THE COST OF MINING % Qraw-MlBook & 7m PUBLISHERS OF BOOKS FOR^ Coal Age * Electric Railway Journal Electrical World * Engineering News-Record American Machinist * Ingenieria Internacional Engineering 8 Mining Journal * Power Chemical & Metallurgical Engineering Electrical Merchandising THE COST OF MINING A DISCUSSION OF THE PRODUCTION OF MINERALS WITH REMARKS ON THE GEOLOGIC, SOCIAL AND ECONOMIC FOUNDATIONS UPON WHICH IT RESTS BY JAMES RALPH FINLAY PAST SECRETARY AND PRESIDENT MINING AND METALLURGICAL SOCIETY OF AMERICA; MEMBER AMERICAN INSTITUTE OF MINING AND METALLURGICAL ENGINEERS; LECTURER AT HARVARD AND OTHER UNIVERSITIES ON THE ECONOMICS OF MINING, CONSULTING ENGINEER UNITED STATES BUREAU OF MINER, ETC. THIRD EDITION ENTIRELY REVISED, ENLARGED AND RESET McGRAW-HILL BOOK COMPANY, INC, NEW YORK: 239 WEST 39TH STREET LONDON: 6 & 8 BOUVERIE ST., E. C. 4 1920 /V /Jr. COPYRIGHT, 1909, 1910, 1920, BY THE MCGRAW-HILL BOOK COMPANY, INC. THK M A P 1, K PKKSS YORK PA PREFACE TO THIRD EDITION During the long and various delays that occurred while the revision of this book was taking its present form the question was entertained whether it would not be fairer to author and readers to give it a different name altogether. It will be seen that it is no longer so narrowly tech- nical as it originally was. But the question was answered in the negative. While it is true that some of the suggestions might, if properly presented, interest the public at large it seems at least as logical to believe that anything that will affect the mining public will affect the whole public. The gist of this idea is contained in a beginning at the revision made in 1917: " There are in the United States alone some two to three million men engaged in the mining and metallurgical industries. With their families and those who are engaged in supplying them with living necessities, that is to say, with the merchants, professional men, educators, etc. who are employed in mining com- munities, we may count on not less than twelve to fifteen million people who are dependent upon and therefore interested in those industries. This is twelve to fifteen per cent, of the total population. If we apply this proportion to the whole English-speaking world, as we may fairly do, we find that at least 20,000- 000 people are directly interested in mining and its cognate arts. When we con- sider that this number equals the white population of the British Empire of a century ago, it becomes evident that they make a field for literary effort larger, taking into account the growth of wealth and information, than that whole Empire could furnish at the end of the Napoleonic wars." This paragraph will illustrate the growth of the conviction that such a body must act upon public opinion, whether consciously or not, as inevitably as the forces of nature. It is therefore sufficient to ask indulgence of the mining public alone for interjecting among the obscure, sometimes trivial figures of mining operations certain suggestions of broader scope. I may quote again conveniently from the earlier paper : "It is necessary also to dwell upon the development of the human animal, intellectual, social and economic, which must take place in order to bring this industry into existence. Let us recall the obvious fact that to the Algonquin Indians who lived in Pennsylvania three centuries ago the anthracite coal fields were not worth the hide of a single deer, and to those same Algonquins the Calumet and Hecla was not as valuable as a boulder of float copper. Then there is the history of these developments. How and why did great mining dis- tricts come into the possession of those who now own them and work in them? How do these owners and workers live and what is their outlook upon the rest of the world?" 42R724 vi PREFACE TO THIRD EDITION At the risk of making a still greater hodge-podge I have ventured to insert some generalizations on geologic history and processes such as seem to explain the origin and govern the distribution of important minerals. These new suggestions have come from a list of persons and experi- ences too long to enumerate. To the members of the Mining and Metal- lurgical Society of America and of the American Institute of Mining and Metallurgical Engineers; to many members and officials of the U. S. Geological Survey, U. S. Bureau of Mines and the Pan-American Con- gress; to many managers, lawyers and financiers; and, not least, to many employes and workers in mines I offer the impression they have made upon me. Much of the statistical matter has been prepared and edited by Mr. G. A. Roush, editor of "Mineral Industry." J. R. FINLAY QUOGUE, LONG ISLAND Sept. 12, 1920. PREFACE TO FIRST EDITION THIS book is the result of experience in the mining business covering some twenty years, in the earlier of which I had to do in rapid succes- sion with such diverse operating conditions as those presented by Lake Superior iron mines, gold mining in Ecuador and Colorado, and lead mining in Idaho and Missouri. The profound differences in methods imposed by natural conditions could not fail to impress themselves on one's attention. Some six years ago a discussion started by Messrs. T. A. Rickard and W. R. Ingalls of the Engineering and Mining Journal on the "Cost of Mining" attracted considerable discussion from mining engineers throughout the world, and I contributed some articles. It was natural to continue the investigation of the subject. In 1908, at the suggestion of Mr. Ingalls, I undertook to prepare some more extended articles for the same journal with a view of rationalizing the subject to show how the natural factors inevitably impose certain costs that sound engineering must recognize, and that to attempt economies unjustified by the con- ditions is the rankest extravagance. This book is the outgrowth of those articles and to a lesser extent of some lectures given at Harvard University and a large amount of dis- cussion and correspondence. The subject is one that is inherently in- teresting to mining men and mining engineers and it seems possible that it may interest a somewhat wider field. Those who are interested in fir mcial and economic developments can hardly escape some contact with the mining business. A full treatment of the subject would be encyclopedic, but no attempt is made here to give the work that character. I have merely tried to give a certain perspective of the business in coal, iron, lead, zinc, copper, gold, and silver, concentrating my effort largely on an attempt to exhibit facts in their proper proportion. The principal source of facts is the official reports of mining companies which are not in some fields so nu- merous as could be wished, and, in fact, from some districts are not to be had at all. The best and most numerous reports are issued by copper, lead, and gold mining companies. In the coal business, reports of a certain kind are abundant and gene- ralized statistics are exceedingly abundant, but little is to be had in the way of detailed information necessary to a satisfactory cost analysis. Consequently, the chapters on coal mining are more general than those on other subjects; but while a detailed treatment of this immense busi- vii viii PREFACE TO FIRST EDITION ness would require a volume in itself, it may be remarked that coal mining is the simplest form of the industry and a sketch of its