[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]
H.R. 6080, TO ESTABLISH THE ``MINERAL COMMODITY INFORMATION AGENCY
(MCIA)'' WITHIN THE DEPARTMENT OF THE INTERIOR
=======================================================================
LEGISLATIVE HEARING
before the
SUBCOMMITTEE ON ENERGY AND
MINERAL RESOURCES
of the
COMMITTEE ON RESOURCES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
__________
Wednesday, September 20, 2006
__________
Serial No. 109-62
__________
Printed for the use of the Committee on Resources
Available via the World Wide Web: http://www.gpoaccess.gov/congress/
index.html
or
Committee address: http://resourcescommittee.house.gov
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COMMITTEE ON RESOURCES
RICHARD W. POMBO, California, Chairman
NICK J. RAHALL II, West Virginia, Ranking Democrat Member
Don Young, Alaska Dale E. Kildee, Michigan
Jim Saxton, New Jersey Eni F.H. Faleomavaega, American
Elton Gallegly, California Samoa
John J. Duncan, Jr., Tennessee Neil Abercrombie, Hawaii
Wayne T. Gilchrest, Maryland Solomon P. Ortiz, Texas
Ken Calvert, California Frank Pallone, Jr., New Jersey
Barbara Cubin, Wyoming Donna M. Christensen, Virgin
Vice Chair Islands
George P. Radanovich, California Ron Kind, Wisconsin
Walter B. Jones, Jr., North Grace F. Napolitano, California
Carolina Tom Udall, New Mexico
Chris Cannon, Utah Raul M. Grijalva, Arizona
John E. Peterson, Pennsylvania Madeleine Z. Bordallo, Guam
Jim Gibbons, Nevada Jim Costa, California
Greg Walden, Oregon Charlie Melancon, Louisiana
Thomas G. Tancredo, Colorado Dan Boren, Oklahoma
J.D. Hayworth, Arizona George Miller, California
Jeff Flake, Arizona Edward J. Markey, Massachusetts
Rick Renzi, Arizona Peter A. DeFazio, Oregon
Stevan Pearce, New Mexico Jay Inslee, Washington
Henry Brown, Jr., South Carolina Mark Udall, Colorado
Thelma Drake, Virginia Dennis Cardoza, California
Luis G. Fortuno, Puerto Rico Stephanie Herseth, South Dakota
Cathy McMorris, Washington
Bobby Jindal, Louisiana
Louie Gohmert, Texas
Marilyn N. Musgrave, Colorado
Vacancy
Steven J. Ding, Chief of Staff
Lisa Pittman, Chief Counsel
James H. Zoia, Democrat Staff Director
Jeffrey P. Petrich, Democrat Chief Counsel
------
SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES
JIM GIBBONS, Nevada, Chairman
RAUL M. GRIJALVA, Arizona, Ranking Democrat Member
Don Young, Alaska Eni F.H. Faleomavaega, American
Barbara Cubin, Wyoming Samoa
Chris Cannon, Utah Solomon P. Ortiz, Texas
John E. Peterson, Pennsylvania Jim Costa, California
Stevan Pearce, New Mexico Charlie Melancon, Louisiana
Thelma Drake, Virginia Dan Boren, Oklahoma
Vice Chair Edward J. Markey, Massachusetts
Bobby Jindal, Louisiana Nick J. Rahall II, West Virginia,
Louie Gohmert, Texas ex officio
Richard W. Pombo, California, ex
officio
------
CONTENTS
----------
Page
Hearing held on Wednesday, September 20, 2006.................... 1
Statement of Members:
Cubin, Hon. Barbara, a Representative in Congress from the
State of Wyoming, Statement submitted for the record....... 7
Drake, Hon. Thelma, a Representative in Congress from the
State of Virginia.......................................... 5
Prepared statement of.................................... 6
Gibbons, Hon. Jim, a Representative in Congress from the
State of Nevada............................................ 1
Prepared statement of.................................... 3
Grijalva, Hon. Raul M., a Representative in Congress from the
State of Arizona........................................... 4
Prepared statement of.................................... 4
Statement of Witnesses:
Brown, David S., President, Wyo-Ben, Inc., and Vice Chairman,
Bentonite Section, Industrial Minerals Association--North
America.................................................... 16
Prepared statement of.................................... 17
Copulos, Milton R., President, National Defense Council
Foundation................................................. 35
Prepared statement of.................................... 36
Holmes, Constance D., Senior Economist and Director of
International Policy, National Mining Association.......... 19
Prepared statement of.................................... 21
Kaas, L. Michael, Mining Engineer, Retired, Arlington,
Virginia................................................... 29
Prepared statement of.................................... 30
Kanagy, David L., Executive Director, Society for Mining,
Metallurgy, and Exploration, Inc........................... 32
Prepared statement of.................................... 34
Meyer, Drew A., Vice President, Marketing and Transportation
Services, Vulcan Materials Company, on behalf of The
National Stone, Sand & Gravel Association.................. 8
Prepared statement of.................................... 9
Additional materials supplied:
American Concrete Pavement Association, American Concrete
Pipe Association, Michigan Concrete Paving Association,
National Concrete Masonry Association, National Ready Mixed
Concrete Association, and Portland Cement Association,
Letter submitted for the record............................ 41
Billingsley, Lee T., President, American Association of
Petroleum Geologists, Letter submitted for the record...... 42
Ellis, Mark G., President, Industrial Minerals Association--
North America, Letter submitted for the record............. 43
Morgan, John D., EM, Ph.D., Statement submitted for the
record..................................................... 45
Naasz, Kraig R., President & CEO, National Mining
Association, Letter submitted for the record............... 46
Skaer, Laura, Executive Director, Northwest Mining
Association, Letter submitted for the record............... 47
Stewart, Shelley, Jr., Senior Vice President, Opertional
Excellence and Chief Procurement Officer, Tyco
International (US) Inc., Letter submitted for the record... 48
Wilson, Jennifer Joy, President & CEO, National Stone, Sand &
Gravel Association, Letter submitted for the record........ 49
H.R. 6080, TO ESTABLISH THE MINERAL COMMODITY INFORMATION AGENCY (MCIA)
WITHIN THE DEPARTMENT OF THE INTERIOR, AND FOR OTHER PURPOSES.
----------
Wednesday, September 20, 2006
U.S. House of Representatives
Subcommittee on Energy and Mineral Resources
Committee on Resources
Washington, D.C.
----------
The Subcommittee met, pursuant to call, at 2:02 p.m. in
Room 1324, Longworth House Office Building, Hon. Jim Gibbons
[Chairman of the Subcommittee] presiding.
Present: Representatives Gibbons, Drake, Grijalva.
STATEMENT OF THE HON. JIM GIBBONS, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF NEVADA
Mr. Gibbons. Good afternoon. The legislative hearing by the
Subcommittee on Energy and Mineral Resources will come to
order. The Subcommittee is meeting today to hear testimony on
H.R. 6080, a bill to establish the Mineral Commodity
Information Agency, and that would be within the Department of
Interior, and for other purposes today as well.
As I said, today the Subcommittee is going to hear
testimony on H.R. 6080, introduced by our good friend and
colleague, Mrs. Drake. This bill will establish the Mineral
Commodity Information Administration within the Department of
Interior using the existing Department personnel and resources.
For more than 100 years, the United States has been
collecting information on mineral commodity statistics. In the
last years of the 19th and the first quarter of the 20th
century, this task was performed by the U.S. Geological Survey.
In 1925, this task was transferred to the Bureau of Mines,
where it resided for 70 years.
In that time, the Bureau of Mines prepared annual mineral
commodity reports on just about every mineral of economic
importance, and the Bureau of Mines became the trusted source
of mineral commodity information used by government agencies,
industry, and academia.
In 1995, the Bureau of Mines was eliminated, and the
mineral commodity information function was transferred back to
the USGS, as we here in Congress place great importance on
continued reporting of mineral commodity information. In 2002,
the President's Fiscal Year 2003 budget proposed to eliminate
the collection of international mineral commodity information
by the USGS. The appropriators wisely rejected the proposal and
restored funding to the program.
The attempts to eliminate international minerals commodity
information collection have continued with each subsequent
budget proposal, and each subsequent proposal damaged the
morale of those charged with reporting the minerals commodity
information to the public. Indeed, these budgetary assaults are
likely to continue unless we at the authorizing committee take
action.
Significantly, these budgetary assaults have continued
throughout the commodities bull market, which started in 2002
and marked the first time prices increased in mineral
commodities in a generation. The bull market in commodities has
been driven by the surging consumption and economies of India
and China. The ``Free World'' versus ``Evil Empire'' dichotomy
of mineral and energy availability has been replaced by a
rough-and-tumble marketplace for mineral commodities.
The United States now finds itself competing for access to
mineral commodities with state-owned or state-financed
companies. In contrast to our competitors, the U.S. mineral
policy has been to rely on private investment, domestic and
international commercial decisions on investment and trading
activities, and access to a set of international mineral
commodity markets to ensure that the needed mineral commodities
are supplied to the United States' economy.
This strategy only works because it is supported with
sound, publicly available data on mineral commodities that take
into account all aspects of the international commodity
markets. The Administration's repeated attempts to eliminate
the collection of international mineral commodity data are at
best unwise and at worst potentially harmful to the nation's
economic security and national security.
The competition for mineral commodities has driven the
prices of goods up for all Americans. It could threaten the
vital national security interest of this nation by fully
depriving us of foreign sources of supply and, in some cases,
the denial of access to mineral resources needed for our
communities could result in a decision to commit U.S. forces to
maintain that access.
In this circumstance, commodity knowledge is both power and
security. With H.R. 6080, we will put into place the policies
that reflect the often repeated but sadly ignored views of the
Congress in this matter. In short, H.R. 6080 would help the
nation's mining industry, the manufacturing industry, and the
U.S. consumers. It will ensure that they continue to have
access to information that they need to make good decisions
about the basic minerals that help to enhance our way of life.
Making sound decisions about the basic commodities that go
into our daily lives will help to preserve the jobs of the
hardworking men and women of the Nation in an era of
competition for resources. I want to thank Mrs. Drake for
introducing this legislation to create a stable source of
mineral commodity information for all our citizens.
I also welcome our witnesses here today as well as our
Subcommittee members to this important Subcommittee hearing. I
will turn now to Mr. Grijalva for his opening statements, and
then I will allow Ms. Drake, who is the author of this bill, to
have time for her remarks as well. Mr. Grijalva.
[The prepared statement of Mr. Gibbons follows:]
Statement of The Honorable Jim Gibbons, Chairman,
Subcommittee on Energy and Mineral Resources
Today, the Subcommittee on Energy and Mineral Resources will hear
testimony about H.R. 6080, introduced by Mrs. Drake. This bill will
establish the Mineral Commodity Information Administration within the
Department of the Interior using the existing Departmental personnel
resources.
For more than 100 years, the United States has been collecting
information on mineral commodity statistics. In the last years of the
19th and the first quarter of the 20th centuries, this task was
performed by the U.S. Geological Survey. In 1925, this task was
transferred to the Bureau of Mines, where it resided for the next 70
years. In that time, the Bureau of Mines prepared annual mineral
commodity reports on just about every mineral of economic importance.
The Bureau of Mines became the trusted source of mineral commodity
information used by government agencies, industry and academia. In
1995, the Bureau of Mines was eliminated and the mineral commodity
information function was transferred to the USGS as we here in the
Congress placed great importance on the continued reporting of mineral
commodity information.
In 2002, the President's Fiscal Year 2003 budget proposed to
eliminate the collection of international mineral commodity information
by the USGS. The appropriators wisely rejected the proposal and
restored funding to the program. The attempts to eliminate
international mineral commodity information collection have continued
with each subsequent budget proposal. And each subsequent proposal
damaged the morale of those charged with reporting the mineral
commodity information to the public. Indeed, these budgetary assaults
are likely to continue unless we as the authorizing committee take
action.
Significantly, these budgetary assaults have continued throughout
the commodities ``bull market'' which started in 2002 and marked the
first long-term price increases in mineral commodities in a generation.
The bull market in commodities has been driven by the surging economies
of India and China. The old ``Free World'' versus ``Evil Empire''
dichotomy of energy and minerals availability has been replaced by a
rough-and-tumble marketplace for mineral commodities. The United States
now finds itself competing for access to mineral commodities with
state-owned or state-financed companies.
In contrast to our competitors, the U.S. minerals policy has been
to rely on private investment, domestic and international commercial
decisions on investment and trading activities, and access to a set of
international mineral commodity markets to ensure that the needed
mineral commodities are supplied the United States economy. This
strategy works because it is supported with sound, publicly available
data on mineral commodities that takes into account all aspects of the
international commodity markets.
The Administration's repeated attempts to eliminate the collection
of international mineral commodity data are at best foolhardy, and at
worst potentially harmful to the Nation's economic security and
national security. The competition for mineral commodities has driven
up the prices of goods to all Americans. It could threaten the vital
national security interests of this nation by fully depriving us of
foreign sources of supply. In some cases, the denial of access to
mineral resources could result in a decision to commit U.S. forces to
maintain that access. In this circumstance, commodity knowledge is both
power and security. With H.R. 6080 we will put into place the policies
that reflect the often repeated, but sadly ignored views of the
Congress in this matter.
In short, H.R. 6080 would help the Nation's mining industry, the
manufacturing industry and consumers. It will ensure that they continue
to have access to the information they need to make good decisions
about the basic materials that help to enhance of our way of life.
Making sound decisions about the basic commodities that go into our
daily lives will help to preserve the jobs of the hard working men and
women of the Nation in an era of competition for resources.
I want to thank Mrs. Drake for introducing this legislation to
create a stable source of mineral commodity information for all of our
citizens. I also welcome our witnesses as well as our Subcommittee
members to this Subcommittee hearing.
______
STATEMENT OF THE HON. RAUL GRIJALVA, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ARIZONA
Mr. Grijalva. Thank you, Mr. Chairman, and I join with you
in welcoming our panel of expert witnesses today on this
legislative hearing on H.R. 6080. In effect, H.R. 6080 would
reestablish the United States Bureau of Mines within the
Department of Interior. It is ironic that as we approach the
end of the 109th Congress with a 2006 midterm election only
weeks away, we are hearing testimony on a new bill introduced
only last week that would actually undo one of the
accomplishments of the Republican 1994 Contract with America.
That GOP manifesto threatened to terminate hundreds of
Federal programs in the name of smaller government. Ultimately,
only two small Federal agencies, the Interstate Commerce
Commission and the United States Bureau of Mines, were
dissolved as the public began to realize the real consequences
of that contract's proposals.
While I was not a Member of Congress at the time, our
Ranking Member Congressman Rahall and many other Democrats
opposed the abolishment of the Bureau of Mines, recognizing the
public benefits this agency provided. The Bureau of Mines, for
example, conducted research to enhance the safety, health, and
environmental impact of mining and processing of minerals and
materials.
