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GENERAL SERVICES ADMINISTRATION,
Contract No. GS-OOP (D)-12085
Wilcox Building, Tulsa, Okla.
GENTLEMEN: 1. The United States of America (hereinafter referred to as the "Government"), acting through the General Services Administration, proposes to enter into a formal contract with you which will provide for the production and disposition by you of 100,000 short tons of acid-grade fluorspar flotation concentrates (hereinafter referred to as "new production"), to be derived from the facilities which you will provide for the purpose of such new production under this order. Such production shall commence as soon as possible after completion of the aforesaid facilities and shall be and continue at an average rate of 20,000 short tons of fluorspar concentrates annually.
2. The fluorspar concentrates to be produced and disposed of hereunder shall be derived from ore mined in or adjacent to Jackson County, Colo., including the fluorspar properties of the Colorado Fluorspar Corp. in Jackson County which you represent you have under option to purchase. Upon your acceptance of this order, you shall immediately exercise such option and proceed without delay with the development, equipment, and preparation of said properties for the production of fluorspar ore and concentrates at the rate required to meet your obligations hereunder, including the acquisition and installation of a flotation mill and related facilities for the production of fluorspar concentrates. You will make such contracts and commitments for supplies and services as are necessary therefor. You shall use your best efforts to complete said facilities and commence production hereunder by May 1, 1952, but such facilities shall be completed and production begun by September 1, 1952.
3. Your new production will be disposed of as follows:
(a) The Government may require you to sell to it any amount up to 6,000 short tons of your new production in each consecutive 6-month period during the term of this contract, commencing with the date that production is begun hereunder, by notifying you in writing on or before 6 months prior to the commencement date of each such period except that with respect to the initial production period, such notice shall be given you within 15 days after you have furnished the Government with your estimate of the commencement date thereof. (b) Your new production for each such period not sold to the Government under subparagraph (a) above shall be offered by you for sale to industry, in accordance with your usual methods of sale, provided, however, that such sales shall be only for utilization in the United States, its Territories, or possessions. (c) Any quantity of your new production for each 6-month production period hereunder which is not disposed of in accordance with the provisions of subparagraphs (a) and (b) above may be tendered to the Government, and the Government shall purchase the amount so tendered, by your giving to the Government written notice of the quantity of new production to be so disposed of at least 90 days prior to the beginning of each such 6-month period; provided, however, that the Government's obligation to purchase pursuant to this subparagraph (c) shall be limited to 15,000 short tons less the quantities disposed of under subparagraphs (a) and (b) above. Deliveries to the Government under this subparagraph (c) shall be made within each consecutive 6-month production period.
(d) The Government may, at its option, accept the fluorspar concentrates sold to it under subparagraphs (a) and (c) above in the form of filter cake or dry fines.
4. All fluorspar concentrates purchased by the Government under subparagraphs (a) and (c) of paragraph 3 hereof shall conform to national stockpile specification P-69a, latest revision as of the date of your acceptance of this order. 5. (a) The price for your new production sold to the Government hereunder in the form of dry fines shall be-
(1) With respect to sales made pursuant to paragraph 3(a) above, the price f.o.b. Northgate, Colo., shall be the higher of (1) $60.00 per short ton, or (2) the market price as quoted in the publication of the Engineering and Mining Journal Mineral and Metal Markets most recently issued prior to
the date on which delivery is made the Government less any allowance for transportation which may be included in such quoted market price.
(2) With respect to sales made pursuant to paragraph 3(c) above, $60.00 per short ton f.o.b. Northgate, Colo.
(b) In the event the Government elects to purchase the fluorspar concentrates in the form of filter cake, the prices thereof shall be the prices set forth in subparagraph (a) above reduced by a percentage equivalent to the percentage of moisture content of such filter cake in excess of the allowable moisture content of 1 percent for dry fines as set forth in the aforesaid national stockpile specification P-69a.
6. Payment for fluorspar concentrates purchased by the Government hereunder shall be made upon presentation of your properly certified invoice, sup ported by a certified weight certificate, a certified analysis report, a signed copy of the bill of lading, and such other documents as the Government may reasonably require.
7. Fluorspar concentrates purchased by the Government hereunder shall be delivered in bulk f.o.b. cars Northgate, Colo. In connection with all deliveries to the Government hereunder, you shall, without any charge to the Government, act as forwarding agent and make all shipments in accordance with instructions to be furnished by the Government. Upon the request and at the expense of the Government, you shall bag any or all of the fluorspar concentrates purchased by the Government hereunder.
8. You will furnish the Government from time to time with such reports as it may reasonably require concerning your operations and production hereunder. The Government shall have the right to inspect and audit your books and records relating to such reports.
9. This order shall terminate 5 years after the commencement date of new production or when a total quantity of 100,000 short tons of fluorspar concentrates have been produced hereunder, whichever first occurs, provided, however, that the obligations of the parties with respect to the disposition of such material as has been produced at the time of termination shall remain in effect until discharged in accordance with the terms hereof.