essential features does not need to be a long one. A single corporation accounts for 55 per cent, of the iron output of the United States, and at the same time its reports are far more luminous than those of any other concern in this business. Accordingly much attention is given to the results and statistical history of the United States Steel Corporation. The independent companies are either utterly secretive or give only financial statements that do not yield much to analysis. The discussion of lead mining covers the results obtained by com- panies typical of the conditions under which 80 per cent, of the American product is secured. In zinc mining information is not very satisfactory, but it is possible to give some idea of the operating conditions under which some 80 per cent, of the American product is obtained. In copper mining a great deal of detailed information is to be had showing results in a fairly satisfactory way in districts that produce nearly 90 per cent, of the North American copper. A few examples are taken from the outside world. In gold and silver, the United States is not pre-eminent and examples are taken rather freely from all parts of the world. It will be seen that the work deals largely with results; matters of an engineering or technical nature are generally left out even to the extent of ignoring such matters as the assay values of ores. This is done in order to make the conclusions base themselves on strictly practical and conservative grounds. It happens by way of coincidence that this vol- ume will serve as a kind of supplement to Mr. H. C. Hoover's work on the " Principles of Mining," which deals with the processes of valuation, organization, and administration, and the methods used in mining the more precious metals. The reader will find in Mr. Hoover's book an outline of some of the technical problems not dealt with here. I must acknowledge the assistance given by various friends in the preparation of this work. Professor H. L. Smyth of Harvard University in particular has aided with many important suggestions and is respon- sible for portions of Chapters I and II. Mr. W. R. Ingalls, editor of the Engineering and Mining Journal, has kindly allowed me to republish from the " Mineral Industry" of 1908 his important study of the cost of " Silver-Lead Smelting," which forms the whole of Chapter XVI. Mr. Raphael Welles Pumpelly has given great assistance in looking over many reports. Messrs. F. W. Bradley, T. A. Rickard, J. Parke Channing, Dr. Douglas, Courtlandt E. Palmer, H. M. Chance, George S. Rice, and many others have all contributed from time to time valuable sug- gestions and criticisms. PREFACE TO FIRST EDITION ix I cannot help feeling that, while all of the material in this book is either old or public property to the extent of being known to at least a portion of the profession, there is nevertheless something new in it in that it presents a view of the economics of mining on a grand scale and in broad outline. It does not seem possible that a mining man can fail to understand my meaning. If the facts are right the book is right. But in the great range of facts that I have tried to look into many things are more or less obscure and it is difficult to be sure that my information is au- thoritative. I shall be greatly obliged if the readers of this book will point out errors or supply information. If there is any demand for it I shall be glad to prepare a revised edition later, filling in some of the shortcomings of the present one. J. R. FlNLAY. NEW YORK, September, 1909. JI. i/III. CONTENTS CHAPTER PAGE JJx PREFACE TO THIRD EDITION v PREFACE TO FIRST EDITION vii . . *""!. THE SOURCE OF POWER 1 VALUE OF MINING PROPERTY 10 NATURE AND USE OF CAPITAL 31 i i/tV. FACTORS GOVERNING VARIATIONS OF COST 46 V. PARTIAL AND COMPLETE COSTS 62 VI. COAL 71 VII. COST OF MINING COAL 92 VIII. THE INDUSTRIAL CLEARING HOUSES AND STATISTICS OF IRON PRODUCTION 110 IK. LAKE SUPERIOR IRON OLD RANGES 123 X. COST OF MINING LAKE SUPERIOR IRON MESABI RANGE AND U. S. STEEL 140 XI. OCCURRENCE, PRODUCTION AND PROSPECTS OF COPPER ....... 171 XII. THE SOUTHWEST COPPER FIELD 189 XIII. JEROME AND THE PRE-CAMBRIAN 201 XIV. LAKE SUPERIOR COPPER MINES 221 XV. BISBEE 248 XVI. THE PORPHYRY COPPERS 271 XVII. THE NORTHWESTERN COPPER FIELD 311 XVIII. COPPER MINES IN VARIOUS DISTRICTS 328 XIX. LEAD 349 XX. SOUTHEAST MISSOURI 356 XXI. SILVER-LEAD MINING 376 XXII. THE COST OF SILVER-LEAD SMELTING 402 XXIII. ZINC STATISTICS 413 XXIV. ZINC MINING 421 XXV. GOLD STATISTICS, WARS AND PRICES 437 XXVI. OCCURRENCES AND PRODUCTION OF GOLD 448 XXVII. QUARTZ-PYRITE GOLD MINES 459 XXVIII. CRIPPLE CREEK, KALGOORLIE AND GOLDFIELD 490 XXIX. SILVER MINING AT COBALT AND GUANAJUATO 507 INDEX. . 523 XI THE COST OF MINING CHAPTER I THE SOURCE OF POWER THE ECONOMIC FUNCTION OF MINERALS MECHANICAL POWER REQUIRES ORGANIZA- TION FOR ITS UTILIZATION ILLUSTRATIONS FROM THE EXPERIENCE OF THE GREAT WAR IMPOSSIBILITY OF INDUSTRIAL NATIONS RETURNING TO THEIR FORMER CONDI- TION AND IDEAS INDUSTRIAL POWER is TRANSMUTABLE INTO MILITARY POWER ECONOMIC PREPONDERANCES IN THE ANGLO-SAXONS The Source of Power. The value of minerals comes largely from the production of mechanical power. The energy lies in coal and chemicals; the application of that energy is obtained through the use of metals. Thus practically all mining contributes to the same ultimate purpose. The usefulness of power in ministering to human needs and desires makes it the most potent form of wealth; and its utilization is the essence of that civilization which we term "modern." The traditional objects of mining enterprise that are celebrated in history and romantic literature, gold, silver and precious stones, seem to be an exception to this generalization; if so, they are merely an exception that proves the rule and an illustration of the new elements that have been brought into human life. These materials are either ornaments, a form of the wealth that may be obtained through the possession of power, or they serve, when used as money, as a kind of lubricant in the engine of production and thus after all participate in its functions. Thus mining may reasonably be described as the basis of the modern economic structure and this has long been evident to those who have given the matter attention; but it is to be doubted whether the great public in the world at large has ever given this fact and its possible consequences the attention that it really demands. The World War which has just been brought to a close has done more to arouse a public perception of the political and social implications that lie in the possession of mineral resources and the art of utilizing them than the sum total of really more important but less spectacular events that have gone before. This perception is not improbably the major development of this great political upheaval and it may have a decided influence on the mining industry for the future. The manner in which the utilization of the powers that lie in the crust of the earth affects the social and political organization of mankind is indicated by some extracts from an address on " Industrial Energy as a Military Weapon" given before the Mining and Metallurgical Society of America in 1915. Although most of the factors dwelt upon in these 1 COST OF MINING paragraphs i'e: inimely better understood now than they were when