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Iron Ore of Canada is owned 25 percent by Hollinger and subsidiaries which is a private Canadian company, is it not?

Mr. PATTON. That is my understanding; yes.

Senator KEFAUVER. And 23.7 by Hanna Mining, 15.4 by National Steel, 16.5 by Bethlehem, 5.1 by Armco, 5.1 by Republic, 5.1 by Youngstown, 4.1 by Wheeling. Is that your recollection of the matter?

Mr. PATTON. I accept that as a statement of fact. I do not know the exact percentages. But we do own the company and stock in the company.

Senator KEFAUVER. Do you make a profit in the Iron Ore of Canada Co.!

Mr. PATTON. Sir?

Senator KEFAUVER. In Iron Ore of Canada?

Mr. PATTON. I did not get the question.

Senator KEFAUVER. This is a profitable operation to you, is it not? Iron Ore of Canada is a profitable operation?

Mr. PATTON. We think so.

We have never received a dividend from it yet, because we are still taking whatever money we are getting and trying to build more efficient plants.

We are just in the process now of building another plant up there to improve it.

Senator KEFAUVER. Do you own a part of it so that you are entitled to get iron ore from them?

Mr. PATTON. Oh, yes, we want to get iron ore from them.

Senator KEFAUVER. And then also the company, of which you are a part owner, sells it on the open market through M. A. Hanna to companies in Germany and in other parts of Europe, which are not owners. Is that correct?

Mr. PATTON. I assume that the M. A. Hanna Co. is selling its share because it is not a consuming company like the steel companies are. So they have to sell their ore, I presume.

I do not know.

Senator KEFAUVER. Wouldn't the cost to you be less since you are a part owner and you do not have to buy it on the open market? Wouldn't it be less to you than to European companies for this reason alone?

Mr. PATTON. I would certainly hope that if we owned stock in a mining company that we would get a dividend, and that as reducing the cost, it would be less or we would not put an investment in it; yes, sir.

Senator KEFAUVER. This is another area where your costs are lower than those of the European companies, is it not?

Mr. PATTON. Oh, that is a pretty farfetched statement, Senator. I do not know whether it is less or whether it is not.

Senator KEFAUVER. It seems to me if you are part owner of the company and you are getting your ore by virtue of your part ownership of the company, and it is up in Labrador, which is further from Germany than you are-it comes through the Great Lakes to Cleveland or down to the coast of the United States-that being a part owner and being nearer would give you a lower price than if you had to buy it on the open market in Europe.

Mr. PATTON. No, we pay the full market price for our ore from the Iron Ore Co. of Canada just like anybody else does, and we hope

that some day that company will make some money and pay us the dividend, but we pay the full market price.

Senator KEFAUVER. I have here a chart, Mr. Patton, showing the places where ore is secured by the steel companies, the percentage of ore content, the freight and delivered price to the plants in the United States, iron ore delivered price per ton unit. Do you have a copy of this, Mr. Patton?

Mr. PATTON. Is this the document you are referring to? Yes, I have a copy.

Senator KEFAUVER. Do you know what is indicated by this table to be a fact?

Mr. PATTON. No, I do not know it to be a fact.

Senator KEFAUVER. These are delivered prices for 1958 of iron ore to the principal steel-producing centers in the United States from the sources from which they are usually supplied. The source is the U.S. Tariff Commission. If you will check these prices against what they have to pay in Europe, I think you will find that generally they are lower, Mr. Patton.

Senator CARROLL. Mr. Chairman, before you leave this item, I would like to put a question here that is pertinent here, about the Mesabi Range. Are you getting much ore from the Mesabi Range anymore? Mr. PATTON. Yes, sir; we are getting considerable ore from the Mesabi Range, not as much as we did in the days when the great open pit mines were still being operated at full capacity, but in the last 10 years, if you please, we have, through millions of dollars spent in research, found the method of taking low-grade taconite, which only contains 23 percent iron, and putting in equipment to mine and beneficiate that up and get rid of the impurities, so that we are now getting a pellet up there that averages about 63 percent iron, and, as a matter of fact, sir, that is the principal source of ore for our company right there.

Senator CARROLL. What percentagewise? Are you getting more ore out of Canada or the Mesabi Range?

Mr. PATTON. Oh, I think there is considerably more ore coming from the United States, still. The foreign ore is increasing some, but the principal source of ore by far is still the United States.

Senator CARROLL. There is great unemployment in that area and I wondered whether the steel companies are abandoning the Mesabi Range and moving into other areas.

Mr. PATTON. On the contrary, by our investment in Reserve Mining Co., in which we are stockholders with ARMCO, and by the investment in Erie Mining Co., put in by Bethlehem and Youngstown and others in a similar project, we have created thousands of jobs up there to make employment for the people who used to work in the other mines which are now shut down.

(At this point in the proceeding, Senator Scott left the hearing room.)

Senator CARROLL. In the open pits?

Mr. PATTON. In the open pits.

Senator CARROLL. Now with this development of taconite, this is where you invested your great sums of money in taconite?

Mr. PATTON. Yes, sir; Reserve Mining Co., of which we are a 50percent owner, invested over $200 million originally, and we are now

in the process of expansion at a cost of $120 million to increase our capacity by 50 percent.

Senator CARROLL. And what is the nature of your investment in Canada?

Mr. PATTON. It is a couple of million dollars or something like that. The whole project cost may be around $300 million, and we have 5 percent of that.

Senator CARROLL. Thank you.

The CHAIRMAN. Gentlemen, there is going to be a rollcall in the Senate in 5 minutes on the Cuba resolution.

Senator KEFAUVER. If I could have about 30 minutes, I could finish with Mr. Patton.