The many fine professionals of the Bureau collected,
analyzed, and disseminated information about mining and
processing of more than 100 mineral commodities across the
nation. In addition, it was a focal point for new and emerging
science and technology in the minerals field. But it was the
Republican-led House-proposed elimination of the Bureau that
after extensive budget negotiations with the Senate,
Presidential vetoes, the Republican proposal prevailed and the
Bureau of Mines was eliminated.
I would suggest that perhaps H.R. 6080 is an indication
that our friends on the other side of the aisle have seen the
error of their ways. I would like to make it clear that we
believe it is appropriate for the Federal Government to address
the nation's critical need for dependable, accurate mineral
information and to support the development of government
policies that will ensure mineral supplies are available to
meet our future needs.
But having gone through the expense and the strain of
abolishing the Bureau a decade ago, we question the timing and
the need for H.R. 6080 at this time. We would also strongly
urge the Chair to secure a cost estimate for the bill before
the full committee considers it next week. Given the fact that
Federal spending has gone up more than 40 percent under this
Administration, it is no wonder that no one is here present to
give us information about that expense from the Administration.
I look forward to the testimony today, Mr. Chairman, and yield
back.
[The prepared statement of Mr. Grijalva follows:]
Statement of The Honorable Raul Grijalva, Ranking Democrat,
Subcommittee on Energy and Mineral Resources
Mr. Chairman/Madame Vice-Chair, I join you in welcoming our panel
of expert witnesses to today's legislative hearing on H.R. 6080, ``The
Resources and Origin Commodity Knowledge Act of 2006.'' In effect, H.R.
6080 would re-establish the United States Bureau of Mines within the
Department of the Interior.
It is ironic that as we approach the end of the 109th Congress,
with the 2006 mid-term elections only weeks away, we are hearing
testimony on a new bill introduced only last week that would actually
undo one of the ``accomplishments'' of the Republicans' 1994 ``Contract
With America'', the GOP's manifesto that threatened to terminate
hundreds of federal programs in the name of smaller government.
Ultimately, only two small federal agencies--the Interstate Commerce
Commission and the United States Bureau of Mines--were dissolved as the
public began to realize the true consequences of the Contract's
sweeping proposals
In fact, the Bureau of Mines did provide public benefits, including
research to enhance the safety, health, and environmental impact of
mining and processing of minerals and materials. Further, the many fine
professionals of the Bureau collected, analyzed, and disseminated
information about the mining and processing of more than 100 minerals
commodities across the nation. In addition, it was a focal point for
new and emerging science and technology in the minerals field.
But, it was the Republican-led House that proposed elimination of
the Bureau and after extensive budget negotiations with the Senate, and
Presidential vetoes, the Republican proposal prevailed and the Bureau
of Mines was eliminated. Perhaps H.R. 6080 is an indication that our
friends on the other side of the aisle have seen the error of their
ways.
I would like to reiterate that we believe it is appropriate for the
federal government to address the Nation's critical need for
dependable, accurate mineral information and to support the development
of government policies that will ensure mineral supplies are available
to meet future needs. But, having gone through the expense and strain
of abolishing the bureau a decade ago, we question the timing and need
for H.R. 6080 at this time.
Further, we strongly urge the Chair to secure a cost estimate for
this bill before the full Committee considers it next week. Given the
fact that federal spending has gone up 40% since President Bush took
office, it is no wonder that Administration officials are not present
to argue in support of taking on yet another government expense.
I look forward to a spirited discussion with today's witnesses.
______
Mr. Gibbons. Thank you, Mr. Grijalva. I will turn now to
the author of the piece of legislation, Ms. Drake, and welcome
her remarks.
STATEMENT OF THE HON. THELMA DRAKE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF VIRGINIA
Ms. Drake. Thank you, Mr. Chairman, and thank you for
having this legislative hearing today on H.R. 6080, as you
said, known as the Resources Origin and Commodity Knowledge Act
or ROCK. Great name I think by the way. This bill would make
the Mineral Information Team with the United States Geological
Survey, an independent agency in the Department of the Interior
with much the same charter as the Energy Information
Administration housed in the Department of Energy.
The MIT collects and disseminates data on virtually every
commercially important nonfuel mineral commodity produced
worldwide. This is information that is critical to businesses,
the government, and importantly the Department of Defense to
help manage the national defense stockpile. Due to the
importance of this data, the MIT should be an independent
agency reporting directly to the Secretary of the Interior.
Virtually every manufacturing sector from aviation to
textiles relies on the unbiased, thorough, and comprehensive
data reported by the MIT. This data is essential for effective
use of our natural resources and for accurate forecasting. The
information for a number of the MIT reports is derived from
proprietary information given by our members precisely because
the government is a trusted third party.
The United States is the world's largest user of mineral
commodities, with processed materials of mineral origin
accounting for over $487 billion in the economy in 2005. This
is an increase of 8 percent in 2004 on top of an increase of
over 13 percent in 2003.
Mr. Chairman, you have already mentioned the need because
of the budgetary assaults, but our nation is facing a global
resources future where we are more dependent than ever on
foreign sources of energy and minerals while at the same time
we are no longer guaranteed to be the major recipient of energy
and minerals from our traditional foreign suppliers.
Businesses operate in a global economy. In 2005, imported
raw and processed mineral materials increased in value by more
than 14 percent to $103 billion. This is why the comprehensive
data provided by MIT becomes even more important. An
independent agency is the goal that this bill will accomplish.
The mission of the newly created Mineral Commodity
Information Administration will continue to collect, analyze,
and disseminate information on the domestic and international
supply of and demand for minerals and mineral materials
essential to the U.S. economy and our national security. So
thank you, Mr. Chairman, for holding this hearing on what I
think is a very important piece of legislation, and I look
forward to the testimony of our witnesses.
[The prepared statement of Ms. Drake follows:]
Statement of The Honorable Thelma Drake, a Representative in Congress
from the State of Virginia
Good afternoon, Mr. Chairman. Thank you for having this legislative
hearing today on H.R. 6080, the Resources Origin and Commodity
Knowledge Act.
This bill would make the Mineral Information Team (MIT) with the
United States Geological Survey, an independent agency in the
Department of the Interior, with much the same charter as the Energy
Information Administration housed in the Department of Energy.
The MIT collects and disseminates data on virtually every
commercially important non-fuel mineral commodity produced worldwide.
This is information that is critical to businesses, the government, and
importantly, the Department of Defense to help manage the National
Defense Stockpile. Due to the importance of this data, the MIT should
be an independent agency reporting directly to the Secretary of the
Interior.
Virtually every manufacturing sector, from aviation to textiles,
relies on the unbiased, thorough, and comprehensive data reported by
the MIT. This data is essential for effective use of our natural
resources and for accurate forecasting. The information for a number of
the MIT reports is derived from proprietary information given by our
members precisely because the government is a trusted third party.
The United States is the world's largest user of mineral
commodities, with processed materials of mineral origin accounting for
over $487 billion in the economy in 2005. This is an increase of 8% in
2004 on top of an increase of over 13% in 2003.
Some may ask, why this legislation is necessary? In 2002, the
Administration's FY 2003 budget proposed to eliminate the collection of
international mineral commodity information. The attempts to eliminate
international mineral commodity information collection have continued
with each subsequent budget proposal. The congressional appropriations
committees have wisely continued to reject calls to eliminate this
critical data. It is time for Congress to step in and prevent this
yearly battle.
Our Nation is facing a global resources future where we are more
dependent than ever on foreign sources of energy and minerals while at
the same time we no longer are guaranteed to be the major recipient of
energy and minerals from our traditional foreign suppliers. Businesses
operate in a global economy. In 2005, imported raw and processed
mineral materials increased in value by more than 14% to $103 billion.
This is why the comprehensive data provided by the MIT becomes ever
more important.
Currently, the continued viability and availability of mineral
commodity information is caught up in the bureaucracy and under
budgetary assault. It is imperative that the importance of the MIT
mission be recognized by establishing it as an independent agency of
the Department of the Interior.
This is the goal that my bill will accomplish. The mission of the
newly created Mineral Commodity Information Administration will
continue to collect, analyze, and disseminate information on the
domestic and international supply of and demand for minerals and
mineral materials essential to the U.S. economy and national security.
Again, thank you Mr. Chairman for holding this hearing on such an
important piece of legislation. I look forward to the testimony from
all our witnesses.
______
Mr. Gibbons. Thank you very much, Mrs. Drake. We will turn
now to our first panel of witnesses. We would like to welcome
them to the hearing today, as we will each of the panels, and
they consist of Drew Meyer from the National Stone, Sand &
Gravel Association; Mr. David Brown from the Industrial
Minerals Association of North America. And in the absence of
Mrs. Cubin, who wanted to be here personally to introduce Mr.
Brown, I would submit for the record without objection a letter
to the Chairman from Ms. Cubin introducing Mr. Brown and would
like to say that she is very complimentary to you, Mr. Brown.
In part, it says, ``The trona and bentonite producers in my
home state provide important jobs and an economic driver for
several local communities, and Mr. Brown's Association does a
commendable job of representing this significant sector of
Wyoming's mineral industry.'' I will submit that for the
record. Mr. Brown, welcome, and also welcome on behalf of
Representative Cubin from Wyoming.
And we also have Ms. Constance Holmes, Senior Economist and
Director of International Policy from the National Mining
Association. Ms. Holmes, welcome very much. We will turn now to
Mr. Meyer, and we will just go right down the row, and the
floor is yours. Mr. Meyer, excuse me. We have a policy here
which I have completely overstepped, which is if each of you
will stand and raise your right hand. We do swear our witnesses
in.
[The prepared statement of Mrs. Cubin follows:]
Statement of The Honorable Barbara Cubin,
Representative for All Wyoming
Mr. Chairman:
Unfortunately, I will be unable to attend today's legislative
hearing on the Resources Origin and Commodity Knowledge Act (ROCK Act),
as I have the sad duty of attending a family funeral.
In my absence, however, I would like to extend my welcome and
thanks to David Brown from the Industrial Minerals Association of North
America. The trona and bentonite producers in my home state provide
important jobs and an economic driver for several local communities and
Mr. Brown's association does a commendable job of representing this
significant sector of Wyoming's mineral industry.
I would also like to express my strong support for the bill under
consideration today. Collecting and making available to America's
producers accurate and detailed global mineral commodity information is
paramount to maintaining a competitive playing field in a growing
international market. I am therefore proud to be an original cosponsor
of this important legislation and look forward to moving the bill
forward.
______
[Witnesses sworn.]
Mr. Gibbons. Let the record reflect that each of the
witnesses answered in the affirmative. I will turn now to Mr.
Meyer. Mr. Meyer, welcome. Before you get started, we have a
little stop and go light system here. We like to say that if
you have your written testimony prepared, we will accept your
written testimony in whole for the record, and you may give a
summary of it. We would like to keep it within five minutes
just so that we can get all of our witnesses in. So the floor
is yours, Mr. Meyer. Welcome, and we look forward to your
remarks.
STATEMENT OF DREW A. MEYER, NATIONAL STONE, SAND & GRAVEL
ASSOCIATION`
Mr. Meyer. Good afternoon, Mr. Chairman and members of the
Subcommittee. Thank you for the opportunity to appear today on
behalf of the National Stone, Sand & Gravel Association and to
speak in support of the Resource Origin and Commodity Knowledge
Act introduced by Congresswoman Thelma Drake. My name is Drew
Meyer. I am Vice President of Marketing and Transportation
Services for Vulcan Materials Company. During my 38-year tenure
with the company, I have spent time working in the corporate
group and division levels both domestically and overseas.
I have served the National Stone, Sand & Gravel Association
and its predecessor associations in a number of leadership
positions, most recently as Vice Chairman. I am a member of the
Committee on Earth Resources of the National Research Council
of the National Academies. In 2002-2003, I served on the
Committee to review the U.S. Geological Survey's mineral
resources program that culminated in the report entitled
``Future Challenges for the U.S. Geological Survey, Survey's
Mineral Resources Program,'' published by the National
Academy's Press in 2003.
Based near the nation's capital, NSSGA is the world's
largest mining association by product volume. Without crushed
stone, sand, and gravel, the nation's infrastructure could not
be built or maintained, and the commerce and quality of life
would be severely reduced.
There are five important points I would like to leave you
with today. The mining community relies upon the information
provided by the MIT to meet the needs of our customers across
the nation. Mineral and mineral products contributed almost one
half trillion dollars to the U.S. economy in 2005. The USGS
Minerals Information Team is an essential government function
that if lost would be irreplaceable.
The MIT information is crucial to many government entities,
notably the Department of Defense and the Federal Reserve. The
MIT function should be recognized, and the team should be
elevated as an independent agency reporting directly to the
Secretary of the Interior. For these reasons, NSSGA strongly
supports H.R. 6080, the Resource Origin and Commodity Knowledge
Act, and urges the Subcommittee to approve this bill.
The United States is the largest user of mineral
commodities in the world. In 2005, domestic users were
importing 100 percent of 16 crucial minerals, and another 26
minerals saw an import rate of 50 percent or higher. As demand
for minerals and mineral products continues to grow, we can
expect reliance on imports to increase.
The information on foreign mineral production issued by the
MIT helps domestic companies know where, how much, approximate
value, demand, accessibility, and more to meet their production
needs. Not surprisingly, the U.S. Government is also an avid
consumer of this information. The Departments of Interior,
Defense, and State, the CIA and the Federal Reserve use this
information. The Federal Reserve Board uses this data to
calculate the indexes of industrial production, capacity, and
capacity utilization, which are among the most widely followed
monthly indicators of the U.S. economy. Clearly, the U.S.
Government highly values the information provided by the MIT.
While I do not claim to have national security
qualifications, I believe my experience provides me the
credentials to state that the MIT function plays an important
role in the security of the nation. First, the DOD relies on
the MIT to develop and maintain the capability to provide
strategic and critical material demand estimates to help manage
the national defense stockpile. Second, the analysis of foreign
country mineral supply and demand provides the State Department
and our intelligence agencies with information on the direction
of foreign governments.
While I strongly believe the MIT is properly housed in the
government, this does not mean the government is a good
caretaker. It is more like an absentee landlord. The MIT
function deserves to be enhanced by establishing it as an
independent agency that reports directly to the Secretary of
the Interior.
In summary, the MIT provides valuable information to both
the public and private sectors, information that is critical to
the economy and national security to the United States. For
these reasons, we urge you to support the ROCK Act. Thank you
for the opportunity to testify today, and I would be pleased to
answer any questions.
[The prepared statement of Mr. Meyer follows:]
Statement of Drew Meyer, Vice President, Marketing & Transportation
Services, Vulcan Materials Company, on behalf of The National Stone,
Sand & Gravel Association
Good afternoon Mr. Chairman and Members of the Subcommittee.
Thank you for the opportunity to appear today on behalf of the
National Stone, Sand and Gravel Association and to speak in support of
the Resource Origin and Commodity Knowledge (ROCK) Act, introduced by
Congresswoman Thelma Drake.