the article was written, the essential considerations will probably be brought out more vividly by quoting part of this address than by any new discussion that I might now write. "At the beginning of the war I believed that industrial energy would prove to be the decisive factor in the struggle, and that this energy might be fairly rep- resented by the use and production of coal and steel. Part of this proposition is now recognized by the public; the other part is not. It is now seen that the nations of Continental Europe that are facing Germany, namely, France, Russia, and Italy, are no match for Germany in the production of the necessary equip- ment and munitions for fighting. I argue that it is equally probable that the whole combination of the Allies, including England, is deficient in the capacity for organizing and for utilizing equipment. I am disposed to believe that the second element is more important than the first, because it requires time to de- velop. This proposition is based on the supposition that military success arises from the same kind of development as industrial success. It will take some time longer to prove this. "The idea is abroad that Germany may be conquered by the Allies if the latter will buy enough copper and other munitions. The reality is that the buying of supplies is a comparatively insignificant part of the problem. To take an in- dustrial comparison, let us suppose that the plants of the United States Steel Corporation were supplied, complete, to Russia, without the organization as it exists today. What use could Russia make of them? "I do not mean to imply that the individual Russian is necessarily inferior as a workman, or as a man, to the individual American. That is one of the difficul- ties in understanding this present situation. Each of the great nations and races of mankind is able to furnish human material that can compete on even terms with that of any other nation. But I think you will recognize quickly that it would take the Russians many years to make any adequate use of the plants of the United States Steel Corporation. It is hardly worth while to go into details. The operation of those plants, including mines, steamships, railroads, rolling mills, and factories of all kinds, requires the development of a vast amount of specialized labor; it also requires a great deal more than that, namely, a slowly developed and highly organized control. The plans and the execution of them must be tested by competition with rivals. The organization must know the fields in which the products, when made, can be sold and utilized. It would be easy to dwell on this subject a long time, but I think you will soon conclude that the plants of the United States Steel Corporation would never reach anything like the effectiveness in Russia which they have in this country, until the Russian nation is developed industrially to such an extent that it can meet such an organ- ization on even terms. In other words, other industries, all of the industries in the country, in fact, would have to be developed in a substantially equivalent manner. This certainly cannot be accomplished over night, nor during the probable continuance of any war. It is a matter that requires nothing short of the industrial organization and development of the nation. A generation, or even two generations, is a short time for such an accomplishment. "Dropping this subject for a moment, it seems to me that we should discuss fundamentals a little. THE SOURCE OF POWER 3 "One such fundamental is that our political ideas and most of our beliefs and prejudices date from the time when the steam engine was unknown. I believe that economic changes have taken place in the leading civilized nations without producing, as yet, the inevitable change in political and social ideas. We are facing facts which we do not recognize, or at least, which are not recognized by the public. We go through forms of thought and attach ourselves to certain prejudices that will not stand the analysis of modern actualities. Some of our political sentiments are like the buttons on a dress coat, which were put there originally to attach swords to, because gentlemen wore swords, and the dress coat is the coat of a gentleman; but there is no longer any actuality in the sword as a weapon, either social or military. The fact that we like to see buttons on a dress coat is a mere sentiment which does not change in the least the relative efficiency of the sword and its successor, the revolver. "What changes of a political, social, and religious nature are to take place I do not know. One thing that the world is learning beyond doubt, is that individ- ual effort, no matter how well developed the individual, is no longer a match for corporate effort. This is a lesson that the Frenchman and the Russian must be learning. We in the United States have learned it, but we hardly realize that we have learned it. "Let me try to explain what I mean: There are certain efforts that cannot be accomplished by the individual, that require a combination of people such as was not contempleted at the time when our government was established. We can see plenty of examples in the mining industry, and plenty more in the railroad business. In fact, we all know that the business of our country in general has reached a point where the large corporation is absolutely indispensable. Con- sider, for instance, the Utah Copper Company. Nothing but failure of such an undertaking could possibly have rewarded the efforts of any man or any group of men in this country 100 years, or even 20 years, ago. Look at the organizations required to conduct the railroad business of this country. The railroads all started in a more or less individualistic manner. A little railroad was built from New York to Harlem; another from Harlem to Poughkeepsie; a third from Pouhg- keepsie to Albany; a dozen pieces of railroad were constructed to form a patch- work system of travel between New York and Chicago. The progress of our industry soon made it plain that such a system was absurdly less efficient than it might be; consequently these little roads wer.e thrown into one system, and operated by one head, so that freight and passengers could be carried through with less expense and delay. "My belief is that the fundamental desire of the human race is to secure greater economy in the production of the necessities and luxuries of life. Any political system or any social idea which interferes with that economy will go to the wall, will be defeated and discarded. The demand for efficiency will finally triumph over any preconceived prejudices regarding personal and political liberty. 