10. The time for performance by you of your obligations hereunder shall be extended at your option by a period equivalent to any delays, interruptions, or cessations caused by force majeure (herein defined as any cause beyond your reasonable control and not due to your fault or negligence, including without limitation, acts of God, strikes, fire, storm, sabotage, acts of war or public enemy, and priority or allocation requirements or other acts of the Federal Government). You shall give prompt notice to the Government of the occurrence of any such cause.
11. All contract provisions presently required by Federal law, Executive order or applicable regulations, to be included in contracts of the type herein set forth are hereby incorporated herein by reference.
12. Your acceptance of this order will be indicated by affixing your signature to this letter and two copies thereof, and mailing or delivering the executed original and one executed copy to the Administrator of General Services within 20 days from the date of this letter. Such acceptance will constitute this order a contract on the terms set forth herein.
13. This contract is entered into pursuant to the Defense Production Act of 1950, as amended (Public Law 774, 81st Cong.; Public Laws 69 and 96, 82d Cong.).
UNITED STATES OF AMERICA,
Assistant Administrator for Defense Coordination, General Services
Accepted: October 9, 1951.
By C. O. ANDERSON,
DEFENSE PRODUCTION ADMINISTRATION,
Subject: Necessity Certificate No. TA-NC-8661.
GENTLEMEN: There is transmitted herewith a certified copy of subject certificate issued pursuant to your application under section 124A of the Internal Revenue Code (section 216 of the Revenue Act of 1950).
The original of the certificate has been transmitted on this date to the Commissioner of Internal Revenue.
To the COMMISSIONER OF INTERNAL REVENUE:
Pursuant to section 124A of the Internal Revenue Code, particularly subsection (e) thereof, and in response to application No. TA-8661 filed on April 27, 1951, by Ozark-Mahoning Co., P.O. Box 449, Wilcox Building, Sixth and Denver, Tusa, Okla., it is hereby certified that subject to the conditions herein below set forth the facilities described in the attached appendix A (consisting of 4 pages) are necessary in the interest of national defense during the emergency period, and that 60 percent of the cost of construction, reconstruction, erection, installation or acquisition thereof after December 31, 1949, is attributable to defense purposes.
As to the described facilities which are to be constructed, reconstructed, erected, or installed, this certificate shall be valid only with respect to those facilities the construction, reconstruction, erection, or installation of which is begun before the expiration of 6 months after the date of this certificate; and as to the described facilities which are to be acquired, or which are to be acquired and installed, this certificate shall be valid only with respect to those facilities acquired or contracted for before the expiration of 6 months after the date of this certificate: Provided, however, That certification of the following items is hereby denied:
APPENDIX A, DETAIL SHEET
Page 2, "Contingencies, 20 percent," under item 2--
This certificate is applicable only with respect to such of the described facilities as are considered by the Bureau of Internal Revenue to be subject to the depreciation deduction allowed under section 23(1) of the Internal Revenue Code and not subject to the depletion deduction allowed under section 23 (m) of such code: Conversely, any facility or part thereof excluded from certification hereunder solely because it has been considered depletable property shall nevertheless be deemed to have been certified if it be determined by the Bureau of Internal Revenue that it is depreciable property under section 23 (1) of the Internal Revenue Code.
Re S. 1285, fluorspar.
Hon. JAMES E. MURRAY,
AMERICAN SMELTING & REFINING CO.,
MINING DEPARTMENT, New York, N.Y., April 14, 1959.
Chairman Senate Committee on Interior and Insular Affairs,
U.S. Senate, Washington, D.C.
DEAR MR. CHAIRMAN: We view with profound concern the proposal contained in S. 1285 to place under comprehensive Government control a raw material vital to American industry and for adequate supplies of which the United States is unquestionably dependent on foreign sources of supply. This legislation can have no purpose other than to force American consumers to subsidize marginal domestic mines. The additional cost of fluorspar to American industry if S. 1285 is enacted would be paid by U.S. producers of basic industrial materials, already hard pressed by rising costs to maintain their position in world markets. With respect to some raw materials overwhelming considerations of national security might justify the burden of regulatory measures such as those proposed by S. 1285. But there can be no national security justification for this legislation. Adequate supplies under emergency conditions are assured to American industry both by the national stockpile and the large reserves of dependable supplies in Canada and Mexico, both of which would supplement supplies from domestic mines then available.
