percent category is intended to include, for example, quartz sands or pebbles when sold for their silica content and novaculite.

"Refractory quartzite" should have been included at 15 percent, and H. R. 8300 should be amended to retain "refractory quartzite" in the specific category in paragraph (3) of section 613 (b) since this was decidedly the concluded intent of the 1950 hearings as reflected in the 1951 act and in the House committee report accompanying H. R. 8300. Refractory quartzite is used primarily for the construction of industrial furnaces. Quartzite, to be suitable for use as a refractory material, must be physically resistant to decrepitation and clear grain in texture and must be chemically pure, as even small amounts of impurities render it unfit for use in making refractories. Although quartzite occurs in abundance in several States, refractory quartzite is definitely scarce and must be searched for and found by geological studies, prospecting, sampling, and chemical analyses.

The principal deposits of refractory quartzite are contained in Pennsylvania, Wisconsin, Alabama, and Ohio. Smaller quantities are obtained from a few other States. The exceedingly critical need for refractories for the continuance of most of our major industries, particularly the iron and steel and aluminum industries which are so vital to the national defense in time of war and to the national economy in time of peace, demands that the refractory quartzite industry be permitted to retain a percentage depletion allowance adequate for maintenance of a healthy industry.

Most of the minerals which are dropped into the "all other minerals” category of paragraph (6) of section 613 (b) are minerals whose production involves little or no waste.

Most of the minerals which have been retained in paragraph (3) of section 613 (b) are minerals which do involve a considerable amount of waste in their production-chemical-grade limestone and metallurgical-grade limestone are good examples. The allowance for depletion in these cases is based on minerals in place in natural deposits. For minerals of this type, justice requires that they be specified in paragraph (3) so that all of the mineral receives 15 percent depletion even though it may be necessary to dispose of the waste resulting from processing the quarry material. Our mineral was in this 15percent class in the 1951 act and should be retained in the 15-percent category represented by paragraph (3) of section 613 (b) of the current revenue bill.

The CHAIRMAN. How are you hurt!

Mr. KAMM. I can illustrate that very quickly. I have here a sample of refractory clay. Now, this is dropped out of paragraph 3 of section 613 (b), down to paragraph 6.

The CHAIRMAN. With what result?

Mr. KAMM. With a result that they retain 15 percent because no part of this is sold for use as riprap, ballast, and so on. In extracting this from the natural deposit, there is practically no waste involved.

Here I have a piece of sawed quartzite, as used in the industrial furnaces in this country. In order to get this, if you picture this as a natural deposit in the ground, we have to channel 18-inch holes into this rock in order to get it out, into the resource.

The CHAIRMAN. Is it your complaint that you are not receiving enough, or that others are receiving too much?

45994-54-pt. 8--11

Mr. KAMM. My complaint is that our competitors are receiving 15 percent on the entire deposit that they have, and that in our case, we are not. We were in the 1951 act, but in this new H. R. 8300, we are not, as it stands.

The CHAIRMAN. Where do you run into this competition?

Mr. KAMM. We run into this competition in the sale of our products in Bessemer converters, in soaking pits throughout the country, and so on. We are the largest manufacturers of soaking-pit linings in the United States and are facing competition from the refractory clay people who are receiving 100 percent, 15-percent depletion.

My point is that in extracting our product, we have a waste as we extract the natural deposit in the ground. That is not true of this type of deposit.

The CHAIRMAN. Why isn't it true?

Mr. KAMM. It is not true because in extracting clay they do not have to channel 18-inch strips into the deposit in order to get the large blocks out. We have to sell this in the form of a block, and in order to get the block we have to cut down into the deposit to get it out.

Now, if we are to get 15 percent-5 percent on the material that we are losing as we channel this out, then we are being cut in two ways. We are being cut because the waste is sold for what we can get for it, which is a low price, and if we got 15 percent on that, it would automatically have a low percentage depletion amount, but if we get 5 percent on it, we are cut twice.

The CHAIRMAN. I must confess I am not clear on it. I hope you will try again. Give me another crack at it.

Mr. KAMM. All right. In extracting this, they can use a diesel shovel to take this out. There is no waste involved.

The CHAIRMAN. Now, what do they get?

Mr. KAMM. 15 percent.

Senator FREAR. On everything?

