State region of Kansas, Oklahoma and Missouri, Tennessee and New Jersey showing that mines have been forced to discontinue or curtail production and lay off workers because imports of lead and zinc are being sold on the markets of the United States at less than the cost of domestic production. In fact, representatives of Canadian and Mexican producers opposing tariff relief by "escape clause action" admitted that the imports are being sold in the United States at less than the cost of production of the Canadian and Mexican lead-zinc mines.

Price below foreign cost of production

Mr. Jean Vuillequez, vice president and director of sales of the American Metal Co., Ltd., testified that his company operates no metal mines in the United States but represented concerns producing in Canada, Mexico, and South Africa and is the principal importer into this country of foreign lead.

He was asked by Commissioner Talbot:

"In other words, a foreign producer at the current market cannot bring lead into this country at a profit?

"Mr. VUILLEQUEZ. Here again I must say that our mines in Mexico are leadzinc and it is the total value per ton of ore that counts. At the present price of lead 131⁄2 cents and 10 cents for zinc we are losing money in Mexico.

"Commissioner TALBOT. *** Neither the foreign mines or the domestic mines can produce lead at a profit at the current price?

"Mr. VUILLEQUEZ. I wish you would add zinc to that, sir, * * *. I wish to make the statement that at the current prices for lead and zinc the mines that our company controls in Mexico are losing money."

Testimony was presented by representatives of the domestic industry to the effect that foreign producers exporting to the United States gained considerable advantage over the mines of this country in competitive trade by devaluation of foreign currencies and because of their much lower wage scales.

Mr. Vuillequez confirmed the devaluation in the case of Mexico and stated that in 1948 the Mexican currency had a value of 4.85 Mexican pesos to the dollar. Today it is 8.65 pesos to the dollar.

Undisputed testimony showed that with the exception of Canada where wages and living standards are much the same as in the United States, foreign miners in many instances receive no more for a day's work than miners in the United States receive for 1 hour.

Canadian situation

Mr. V. C. Wansbrough, managing director, Canadian Metal Mining Associaton, testified that Canada has a closely parallel situation to the United States because of the decline in lead and zinc prices. He stated that 15 lead-zinc producers in Canada have been forced to close operations in the past year. Some of the large and long-established producers have postponed expansion projects. Testimony from Mr. Wansbrough and his consultant, Mr. G. C. Bateman, was to the effect that 55 lead-zinc producers were operating mines in Canada a year ago and 15 of them have been forced to close by low metal prices.

Their testimony showed that one Canadian Company, the Consolidated Mining & Smelting Co., affiliated with the Canadian Pacific Railroad Co., operating the largest lead-zinc mine in the world, produces all of the refined lead and more than 70 percent of the refined zinc in Canada. The next most important is Hudson Bay Co. which produces the remaining refined zinc.

War causes market changes

Mr. Wansbrough stated that prior to World War II, Canadian markets for lead and zinc were in Europe and the Orient but with the outbreak of war these markets were lost to Canada. The United States which previously had been self-sufficient in the two metals developed a deficit that was made up in considerable part by Canada and Mexico.

It will be recalled, however, that the shift in trade channels came about from the submarine menace and the occupation and devastation of much of Europe. At the same time the United States became the great arsenal of democracy and has continued since to give support as well as assistance in rearmament for defense against aggression to much of the free world. In case international tensions lessen and other nations become less dependent on our assistance, possibly our need to import foreign lead and zinc to supplement domestic supplies will not be so great.

Tariffs and subsidies

It was stated that the closing of lead-zinc mines in Canada on economic grounds was not in any degree attributable to tariff concessions granted by the Canadian Government. Obviously Canadian lead-zinc mines exporting the major portion of their production are not concerned over tariff reductions on lead and zinc by Canada. The situation in that respect is not parallel to this country. Mines in the United States perhaps are better qualified to testify concerning the effect of tariff reductions granted by the United States Government.

Mr. Wansbrough testified that the Government of Canada was forced to subsidize the gold mining industry because communities existing solely because of the mining activity in many cases would have gone out of existence unless something had been done to maintain the mines. Evidently Canada is solicitous of the mining communities. No evidence was given to indicate that the two large companies producing all of the refined lead and zinc in Canada were in need of governmental assistance.

Production and consumption of lead and zinc

Production figures for the past 5 years indicate an available mine output of lead in the United States amounting to approximately 400,000 tons a year. Secondary production recoverable from scrap amounts to approximately 415,000 tons. Thus some $15,000 tons from domestic sources are available for consumption. Reported consumption for 1952, a year of high business activity, was 1.130,000 tons, indicating a need for 315,000 tons of foreign material to supplement our domestic supplies. Imports, however, were 643,643 tons, more than double our needs.