My name is Drew Meyer. I am Vice President, Marketing &
Transportation Services, Vulcan Materials Company. During my 38-year
tenure with the company, I have spent time working in the corporate,
group, and division levels, both domestically and overseas. I have
served the National Stone, Sand & Gravel Association (NSSGA) and its
predecessor associations in a number of leadership positions, most
recently as Vice Chairman. I was elected to Honorary Life Membership of
the Board of Directors in January 2004. In 2003, I was also honored
when Aggregate Manager Magazine selected me as The AGGMAN Professional
of the Year for 2002.
In addition, I am a 40-year member of the Society of Mining,
Metallurgy and Exploration (SME), where I serve on the Board of
Directors. I was Chairman of the Construction Materials and Aggregates
Committee; am currently a member of the Mineral Education
Sustainability Task Force; and, serve as Vice-President of the Board of
Trustees of the SME Foundation. I am a member of the Board of Directors
of the Mineral Information Institute (MII) and serve as Chairman of the
Nominating Committee. I am also a member of the Committee on Earth
Resources of the National Research Council of The National Academies, a
member of the American Marketing Association, and a member of the
National Association of Business Economists. In 2002-2003, I served on
the Committee to Review the U.S. Geological Survey's Mineral Resources
Program that culminated in the report entitled, ``Future Challenges for
the U.S. Geological Survey's Mineral Resources Program'' published by
The National Academies Press in 2003. I graduated from Pennsylvania
State University where I earned B.S. and M.S. Degrees in Mineral
Economics.
Based near the nation's capital, NSSGA is the world's largest
mining association by product volume. Its member companies represent
more than 90 percent of the crushed stone and 70 percent of the sand
and gravel produced annually in the U.S. and approximately 117,000
working men and women in the aggregates industry. During 2005, a total
of about 3.2 billion tons of crushed stone, sand and gravel, valued at
$17.4 billion, were produced and sold in the United States. Without
these important commodities, the nation's infrastructure could not be
built or maintained, and the commerce and quality of life would be
severely reduced. In 30 of the 50 states, crushed stone, sand and
gravel are the principal nonfuel minerals produced, and in another 10
states, our product is the second most valuable nonfuel mineral
produced. With over 11,000 operations nationwide, approximately 70
percent of the nation's counties house an aggregates operation, many
with multiple operations.
There are five important points I would like to leave you with
today.
1. The mining community relies upon the information provided by
the MIT to meet the needs of our customers across the nation.
2. Mineral and mineral products contributed almost one-half a
trillion dollars to the U.S. economy in 2005.
3. The USGS Minerals Information Team (MIT) is an essential
government function that if lost, would be irreplaceable.
4. The MIT information is crucial to many government entities,
notably the Department of Defense and the Federal Reserve.
5. The MIT functions should be recognized and the team should be
elevated as an independent agency reporting directly to the Secretary
of the Interior.
For these reasons, NSSGA strongly supports H.R. 6080, the Resource
Origin and Commodity Knowledge Act and urges the Subcommittee to
approve this bill.
Returning to my first point regarding use by the mining industry of
the MIT data let me use my company as an example. It is difficult to
give a concise statement about the value of the data collected and
published by the Mineral Information Team because our use of the data
is extensive. While Vulcan's primary focus is on the production and use
of construction aggregates, our position as a major supplier to the
more than $1 trillion construction industry requires us to incorporate
information about the many other commodities used, some of which are
competitive and others of which are complementary. The availability of
cement, lime, gypsum, and dimension stone, to name a few are integral
to the construction industry and the use of aggregates in construction.
Materials flow analysis and information on recycling of aggregate
materials and other recycled products are also valuable. Materials flow
analysis helps us to assess the way our products contribute to
sustainability and how to increase our contribution.
Vulcan is actively involved in recycling construction materials in
a number of markets. Information collected and published by the MIT on
recycling helps us to assess the market for recycled materials and
adjust the production of virgin aggregates to accommodate those
products.
The aggregates industry is highly fragmented and aggregates' high
bulk density generally restricts shipments to local and regional
markets. The quarterly survey conducted by the MIT (and in which Vulcan
participates) is vital to our understanding of the differing demand
levels in various regions of the U.S., on a nearly real-time basis,
which allows us to more closely match supply with demand.
And most importantly, as a mineral economist, I cannot overstate
the importance of having long-term continuous data streams collected in
a professional and consistent manner for helping our industry predict
the future. It might surprise some members of the committee to learn
that based on very conservative assumptions, the MIT predicts that more
crushed stone will be consumed in the first 25 years of the 21st
century than were consumed in the entire 20th century. That information
assists us in our strategic planning and has important policy and
environmental implications that the Congress and other public entities
must consider.
As for the industry as a whole, I use history as a guide. In 2004,
the nation was facing a surge in the price of steel and cement. Many
transportation and construction projects saw prices soar. Local
governments, which had estimated prices in the years prior, saw project
bids submitted at prices far above what they had budgeted for a
specific project. Many projects were scaled back and others were simply
dropped. Private contractors experienced the same difficult price
increases and outcomes. There seemed to be no end in sight to the price
increases until the Minerals Information Team released data showing the
steel and cement shortages were not due to a supply shortage, but a
logistical problem because ships that normally transport the products
were busy elsewhere--notably loading or offloading in China. The MIT
data helped to calm the markets, and we were able to weather the storm.
While prices remained high, and still are in some cases, identifying
the cause of the problem was important. No private sector entity could
mimic the MIT in this respect and be able to influence the market in
such a way.
The United States is the largest user of mineral commodities in the
world. As a matter of fact, processed materials of mineral origin
accounted for over $487 billion in the U.S. economy in 2005. This was
an increase of 8 percent over 2004 on top of an increase of almost 13
percent in 2003. Minerals went into every manufactured product
imaginable, from concrete and steel to hybrid vehicles and medical
devices. Minerals and the products produced with them are the basis of
the superior quality of life enjoyed by the nation.
Not all minerals are mined in our backyard, however, which required
domestic manufacturers and consumers to import approximately $103
billion worth of minerals in 2005. I have attached two charts, appendix
A and B, produced by the MIT that show the increasing reliance of the
nation on imported minerals. In 1985, 29 important minerals were
imported at various levels to meet the needs of domestic users. In
2005, domestic users were importing 100 percent of 16 crucial minerals,
and another 26 minerals saw an import rate of 50 percent or higher. As
domestic manufacturers find new and innovative uses for minerals and
mineral products, we can reasonably expect this list to grow.
The information on foreign mineral production issued by the MIT
helps domestic companies know where, how much, approximate value,
demand, accessibility, and more to meet their production needs. The era
of U.S. prominence in being served first has ended. Today companies
operate in a global marketplace that does not necessarily give
preference to U.S. customers, which makes the information gleaned from
the MIT essential to companies in order to serve their customers today
and plan for those of tomorrow.
Not surprisingly, the U.S. government also is an avid consumer of
this information. To complement coverage of mineral production,
information is collected, analyzed and disseminated on individual
country mining, environmental, investment, and other laws that affect
the minerals industry; trade with emphasis on the interactions with the
United States; structure and ownership within the industries; types of
deposits; labor force; official reserves data; and other pertinent
information. The Departments of Interior, Defense, and State, the CIA,
Federal Reserve, and private sector companies use this information. The
Federal Reserve Board uses this data to calculate the indexes of
industrial production, capacity, and capacity utilization, which are
among the most widely followed monthly indicators of the U.S. economy.
[See attachment 3 for more information.] Clearly the U.S. government
highly values the information provided by the MIT.
While I do not claim to have national security qualifications, I
believe my experience provides me the credentials to state that the MIT
function plays an important role in the security of the nation. First,
the DOD relies on the MIT to develop and maintain the capability to
provide strategic and critical material supply and demand estimates to
help manage the National Defense Stockpile. Second, the analysis of
foreign country mineral supply and demand provides the State Department
and our intelligence agencies with information on the direction of
foreign governments. For example, if a newly installed government
starts repossessing foreign-owned mines, limiting property rights, or
enacting tough new taxes, this would raise red flags within our
government. Conversely, if the opposite actions were taking place, it
would also draw the attention of the government. The value of foreign
mineral reporting transcends the simple market price of a particular
commodity.
It has been suggested that if the MIT function were to be
dissolved, a private company or perhaps a university might assume the
responsibility. Nothing could be further from the truth. The
information for a number of the reports is derived from proprietary
information given by NSSGA members precisely because the government is
a trusted third party. The data Vulcan Materials Company provides the
MIT is considered proprietary, and I would be extremely hesitant to
recommend handing such valuable information over to another company or
a university without ironclad guarantees of the security of that
information. I predict that if the MIT function was dissolved, it would
take a long time, if ever, before any company could develop personnel
equipped to produce and publish data equal to that produced by the MIT.
In response to the Administration's repeated attempts to curtail
foreign mineral reporting, I fully agree with the statement included in
the FY 2006 Interior, Environment and Related Agencies Conference
Report (109-188):
The managers strongly disagree with the Administration's
proposed reductions to the minerals assessment program and
believe it is irresponsible for the Administration to decrease
or eliminate funding for what is clearly an inherently Federal
responsibility.
In a 2003 report, the National Academy noted that, ``The Minerals
Information Team (MIT), funded by the Mineral Resources Program (MRP),
is among the longest-running, systematic information collection,
analysis, and dissemination functions within the federal government.''
It would be a serious loss if even a portion of this data collection
were dissolved.
While I strongly believe the MIT is properly housed in the
government, this does not mean the government is a good caretaker; it
is more like an absentee landlord. The MIT function deserves to be
enhanced and transferred out of the USGS so that it reports directly to
the Secretary of the Interior.
Despite the importance of the information to the public and private
sectors, the MIT is buried within the Geology Division of the USGS.
Serious people have wondered why the MIT function, which has national
and international customers, is housed under the Regional Executive -
Eastern Region Geology. This is a full five levels down from the
Director of the USGS. There are another three levels before one reaches
the Secretary of the Interior. In comparison, the Energy Information
Agency, which provides a similar type of information, is separated from
the Secretary of Energy only by the Deputy Secretary.
The placement of the MIT within the organization lends credence to
the idea that the MIT function is not a high priority of the USGS. In
fact, at a March 3, 2005, hearing of the House Interior Appropriations
Subcommittee, Charles Groat, then USGS Director, seemed to say that the
proposed cut of $2 million to the MIT could be made because the
minerals reporting function was not a core mission of the USGS.
In November 2005, the USGS released the Minerals Resource Program
(MRP) Five Year Plan 2006-2010, outlining four long-term goals. The MRP
houses the MIT. The fourth goal of the plan is aptly titled ``Ensuring
availability of long-term data sets describing mineral production and
consumption for national security needs.'' Despite being an identified
goal, the plan flat funds the MIT for the entire five years. While the
MRP itself is statically funded over the timeframe, the MIT function is
clearly not a priority. Continued funding at the current level over
that long a period means that the MIT will not be able to do tomorrow
what it does today, even with an extremely low inflation rate. In
addition, the Director's Outlook for FY 2007, signed by P. Patrick
Leahy, acting director of the USGS, fails to mention in any capacity
the important role the MIT serves.
These facts lead us to believe the MIT should be removed from USGS
to ensure the data and analysis, essential to the economy and national
security of the nation, are given the proper priority.
The Committee to Review the U.S. Geological Survey's Mineral
Resources Program, on which I served, issued a report entitled,
``Future Challenges for the U.S. Geological Survey's Mineral Resources
Program'' and recommended a number of changes. I am pleased to note
that the ROCK Act incorporates two of the primary recommendations into
the legislation. First, the ROCK Act would strengthen the analysis
capabilities of the MIT so that more comprehensive reports on material
flows are available. In addition, the legislation establishes a
permanent advisory committee consisting of a wide range of users of MIT
data and analysis to ensure its activities are fully updated and
relevant to the users. These two important provisions will enhance the
value of the data and reports issued by the MIT and ensure ``bang for
the buck.''
In summary, the MIT provides valuable information to both the
public and private sectors, information that is critical to the economy
and national security of the United States. For these reasons we urge
you to support the ROCK Act.
Thank you for the opportunity to testify today. I would be pleased
to answer any questions.
Attachments
[Appendices A, B and C follow:]
[GRAPHIC] [TIFF OMITTED] 30099.010
[GRAPHIC] [TIFF OMITTED] 30099.011
[GRAPHIC] [TIFF OMITTED] 30099.012
______
Mr. Gibbons. Thank you very much. You certainly could have
practiced that for a number of hours and still never have been
closer than you were. You were right to the second with that
five minutes. That was impressive, Mr. Meyer. Thank you very
much.
Mr. Meyer. Thank you.
Mr. Gibbons. I turn now to Mr. David Brown from the
Industrial Minerals Association of North America. Mr. Brown,
welcome. The floor is yours.
STATEMENT OF DAVID S. BROWN, INDUSTRIAL MINERALS ASSOCIATION OF
NORTH AMERICA
Mr. Brown. Thank you, Mr. Chairman. Chairman Gibbons,
Ranking Member Grijalva, members of the Subcommittee, my name
is David Brown, and I am President and CEO of Wyo-Ben, Inc. and
Vice Chairman of the Bentonite Section at the Industrial
Minerals Association, North America. I am here to express my
strong support for H.R. 6080, the Resources Origin and
Commodity Knowledge Act, otherwise known as the ROCK Act.
Founded in 1951, Wyo-Ben is a leading manufacturer of
bentonite clay-based products and remains a privately held
company headquartered in Billings, Montana. Wyo-Ben is a small
business, and we employ approximately 150 individuals, who
serve a variety of functions in our operations in Montana and
Wyoming.
Wyoming bentonite is referred to as the clay of a thousand
uses, and our materials are used worldwide in applications such
as oil and gas and water well drilling, metal casting,
environmental construction and remediation, hazardous waste
treatment, cat litter, cosmetics, and pharmaceuticals as well
as many other industrial and consumer-related products.
Because of its unique characteristics, nearly 20 percent of
the Wyoming bentonite produced is exported internationally. The
Industrial Minerals Association, North America, IMA-NA, is a
trade association organized to advance the interests of North
American companies that mine or process industrial minerals.
These minerals are used as feedstock for the manufacturing and
agricultural industries and are used to produce such essential
products as glass, paints and coatings, ceramics, detergents,
and fertilizers.
Mr. Chairman, it is likely a rare occasion when a small
businessman comes before Congress and asks that a government
institution be preserved and indeed requests that the status of
that same institution be elevated. I am here to do exactly that
and to ask that you and your colleagues support the ROCK Act.
It is time that the supply and demand for strategic and
critical minerals are accorded the same attention that energy
resources receive at the Energy Information Administration.
The legislation before you today, the ROCK Act, recognizes
the vital importance of the work done by the Minerals
Information Team, or MIT, and will ensure that it has the
independence, staff, and funding to fulfill its mission.