Mr. KAMM. On everything.

Senator FREAR. Including what in your industry is waste?
Mr. KAMM. Including what in our industry is waste.

Senator BUTLER. Mr. Chairman, might I ask a question there which may help us a little? I am confused, although I am rather familiar with this thing: What is the expense in discovering new deposits of this material? You know, when you are discovering-well, even coal. You have an expense of core drilling and so forth. What expense do you have?

Mr. KAMм. We have similar expenses, except that there is no definite record of future deposits available, and because they are indefinite, the expense may be tremendous in locating new deposits.

We have the same type of approach. We have to core drill; we have to explore; we have to have chemical analyses to determine the purity of the deposit. All of those expenses are coupled with exploration. Senator BUTLER. I suppose a lot of discovery is accidental?

Mr. KAMM. In part it could be.

Senator BUTLER. Mr. Chairman, I have seen all these operations, and of course, as you know, I have never had any knowledge of the expense in discovering the raw material, and that is what I was trying to determine.

Mr. KAMM. It would be a very heavy and material expense, without any question.

The point I was making, Mr. Chairman and members of the committee, is that in extracting this particular product, there is practically no waste because you don't have to cut the block in order to get it out. In cutting the block here, you lose a great amount of the raw material as you are getting it out. It forms in chips as you are cutting through on the block.

Now, under this new bill, we would get 5 percent on the chips as we cut out these blocks, rather than 15 percent.

The CHAIRMAN. Doesn't the other fellow get 5 percent if he uses it for ballast and that sort of stuff?

Mr. KAMM. No. In the clay industry, you see, there is no such use of it and there is no waste to be put to that use.

The CHAIRMAN. I am looking at section 613.

Mr. KAMM. Yes.

The CHAIRMAN. Do you understand subparagraph 6? It says, "15 percent." "All other minerals, except that the percentage shall be 5 percent for any such other mineral when used or sold for use as rip rap, ballast, road material, rubble, concrete aggregate, dimension: stone, ornamental stone, or for similar purposes.'

Senator FREAR. Under (3) it also lists ball clay, aggregate clay and so forth, which his competitor is categoried under, is that not right? Mr. KAMM. That is right.

The CHAIRMAN. The thing that bothers me is, what advantage do you want that the other fellow hasn't got, or vice versa?

Mr. KAMM. All we want is an equivalent position with our competitor. That is all we want. Under this act, as it now appears, we are not getting an equivalent position.

The CHAIRMAN. You are getting 15 percent on your main operation,. is that right?

Mr. KAMM. We are getting 15 percent on the refractory product. The CHAIRMAN. And you get 5 percent on the waste?

Mr. KAMM. That is right.

The CHAIRMAN. Now what do you want?

Mr. KAMM. We would like to have 15 percent on refractory quartzite, and have that cover the waste which is extracted while we are getting our product out.

The CHAIRMAN. Do the other people have the same advantage, where he gets his stuff out?

Mr. KAMM. Yes; he does, because he has no part of his product sold for riprap, ballast, or anything like that.

The CHAIRMAN. What does he sell his stuff for?

Mr. KAMM. Because it is clay; there is no byproduct usable for ballast or riprap. I wonder if I make myself clear?

The CHAIRMAN. No, not to me, but that may be my fault. That is what I am trying to find out. I am seriously trying to find out just exactly what your complaint is, because frankly, I don't understand it. Now, that is not your fault, that is my fault. We are here to learn, so try again and see if you can't clear me up on this.

Senator BUTLER. Before he goes on, Mr. Chairman, what is thepercentage of waste in both classifications? I presume the expense of handling the waste is one of the things.

Mr. KAMM. Quite definitely. Our waste will run 30 percent in extracting the blocks. If you have a large quarry surface, in order to

get these solid blocks out which we sell to the furnaces, we have to waste a certain amount to extract the solid block.

Our competitors, who are the refractory clay people, in china clay, aggregate clay, and some of the other clays listed, they do not have that problem, because in getting it out, they don't have to cut and shuffle around. They can just go in with a shovel and take it out. The CHAIRMAN. Now, what depletion do they get?

Mr. KAMM. Fifteen percent.

The CHAIRMAN. What do they get if they use it for ballast and these other things that are mentioned?