Evidence was offered showing that mine production of zinc in the United States during recent years has been discouraged greatly by the heavy imports of low-priced foreign material entering our markets. But during 1951 and the first half of 1952 when foreign zinc was attracted elsewhere by higher prices, United States mine production was at the rate of approximately 60,000 tons a month. This indicates an available output in excess of 700,000 tons a year if protection is afforded to maintain a healthy domestic mining industry. An additional 60,000 to 70,000 tons is recoverable from scrap. Reported consump tion for 1951, a year of high demand, was 1,067,816 tons including pigments. For 1952 when losses were suffered by the steel strike, consumption was approximately 954,289 tons. Assuming 1 million tons to constitute normal consumption under conditions now prevailing, somewhat less than 300,000 tons of imports are sufficient to supplement supplies available from domestic sources. During 1952, 699,252 tons were imported, which as in the case of lead was more than twice our needs.

Excessive imports

Testimony indicated that imports of zinc in metal and ore are coming here at a rate in excess of the total consumption of the United States. Foreign zinc has beeen offered in our markets within recent months at a price of 9 cents a pound which is considerably below the cost of domestic production. The lead and zinc industries of the United States, the largest and most important in the world, are being put out of business rapidly by excessive imports.

Total imports of zinc in all forms in June amounted to 84,257 tons, and in July to 85,212 tons. By comparison, total United States shipments of slab zinc in September were 57,547 tons including domestic, exports, and deliveries to the Government. This means that enough zinc is being imported to close down every lead-zinc mine in the country and still leave a surplus above present needs.

Imports of lead and zinc for the first 8 months of 1953 and the increase over 1952 were as follows:

Imports of slab zinc have increased tremendously over previous years. Foreign metal brought in during the first 8 months of 1953 shows an increase of 139,951 tons over the corresponding period of 1952 as follows:

January-August, 1953.

January-August, 1952.

Increase
Increase

_tons. 196, 964 __do____ 57, 013

_do____ 139, 951 __percent__ 245. 4

Notwithstanding the excess tonnage available for use from domestic production, imports of slab zinc for the year 1952 were 115,151 tons. And despite this substantial surplus in 1952, imports of slab zinc have increased 245 percent over 1952 during the first 6 months of this year to cause unemployment in the smelters of Illinois and mines throughout the country.

As to the need for increased tonnages in any particular grade of metal, domestic producers may be depended upon to expand production facilities to pro

vide whatever quantities are required if they have assurance of reasonable protection for their investments against the competition of foreign metal offered at less than the cost of domestic production.

Mine output depressed

Consider the effect of these heavy imports on domestic mine production. Mine output of recoverable lead in August, the latest figure available, was 25,930 tons, the lowest since August 1948, when work stoppages in Missouri reduced the overall production, and the fifth consecutive month of decline.

The July output of recoverable zinc from domestic mines declined to 41,000 tons, the smallest monthly output since October 1949, compared to a production of 62,663 tons in May 1952, before the flood of foreign zinc broke the American market.

The vast mineral resources of the western United States probably exceed those of any similar area in the world. Testimony showed that new lead-zinc mines have been opened when the demand required additional production both in the west and in the eastern mining districts of Tennessee, Pennsylvania, Virginia, and Wisconsin. The problem bothering the domestic mining industry is not shortages.

Evidence demonstrated that the deplorable condition of the lead-zinc industry is the result of foreign materials being dumped in this country in the absence of adequate tariff protection for the domestic industry. Low-wage competition has grown more damaging because of the devaluation of foreign currencies. Aid from our taxpayers has been used to finance the purchase of stocks of metals under the socialistic practices of foreign governments only to have the stocks later released to break prices in the markets of the United States. Overstimulation of foreign production by high prices when United States mines were restricted by means of price controls has contributed to put United States mines in the fix they are in.

Tariffs lowered

The tariffs on zinc ores and metal have been lowered under successive reciprocal trade agreements negotiations to six-tenths and seven-tenths of a cent a pound, respectively, and on lead ores and metals to three-quarters of a cent and 116 of a cent a pound. These duties afford no protection of consequence against low-wage imports and devalued currencies.

Much more might have been presented in the way of statistical information to show the injury suffered by the lead-zinc mines and their need for relief from excessive imports. But it is plainly evident that when more than double the tonnages of lead and zinc we need are imported and offered at prices below the cost of domestic production, the consequences can only be disaster for an industry essential to national defense and security.

Of all the industrial metals in common use, iron, copper, lead, zinc, and aluminum, only lead and zinc are below OPS ceiling prices at this time. The precipitous 48.7 percent drop in the price of zinc from 19% cents to its present level of 10 cents and the 36.8 percent drop of lead from 19 cents to the low of 12 cents emphasizes the serious injury suffered by the mining industry of the United States caused by excessive tonnages of foreign metals thrown on the domestic market.

Is it in the public interest to permit an industry which is the largest of its kind in the world, and which is essential to national defense and security, to be priced out of existence by a flood of foreign lead and zinc offered at less than the cost of domestic production? The President has stated that a strong domestic mining industry is vital to national security and the continued prosperity of the country.

In answer to the question is the survival of the lead-zinc industry of the United States of importance to the Copper and Brass Association, Theodore E. Veltfort, manager, answered: "I have already indicated by all means it is. Of course, we need it. There is no question about that."

Higher costs

A combination of low prices and high costs makes it impossible to operate domestic lead-zinc mines at a reasonable profit. A comparison of current prices and wages with United States Bureau of Labor Statistics figures of past years shows the precarious condition now prevailing :