The U.S. is the world's largest user of mineral
commodities. Every year, about 25,000 pounds of new nonfuel
minerals from the earth must be provided for every person in
the U.S. just to maintain our current standard of living.
Domestic manufacturers and consumers of mineral products in
2005 depended on other countries for more than 50 percent of 42
mineral commodities critical to the U.S. economy. We believe
the U.S. should promote an environment conducive to competition
in the global marketplace, and collection and analysis of
mineral commodity data on an international basis serves that
end.
In today's global environment, the U.S. must maintain its
capacity to assess critical mineral resources both within and
outside the U.S. The Subcommittee does not need to be reminded
of the multifaceted pressures exerted on U.S. manufacturers,
but it is worth noting that the information provided by the MIT
enables American companies to use domestic resources
effectively, forecast worldwide market conditions, develop
informed strategic business plans, and respond effectively to
short-term fluctuations and long-term trends in mineral prices,
supplies, and demand.
In China, for instance, information on the hundreds of
small artesianal bentonite mines would be impossible for me to
obtain without the reports from the MIT. The reports provide
information on the individual country laws that affect the
minerals industry trade, with emphasis on interactions with the
United States structure and ownership within the mining
industry, types of deposits, labor force, and other pertinent
information. This valuable information helps me in
consideration of potential foreign partnerships.
In summary, a central, comprehensive, and unified mineral
commodity data and information program is the best way to
collect and distribute information on minerals critical to the
U.S. economy and national security. I respectfully request your
passage of H.R. 6080, the ROCK Act. Thank you for your kind
attention. That concludes my formal statement, and I would be
happy to answer any questions you may have for me.
[The prepared statement of Mr. Brown follows:]
Statement of David Brown, President, Wyo-Ben, Inc., and Vice Chairman,
Bentonite Section Industrial Minerals Association--North America
Chairman Gibbons, Ranking Member Grijalva, Members of the
Subcommittee, I am David Brown, B-R-O-W-N, and I am President of Wyo-
Ben, Inc., and Vice Chairman of the Bentonite Section at the Industrial
Minerals Association--North America. I am here to express my strong
support, and the strong support of the member companies of the IMA-NA,
for H.R. 6080, the Resources Origin and Commodity Knowledge Act (the
ROCK Act).
Founded in 1951, Wyo-Ben is a leading manufacturer of bentonite
clay-based products and remains a privately held company headquartered
in Billings, Montana. Wyo-Ben is a small business and we employ
approximately 100 individuals who serve a variety of functions in
Montana and Wyoming. Our three bentonite processing facilities are
located in the Big Horn Basin region of North Central Wyoming and South
Central Montana. Our employees are focused on quality and continually
look for new and innovative solutions for customers' needs in the
global market. Our materials are used worldwide in applications such as
oil, gas, and water well drilling, metalcasting, environmental
construction and remediation, hazardous waste treatment, cat litter,
cosmetics and pharmaceuticals, as well as many other industrial and
consumer-related products. Wyo-Ben mines its reserves from the richest
deposit of bentonite in the world. As our name implies: We are Wyoming
Bentonite. Wyoming bentonite is well-known as the best bentonite in the
world.
The Industrial Minerals Association--North America (IMA-NA) is a
trade association organized to advance the interests of North American
companies that mine or process industrial minerals. These minerals are
used as feedstocks for the manufacturing and agricultural industries
and are used to produce such essential products are glass, paints and
coatings, ceramics, detergents and fertilizers. The IMA-NA membership
includes producers of ball clay, bentonite, borates, calcium carbonate,
feldspar, industrial sand, mica, soda ash (trona), sodium silicate,
talc and wollastonite. IMA-NA's membership also includes many of the
suppliers to the industrial minerals industry, including equipment
manufacturers, railroads and trucking companies, and consultants.
Industrial minerals account for approximately 14% of domestic mine
production.
We believe that the U.S. should continue industrial minerals
research to ensure a stable supply of materials essential to our
national economy and to our way of life. The U.S. is the world's
largest user of mineral commodities. Every year about 25,000 pounds of
new non-fuel mineral materials from the earth must be provided for
every person in the U.S. just to maintain our current standard of
living. The Minerals Information Team (MIT) is uniquely situated in the
federal government to provide scientific information for objective
resource assessments and unbiased research results on mineral
potential, production and consumption. As a long-time beneficiary of
the information provided by the MIT, I would like to express my
gratitude for the fine work accomplished and exceptional products
produced by the Team. I can think of no other single public or private
entity that provides fundamental data of such paramount importance to
my business.
The value of this information to my business cannot be over-
emphasized. If I was unable to obtain this information from the
government, I would be required to purchase the information from other
sources at significant cost to my business, if it were available at
all. By way of example, the cost to my company to receive a report on
bentonite from one private research company based in the United Kingdom
would have been $4,200 for 2005. As this report would be generated from
the private sector it is more likely to be biased. It also is my belief
that the information would not be as complete and accurate as that
provided by the MIT. It should go without saying that this annual cost
likely would be borne by hundreds of similarly situated organizations
throughout the country. Most of these organizations are small
businesses.
Currently housed in the U.S. Geological Survey, the Minerals
Information Team collects, analyzes, and disseminates information on
the domestic and international supply of, and demand for, minerals and
mineral materials critical to the U.S. economy and national security.
For the last four years, the Administration's annual budget request has
proposed eliminating MIT's funding for collection of international
mineral commodity information. Congress wisely has rejected these
efforts. Rather than reducing our national capacity regarding economic
intelligence relative to minerals and mineral material resources, I
believe it should be strengthened.
The reductions proposed by the Administration would have terminated
data collection and analysis for 100 mineral commodities in 180
countries outside the U.S. The budget cuts had the potential to limit
severely available data on global industrial minerals production and
consumption, while continuing to make domestic data readily available
outside the U.S. In a globally competitive marketplace, that would have
meant that global competitors would know more about U.S. production and
consumption than U.S. producers would know about their global
competition.
Mr. Chairman, it likely is a rare occasion when a small business
man comes before Congress and asks that a government institution be
preserved; and indeed for the status of that same institution to be
elevated. I am here to do exactly that, and to ask that you and your
colleagues support the ROCK Act. It is time that the supply and demand
for strategic and critical minerals and mineral materials are accorded
the same attention that energy resources receive at the Energy
Information Administration. It is time to raise the status of the MIT
organization within the federal government to a position of prominence
that is reflective of the contributions it makes to our country. Since
1963 my family has relied on the vital information prepared by the USGS
Minerals Information Team. Indeed, on the shelf in my office I have
editions of the Minerals Year Book going back to that year. It is my
profound wish that I be allowed to continue my collection.
The legislation before you today, the Resource Origin and Commodity
Knowledge (ROCK) Act, recognizes the vital importance of the work done
by the MIT and will ensure that it has the independence, staff and
funding to fulfill its mission. The bill will remove the MIT from under
the U.S. Geological Survey and establish it as a stand-alone agency
within the Department of the Interior. The ROCK Act will restore the
MIT's staff to historical levels and add additional positions to
perform the new and expanded functions authorized in the bill by
transferring a total of 300 professional and administrative positions
(filled and unfilled) from USGS and DOI. Finally, the ROCK Act
authorizes appropriations of up to $30 million annually for 10 years.
We believe the U.S. should promote an environment conducive to
competition in the global marketplace and collection and analysis of
mineral commodity data on an international basis serves that end. In
today's global environment, the U.S. must maintain its capacity to
assess critical mineral resources both within and outside the U.S. The
Subcommittee does not need to be reminded of the multi-faceted
pressures exerted on U.S. manufacturers. But it is worth noting that
the information provided by the MIT enables American companies to use
domestic resources effectively, forecast worldwide market conditions,
develop informed strategic business plans, and respond effectively to
short-term fluctuations and long-term trends in mineral prices,
supplies and demand.
In China for instance, information on the hundreds of small
artesian bentonite mines would be impossible for me to obtain without
the reports from the MIT. The reports provide information on individual
country laws that affect the minerals industry; trade with emphasis on
the interactions with the United States; structure and ownership within
the mining industry; types of deposits; labor force; and other
pertinent information. This valuable information, available from no
other source, for example, helps me in the consideration of potential
foreign partnerships.
Critiques could argue that the private sector is best suited to
develop information on the occurrence, production and use of minerals
outside the United States. Theoretically, at least, the private sector
could perform these functions. Pragmatically, however, the collection
and distribution of this data is an inherently governmental function.
Consider this...
According to the Mine Safety and Health Administration, there are
currently 12,000 metal and nonmetal mineral mines in the United States,
covering 106 different mineral commodities. Of these mines, all but 21
mines employ fewer than 500 employees and, as such, are small
businesses as defined by the Small Business Administration. I ask you,
what is the likelihood that the owners or operators of these 12,000
mines will pay someone to develop current occurrence, production and
use data on non-U.S. minerals? Alternatively, imagine the conflicting
data that likely would result if each of these mines were to pursue
this information independently, for antitrust prohibitions probably
would prohibit them from pursuing it collectively. Is the public
interest best served by encouraging individual companies to develop
generic global economic intelligence and data, or is this work best
accomplished by the central government on behalf of the institutions
and industry sectors that need, and benefit, from its generation? I
submit to you that a central, comprehensive, and unified mineral
commodity data and information program is the best way to collect and
distribute information relevant to minerals and minerals materials
critical to the U.S. economy and national security.
I respectfully request your passage of H.R. 6080, the Resource
Origin and Commodity Knowledge (ROCK) Act, which will collect and
analyze economic intelligence on the broad array of mineral
commodities, their occurrence, production and use.
Thank you Chairman Gibbons, Ranking Member Grijalva, and Members of
the Subcommittee for your kind attention. That concludes my formal
statement. I would be pleased to answer any questions you may have for
me.
______
Mr. Gibbons. Thank you very much, Mr. Brown, and I am also
very impressed with yours. You had an additional five seconds
that you could have consumed under that clock, and I do not
know why I am focused on the time. It is just built into my
head I guess. You know when the airplane pushes back at 2:00,
it is supposed to push back at 2:00. So anyway.
We turn now to Ms. Constance Holmes, Senior Economist and
Director of the International Policy of the National Mining
Association. Ms. Holmes, welcome. The floor is yours. We look
forward to your timely advice as well.
STATEMENT OF CONSTANCE D. HOLMES, SENIOR ECONOMIST AND DIRECTOR
OF INTERNATIONAL POLICY, NATIONAL MINING ASSOCIATION
Ms. Holmes. Thank you very much, Mr. Chairman. I am very
pleased to be able to represent the National Mining Association
today and to give our strong support for the Resource Origin
and Commodity Knowledge Act or the ROCK Act. As you probably
know, the National Mining Association represents companies that
produce most of the nation's coal, metals, industrial minerals,
as well as the manufacturers of mining and mineral processing
machinery, equipment, and supplies and other services that
support the mining industry.
All of our members use the data and have a significant
interest in ensuring the widespread and public availability of
the critical information on nonfuel minerals that the Minerals
Information Team provides to us at the current time. We would
like to commend you, Mr. Chairman, and all of the members of
the Subcommittee and Congresswoman Drake especially for
identifying this very serious problem and for taking action to
introduce legislation that results in a sound solution.
Metals and minerals are a very vital part of our economy,
and the goods that we use every day depend upon them. The
defense of our nation depends upon them, and the importance of
the accurate, timely, and complete information about the
commodities, their reserves, where they are produced, how much,
where they are used, simply cannot be underestimated. It is
important to business, yes, but it is also vital to our
government at all levels and to the Congress as you consider
policies with respect to access and production of these
important commodities and other policies of importance to our
national security.
But as it now stands, the government's ability to provide
the data information and analysis has certainly deteriorated
over the past decade and with certainty will continue to
deteriorate unless action is taken now to reverse the trend.
Since 1995, various Administrations from both parties have
failed to recognize the importance of maintaining a central
database that includes information on U.S. metals and minerals
and, just as necessary, the international information on these
same commodities.
During that time, our capability to collect, maintain,
analyze, and disseminate the data has declined, and the
timeliness of the data has declined as well. This is clearly
not the fault of the professional and the exemplary efforts of
the Mineral Information Team, the group within USGS now charged
with the responsibility for collecting and maintaining the
important data. But it is due to the constant decline in budget
requests and ultimately appropriations in terms of real dollars
for MIT activities.
Although wisely Congress restores some of the budget cuts
each year, total appropriated levels have still unfortunately
dropped, which, as you pointed out, has forced a reduction in
staff by over 20 percent, the loss of important expertise, and
a reduction in the scope of data collected, its timeliness, and
the ability to provide needed analysis of the U.S. mineral
situation to the Congress, other government agencies, and to
the public. Decisions are simply being made without the benefit
of needed information, and this can only result in less than
ideal public policy.
MIT data is used for a number of purposes that are detailed
in my statement, but one of the most important uses of the data
is to document the growing dependence on imports to meet our
everyday needs for basic materials. Increasing globalization
and demand for minerals necessitate an understanding of both
domestic and international factors that affect the supply and
demand of the resources that we need and we have to compete
for.
But what if we did not have the data required to tell us
how much our import dependency is increasing or how vulnerable
we are to supplies from possibly less than stable or less than
friendly governments or why prices are increasing and supplies
in the U.S. are decreasing due to demand from other countries?
MIT's supply and consumption data is the only source of
mineral information that provides the necessary understanding
for both the domestic and international factors that could
adversely affect almost every segment of the U.S. economy. It
allows us to answer questions and to devise solutions when
problems do occur.
Creating an independent agency within the Department of
Interior will give a needed priority to the continuity of this
effort. Mr. Chairman and members of the Subcommittee, we cannot
encourage you to pass this legislation fast enough, because
this new effort and new information effort within the
Department of Interior is greatly needed and is needed now.
Thank you very much. I would be pleased to answer questions.
[The prepared statement of Ms. Holmes follows:]
Statement of Connie Holmes, Senior Economist and Director,
International Policy, National Mining Association
My name is Connie Holmes, senior economist and director of
international policy at the National Mining Association (NMA). NMA
appreciates the opportunity to testify before the House Resources
Committee in strong support of H.R. 6080, the Resources Origin and
Commodity Knowledge or ROCK Act.
NMA is the principal representative of the producers of most of the
nation's coal, metals, industrial and agricultural minerals; the
manufacturers of mining and mineral processing machinery, equipment and
supplies; and the engineering and consulting firms, financial
institutions and other firms that serve the mining industry. Our
association and our members have a significant interest in ensuring the
widespread and public availability of critical information on mining
and mineral commodities, the objective of the ROCK Act.
NMA commends the committee for your leadership in bringing a
serious issue to light and for taking action to legislate a sound
solution. The importance of accurate and timely information about
metals and minerals cannot be underestimated. Metals and minerals and
the products that they make possible form the basis of our economy and
ensure our national security. Just as business requires sound,
accurate, and timely data and analysis to use as the basis for making
decisions, so too does the Congress, federal, state and local
governments and the public require such data in order to form public
minerals policies.