1 1 This statement has been a great disappointment to many persons who have written to me about it, but perhaps they have not realized fully what was meant. Let me explain my point of view by an example. Schoolcraft, writing about the mining industry of Southeast Missouri in 1819, just 100 years ago, gives statistics about the number of men employed and the amount of lead they produced. Com- paring this information with the statistics of the present day we find that in 1919 each man produces 200 pounds of lead per day against 20 in 1819; ten times as much. 4 THE COST OF MINING "We were all born while a revolution was going on in human affairs, and we shall die before that revolution ends. This revolution is a fundamental accom- plishment, such as the human race is not likely to repeat again for thousands The natural difficulties to be faced in the way of depth, water to be pumped, etc. are much greater now than they were then. The industrial changes (and their effect on social organization) that have brought about these results can hardly be illustrated better than by Schoolcraft's description of a smeltery. He gravely estimates its cost, at $40! A modem smeltery in the same district costs not less than $1,000,000. The amount of capital required to enter the lead business as an independent operator in 1819 was such that any miner now working in the mines could afford it if he could trans- port his present resources back to that period. At that time there were scores, if not hundreds, of independent operators; now, with the immensely increased output, the number of operators has been reduced to four corporations. The liberty of private enterprise has disappeared. The population of the district has no opportunity to earn a livelihood in lead mining other than to work for these concerns. What cur- tailment of liberty could be more vital than this? "If we are to consider this situation as a political and social matter we have to weigh two questions; (1) Is a return of the conditions which gave so much personal liberty in 1819 desirable? (2) Is it possible? "As to the desirability of it we may point to the fact that the gross output in 1819 out of which the lead miner could pay himself and seek return on his capital was 20 pounds of lead. Today his wages, without any capital yield, him the equivalent of 70 pounds. By surrendering his liberty to be an operator, he acquires another kind of liberty that of having more to live on; better food, better clothes, more enlighten- ment, greater freedom of travel, a wider range of experience. There is such a thing as blind worship of catchwords. The word liberty is often used as a kind of fetish and anyone who seems willing to curtail it is apt to be denounced as a malignant heretic. But we are actually surrounded by innumerable limitations of liberty and the whole process of organization, cooperation and law is one of defining and estab- lishing them. The one great liberty which may be obtained from suffering such re- straints is the escape from economic misery. Thus I doubt if the Missouri miner entertains any real desire to exchange his situation of today with that of a hundred years ago. If it came to that he would reach the practical matter of weighing the liberties he has gained against those he has lost; and, sentiments to the contrary not- withstanding, the value of those liberties is measured in plain dollars and cents, or in pounds of lead. " (2) Whatever the desirability of the old conditions, a return to them is im- possible. They do not exist. "Thus I think we may discern that in many ways the great industrial forces that affect political and social conditions act like the forces of nature itself. He who embarks his capital in a stage, coach to compete with railroads, believing that railroad corporations are an improper thing, is as sure to be hurt financially as he would be sure to be hurt physically if he stepped out of a sixth-story window believing that the law of gravity is an improper thing. It seems absurd to argue about such great forces as matters of right and wrong; he is right who understands them; he is wrong who does not understand them. I suppose we may, as an intellectual exercise, picture to ourselves a return to the economic conditions of a hundred years ago, but to picture it as something that people would consent to, seems a mere extravagance. It would involve the starvation, or at least the migration, of scores of millions of peo- ple, make the great cities of the world impossible, annihilate the conveniences that the most civilized people have grown to regard as necessities and alter profoundly the relative power and influence of nations. THE SOURCE OF POWER 5 of years. It is something that we are all familiar with, but which we do not think very much about. It is the conquest of natural energy by the human brain. "One hundred and fifty years ago, men had no resources for accomplishing their work except the muscular power of men and animals, with a little crude de- velopment of wind and water power. Now we use our hands and our brains to direct forces scores of times more energetic. The result is prodigious and it is causing a complete rearrangement of our mode of life. It is causing us to look upon nature itself in a different way, and it is altering profoundly the relations between men and between nations. "The source of this power at present is largely coal. The power of coal is developed through machines made of metals. This is not so much a chemical or material fact, as it is a human fact. The utilization of this power is made pos- sible only by the development of human organizations to match it. A locomotive is no more the machine that accomplishes the work of a railroad than a statue is a living man. You cannot use a locomotive without a railroad, and you cannot have a railroad without work for it to do; you cannot have work for it without big industries. In short, you cannot have first-class mechanical service and efficiency except in a highly developed industrial nation. The mere existence of power- driven industry on a large scale proves in itself that a country which supports it possesses a different and more efficient organization than a country which does not support it. "When I learned some years ago that it took 10 or 15 Hindoo coolies to ac- complish the work of one of our miners in this country, I could not understand it. The difference seemed preposterously great. It was all the more extraordinary because it occurred in a mine just as thoroughly equipped with machinery as the mines of this country. The reasoning I have offered you is an attempt to explain it. Industrial efficiency cannot exist in a population that neither understands nor demands it. "An adequate explanation must cover the improvements that are steadily made in our business. I know of mines in which each man is producing twice as much as he produced 10 years ago, without working any harder, and without any improvements in or additions to the machinery. I am satisfied that industrial efficiency means nothing less than national effort, produced by slow growth, by* the habit of cooperation, and by a widespread recognition of the value of coopera- tion and belief in it. "Thus we come to understand that, while it is as true as it ever was that the Frenchman or the Russian is just as good a man, as an individual, as the American or the German, the possibility is open that in an industrial sense the French nation or the Russian nation may not be one-quarter as efficient as the Americans or the Germans. "It is a fact not generally recognized that today there are only three nations in which mechanical industry is widespread, namely, the United States, the Brit- ish Empire, and Germany. 