The CHAIRMAN. We do not want to miss the quorum call.

Mr. PATTON. We would be grateful if we could finish today, sir. The CHAIRMAN. Just a minute now; we are going to finish today. I am just debating whether to come back or not, whether to close now. Senator CARROLL. Mr. Chairman, a parliamentary inquiry. I missed the first two hearings here. Has Mr. Patton been the only witness?

The CHAIRMAN. Yes.

Senator CARROLL. Is there going to be any other witness on?

I heard you make a statement this morning that there is going to be just one witness on one side.

The CHAIRMAN. That is right.

Senator CARROLL. And one witness on the other.

The CHAIRMAN. That is right.

Senator CARROLL. Are we supposed to absorb all these figures by osmosis?

The CHAIRMAN. I do not know. I have been catching it from all over the committee, and if we want to vote to get rid of it

Senator KEFAUVER. Mr. Chairman, may I say I have some very important matters to ask Mr. Patton about."

The CHAIRMAN. All right; we will come back right after the vote. I will run for a few minutes, but when my plane leaves for Memphis I am going to be on that plane, and these hearings are going to be

over.

Senator CARROLL. Mr. Chairman, I asked a question, whether or not there is going to be another witness after Mr. Patton. Do I understand that there is going to be?

The CHAIRMAN. Well, who is the witness?

Senator KEFAUVER. Mr. Loevinger has attended the past hearings. Of course, if I am going to be cut off when the Chairman leaves, I am not going to have any chance

The CHAIRMAN. We can take Mr. Loevinger another day.

Senator KEFAUVER, I think the record ought to be printed so all the members can have a chance to read it.

The CHAIRMAN. No, sir; we are going to vote next Tuesday. Senator CARROLL. We are going to vote next Tuesday, but the question on what we vote may be an open question.

(Short recess taken.)

(Present: Senators Eastland, Kefauver, and Scott.)

The CHAIRMAN. Let us have order, please.

Senator KEFAUVER. Mr. Chairman, do you want me to proceed? The CHAIRMAN. Yes. Is Mr. Loevinger here?

Senator KEFAUVER. He is on his way.

Mr. Chairman, we were talking about iron ore, and I have here an official document of the Statistical Office of the West German Government which we will identify to the reporter.

(The document referred to was made a part of the record and will be found in the files of the committee.)

Senator KEFAUVER. It shows the price of Kiruna D Swedish ore in 1958 delivered at the Ruhr in reichsmarks per ton. Translating into dollars and also into the 52 percent of iron ore which is the basis of the Tariff Commission figures for the United States, we find that their price in 1958 was $13.55 per ton delivered at the Ruhr, compared with the average delivered price of the same iron ore content of steel to the steel companies in the United States of around $11 per ton.

(At this point in the proceedings Senator Ervin entered the hearing room.)

Senator KEFAUVER. This, of course, does not take into account any advantage that might accrue to the American companies by owning part, or in some cases all, of their iron ore supply. Do you have any comment, Mr. Patton? This is at page 157 of the document. The CHAIRMAN. What is it?

Senator KEFAUVER. It contains statistics on the steel industry put out by the German Government, Statistics Vierteljahreshef, October 1959, Dusseldorf, February 1960. It is the official document of prices of steel in various countries from which they buy iron ore.

(At this point in the proceeding Senator Hart entered the hearing room.)

Senator KEFAUVER. On this basis this is another area where costs abroad are not lower than your costs but instead appear to be somewhat higher. Is that not correct, Mr. Patton?

Mr. PATTON. I have no knowledge of that, Senator. I merely would like to observe while I do not know what the costs of these foreign companies are, it is of great significance to me that they come into the United States and offer for sale their products at $20, $30, and $40 a ton less than we can afford to sell ours for, and still make money, and at the same time have higher costs than we do. It just does not add up to me, sir.

Senator KEFAUVER. That is of great significance, and I wonder if have thought about the fact that they were operating at 80 percent of capacity or more while you were operating at 50 percent.

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Mr. PATTON. The same situation prevails.

Senator KEFAUVER. Otherwise, you would concede that, by operating at 90 percent of capacity, you can make a ton of steel cheaper than by operating at 50 percent of capacity, would you not?

Mr. PATTON. Oh, yes; sure.

Senator KEFAUVER. I expected that to be the answer.

Mr. PATTON. It isn't to me. The same situation prevails when you are operating at higher rates of capacity.

Senator KEFAUVER. I am surprised, Mr. Patton, that you are so fearful of foreign competition and so concerned about it and yet are not more knowledgeable about the costs of your foreign competition. Mr. PATTON. I do not know how we would get their costs.

Senator KEFAUVER. I am sure that Armco must know a great deal about foreign costs because they build plants in many parts of the

world. They have 18 plants in other countries which are not making steel as such, but products made from steel. Also, United States Steel has an interest in a steel mill in Italy, I believe, and has been planning on building in other countries, including India. That is to your knowledge, is it not?

Mr. PATTON. Not to my knowledge. I do not think any steel company in America has a basic steel plant outside the United States, and I do not know what their plans are. I haven't heard of any.

Senator KEFAUVER. I would like to make this next table a part of the record. It shows that in 1958 when you began to experience a growing loss of your exports and a rise in imports into the United States, your prices went up, whereas in the other countries competing with you they brought their prices down and operated at a capacity. Throughout the world, demand for steel fell off in 1958. You raised your prices. Your European competitors lowered theirs.

This is shown by tables 13a and 13b which I would like to have made a part of the record.

(The tables referred to follow :)

CHANGE IN EXPORT PRICES OF SELECTED STEEL PRODUCTS

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