Unfortunately, over the last ten years various administrations have
failed to recognize the importance of maintaining a central data base
that includes information on U.S. metals and minerals as well as
international information on these same commodities. During this time,
our capability to collect, maintain, analyze and disseminate this data
has declined sharply. The timeliness of the data that remains has
declined as well. Clearly, this is not the fault of the professional
and exemplary efforts of the Minerals Information Team (MIT)--the group
within the United States Geological Survey (USGS) charged with the
collecting, maintaining and reporting minerals and metals data. The MIT
collects and disseminates data on virtually every commercially
important non-fuel mineral commodity produced worldwide.
Rather, it is due to the constant decline in appropriations for MIT
activities that has resulted in a reduction in staff and expertise.
This in turn has forced a reduction in the scope of the data collected,
its timeliness and the ability to provide needed analysis of the U.S.
minerals situation to Congress, other government agencies and the
public. The United States has gone from possessing one of the best and
most relied upon collection of metals and mineral information to
holding a collection more akin to those found in second tier mineral
producing countries. This downgrade has caused serious ramifications
for U.S. business and most particularly to the U.S. government,
including our defense sector. Both short- and long-term decisions are
now being made without the benefit of needed information.
The public and private sectors rely on the MIT information to
better understand the use of mineral materials and their ultimate
disposition in the economy; to use national resources efficiently; and
to forecast future supply and demand for minerals both in the United
States and globally. Information provided by MIT is used in the
analysis of policies, in formulating plans to deal with shortages and
interruptions in metal and mineral supplies and in the development of
strategies to maintain America's competitive position in the global
economy.
MIT data is used by:
National security agencies to develop an understanding of
strategic and critical minerals and to understand the effect that
changes in natural resource markets can have on the economic and
political stability of developing countries.
The Department of Defense to help manage the National
Defense Stockpile.
The Federal Reserve Board for critical economic
forecasting.
The Department of Commerce's Bureau of Industry and
Security to analyze and resolve trade disputes.
And, of course, Congress uses the data and analyses stemming from
it as the basis to determine public policy.
There are critical non-governmental uses for this data as well.
Manufacturers need the data, because as primary users of
minerals, they need to know production trends and other information to
project price, availability and other factors.
Financial institutions use the data to make loan
decisions based on availability of minerals.
For market analysts and academicians the data is the only
source for the majority of the U.S. statistical data on mining and
mineral commodities.
The mining industry uses the data to make sound
marketing, finance and land-use decisions.
The United States has an abundance of natural resources including
the metals and minerals that are the foundation of our industrial
economy. Only the combined countries of the former Soviet Union and
Australia ranked higher than the U.S. in a recent study of the global
distribution of 15 metals with important uses. However, our nation is
becoming more dependent upon foreign sources to meet our metal and
minerals requirements, even for minerals with adequate domestic
resources. America now depends on imports from other countries for 100
percent of 17 mineral commodities and for more than 50 percent of 42
mineral commodities.
This increased import dependency is not in the national interest.
Increased import dependency causes a multitude of negative
consequences, including aggravation of the U.S. balance of payments,
unpredictable price fluctuations and vulnerability to possible supply
disruptions due to political or military instability. It is
irresponsible to ignore the vast mineral resources we have within our
nation's boundaries. But, what if our nation did not have the data
required to tell us how our import dependency is increasing? Or how
vulnerable we are to supplies from less than stable governments? Or why
prices are increasing and supplies decreasing due to demand from other
countries? Without the MIT and the data it collects we could not answer
those questions or determine potential market problems in advance.
The Bureau of Land Management's (BLM) recent statement on ``Energy
and Non-energy Minerals'' acknowledges the government's responsibility
to decrease our nation's dependency on overseas sources of minerals. In
particular, the policy reaffirms the importance of the Domestic
Minerals Program Extension Act of 1953, which recognizes:
``...the continued dependence on overseas sources of supply for
strategic or critical minerals and metals during periods of
threatening world conflict or of political instability within
those nations controlling the sources of supply of such
materials gravely endangers the present and future economy and
security of the United States. It is therefore declared to be
the policy of the Congress that each department and agency of
the Federal Government charged with responsibilities concerning
the discovery, development, production, and acquisition of
strategic or critical minerals and metals shall undertake to
decrease further and to eliminate where possible the dependency
of the United States on overseas sources of supply of each such
material.''
This act is still relevant to our country's increasing
vulnerability to access strategic and critical minerals, and the
potential adverse impact of that vulnerability on national and homeland
security. This law and our government's responsibility to decrease
dependency on foreign minerals cannot be implemented without the
minerals information provided by MIT.
Our vulnerability to over-reliance on foreign supplies is
exacerbated by competition from the surging economies of countries such
as China and India. As these countries continue to evolve and emerge
into the global economy, their consumption rates for mineral resources
are ever-increasing as they build their economies using the same
mineral resources that we used to build and maintain our economy. As a
result, there exists a much more competitive market for global mineral
resources and some mineral resources that we need in our daily lives
are no longer as readily available to the U.S.
Increasing globalization and demand for minerals necessitate an
understanding of the international factors that affect the supply and
demand of the resources the U.S. is competing for, the demand for which
is increasing both domestically and internationally. For example,
China's consumption of copper has more than quadrupled in the last
decade and China's consumption outstripped that of the U.S. in 2002.
MIT's supply and consumption data is the only source of minerals
information that provides the necessary understanding of international
factors that could adversely affect the U.S. Creating an independent
agency will ensure that such data continue to be collected and help
insulate the MIT from repeated budget cuts.
As recently as last winter the Office of Management and Budget
included the Minerals Resource Program on a list of programs for
reduction or elimination. Administration budget requests consistently
recommend eliminating our ability to collect and analyze international
minerals data, at a time when the minerals industry is becoming more
global and America is becoming more dependent on imports for more
commodities. Even as you are holding this hearing, the Minerals
Information Team is considering further staff reductions and taking
other actions to meet another reduced budget in FY2007. Congress cannot
act too soon to stem this tide by acting expeditiously to pass H.R.
6080.
The ROCK Act will ensure the wide availability of minerals
information by making the United States Geological Survey's (USGS)
Minerals Information Team (MIT) an independent agency within the
Department of the Interior.
NMA appreciates the opportunity to express its support for H.R.
6080 and looks forward to the establishment of an independent Minerals
Information Agency within DOI. I would be happy to answer any
questions.
______
Mr. Gibbons. Thank you very much, Ms. Holmes. Like your
colleagues up there, you did very well in putting your summary
within the time required. We are now at that point in our
Subcommittee hearing where we turn to the members of the
committee for questioning, and we will limit it to five
minutes. If we get to the end and find that there are still
more questions, we will of course have an extra round, but I
would like to yield my time to Ms. Thelma Drake, who is the
author of the legislation, for the first round of questioning.
Ms. Drake.
Ms. Drake. Thank you, Mr. Chairman, and thank all of you
for your testimony today, and I am going to start with Mr.
Meyer. Mr. Meyer, you noted that you are giving proprietary
data to a trusted third party. Do you believe that any
contractor or any private party could properly protect that
data, and do you believe the protections that are in the bill
are sufficient to protect data?
Mr. Meyer. We do give the information, and as a public
company, we have always had a policy of publishing most of the
data that we give to the U.S. Bureau of Mines. We have total
confidence in the current MIT. We have total confidence in
their ability to keep the information confidential.
Many of the other companies in our industry--and there are
nearly 11,000 of them--are private companies, and those private
companies are not willing to give their information as freely
as we do, and they are all concerned--or not all, but many of
them are concerned about the ability to keep that information
confidential.
I feel very certain that many of those who currently give
their information to the MIT, the U.S. Geological Survey, would
not if it was to a private, outside group, because I think they
would be concerned that us big guys--and our company is the
largest in the aggregate industry--would somehow get access to
that information. But the current MIT has proven over the years
that they can and will keep the information confidential.
Ms. Drake. Thank you. And, Mr. Brown, I see that you have
two books standing up there. Could you tell us what they are?
Mr. Brown. Well, they are actually the 1963 version of
Volume 3 and 4 of the Minerals Yearbook, and this happens to be
the international book, and this is the domestic book, and I
brought those because we have a collection that sits on our
bookshelf in our company, and we have used this information
since 1963 to help us in identifying what is happening both
domestically and internationally in our industry, in the
bentonite industry. And we use that information to assess
whether there are opportunities for us.
And in the international arena today, that is very
important because we do not know what is happening in China,
for example, or Russia without information like this. There is
an emerging bentonite industry in those countries, and as a
dominant player in that industry, we would like to be
positioned and have the knowledge to take advantages of joint
venture opportunities, for example, that may exist. So that
information has been very important to us over the years.
Ms. Drake. Thank you. And, Mrs. Holmes, you mentioned that
MIT is considering further staff reductions and taking other
actions to meet the reduced budget for 2007. Can you expand on
that, and should we be talking to appropriators to sort of put
this on hold while we work on this bill?
Ms. Holmes. To answer your last question first, yes, I
believe you should be talking to appropriators to make certain
that the staff and resources of the MIT team as they exist now
are maintained into next year. As you know, the budget request
this year was much lower. We have confidence that it will be
restored, but MIT management must of course take steps to plan
for a lower budget, and we are told that they are doing this.
This is of great concern to all of our members and all of
the users of the information. And I might add we all do use
this information very heavily. We also have a collection of
these Minerals Yearbooks that we consult on an extremely
regular basis.
Ms. Drake. Thank you. And, Mr. Chairman, I see my time is
up. I will yield back.
Mr. Gibbons. Very well. Thank you, Ms. Drake. We will turn
now to Mr. Grijalva for any questions he may have.
Mr. Grijalva. Thank you, Mr. Chairman. I guess this is for
all the witnesses and following up on Mrs. Holmes' testimony.
We know that the United States Bureau of Mines was dissolved in
1995, and I think in listening to testimony, we also heard the
Federal Government continues to impose annual budget cuts that
I think negatively affect USGS' mineral information and
commodity assessment capabilities.
So it is a general question for all three of you. How can
Congress and this Administration ensure proper funding,
necessary funding, for the Minerals Commodity Information
Administration? And I think as a corollary to that question as
well: Do you believe that the Mineral Commodity Information
Administration will be equally sufficient as the United States
Bureau of Mines that was abolished in 1995? Two-part question,
and I guess we can begin with Ms. Holmes if that is
appropriate.
Ms. Holmes. Well, we do not think that the Administration,
the proposed Administration, would replace or replicate if you
will the Bureau of Mines, which had many, many more functions
than data collection and analysis and dissemination.
We do think, however, that the proposed Administration with
the Department of Interior will give a priority to the data
collection efforts of the Mineral Information Team and will
allow them to be independent in their work, will allow them to
certainly maintain the confidentiality of data, which is
extraordinarily important to all of our companies, and will
allow them to provide both the domestic and the international
materials and data to both government and private industry as
they need it.
We think that through a separate line item, if you will, a
separate area in the budget, that the Congress certainly will
be able to assure that that funding level is maintained, just
as you have assured that the funding levels for the Energy
Information Administration have been maintained.
Mr. Grijalva. Then that line item would be similar. Well,
the same example is if the Bureau of Mines had that separate,
distinct line item.
Ms. Holmes. Yes. It would be separate, distinct, and it
would show that it is a priority.
Mr. Grijalva. I am trying to keep to five minutes.
Mr. Brown. Well, I do not know if I am the best person to
answer the question of the funding and whether it would be the
same or continue, but I can say the quality of the information
I believe would be----
Mr. Grijalva. Given the discussion that the funding at this
point--let me categorize it for you--is not sufficient and in
fact there have been reductions, when I brought up the question
of proper and necessary funding, that is what I was directing
that question at.
Mr. Brown. And let me answer that if I can by dealing with
the quality of the information, because the quality of the
information is good information, and if we were to use the
alternatives, it would not be as good as information. So is the
funding adequate today? I do not know if it is adequate or not,
but I can tell you that we are using the information today that
is being generated. We want the program to continue so that we
have access to this information that is vital on the
international markets.
Mr. Grijalva. Thank you.
Mr. Meyer. From the number of interactions I have had with
the MIT, I think that it is clear that the funding has not been
adequate. They have been, I think, very professional and
excellent stewards of the money that they have been given, but
it has not been enough to allow them to modernize some of their
data collection activities, and I think it is extremely
important that we make certain that that happens, and this
agency will, I think, help that to happen.
Mr. Grijalva. I have no further questions, Mr. Chairman.
Mr. Gibbons. Thank you, Mr. Grijalva. Let me just take a
few minutes here of my time and ask some very simple questions.
First of all, Mr. Meyer, many times when we pass a bill in
Congress here that goes, for example, in the transportation
issue, the construction of a highway project or something of
that nature, we do not oftentimes think about how it is that
those people we charge with the responsibility of constructing
those highways, building those roads and bridges, get the
information necessary to pull together the cost of where they
will get the materials, et cetera.
The information from MIT here obviously goes to assisting
and aiding in the ability of I would say not only decision
makers and policymakers but contractors who look at sources of
minerals, where they are going to get it for highways. Just in
a typical highway project, how much of your product, sand and
gravel, goes into a typical mile of highway construction?
Mr. Meyer. It certainly depends upon the type of highway
constructed, but in the neighborhood of 40 to 50,000 tons per
mile is a fairly good estimate of the amount of material that
goes into highway construction. A smaller project where all
they are doing is resurfacing it could be a lot less, on the
order of 1,000 or 1,500. But construction requires a tremendous
amount of aggregate.
Mr. Gibbons. So, in that 40 or 50,000 tons that go into a
typical mile, the farther you get from the source of the
supply, then you have to calculate the added cost into
construction of that. So it is very important to know where and
how much and the quality of the sand and gravel and other
materials, and this information would be very helpful I am
sure, which is part of our economy as we look down the road.
Mr. Meyer. Yes.
Mr. Gibbons. Mr. Brown, you indicated that approximately
25,000 pounds of material, minerals, metals are used each year
by every person. Is that a figure which is widely accepted or
recognized as the mineral production requirement for this
country, or is this a national or an international figure that
has been accepted as well?
Mr. Brown. Well, I do not think that necessarily is an
international figure. It is a national figure. It is unknown
for the most part. I do not think people understand what they
use every day and the minerals that are involved in that.
Mr. Gibbons. Could you give us some examples?
Mr. Brown. Sure. If this was glass, it would have soda ash
in it. Metal in the table could very well have used bentonite
for the casting. The oil that is produced for any of the things
that might be in the room used bentonite for drilling that oil
and gas well, and the list goes on. I said bentonite is the
clay of a thousand uses, and it truly is. It is used in many,
many things that we use every day.
Mr. Gibbons. And I am sure that in that 20-plus thousands
pounds per individual per year that that includes the coal that
is mined to produce electricity, much of which is consumed back
here even in this city from a coal-fired power plant just down
the road.