1 It is not fair, of course, to say that industry has not been developed in other countries, but these nations are so far ahead of any rivals that they are very distinctly in a class by themselves. These three nations produce about 86 per cent, of the coal of the world, and undoubtedly operate 1 This meant the Teutonic group as it was in the war. 6 THE COST OF MINING an equally large percentage of its machinery. It is a remarkable fact it may be an accident, but still it is a fact that all of these nations are predominantly Teu- tonic. It may be an accident that this race of men happened to gain possession of the more important territories that contained coal; but whether an accident or not, it makes no difference as to the importance of the developments that have come from it. It happens that one of these nations is the most highly developed military nation in the world. The other two, while developed industrially quite as highly as Germany, happen to be about the least military nations of the world. In my judgment, the unmilitariness of England and the United States is due to one cause only, namely, their' isolation, their freedom from enemies capable of easily attacking them. If these nations felt compelled to do so, they could de- velop enormous military powers; but we may also believe, from our available sources of reasoning, that the development of such military power will take a long time and can be accomplished only.by a thorough political and social organi- zation on terms of military efficiency." The statistics upon which these remarks were based are no longer of sufficient interest to be quoted in full. The essence of them was that after their occupation of Belgium and Northern France the Germans held in their control in 1915 a manufacturing energy, so far as that could be measured by the consumption of coal and steel, equal to more than six times that of all the Allies on the continent; 380,000,000 tons of coal against 45,000,000 tons for France, Russia and Italy combined; that they even held a preponderance over the entire group of Allies including Great Britain. That Empire contributed industrial energy represented by 257,000,000 tons of coal, giving the Allies immediate resources of 300, 000,000 tons. In iron production the Germans controlled plants with a capacity of some ^6,000,000 metric tons a year, while that of the Allies was apparently reduced to about 14,000,000 tons. It is probable that both groups were unable to maintain the efficiency of their plants on account of the shortage of labor; but which side suffered most in this respect is not yet clear. "Some further interesting comparisons may be made. In the consumption of fuels, the United States is easily the foremost nation, consuming an average of over 6 tons per capita. England, Belgium, and Germany seems to be about on the same level, with the consumption of approximately 4 tons per capita. It is, I believe, conceded by all observers that the industrial output per man is greater in the United States than in any other country; probably about in pro- portion to the consumption of coal, that is to say, the use of mechanical energy. A review of the consumption of fuels by the leading industrial nations shows some interesting figures. Russia is apparently in about the same condition that the United States was in 1850. Wood is still largely used as fuel for locomotives, just as it was in this country at that time. The consumption of mineral fuel is about Y ton per capita, as it was in the United States in 1850. In the progress of the United States from 1850 to 1918, we find that today we are using 25 times as much coal per capita as we wsre then; and an estimate of the wealth per capita THE SOURCE OF POWER 7 as given in the World's Almanac, shows $300 in 1850 and $1785 in 1918. If the productivity of a nation can be measured by this wealth, it would seem that the producing capacity of an American citizen is about six times that of a Russian. It seems also that, by the same comparison, France is now only as far advanced industrially as the United States was about 1875. This certainly does not mean that specialized industries are not fully as well developed in France as in this country. What it probably does mean is that the mass energy is much less. France consumes only about 1.6 tons per capita, which I think almost certainly means that most of the French people are at work on farms and small shops and not in the factories. They work more with their hands and less with machinery." The power that lay in the industrial resources thus outlined was abundantly demonstrated by the final event of the war. The vast populations of eastern Europe, meagerly developed industrially, were unable to sustain a thorough military organization. It is probable that they ruined their own armies by making those armies greater than their resources could provide for: the result was hardship, starvation, divided councils, discouragement and finally a collapse of the national morale. The Germans continued to make decided headway until they were finally overmatched by the accretion to the Allies of all the industrial powers of the western nations. Then in their turn, the less highly organized nations of the Teutonic group finally collapsed one after the other. The collapse of each nation took the form of a social and political explosion; their organizations no longer stood the strain. The industrial power of the United States stimulated to the full by the war reached proportions far greater even than I have indicated. The combined prduction of anthracite, bituminous coal and natural gas in 1918 gave the country fuel resources equal to 775,000,000 tons of coal, in all probability equal to or greater than the production of all the rest of the world put together; this in addition to putting 3,700,000 men into the army as well as sending a considerable number of persons to the war in civil capacities. The steel production of this country like- wise ran up to an average of 45,000,000 metric tons for each of the years, 1916, 1917, and 1918, again equal to that of the rest of the world. Comparisons are said to be odious; and those who draw attention to such statistics as these are sometimes accused of strutting and bragging in the interest of their own country. I wish to disclaim any motive whatever except to express the facts. That great political influences accompany these facts is, I believe, a truth which can be little affected either by arrogance or humility. Arrogance is of course a form of stu- pidity and it is within the powers of stupidity to injure or destroy the prosperity and prestige of a nation, but this is a matter that has noth- ing to do with statistics. It is a fact that the United States is today, and promises to continue indefinitely to be, the greatest producer, user and owner of power of all the nations of the earth. This power is 8 THE COST OF MINING not by any means a fanciful or hopeful appraisal of military strength, but an actual measure of dynamic force, which may be transmuted into military energy in due proportion; but that is almost a negligible factor in the value of it. If we look upon the English-speaking peoples as an almost homogene- ous group, between the parts of which national distinctions are to be of minor importance a view, by the way, that seems rational and desir- able we shall find that the economic preeminence which they enjoy at present seems guaranteed for the future by a singular combination of the factors to which I have been calling attention. The group occupies only an insignificant fraction of the area of Europe and constitutes only one-tenth of the population of that continent, but the British Isles enjoy advantages