An example of the resources available to U.S. industry is provided by the properties of this company located in Mexico. The American Smelting & Refining Co. (Asarco) has developed certain substantial fluorspar deposits located primarily in the Paila and Encantada Districts, State of Coahuila, Mexico, and has constructed a mill to produce acid-grade fluorspar flotation concentrates at Agujita, Coahuila, Mexico. The mill was brought into production in 1953 and currently has a capacity of 3,500 tons per month. This mill together with Asarco's associated fluorspar mining properties, represents an investment of American capital of about $1,850,000. The mill is located at an inland location about 60 miles from the United States-Mexican border and the mining properties which supply the mill all lie within a radius of 150 miles. In the past 12 months the mill has shipped an average of 2,000 short tons of acid-grade fluorspar concentrates per month, all of which have moved by rail and been sold in the United States. The principal consumer of Asarco's fluorspar concentrates has been the Nyotex Division of Stauffer Chemical Co., whose hydrofluoric acid plant is located at Houston, Tex. Because of its geographical location, domestic concentrates would not be available to this plant except upon payment of a substantial freight penalty.
In addition to the above properties, this company owns resources near Parral, Chihuahua, where development work to date indicates additional reserves capable of producing at competitive prices several million tons of acid-grade fluorspar concentrates.
These Mexican resources are as secure against enemy attack as is any domestic source. Indeed, the geographical location of the principal Mexican deposits of fluorspar which favors them as the supplier for the growing industrial complex of Southwestern United States, indicates that preservation of the ready availability of Mexican sources of supply is itself essential to the national security. We urge that it is in the interests of the United States to encourage the continued development of resources such as the foregoing which are ideally situated to supply certain segments of the U.S. industry at fair competitive prices. The added cost to U.S. industry of the artificial prices sought by the domestic producers supporting S. 1285, the injury to American companies which have invested in fluorspar deposits abroad to supply the American market, and the burden of administration which would be placed on the Government by this legislation would far outweigh such special interests as would be served by the proposed scheme of import control.
ADIN A. BROWN, Vice President.
MINERVA OIL CO., Eldorado, Ill., April 18, 1959.
Hon. JAMES E. MURRAY, Chairman, Senate Interior and Insular Affairs Committee, U.S. Senate, Washington, D.C.
SIR: I wish to thank you and members of the Subcommittee on Minerals, Materials, and Fuels for affording me the opportunity of testifying April 13 on behalf of the ceramic and metallurgical portion of the domestic fluorspar industry at the hearing on Senate bill 1285.
In the course of testimony by the opposition, representatives for the consumers said, on at least two occasions, that they were deeply concerned about the domestic reserves of fluorspar "down the road." They defended their heavy dependence upon foreign fluorspar imports on the basis of static and dwindling domestic reserves. I wish to submit my thoughts in rebuttal, and make statements in addition to those in my testimony, bearing on this subject.
Minerva Oil Co. has been successful in finding by prospecting and development, more tons of ore reserves in every year but two since 1944, when it commenced production. Its reserves at this time are greater than at any time in its history.
We have seen several of the chemical and aluminum companis enter the district briefly, usually with men inexperienced in the type of mineral and the type of host rocks in which fluorspar is found here. It has been our experience, and also the experience of other companies that have succeeded in the district, that it takes from 6 months to a year of careful study before good geologists are competent to conduct carefully considered prospect drilling programs at depth. This requirement includes the best people of the U.S. Bureau of Mines and the Geological Survey.
There were statements made that the USBM had been unsuccessful in finding new reserves, and therefore it was made to sound as if this proved no reserves would ever be found by anyone. Unfortunately, the general public does not know that the Bureau does not even set itself up as a competent exploration organization in cases like this. This is particularly true when they have very limited budgets or are called upon to examine particular properties, or are rigidly limited in what they can do. DMEA efforts have only been successful on extending already clear-cut evidence of mineralization, whereas the real need exists for exploring for deepseated ore bodies along fault zones and structures where no surface indication of fluorspar is seen.
The industry, until right now, has been sorely crippled by the lack of adequate topographic maps. The new maps made by the U.S. Geographical Survey with air photo controls are just now available in preliminary form, and can thus provide the basis for geological mapping now underway by the Illinois Geological Survey. A fair geological map of Kentucky was made a few years ago by collaboration of Dr. A. H. Sutton with the Geological Survey. There are also new topographic maps which have been available only for the past 2 or 3 years for the Kentucky side of the fluorspar district.
Already, largely as a result of new maps providing clues to the geological departments of the companies now in the field, there have been important new discoveries reported by Minerva Oil Co., Ozark-Mahoning Co., Aluminum Co. of America, Reynolds Metals Co., and Pennsalt Chemical Co. With the exception of New Jersey Zinc Co., these are the only companies who have been active persistently in hunting for new reserves in recent years, with adequate budgets for exploration.
Other companies, including Du Pont and Kaiser Aluminum & Chemical Co., conducted a program of such short duration and let their geologists study the structures for so short a time prior to drilling, that they would have been lucky indeed to have made an important discovery in the short time they were here last year.
The Illinois-Kentucky district, as may be seen on the U.S. Geological Survey regional geological map of the area, consists of two broad domes, connected by a shallow saddle, alined northwest to southeast. These are intricately transected by several patterns of southwest-to-northeast trending, normal faults, some places in tension and some in compression. Along the compressionary zones, bedded deposits of fluorspar formed adjacent to the fault zones, and the