Mr. Brown. It sure is.
Mr. Meyer. Many are not aware, but 20,000 pounds of that is
aggregate.
Mr. Gibbons. To drive on on their highways?
Mr. Meyer. Yes, sir.
Mr. Gibbons. Very good. Let me turn to Ms. Holmes, and you
have pointed out that there is and has been a decline in the
ability of this country's ability to collect, maintain,
analyze, and disseminate data recently. Do you see that
leveling out or changing or even increasing without the passage
of this legislation?
Ms. Holmes. Absolutely we do not. This legislation is
necessary to advance and to enhance the data collection ability
of the Mineral Information Team. Without the priority that is
given by a piece of legislation such as this and making
collection a priority, the trend can only continue to go
downward, and it can only continue to be much more difficult
for those very good people at MIT to serve the needs of the
Congress, the rest of the government, and of the public in
providing us with that accurate data.
Mr. Gibbons. Now there is some parallels already drawn
earlier when we talk about the Department of Energy and the
Energy Information Administration and their contribution to
being able to analyze and point to economic benefit of having
information available to us. This would be the equivalent or
something similar to that only on the mineral side, is that
correct?
Ms. Holmes. That is our understanding, yes, and as
representatives of coal producers, we are very familiar with
the Energy Information Administration and the excellent job
that they do in collecting data, analyzing data and
forecasting, and it is my understanding that the Mineral
Information Administration would also be able to use the data
to forecast our needs as well, which would be an additional
service to the government and the Congress.
Mr. Gibbons. And in reading this legislation, do you find
therein the intent or the attempt I should say to reauthorize
the Bureau of Mines? Is that what this legislation is about?
Ms. Holmes. No, we do not believe that it would reauthorize
the Bureau of Mines. As I mentioned, the Bureau of Mines had a
much broader mandate than just data collection. They were
involved in research activities and any number of other
activities other than data collection and analysis and
dissemination. So this is not a recreation of the Bureau of
Mines. It is a creation of a new and much more modern effort to
maintain our nation's important mineral databases.
Mr. Gibbons. I have gone over my time a little bit, but,
Ms. Drake, do you have any additional questions that you would
like to ask?
Ms. Drake. Mr. Chairman, I just have one more I wanted to
ask about. Mr. Meyer, I also serve on the House Armed Services
Committee, and we received a report from the Under Secretary of
Defense committing Department of Defense to conducting an in-
depth study of the national defense stockpile, and the results
of that study I am sure are going to propose a new
configuration for the stockpile. So, if MIT were no longer
gathering the international information, and with these latest
budget proposals, who would DOD turn to to get that information
for us?
Mr. Meyer. I do not know. I do not think there is any
other. There is certainly no other organized group to do it.
They would probably have to get it through various
intelligence-gathering activities or through the embassies. I
do not know.
Ms. Drake. Yes. All right.
Mr. Meyer. There is no place I know of that it is collected
otherwise.
Ms. Drake. Thank you, Mr. Meyer.
Mr. Chairman, I will yield back.
Mr. Gibbons. Thank you. Let me follow it up with just one
question that either probably Ms. Holmes or Mr. Meyer might be
better addressed at answering, and that would be a simple one.
From your experience over the course of the years that you have
dealt with the USGS or dealt with the information that has come
from them, why do you believe there is such a low rating within
those government agencies of the mineral information that we
see today? It seems that it is the bottom of the totem pole.
Why do you think that it is that way if it plays such an
important part in the economy and decisionmaking both within
the government and outside of the government?
Mr. Meyer. Connie, you want to try it first?
Ms. Holmes. It is taken for granted, and I do not think
that many of the people within the government that actually use
the data really recognize its importance even though we do. The
members of this committee do, but by and large, the general
public simply does not.
Mr. Meyer. I think they are all subject to a certain
competition for funding, and there are things that are a whole
lot more sexy that the USGS is involved in: earthquake
forecasting, volcanos, things like that that the public looks
at and has an interest in, and so if they are not getting
enough money and something has got to give, it is information.
It is an easy thing to kind of not fund completely.
At least that is the way I feel, and I think that is what
happens. Those people who use it really need it, and there are
a good many people out there who only need it when they need it
and then in the meantime, they do not think about it, and so
they do not put any pressure on anybody to collect it on a
regular basis.
Mr. Gibbons. I guess my analogy would be if we did not have
a telephone book sitting at our house by the telephone and you
never think about it, it is always there, and you rarely use it
anymore, but when you do, it is nice to have that information.
So yes, I would agree with all of your assessments on why it is
important as well.
So, if there are no further questions, let me also indicate
that we will probably have written questions from members of
the committee who may not be here today submitted to you. We
would submit those to you in writing and would ask that you do
return them within 10 days of receipt for answering those
questions to us. And with that, I will excuse our first panel.
Thank you very much for your service, your time, and your
testimony before this committee. It is very important to us.
And we will call up our second panel, which consists of Mr.
Michael Kaas from Arlington, Virginia; Mr. David Kanagy,
Executive Director, Society for Mining, Metallurgy and
Exploration, Inc.; Mr. Milt Copulos, President, National
Defense Council Foundation. And before you do get seated, we go
through this ritual again of swearing each and every one of you
in.
[Witnesses sworn.]
Mr. Gibbons. Let the record reflect that each of the
witnesses answered in the affirmative. The same admonition
about the traffic light. Green is to go for five minutes. Stop
is when you reach five minutes. If you go over, if you get too
drastic in your exuberance to talk, well, I will ask you to sum
it up at some point in there. But please know and understand
that your full written and complete testimony will be entered
into the record. We will turn now to Mr. Kaas. Thank you and
welcome.
STATEMENT OF MICHAEL KAAS, ARLINGTON, VIRGINIA
Mr. Kaas. Good afternoon, Mr. Chairman and members of the
Subcommittee. My name is Mike Kaas. I am a mining engineer. In
2004, I retired after 28 years with the Federal Government and
12 years in the private sector. Twenty years of my government
service was at the U.S. Bureau of Mines, where I held several
senior management positions in minerals information and
analysis and in the environmental technology research program.
I appreciate the opportunity to appear before you today. I
commend the committee for recognizing the necessity of a
comprehensive and unbiased minerals commodity information
program.
As has been said earlier, from 1925 until it closed in
1996, the Bureau of Mines had a worldwide reputation for
excellence in minerals data collection, analysis, and
dissemination. Since 1996, the U.S. Geological Survey Mineral
Information Team has faithfully tried to continue the Bureau's
legacy in the collection of mineral commodity data and in
providing that data to the public and other government
agencies.
That job has not always been an easy one. Not all of the
mineral information capabilities of the Bureau of Mines were
transferred to the U.S. Geological Survey in the first place.
Information-sharing with the technical experts in the Bureau's
research programs was also lost. At the Survey, the team's
budget has been constrained, and staffing levels have been
reduced.
In H.R. 6080 and with the creation of the Mineral Commodity
Information Administration and with the incorporation of the
Minerals Information Team, we will elevate the stature of
mineral commodity information. Nonfuel mineral materials issues
will likewise be elevated and should play a more prominent
policy role.
The financial footing of the Mineral Information Team will
also be strengthened. The ROCK Act could also provide the means
to make the new program more global and forward-looking in
three ways, and these ways are not always completely explicitly
spelled out in the current language of the Act, but let me just
highlight each of these quickly.
First, gathering foreign minerals information should be
enhanced. More than ever before, nonfuel mineral materials are
a truly global business. Rather than being downsized, staffing
of international minerals specialists should be increased.
Second, the engineering and economic analysis capabilities in
the new program should be strengthened with increased skills
and staff. This will permit the organization to perform more
comprehensive, forward-looking assessments of mineral supply.
Let me mention just one example. Availability curves from
these analyses can show the total worldwide quantity of
recoverable material as a function of the estimated production
costs of each deposit and of course with other financial
parameters in the analysis. They can predict when existing
mines will be exhausted and when deposits should come online,
new deposits. In the last 10 years, access to information on
the deposits in the former Communist bloc countries has
improved. This will increase the value of new supply analyses.
Finally, this new Minerals Administration should build a
capability to track worldwide technology developments. Whether
they burst on the scene or are the result of continued
incremental improvements, advanced technologies permit us to
discover new deposits, to recover lower grade mineral
resources, to produce valuable materials from waste streams,
and to develop innovative new uses for minerals. To anticipate
and analyze the impacts of new advancements, active contact
should be made with universities, research institutes, and
companies engaged in the development of new mineral materials
technology. Thank you very much for listening to my remarks,
and I will be glad to take any questions.
[The prepared statement of Mr. Kaas follows:]
Statement of L. Michael Kaas, Mining Engineer, Retired
Mr. Chairman and Members of the Committee:
I am Mr. L. Michael Kaas, a mining engineer and a Professional
Engineer licensed in the State of Minnesota. In 2004 I retired after 28
years in the Federal government and 12 years in the private sector.
Twenty years of my government service was at the U.S. Bureau of Mines
where I held several senior management positions in the minerals
information and analysis program and in the environmental technology
research program.
After the Bureau of Mines closed in 1996, I was instrumental in
organizing the U.S. Bureau of Mines Alumni Association. It was a
completely web-based community of past Bureau employees, many of whom
found themselves job hunting and utilized the website,
www.bureauofmines.com, to network with one another. The website served
that purpose well and was actively maintained for several years.
I appreciate the opportunity to appear before you today. I commend
the Committee for recognizing the necessity of maintaining an
independent and authoritative non-fuel mineral commodity information
capability in the Federal government. As the world's largest consumer
of minerals, America's economy and standard of living depend on the
availability of mineral materials. The domestic mineral materials
industries mine, process, and ship nearly $500 billion of non-fuel
mineral commodities annually. While the Nation has been blessed with
abundant reserves of many minerals, we are dependent on imports for 50
percent or more of over 40 important non-fuel mineral materials. As the
world's appetite for minerals grows, especially in countries like China
and India, global competition for mineral supplies will surely
increase. Industry and government will require comprehensive and
unbiased non-fuel mineral materials information with which to base
future plans and policies.
From 1925 until it closed in 1996, the Bureau of Mines had a
worldwide reputation for excellence in minerals information collection,
analysis, and dissemination. Since 1996, the U.S. Geological Survey,
Mineral Information Team has continued the Bureau's legacy in the
collection of mineral commodity data and in providing that data to the
public and other government agencies. That job has not always been an
easy one. First of all, not all of the minerals information functions
of the Bureau of Mines were transferred to the Geological Survey. Some
important information and analysis capabilities were eliminated
altogether. The association and information sharing with the technical
experts in the mining, metallurgical, and environmental technology
research programs was also lost when they too were terminated. Since
the transfer to the Geological Survey, Minerals Information Team
budgets have been constrained, staffing levels have been reduced, and
the International Minerals Section has been a perennial target for
elimination.
Not all the news has been negative. The Minerals Information Team
seized upon the power of the Internet and used it to provide more
efficient and effective distribution of its publications. Materials
flow studies by the Minerals and Materials Analysis Section have
provided a more complete picture of the life cycle of several important
mineral commodities, the role of recycling in materials supply, and the
generation and management of waste products.
H.R. 6080 and the creation of the Mineral Commodity Information
Administration (MCIA) with the incorporation of the Minerals
Information Team will strengthen the financial footing of the current
program. By elevating the stature of the mineral commodity information
function through this new Administration, non-fuel minerals issues will
likewise be elevated and should play a more prominent policy role. The
establishment of a Mineral Commodity Advisory Committee will provide
valuable outside input to the new Administrator. The Act properly
affirms the need for government to respect the confidentiality of
minerals data. Protection of confidential data was a key factor in the
success of the Bureau of Mines' information sharing partnerships with
producers and consumers. It continues to be so at the Geological
Survey.
H.R. 6080 and the new Mineral Commodity Information Administration
could also provide the means to strengthen and enhance the current
Minerals Information Team's program in three important ways:
First, the new program should take a more global and forward-
looking view. More than ever before, non-fuel mineral materials
production and trade is a truly global business. It is appropriate that
mineral commodity statistical surveys should continue to provide in-
depth domestic production, consumption, and trade data. However, the
gathering of foreign minerals information should be enhanced. Rather
than being downsized, staffing of the International Minerals Section
should be increased from its current level. This will help ensure that
an accurate and thorough understanding is maintained of the mineral
materials economies and trends in all major foreign mineral producing
or consuming countries. The two recommendations that follow also
support the need for a more global, forward looking perspective.
Second, the engineering and economic analysis capabilities in the
new program should be strengthened. This will permit the organization
to provide comprehensive, forward-looking assessments of minerals
supply.
Minerals availability analyses are an example of an output of this
type of enhanced capability. Availability curves depict the relative
economic viabilities of significant individual deposits. These curves
can show the estimated total quantity of recoverable material as a
function of the total production cost of each deposit and other
financial parameters. Based on the production rates at each deposit,
curves can show when existing mines will be exhausted and when new
deposits should come on-line. In the last 10 years, access to
information on deposits in the former Communist Block countries has
improved. This additional information will increase the value of new
supply analyses.
In a simplified fashion, here is how this analytical process would
work:
(1) The Mineral Commodity Advisory Committee would select the
commodities for which analyses would be conducted. The selections would
be based on the level of concern about future supply shortfalls.
(2) Existing mines and undeveloped deposits of the essential
commodities worldwide would be tracked and basic data would be
collected.
(3) Engineering and cost analyses, essentially mini-feasibility
analyses, would be conducted for each deposit. Capital and operating
costs would be estimated. By using consistent cost estimation and
financial analysis methodologies for these analyses, comparable data on
each deposit would be produced regardless of its location.
(4) Supply analyses would then be conducted using the engineering
and cost data for selected groups of deposits. Availability curves
would be produced for a variety of economic conditions.
The analytical methods I have just described were included in the
Bureau of Mines Minerals Availability Program that was terminated in
1996. They are well documented in many publications. The software tools
and other methods developed by the Bureau could provide a jump-start
for the process at the new Mineral Commodity Information
Administration.
Finally, this new Administration should build a capability to track
worldwide mineral materials technology developments. Mineral production
and utilization as we know it would not be possible without the
enabling technologies. Whether they burst upon the scene or are the
result of continued incremental improvements, advanced technologies
permit us to discover new deposits and economically recover lower-grade
mineral resources. The domestic taconite/iron, copper, and gold
industries all utilize advanced technologies to stay competitive.
Advanced technologies also facilitate the recovery of valuable
materials from waste streams and allow the development of innovative
new uses for minerals. To fully anticipate and analyze the impacts of
new technologies on future minerals production and consumption, active
contacts should be maintained with universities, research institutes,
and companies engaged in the development of new mineral materials
technology.
I encourage the Committee to consider additional language for H.R.
6080 to more explicitly address these opportunities for further
strengthening of our Nation's mineral commodity information and
analysis capabilities.
Thank you very much for listening to my remarks. I will be glad to
take any questions.