in the way of coal resources and a strategic position for trade that gives them an importance altogether out of proportion to these figures. They inhabit or control outside of Europe territories of about 18,000,000 square miles, one-third of the land surface of the world, approximately 150 times the area of the British Isles. These English- speaking people actually occupy the whole continent of Australia, nine- tenths of North America, the temperate regions of South Africa, besides exerting a political control over the major part of Africa and the southern part of Asia. Political control over areas already densely populated is perhaps an advantage in the way of promoting and maintaining trade, but it is only a shadowy and generally a temporary national asset ; certainly not to be compared in value with the actual ownership of lands. The areas so owned and settled by white English-speaking people in America, Australia, New Zealand and Africa amount to not less than three times the whole area of Europe, nearly a hundred times that of the British Isles. Moreover these lands are actually the best that are to be found, predominantly temperate in climate, fertile in soil, and apparently supplied with mineral resources even out of proportion to their area. Surely to defend and secure this property to the best and permanent use of the people who own it is a policy that seems reasonable enough and important enough. If the League of Nations now being launched does not prove workable a league of the Anglo Saxons alone would seem able to take its place and guarantee what any other league might guarantee ! It is an old saying that " Charity begins at home." We have great resources. One great advantage possessed by the Anglo Saxons is plenty of room. We are not oppressed by the terrors of over-population. Why encourage that terror and bring it nearer by hastening the growth of population by promoting immigration into these vast areas? We talk sometimes of " undesirable neighbors." Is not too great a multitude of neighbors of whatever kind essentially undesirable? At any rate let us take some measure of the mineral production and resources of this group of people. One purpose in calling attention to THE SOURCE OF POWER 9 this fact is to show that a discussion of the mining industry of the English- speaking peoples is in most cases to cover a preponderance of the world's output and will therefore indicate the preponderating conditions of the world's industry. It is particularly necessary and desirable for the pur- poses of this volume that this happens to be the case; for the disturbances of the past five years have almost eliminated statistical information from a large part of the rest of the world. The following figures show the comparative status of the English- speaking peoples in 1918, with regard to the leading mineral and metal- lurgical industries. PIG IRON (METRIC TONS) Estimated World's Production 71,166,000 tons United States 39,678,000 tons 56 per cent, British Empire 10,612,000 tons 15 per cent. Combined 50,290,000 tons 71 per cent. COPPER (METRIC TONS) Estimated World's Production 1,395,200 tons United States 848,200 tons 61 per cent. British Empire 106,400 tons 8 per cent. Combined 954,600 tons 69 per cent. COAL (METRIC TONS) Estimated World's Production 1,334,500,000 tons United States 616,556,000 tons 46 per cent. British Empire 231,855,000 tons 17 per cent. Combined 848,411,000 tons 63 per cent. GOLD (DOLLARS) Estimated World's Production $372,518,400 United States 68,493,50018 per cent. British Empire 250,824,000 67 per cent. Combined 319,317,500 85 per cent. SILVER (FINE OUNCES) Estimated World's Production 177,453,300 oz. United States 67,879,200 oz. 38 per cent. British Empire 35,625,100 oz. 20 per cent. Combined 103,504,300 oz. 58 per cent. LEAD (METRIC TONS) Estimated World's Production 1,307,000 tons. United States 499,600 tons 41 per cent. British Empire 227,900 tons 19 per cent. Combined ,,,,,,,,,, 727,500 tons 60 per cent. CHAPTER II VALUE OF MINING PROPERTY POPULAR TENDENCY TO TAKE FRAGMENTARY VIEW OF MINING INDUSTRY ITS EXTENT AND GROWTH IN THE UNITED STATES BASIS OF VALUATION OF MINES AVERAGE PRICES AND COSTS CONCURRENT FLUCTUATION OF COSTS WITH PRICES THE NORMAL PROFIT OF MINES ESTABLISHED BY COMPETITION WITH ONE ANOTHER, PROBABLY AS A PROPORTION OF THE GROSS OUTPUT TYPES OF MINING PROPER- TIES NATURE OF A MINING INVESTMENT KNOWN AND UNKNOWN ORE RESERVES DEPENDENCE OF MINES ON CONTINUED DEVELOPMENT CALCULATION OF VALUES OF MINES FROM KNOWN FACTORS. In this volume I propose to discuss the business of mining on broad lines. Most people who connect themselves with this most important industry are interested only in certain sections of it, even to a point of almost forgetting that there is a mining business outside of their own particular field. People who have been engaged, for instance, in gold mining are apt to think of coal and iron mining as a different business. We find people talking about mining stocks in an unjustifiably restricted sense. A certain group will think of them as referring to shares in highly speculative precious metal enterprises, and will not even consider as coming within their range such really stable and valuable securities as those of the Homestake, Treadwell, or of the many great gold-mining enterprises controlled by British capital. The public does not know that the class of speculative gold and silver mines which depend on the dis- covery of an occasional bonanza, which is very likely to be exploited much more vociferously in the newspapers and on certain stock exchanges than its value warrants, forms only an insignificant fraction of the mining business. Such properties really depend more on psychology than on values. It is instinctive with a certain fraction of the human race to be enormously attracted by the glitter of gold. Another section of the mining public is that which devotes itself to speculation in copper shares, ignoring on the one hand, as too speculative, ventures in gold, silver, or lead, and on the other hand, as too slow, ventures in coal, iron, or building material. We have a very much larger group of people interested in coal and iron, who look upon their business as being more allied to manufacturing and devoid of the specula- tive element that is supposed to enter so largely into the mining business. Extent and Growth of Mining Business. As a matter of fact the real mining business of the United States or of the world at large is too vast to be readily comprehended by any single person. The technical part of copper mining or of oil production is in itself a sufficient study 10 VALUE OF MINING PROPERTY 11 for any man who wishes to devote himself to it; but from the standpoint of the investing public not directly concerned with the management of properties there is no necessity for dwelling in much detail on the separate sections of the mining business. Ultimately there is no essential distinc- tion between mining brick clay and mining diamonds. They are equally natural products; they must be looked for and handled on pretty much the same principles. It is probably a fact that brick clay is just as profit- able and just as valuable as the rock which contains the almost infinites- imal proportion of diamonds which give it value. Products 1898 Quantity Value Metallic Iron, pig, long tons Silver, troy ounces Gold, troy ounces Copper, sales value, pounds Lsad (refined), sales value, short tons 11,773,934 54,438,000 3,118,398 526,512,987 222,000 115,399 31,092 5,200,000 3,238 11,145 $116,557,000 32,118,400 65,463,000 61,865,276 16,650,000 10,385,910 1,188,627 1,716,000 532,101 3,956 Zinc, sales value, short tons Quicksilver (value at San Francisco) flasks (75 Ib. net) . . Aluminum, pounds Antimony, short tons Nickel, value at New York, pounds Tungsten ore (60 per cent, concentrates) short tons. . . . Platinum and allied metals, troy ounces Miscellaneous ..... 