Mr. KAMM. Well, if they had any clay used for that purpose, they would get 15 percent.

The CHAIRMAN. They would get 5 percent, wouldn't they?
Mr. KAMM. That is only for stone used for those purposes.

The CHAIRMAN. I think it is a little clearer, but it isn't entirely.
Mr. KAMM. I am sorry. It is my fault.

The CHAIRMAN. No; it is not your fault, at all.

Senator FREAR. In this paragraph 6, it says, "When used or sold." Now, if they have any and don't sell it, that takes them out of that classification; does it not?

Mr. KAMM. That is right. You see, we are competing with the other fellow, and if we can sell any part of this, then we are getting in there on a price basis. It is a matter of price competition that we are concerned with.

Would you like me to continue, Mr. Chairman?

The CHAIRMAN. Please do.

Mr. KAMM. Although the Ways and Means report, as already quoted, states there are "no reductions in the rates of percentage allowed by the present law and regulation," this intent is not carried out with respect to refractory quartzite. H. R. 8300 will substantially reduce the depletion allowance of my company, the Cleveland Quarries Co.

The primary use of our product is for refractory purposes. However, as already stated, there is a good deal of unavoidable waste in the production of our product which is also the case of all other minerals in subsection 3. Even under present law, where we obtain 15 percent depletion for our entire output, we receive substantially less depletion for the waste portion which is sold for inferior uses, because the price received therefor is so much lower.

The CHAIRMAN. Could your point be stated this way, that in your operations, in your particular deposits, you have a percentage of waste which does not occur to the other fellow you are competing with; is that the whole point?

Mr. KAMM. Yes, it is.

The CHAIRMAN. Thank you very much.

Senator FREAR. But if he sells his waste, you are allowed only 5 percent on that, where the other fellow, if he has waste and doesn't use it or sell it, then he gets the total 15 percent all the way through; is that right?

Mr. KAMM. That is right.

The CHAIRMAN. Well, you get 15 percent for that which you sell. Mr. KAMM. For refractory purposes; that is right.

The CHAIRMAN. And the other fellow doesn't make any money on that which he doesn't sell; does he?

Mr. KAMM. That is right.

Senator FREAR. But he still gets 15 percent depletion?

Mr. KAMM. That is right.

The CHAIRMAN. The whole point is whether the other fellow has the element of wastage which you have in your product.

Mr. KAMM. That is right.

The CHAIRMAN. And you are both being treated the same way on the same products that you make?

Mr. KAMM. That is right.

The CHAIRMAN. Go ahead.

Mr. KAMM. If, on top of this, Congress sees fit to enact section 613 (b) in its present form, we will be doubly penalized on this waste output, because not only will the lower price reduce our depletion allowance but, on top of that, we will receive only 5-percent depletion based on that lower price.

In summary, let me point out again that refractory quartzite is a vital, scarce commodity, involving the expenditure of large sums of money in its exploration and production. Refractory quartzite is presently receiving 15-percent depletion, and quite properly so.

Section 613 (b) of H. R. 8300, in its present form, would result in a serious reduction in the percentage depletion allowance for refractory quartzite.

The CHAIRMAN. Is your business profitable at the present time?
Mr. KAMM. At the present time, it is not.

The CHAIRMAN. When did it cease to be profitable?

Mr. KAMM. It ceased to be profitable about last November. We have had a period, here, where the steel mill decline has affected our business.

The CHAIRMAN. It would also affect the other fellow's business, too, would it not?

Mr. KAMM. It presumably would, yes.

The CHAIRMAN. Go ahead.

Mr. KAMM. At the same time, no corresponding reduction would be made in the depletion allowance granted to the materials with which refractory quartzite is competitive.

I, therefore, respectfully ask this committee to retain the present depletion allowance for refractory quartzite by amending section 613 (b) of H. R. 8300 to specifically include "refractory quartzite" in paragraph (3) thereof.

Thank you for the privilege of appearing before your committee. The CHAIRMAN. Thank you very much for coming.

Will you bring that up in executive session, please?

Mr. SMITH. Yes, sir.

The CHAIRMAN. Now, Mr. Clarke, we will hear from you.
Where is Mr. Clarke?

Mr. William Quinette

Mr. Quinette is with the Colorado Mining Association, and is accompanied by Mr. Bob Palmer.