______
Ms. Drake. Thank you, Mr. Kaas. Next I would like to
recognize Mr. Kanagy.
STATEMENT OF DAVID L. KANAGY, EXECUTIVE DIRECTOR, SOCIETY FOR
MINING METALLURGY, AND EXPLORATION, INC.
Mr. Kanagy. Thank you. Thank you to everyone for allowing
us to speak. I am Dave Kanagy, Executive Director of SME, the
largest professional membership organization in the world with
interest in mineral reporting. I am here today on behalf of SME
and its 12,000 members.
The introduction of legislation to recognize the USGS
Mineral Information Team by making it an independent agency
within the Department of Interior strongly conveys the
important message that minerals are vital to the United States'
economy and its well-being.
Mineral commodity prices are generally dictated by the
world market such that knowledge of domestic production must be
put into the context of global supply and demand. MIT is the
only agency that does this. Its data are used by a wide variety
of Federal Government agencies, such as the Department of
Interior, Commerce, State, Defense, Central Intelligence
Agency, and by state agencies concerned about their state and
local economies and by the companies that supply production and
reserve data to the MIT.
These data help determine the vulnerability of the United
States with regards to limitations of supply from certain
countries, its domestic and international dependency on a
limited number of mines or regions for specific commodities,
and its measure of independence with respect to mineral
resources. They also indicate how the changes in demand from
other countries will impact prices in the U.S., the adequacy of
our national defense stockpile, and the ability of substitutes
should shortages occur.
In addition to providing data on production and resources,
the MIT monitors the implementation of environmental health and
safety and other laws related to mining and mineral processing.
It also provides the basic information required to elevate the
sustainability of mineral resource production at national,
regional, and global levels.
Although many look upon mining, agriculture, and other
basic industries such as steel and materials development as not
necessary, these industries and the products they develop are
the backbone of the U.S. economy. If you look at the electronic
and information age we are living in, you note that all of the
new technologies require copper, platinum, iron ore, and other
commodities to ensure that our electronic communication can
take place with reliability.
Prior to the elimination of the U.S. Bureau of Mines,
Bureau personnel reported on U.S. and global production and
reserves, while mineral resource experts in the USGS estimate
it uncovered resources that could possibly become reserves in
the future. Bureau of Mines personnel largely formed the MIT,
and they are complemented by mineral resource experts at the
USGS. This legislation ensures that vital mineral commodity
information continues to be available.
Currently, the MIT collects and disseminates data on
virtually every commercially important nonfuel mineral
commodity produced worldwide. Since 2002, the commodities
markets have experienced steady price increases. Base and
precious metals such as copper, zinc, molybdenum, nickel, and
gold have all experienced London Metal Exchange price increases
of more than 100 percent and, in some cases, more than 1,000
percent.
These are long-term price increases that appear to be more
cyclical highs as a new bottom on prices seems to be holding on
nearly all commodities. Much of this can be attributed to the
rapid industrialization of China and India. The impacts of
these surging Asian economies on the U.S. domestic minerals
supply need to be recorded and documented to ensure that the
U.S. interests are well-protected.
Without these data being put into our proper global context
by the MIT, the U.S. will be vulnerable to potential
disruptions in supply that could slow down our economy or make
it difficult to produce hardware needed for our defense. If an
independent MIT is established to provide necessary data, the
market will be able to take care of changes in pricing due to
supply and demand with little intervention from the government.
With the formation of the Energy Information
Administration, EIA, clearly the Federal Government understands
the importance of the worldwide demand on energy production.
The establishment of the Minerals Commodity Information Agency
would also demonstrate that the Federal Government understands
the importance of minerals to our society.
Accurate and timely data is critical to making good
decisions. Without a credible public data source, the advantage
immediately rests with the commodity developer, commodity
supplier, middleman, broker, promoter, or commodities dealer
who has data. If the policymakers and businesses must make an
informed business decision or develop a sound policy, they will
be at the mercy of the person or group that possesses the
necessary information.
There are 81 nonfuel mineral commodities presently tracked
by the MIT. U.S. companies relied on imports for more than 50
percent of those commodities, and of those commodities, the
U.S. is 100 percent dependent on 16 minerals being imported
every year. The reality of that probably will not change as
there are no known reserves of those commodities within the
United States.
We urge Congress to pass the Resource Origin and Commodity
Act of 2006 as soon as possible so that MIT may independently
produce accurate and timely reports for government agencies.
SME would be pleased to provide this committee with any further
details or information. Thank you.
[The prepared statement of Mr. Kanagy follows:]
Statement of David L. Kanagy, Executive Director,
Society for Mining, Metallurgy, and Exploration, Inc.
Thank you, Mr. Chairman, distinguished Members of Congress, and
guests. I am David Kanagy, Executive Director of SME--the Society for
Mining, Metallurgy, and Exploration--the largest professional
membership organization in the world with interests in mineral
reporting. I'm here today on behalf of SME and its 12,000 professional
members.
The introduction of legislation to recognize the USGS Minerals
Information Team (or MIT) by making it an independent agency within the
Department of Interior strongly conveys the important message that
minerals are vital to the United States economy and its well being.
Mineral commodity prices are generally dictated by the world market,
such that knowledge of domestic production must be put into the context
of global supply and demand. MIT is the only agency that does this. Its
data are used by a wide variety of federal government agencies, such as
the Departments of Interior, Commerce, State, Defense, Central
Intelligence Agency and by state agencies concerned about their state
and local economies, and by the companies that supply production and
reserve data to the MIT.
These data help determine the vulnerability of the United States
with regard to limitations of supply from certain countries; its
domestic and international dependency on a limited number of mines or
regions for specific commodities, and its measure of independence with
respect to mineral resources. They also indicate how the changes in
demand from other countries will impact prices in the US; the adequacy
of our National Defense Stockpile, and the availability of substitutes
should shortages occur. In addition to providing data on production and
resources, the MIT monitors the implementation of environmental, health
and safety, and other laws related to mining and mineral processing. It
also provides the basic information required to evaluate the
sustainability of mineral-resource production at national, regional,
and global levels.
Although many look upon mining, agriculture and other basic
industries, such as steel and materials development, as not necessary,
these industries and the products they develop are the backbone of the
U.S. economy. If you look at the electronic and information age we are
living in, you'll note that all of the new technologies require copper,
platinum, iron ore, and other commodities to ensure that our electronic
communication can take place with reliability.
Prior to the elimination of the U.S. Bureau of the Mines, Bureau
personnel reported on U.S. and global production and reserves, while
mineral-resource experts in the USGS estimated undiscovered resources
that could possibly become reserves in the future. Bureau of Mines
personnel largely formed the MIT, and they are complemented by mineral
resource experts at the USGS. This legislation ensures that vital
mineral-commodity information continues to be available.
Currently, the MIT collects and disseminates data on virtually
every commercially important non-fuel mineral commodity produced
worldwide. Since 2002, the commodities markets have experienced steady
price increases. Base and precious metals such as copper, zinc,
molybdenum, nickel, and gold have all experienced London Metal Exchange
price increases of more than 100%--and in some cases more than 1000%.
These are long-term price increases that appear to be more than
cyclical highs, as a new bottom on prices seems to be holding on nearly
all commodities. Much of this can be attributed to the rapid
industrialization of China and India. The impacts of these surging
Asian economies on the U.S. domestic minerals supply need to be
recorded and documented to ensure that the U.S. interest are well
protected. Without these data being put into proper global context by
the MIT, the U.S. will be vulnerable to potential disruptions in supply
that could slow down our economy or make it difficult to produce
hardware needed for defense. If an independent MIT is established to
provide necessary data, the market will be able to take care of changes
in pricing due to supply and demand with little intervention from the
government.
It is estimated that the United States economy consumed over $487
billion in minerals in 2005, which was an 8% increase over 2004 and an
increase of over 13% in 2003. In addition, the U.S. imported $103
billion in mineral commodities to support our domestic economy. With
U.S. consumers demanding this volume of minerals, it is critical that
MIT collect, analyze and disseminate information on the domestic and
international supply of and demand for minerals and mineral materials.
With the formation of the Energy Information Administration (EIA),
clearly the Federal Government understands the importance of worldwide
data on energy production. The establishment of the Minerals Commodity
Information Agency would also demonstrate that the Federal Government
understands the importance of minerals to our society.
Accurate and timely data is critical to making good decisions.
Without a credible public data source, the advantage immediately rests
with the commodity developer, commodity supplier, middleman broker/
promoter, or commodities dealer who has ``data.'' If the policymakers
and businesses must make an informed business decision or develop a
sound policy, they will be at the mercy of the person/group that
possesses the necessary information.
There are 81 nonfuel mineral commodities presently tracked by the
MIT. U.S. companies relied on imports for more than 50% of those
commodities. And of those commodities, the U.S. is 100% dependent on 16
minerals being imported every year--a reality that probably won't
change, as there are no known reserves of those commodities within the
United States.
Conclusion
We urge Congress to pass the Resource Origin and Commodity
Knowledge Act of 2006 as soon as possible so that the MIT may
independently produce accurate and timely reports for governmental
agencies to use in planning for the future and for industry as it
supplies our national needs for mineral resources. SME would be pleased
to provide this committee with any further details or information to
ensure a full understanding of the mineral needs and use within the
U.S. and the world economies.
______
Ms. Drake. Thank you, Mr. Kanagy. And next, Mr. Copulos.
STATEMENT OF MILT COPULOS, PRESIDENT,
NATIONAL DEFENSE COUNCIL FOUNDATION
Mr. Copulos. Congressman Drake, I would be remiss if I did
not take a moment to commend you and your colleagues for doing
this. Having been on the firing lines with this data, I can
tell you it is much, much long overdue. In order to not be
repetitive, I am going to summarize and just really focus on
two key points.
First, take into consideration the following: A jet engine
such as we use in our fighter aircraft uses 2.7 tons of
titanium, of which 63 percent is imported; 2.6 tons of nickel,
of which 54 percent is imported; 1,600 pounds of chromium, of
which 69 percent is imported; 1,000 pounds of cobalt, of which
78 percent is imported; 800 pounds of aluminum, of which 47
percent is imported; 3 pounds of tantalum, of which 91 percent
is imported; and 200 pounds of columbium, of which 100 percent
is imported.
In fact, the situation is beginning to show up in the
bottom line. Last April, Major General James Pillsbury,
Commander of the U.S. Army's Aviation and Missile Command,
complained that metal shortages are causing long production
lead times for critical parts, adding as much as $4.2 million a
day to certain contracts.
In the future, this is only going to get worse because the
things such as pram rare earth [phonetic] we are 100 percent
dependent on are absolutely critical to the production of
things like our Future Force Warrior program equipment, which
is what made our people so effective in Iraq and will make them
so effective in other warfare.
In addition, I have a personal stake in this. In 1986, I
was asked by the Reagan White House to come in as a special
consultant to draft the national critical materials report, and
at that time, I discovered two things, one of which was that
the minerals commodities specialists at the U.S. Bureau of
Mines were absolutely world-class scientists, the finest people
I have ever met and worked with.
The other is they were being stifled and underutilized even
then because there were people in some quarters of government
who took a bookkeeper's approach to our need for information on
minerals. They knew the cost of everything and the value of
nothing. That really has not changed.
One other illustration is during that same period, I
performed some classified research for the Central Intelligence
Agency. I can say now without getting into many details and
specifics that had we had the kind of information you are
talking about now, we would have had a three to five-year
advance warning of the collapse of the Soviet Union. That is
how important this information is. I cannot overstress it.
The question is: Why have we not gotten there? Why cannot
we do this? Well, the fact is we can do it, and you are showing
us the way. During that same period, I did a lot of work with
the Department of Energy, in particular the Energy Information
Administration. To this day, I rely heavily on their documents.
They provide exactly the kind of information that we need on
minerals.
The fundamental problem I think is that we are unaware of
our use of minerals in this country. You pull up to a pump. You
buy a gallon of gasoline. You know what it costs. You do not
pull up to the pump and buy a pound of copper and realize it
has gone up 500 percent in the last five years or that your
country cannot function without it.
For example, a hybrid automobile, Toyota Prius, uses twice
as much copper as a sedan would, and a sedan made as a hybrid
would use four times as much copper as a conventional sedan.
All these things are interconnected. They are part of a whole,
and one reason we do not understand that is we do not have the
information available that we should that would be able to let
us inform the public about this.
Also, the international competition is growing, and given
the key roles that many of these minerals do play in national
defense, it is absolutely essential that we have the type of
information on mineral production outside this country on a
regular, timely, daily basis if need be that we do not have
today.
If you look back to the period during Hurricane Katrina,
the Energy Information Administration was publishing daily
updates on the energy situation in the Gulf in terms of
production, rate count, electricity, pipeline flows.
The people at the Mineral Information Team have the
technical capability to do this. They have the knowledge as
individuals. What they lack is an infrastructure and a system
which is inclined to do it. Frankly, we have a 19th century
attitude toward a 21st century market, and it is something we
can ill afford, and we can only continue to allow it to persist
at our peril.
[The prepared statement of Mr. Copulos follows:]
Statement of Milton R. Copulos, President,
National Defense Council Foundation
My name is Milton R. Copulos and I am President of the National
Defense Council Foundation. I want to thank the Committee for the
opportunity to share my views today. I especially want to commend
Chairman Gibbons for his leadership in calling attention to our
nation's dangerous import dependence on nonfuel minerals and to the
urgent need for a source of accurate timely information on both
domestic and international mineral commodity markets.
Although most Americans are now aware of our dangerous dependence
on imported oil, most have little conception of our equally dangerous
dependence on imported nonfuel minerals. Indeed, while many
commentators express concern at our 65.5% oil import dependence, few,
if any raise an alarm over the fact that we rely entirely on imports
for 16 critical mineral commodities, and for 42 for more than half of
our needs. The implications of this dependence for our economy and our
ability to defend ourselves cannot be overstated.
For example, we are 100% dependent on imports for our supplies of
Yttrium, which is essential to the manufacture of key defense products
such as aircraft components, radar and microwave transmitters. We are
also totally dependent on imports for our supplies of rare earths which
are also essential to the manufacture of radars as well as computer
monitors and permanent magnets. Or consider for a moment, our import
dependence on some of the key minerals required to manufacture a
military jet engine.
One Jet Engine, such as those used in our fighter aircraft contains
2.7 tons of Titanium of which 63% would be imported; 2.6 tons of Nickel
of which 54% would be imported; 1,600 pounds of Chromium of which 69%
would be imported; 1,000 pounds of Cobalt of which 78% would be
imported; 800 pounds of Aluminum; of which 47% would come from imports;
200 pounds of Columbium of which 100% would come from overseas and 3
pounds of Tantalum of which 91% would be imported.
I should also note that the danger our dependence poses is not some
theoretical concept. Last April, Major General James Pillsbury,
commander of the U.S. Army's Aviation and Missile Command complained
that metals shortages are causing long production lead times for
critical parts and adding as much as $4.2 million per day in extra
costs to some contracts.