225 1,913 Total value of metallic products p , . Non-metallic (spot values) Bituminous coal (o), short tons 166,593,623 47,663,076 305,482,183 132,608,713 75,414,537 15,296,813 44,193,359 Pennsylvania anthracite, long tons Natural gas and natural-gas gasoline Petroleum, barrels Total fuels Structural materials Abrasive materials Chemical materials Pigments . . 55,364,233 267,513,422 123,592,445 1,098,784 12,387,719 2,962,055 10,236,246 Miscellaneous Total value of non-metallic mineral products Total value of metallic products 417,790,671 305,482,183 1,000,000 Estimated value of mineral products unspecified Grand total ... . $724,272,854 (a) Includes a small amount of peat in 1908 and 1918. 12 THE COST OF MINING It may be a matter of surprise to many business men to learn that in 1918 the total mineral production of the United States in a crude form at the mines or metallurgical works was $5,526,162,000; that the total num- ber of men employed in this business must be approximately 2,500,000; that of this total output the value of gold and of silver are each less than \Y per cent.; copper less than 9 per cent.; while pig iron accounts for 21 per cent.; coal, 33 per cent.; natural gas and petroleum over 5 per cent, lead, zinc, and ferro-alloys are each considerably in excess over gold ; and structural materials such as clay, cement, lime, and stone equal the value of copper. The contemplation of these figures will be a great help to one's sense of proportion in the mining business. I accordingly present the following tables of mineral production from the reports of the U. S. Geological Survey: 1 908 19 18 Quantity Value Quantity Value 15,936,018 52,440,800 4,574,340 . 942,570,721 325,595 190,749 19,752 11,152,000 2,246 $254,321,000 28,050,600 94,560,000 124,419,335 27,444,715 17,930,406 872,446 2,434,600 359,360 38,981,308 67,879,206 3,313,373 1,908,533,595 558,256 492,405 32,883 5,183 882,000 $1,296,193,508 67,879,206 68,493,500 471,408,000 79,561,350 89,618,000 3,863,752 41,159,000 1,306,116 401,000 671 750 229,955 14,240 467,081 5,041 38,831(6) 6,802,000 4,023,757 22,359,989 550,744,388 2,153,139,000 332,573,944 74,347,102 374,268,268 158,178,849 54,640,374 585,990,261 88,237,575 1,466,047,243 336,480,347 230,840,000 179,572,479 129,706,258 350,131,000 690,190,000 716,793,749 2,723,557,690 261,757,143 442 839 601 1,074,039 2,734,692 31,925,866 110,065,326 7,603,269 28 044 337 25,646,516 59,081,022 1,044,800,582 550,744,388 3,366,322,668 2,253,139,000 250,000 6 700 000 $1,595,794,970 $5,526,161,668 (6) Figures for 1917; 1918 not available. VALUE OF MINING PROPERTY PRICES OF SILVER, COPPER, LEAD, AND ZINC, 1850-1918 13 Year Silver," fine oz. Copper, 6 pound Lead,-' pound Zinc,'' pound Year Silver,' fine oz. Copper, 6 pound Lead,' pound Zinc,<* pound 1850 $1.32 $0.22 $0.05 1885 $1.07 $0.108 $0.040 $0.043 1851 1.34 0.166 0.05 1886 0.98 0.111 0.046 0.044 1852 1.33 0.22 0.05 ! 1887 0.99 0.138 0.045 0.046 1853 1.35 0.22 0.06 $0.055 1888 0.94 0.168 0.044 0.049 1854 1.35 0.22 0.06 1889 0.94 0.135 0.039 0.05 1855 1.34 0.27 0.07 1890 1.05 0.156 0.045 0.055 1856 1.34 0.27 0.066 1891 0.99 0.128 0.043 0.05 1857 1.35 0.25 0.06 1892 0.87 0.116 0.041 0.046 1858 1.34 0.23 0.06 1893 0.78 0.108 0.037 0.04 1859 1.36 0.22 0.055 1894 0.63 0.095 0.033 0.035 1860 1.35 0.23 0.056 1895 0.65 0.107 0.032 0.036 1861 1.33 0.22 0.05 1896 0.68 0.108 0.03 0.039 1862 1.35 0.22 0.06 1897 0.60 0.12 0.036 0.041 1863 1.345 0.34 0.06 1898 0.59 0.124 0.038 0.046 1864 1.345 0.47 0.07 0.139 1899 0.60 0.171 0.045 0.058 1865 1.337 0.392 0.066 1900 0.62 0.166 0.044 0.044 1866 1.339 0.342 0.07 1901 0.60 0.167 0.043 0.041 1867 1.33 0.254 0.065 1902 0.53 0.122 0.041 0.048 1868 .326 0.23 0.065 1903 0.54 0.137 0.442 0.054 1869 .325 0.242 0.06 1904 0.58 0.128 0.043 0.051 1870 .328 0.212 0.06 1905 0.61 0.156 0.047 0.059 1871 .325 0.241 0.06 1906 0.68 0.193 0.057 0.061 1872 .322 0.356 0.064 1907 0.66 0.20 0.053 0.059 1873 .297 0.280 0.06 1908 0.53 0.132 0.042 0.047 1874 .278 0.220 0.06 1909 0.52 0.13 0.043 0.054 1875 .24 0.227 0.058 0.07 1910 0.54 0.127 0.044 0.054 1876 .16 0.21 0.061 0.072 1911 0.53 0.125 0.045 0.057 1877 .20 0.19 0.550 0.06 1912 0.615 0.165 0.045 0.069 1878 .15 0.166 0.036 0.049 1913 0.604 0.155 0.044 0.056 1879 .12 0.186 0.041 0.052 1914 0.553 0.133 0.039 0.051 1880 .15 0.214 0.05 0.065 1915 0.507 0.175 0.047 0.124 1881 .13 0.182 0.048 0.052 1916 0.659 0.246 0.069 0.134 1882 .14 0.191 0.049 0.053 1917 0.824 0.273 0.086 0.102 1883 .11 0.165 0.043 0.045 1918 1.00 0.247 0.071 0.091 1884 .11 0.13 0.037 0.044 a Report of Director of the Mint, pp. 212-213, 1914. Equivalent of fine ounce based on average price and average rate of exchange. For 1916 and 1917 dealers' buying price, New York. For 1918 average price supplied by Bureau of the Mint. b Weed, W. H., Copper handbook, vol. 11, pp. 1339, 1343, for years 1850-1903. By computation from data for years 1850-1860, p. 1339. Survey computations for electrolytic copper since 1904. For 1916, 1917, and 1918, sales price all marketable grades. c New York price, Ingalls, W. R., Lead and zinc in the United States, p. 203, 1908. U. S. Geological Survey since 1904. For 1916, outside spot quotations, New York. For 1917 and 1918 average sales price, all grades. d New York price, 1875-1904, Ingalls, W. R., Lead and zinc in the United States, p. 342, 1908. St. Louis price, U. S. Geological Survey, since 1904. The'zinc*price for 1915, 1916, 1917 and 1918 is average sales price of zinc, all grades. Oral commu- nication from C. E. Siebenthal for 1853 and 1864. 14 THE COST OF MINING TOTAL VALUE OF MINEKAL PRODUCTS OF THE UNITED STATES FROM 1880 TO 1918. Unspecified Year Metallic Nonmetallic (metallic and Total nonmetalic) 1880 $187,880,880 $173,581,917 $6,000,000 $367,462,797 1881 189,413,459 207,207,019 6,500,000 403,120,478 1882 215,820,070 230,785,547 6,500,000 453,105,617 1883 197,881,610 243,679,889 6,500,000 448,061,499 1884 180,284,208 221,755,346 5,000,000 407,039,554 1885 172,218,218 242,332,845 5,000,000 419,551,063 1886 204,399,872 250,985,090 800,000 456,184,962 1887 240,791,068 294,041,980 800,000 535,633,048 1888 242,010,000 310,888,983 900,000 553,798,983 1889 250,324,369 291,001,413 1,000,000 542,325,782 1890 303,440,430 310,988,907 1,000,000 615,429,337 1891 280,484,844 319,363,338 1,000,000 600,848,182 1892 283,715,295 337,516,444 1,000,000 622,231,739 1893 223,153,770 321,339,395 1,000,000 545,493,165 1894 186,835,353 362,409,394 1,000,000 550,244,747 1895 248,033,039 393,658,083 1,000,000 642,691,122 1896 252,075,130 387,965,870 1,000,000 641,041,000 1897 269,934,178 380,677,600 1,000,000 651,611,778 1898 308,247,446 417,794,018 1,000,000 727,041,464 1899 483,520,531 525,571,880 1,000,000 1,010,092,411 1900 513,731,959 594,194,796 1,000,000 1,108,926,755 1901 493,313,578 660,764,256 1,000,000 1,155,077,834 1902 604,517,044 722,433,728 1,000,000 1,327,950,772 1903 588,753,010 905,628,365 1,000,000 1,495,381,375 1904 501,114,224 859,074,529 400,000 1,360,588,753 1905 702,584,608 921,181,524 400,000 1,624,166,132 1906 886,179,981 1,016,390,015 200,000 1,902,769,996 1907 904,093,201 1,165,748,197 100,000 2,069,941,398 1908 550,744,388 1,043,702,454 250,000 1,594,696,842 1909 754,940,809 1,131,515,921 300,000 1,886,756,730 1910 749,876,234 1,241,039,986 300,000 1,991,216,220 1911 680,888,929 1,245,676,783 250,000 1,926,815,712 1912 866,381,073 1,378,310,236 500,000 2,245,191,309 1913 883,222,012 1,557,976,159 420,000 2,441,618,171 1914 691,081,734 1,426,754,508 470,000 2,118,306,242 1915 991,729,648 1,398,565,121 7,450,000 2,397,744,769 1916 1,620,508,000 1,878,464,000 15,000,000 3,513,972,000 1917 2,086,233,000 2,915,326,000 5,700,000 5,007,259,000 1918 2,153,139,000 3,366,323,000 6,700,000 5,526,162,000 Grand total. . 