In the future, as we increasingly integrate high-tech components
into our arsenal as, for example, in the Future Force Warrior program,
the need for specialty minerals and materials can only grow and that
increased need will bring with it an accompanying need for current,
timely information.
Yet, we have failed miserably in ensuring that such information
will be available. Instead, we have continued to employ a 19th century
view of information requirements to address 21st century problems.
At the heart of the issue is the lack of an accessible, credible
source of timely information.
This deficiency, however, is not a recent development.
The need to have accurate information on the nation's mineral
resources has been recognized from the earliest days of the Republic.
Indeed, one of the important assignments given to Lewis and Clark on
their journey of discovery was to catalog as much information on
mineral deposits as possible. By 1879, when the U.S. Geological Survey
was created, among its first actions was to establish the Mining
Statistics Division. In 1925, the responsibility for gathering mining
data was transferred to the U.S. Bureau of Mines, where it remained
until 1996 when it was returned to the U.S. Geological Survey.
In addition to the general need for data on mines and minerals, the
advent of the 20th century created another imperative to collect this
information. During the First World War, it became evident that
minerals had taken on a new importance in relation to national defense.
Until that time, the nation had given little thought to the adequacy of
its mineral resource base. But the war changed that. As a result, in
1921, the U.S. War Department m the ``Harbord List,'' of 28 minerals
that had been in short supply during the conflict.
Still, little was done until 1939 when conflict erupted in Europe
and the potential threat to the United States became clear. In that
year, the Navy Department was given $3.8 million to purchase reserves
of key materials, and another $70 million was allocated by Congress for
the creation of a strategic stockpile.
The next year, President Roosevelt ordered the Reconstruction
Finance Corporation to begin making significant purchases of war
materials. The RFC's Metals Reserve Corporation was assigned the
specific task of acquiring strategic metals.
Despite these measures, there were shortages of key commodities
during World War II occasionally leading to bizarre consequences. For
example when copper supplies proved insufficient to meet both military
munitions needs and the need for enormous amounts of wiring by the
Manhattan Project, the wire was made from silver instead. In fact,
copper supplies were so critical that the War Department released 2,800
copper miners from active duty in the Armed Forces in 1942 so that they
could return to the mines.
The lessons of the two World Wars, however, were not taken to
heart.
By 1949, the U.S. had become heavily dependent on foreign sources
for a number of key commodities including manganese and chromium.
Unfortunately our source for these imports was the Soviet Union. As a
result, when the Berlin Crisis arose, the Soviets were quick to cut off
our supplies, and it was only by virtue of the development of
alternative suppliers that we were able to fend off the predatory move.
Concern over the Soviet action and the nation's demonstrated
vulnerability to import disruption led to creation of the Paley
Commission in 1952 with a mandate to analyze our critical materials
needs. Little action was taken, however, to act on the Commission's
recommendations. Moreover, this would be the last analysis of our
strategic and critical materials needs for two decades.
Again, in 1973, in the wake of the OPEC embargo and a renewed
interest in natural resource imports, the USGS published an overall
assessment of the nation's mineral resources. It would be another
decade before the subject was revisited.
In 1986, I had the privilege of acting as a consultant to the White
House to draft the National Critical Materials Report, the first
analysis of this vital issue in over a decade. During this period, I
also conducted classified research on the issue for the Central
Intelligence Agency. In the course of this research I was stunned to
discover how poorly structured our information systems were in this
area.
As I attempted to obtain timely reliable information to conduct my
analysis, it quickly became evident that I would have to rely on
private sources.
I should take a moment to note here that it also became evident
that the lack or data was not the result of a shortage of competent,
qualified personnel. The mineral commodity specialists I worked with at
the time were of the highest caliber, each a world class specialist in
their area of expertise. Moreover, they were dedicated to providing the
best possible analysis and information. Indeed, many expressed to me
their frustration over not being more effectively utilized.
Rather, at the heart of the problem was a fundamental lack of
understanding of the need for timely information and a head in the sand
attitude that viewed mineral commodities purely in economic terms with
no appreciation of their strategic dimension.
It was, in essence, a bookkeepers view which saw the cost of
everything and the value of nothing.
Worse, this problem has persisted to the present. Despite the fact
that we are in a shifting and volatile global threat environment, and
in a period of rapidly evolving technology that is having a significant
effect on the types and volumes of minerals and metals that have
strategic importance there is no attempt at real time data collection
and dissemination. We are in effect flying blind.
Yet, this need not be the case.
I would contrast our dismal failure to provide adequate information
resources in regard to nonfuel minerals with the information resources
we provide related to energy.
The Energy Information Administration provides exactly the type of
data we desperately need about nonfuel minerals. It routinely publishes
information on a daily, weekly, monthly and annual basis on a wide
variety of important factors affecting energy markets, production, use
and research. During the Gulf hurricanes, it provided daily updates on
energy production and transportation within that region. All of this,
mind you, was available to any citizen instantly over the Internet.
So, it can be done, and I would suggest, it must be done.
Our failure to anticipate the energy supply disruptions of the
1970s and 1980s arose in part from a fundamental lack of information.
While experts might have been aware of the evolving problem, there was
no place a citizen, reporter, or for that matter public official could
go to obtain current, accurate information. The creation of the
Department of Energy in 1977 was soon followed with the establishment
of EIA. In the nearly three decades since, EIA has created the
capability to meet the energy information needs of all sectors of
society. There is no reason why we cannot do the same in regard to
minerals.
It should also be understood that providing information is a role
that all thoughtful people, regardless of ideology, can agree is
appropriate for government. In the case of minerals, it is even more so
since such a large proportion of the nation's mineral resources are
found on federal lands. Further, the creation of such an entity need
not entail undue expense. Individuals with the requisite expertise are
already on the government's payroll, and are often underutilized. With
the advent of the Internet and personal computers, it is easy to make
publications readily available to the general public, the media and
government officials at minimal cost as well.
In the final analysis, the question is not whether we should create
such an entity, but rather why we have not already done so.
______
Ms. Drake. [Presiding.] Thank you. I am going to start with
you, Mr. Kaas. How do you think that the national mineral
policies have faired since the Bureau of Mines was shut down?
Mr. Kaas. Well, I think from some of the earlier
discussions, it is evident that people frequently take minerals
for granted, whether it is the man on the street or higher up
in the chain of command. The creation of mineral policy does
require a strong database on production, consumption of
minerals, and it also requires that you know where mineral
reserves are going to come from in the future.
It is very nice to think about what is out there we have
not discovered yet, but you really cannot produce anything from
a mineral deposit until you find it, and when you find it, you
have to make sure you have the technology available to enable
that to become utilized.
So, as we look to the future policy needs of the country,
we are going to be dependent on a strong information base on
what we are doing in terms of producing and consuming minerals
now. We are also going to need to be looking at where are the
locations around the planet where mineral deposits have been
discovered that we can produce either with current technology
or with technology that is in the laboratories today.
Ms. Drake. And, Mr. Kaas, you mentioned expanding the
responsibilities of the Mineral Commodity Information
Administration. Would you be willing to help us and provide
draft language for the committee?
Mr. Kaas. Sure, I would be glad to do that.
Ms. Drake. Thank you. And, Mr. Kanagy, if we do not
establish the Mineral Commodity Information Administration,
what do you think will happen to the Minerals Information Team
at USGS?
Mr. Kanagy. Well, I suspect they will continue to function
in some smaller way at USGS, but the data that these people
provide is critical for all of the issues that everybody has
mentioned here today.
Ms. Drake. Well, you made an interesting point about people
just do not look at these industries as necessary, and it makes
me a little concerned about making sure we convince our Members
of Congress how important this issue is, so we might be looking
to your help for that.
Mr. Kanagy. Well, here is an idea for you. When you go to
the grocery store, the FDA has got the fat content, the sodium
content, et cetera, on each of the food products that we buy in
the grocery stores. Maybe we ought to have a law where you have
to list all of the resources contents on automobiles and
clothing and all the other things that we manufacture in this
country so that people will realize what minerals go into each
of our products that we consume in our country today.
Ms. Drake. Well, Mr. Copulos, you did that with your
opening, because I do not think anyone ever thinks about the
huge amount of minerals that are used and what minerals and
mined products are needed for our national defense. I think we
need to have a copy of that from you--we do--and give that to
people as we talk about the bill and how they are supplied to
us, that they are not from the U.S. I think that is an eye-
opener. But how often do you think that the U.S. should have a
national critical materials report?
Mr. Copulos. First of all, I think it should be annual. We
had a huge fight with OMB over this because the fact is that if
anyone has got a bookkeeper's mentality, it is OMB, and at the
end, they kept trying to cut back. They wanted to classify 90
percent of it because they did not want the information on the
mineral commodities published because they wanted to sell the
stockpiles.
And in fact, it got to the point where they were sending me
around to meet with the various people, the mineral commodities
experts we did work with, and the one in Washington said, oh,
you are the psychologist, because I was going in and reassuring
them of their work. And they began to believe there was a
psychologist being sent around to help them through the
terrible battering they were getting from OMB.
So we have had an attitude toward the mineral commodity
data side for some reason that has been not just antiquated. It
has been almost hostile, and I do not know why that is, but I
know we can ill afford it.
Ms. Drake. And do you think this function of an annual
report should be in the Mineral Commodity Information
Administration? Is that the right place for it?
Mr. Copulos. I do for this reason. I think you need a
Mineral Commodity Administration so that you get unbiased
information, and you need the report to come out of somewhere
that is not subject to the political considerations that
sometimes happen. I went over for three months to draft the
report. It took 18 months to get out, and 90 percent of that
time was purely political infighting.
Ms. Drake. Well, I would like to thank all of you for your
testimony. I find it very interesting that we have had six
panelists today and you have all agreed. Could we have you back
more often? But members of the Subcommittee may have additional
questions for the witnesses, and we would like to ask you to
respond to these in writing. The hearing record will be held
open for 10 days for these responses.
So, if there is no further business before the
Subcommittee, the Chairman again thanks the members of the
Subcommittee and our witnesses, and the Subcommittee stands
adjourned.
[Whereupon, at 3:15 p.m., the Subcommittee was adjourned.]
[Additional material submitted for the record follows:]
[A letter submitted for the record by the American Concrete
Pavement Association, American Concrete Pipe Association,
Michigan Concrete Paving Association, National Concrete Masonry
Association, National Ready Mixed Concrete Association, and
Portland Cement Association follows:]
[GRAPHIC] [TIFF OMITTED] 30099.004
[A letter submitted for the record by Lee T. Billingsley,
President, American Association of Petroleum Geologists,
follows:]
[GRAPHIC] [TIFF OMITTED] 30099.005
[A letter submitted for the record by Mark G. Ellis,
President, Industrial Minerals Association--North America,
follows:]
[GRAPHIC] [TIFF OMITTED] 30099.006
[GRAPHIC] [TIFF OMITTED] 30099.007
[A statement submitted for the record by John D. Morgan,
EM, Ph.D., follows:]
Statement submitted for the record by John D. Morgan, EM, PhD
Modern industrial civilizations require adequate and continuing
supplies of basic mineral materials: foods and timber, which in turn
are dependant on mineral materials. Resource-poor Imperial Japan
recognized this truth in the 1890's, culminating in its efforts to
create the Greater East Asia Co.-Prosperity Sphere by military force.
So also did Germany in its ``Drang Nach Osten'' (Push to the East) in
the 1930's. Even Czarist Russia, with huge lands, pushed into eastern
Asia in the 1880's, to increase its supplies of essential materials.
More recently the Communist Government of China, with its 1.3 billion
people is using money and contracts to tie up long-term-supplies of
essential materials worldwide.
In 1879 the U.S. Geological Survey was created to make detailed
investigations of mineral resources, and those efforts were augmented
in 1910 by the creation of the U.S. Bureau of Mines to look more
closely at mineral requirements and supplies. World War I and II
clearly demonstrated the need for adequate Federal Government
information, plus intelligent information-backed programs to ensure
expanded supplies and adequate stockpiles. Government contracting and
controls, including priorities, allocations, and price controls were
based on good information, as were draft decisions exempting critical
workers in the mineral industry and agriculture. Supplies from
accessible foreign countries also entered into critical supply/demand
analyses, as did the requirements of friendly allied nations.
In wartime, and in periods of international uncertainty such as
today, it is critical that the U.S. Government have personnel and
organizations that are competent to handle information that is
classified as ``company proprietary'' and government ``restricted'',
``confidential'', ``secret'', ``top secret'', ``atomic energy'', etc.
During the ``Cold War'' the U.S. Bureau of Mines had a staff of
technically trained persons who were cleared to collect and utilize
such information. But information, in itself, is sometimes inadequate
without informed cross-checking efforts. Consequently, the USBM had
experts (GS14 or 15) in more than 30 mineral-producing states, where
they were in touch with state agencies and industrial facilities. The
USBM also had commodity specialists who covered specific areas
(bauxite, alumina, aluminum, lead and zinc, for example) who visited
production and utilization sites at home and abroad. USBM also had
country specialists who knew foreign languages, visited foreign
sources, and often were foreign born. It had fluent staffers in
Russian, Serbian, French, German, Japanese, Arabic, Farsi, Hindi, and
many others. Then, for example, if information on copper were needed,
the state specialist on Arizona, the country specialist in Chile, and
that commodity specialist on copper, should be in close agreement.
Merely because some computer print-outs are on white paper and with
clear printing is no certification of accuracy. Experts must know Who,
What, Why, When, Where and How.
The unit that was transferred from the USBM to the USGS in 1996 had
that capability. But in recent years, retirement, deaths, and funding
cuts have seriously depleted that reservoir of talent. The USBM's
mineral industry component of the National Defense Executive Reserve
was eliminated more than a decade ago, and the Nation's Defense
Industrial Base is rapidly shrinking. Present National Security needs
require prompt and intelligent action to restore lost capabilities.
Dr. Morgan was a Major, Combat Engineers in World War II, and from
1948 to 1995 a Senior Government Official of the Federal Government in
agencies dealing with national security matters.
______
[A letter submitted for the record by Kraig R. Naasz,
President & CEO, National Mining Association, follows:]
[GRAPHIC] [TIFF OMITTED] 30099.008
[A letter submitted for the record by Laura Skaer,
Executive Director, Northwest Mining Association, follows:]
[GRAPHIC] [TIFF OMITTED] 30099.009
[A letter submitted for the record by Shelley Stewart, Jr.,
Senior Vice President, Opertional Excellence and Chief
Procurement Officer, Tyco International (US) Inc., follows:]
[GRAPHIC] [TIFF OMITTED] 30099.001
[A letter submitted for the record by Jennifer Joy Wilson,
President & CEO, National Stone, Sand & Gravel Association,
follows:]
[GRAPHIC] [TIFF OMITTED] 30099.002
[GRAPHIC] [TIFF OMITTED] 30099.003