22,143,496,000 31,652,615,000 91,440,000 53,887,551,000 VALUE OF MINING PROPERTY 15 It is to be understood, of course, that market values are not received by producers for metals in ore and intermediate products, nor always for metals in marketable form; that payment is made in accordance with contracts for treatment or sale; and that, therefore, average daily quota- tions do not necessarily agree with average prices received. I have not been able to cover the whole field of the mining business, but I shall endeavor to present some idea of the business as applied to coal, iron, gold, copper, silver, lead, and zinc. These materials amount to over 75 per cent, of the total mineral output and it is fair to believe that the principles governing the exploitation of this much will apply also to the remainder. The above tables should not be dsmissed without some further com- ment. They emphasize not only the importance of the mining business, but also its increasing importance. The mineral output per capita in the United States in 1880, which was a boom year, was less than $7.50, while in 1918 it had risen to $50. There is not the slightest indication that the increase in the use of minerals has anywhere nearly reached its limits. On the contrary, the development is in full career and is likely to continue for many decades. So long as the United States has two thousand billion tons of accessible coal within its borders and vast tracts of irrigable and swamp lands still undeveloped and a rapidly increasing population daily becoming more accustomed to increas- ing standards of efficiency and an increasing scale of comfort, we may look forward to great increases of business. There is no other field in which activity promises to be more widely extended than in mining which fur- nishes the basis for most of the characteristic manufactures of modern civilization. Valuation of Established Mining Concerns. It is in this particular field also that the process of consolidation of unit enterprises into larger, more stable, and more effective groups is most noticeable. It is in- evitable that this process will mean an extension of ownership among a larger number of holders, concurrent with the concentration of man- agement in proportionately fewer but more effective hands. The great enterprises of the present are usually far beyond the resources of any individul capitalist. Shares of most of our great corporations are divided among many thousand people. The expansion of this kind of ownership is as inevitable as the expansion of business itself. I regard it, therefore, as an important function of the mining engineer and mining investor of the immediate future to study and fix the valuation of industrial shares, based partly or wholly on mining enterprises, as well as of single min- ing properties. My purpose is to explain hqw the valuation of mining properties depends on some cardinal principles that are easily understood in general terms, but may easily be obscured in concrete cases. These principles of course apply not to speculation but to serious 16 THE COST OF MINING investment. The basic factors are : first, average market prices ; secondly, average costs; thirdly, the life of the mine. While each of these factors is so easily understood as to be practically axiomatic their application always involves questions that are not always easy to answer. Average Prices. The average price of any article for a period of years in the past is usually very easy to determine, but we are immediately confronted with the fact that prices determined with accuracy for certain periods of years do not agree with equally well determined prices of other periods of years. For example, the price of copper for the last sixty years has averaged 16.33 cents per pound. For the last twenty years it has averaged 16.89 cents per pound while for the last ten years it has averaged 17.96 cents per pound. Now since the question is not what prices have been in the past, but what they are likely to be in the future, it is evident that we must select from these various averages the one that seems most likely to conform with the probable conditions ahead of us. Such a selection involves the consideration of a great variety of subjects. A thing that throws most light on this problem is the course of prices themselves. If these prices are plotted in a curve for a long period of years it will be found that there have been a series of high- price periods followed by another series of low-price periods. It may and will make a good deal of difference with our prediction of the future whether the crest of each high wave is higher than that of the one pre- ceding it, and the low wave not quite so low as the one that preceded it. If we find such a state of affairs, we are probably justified in concluding that the average price of such a commodity is rising. One will be influenced in like manner by the demand for a given article in comparison with other articles. If we should find, for instance, that the amount of lead used in 1890 was equal to the amount of copper used, while in 1900 only one-half as much was used, and in 1910 only one-quarter as much, it would seem to be well worth while to look into the reasons for such changes. These reasons might be complex and obscure. It might be that they would argue either for higher or for lower prices for either of the articles in question. If the consumption of lead were proportionately diminished, it might be explained by a deficient supply which would argue for higher prices, or it might be due to a substitution of other materials for the uses to which lead had been put; which would argue for lower prices. It is well to point out that these are precisely questions that people engaged in trade are constantly con- sidering. But for the man who is looking for general tendencies and not for the conditions of the moment the ideas of such people are too much fixed on near considerations. Their eyes are apt to focus not on the developments of a decade, but on those of a week or month. It is against the judging of great and stable securities on these momentary considera- tions that it is most necessary to protest. VALUE OF MINING PROPERTY 17 Average Costs. The determination of average costs is the principal matter discussed in this volume. It is necessary to introduce here a consideration that is easily overlooked, namely, that if prices vary, costs vary also, but not to the same extent. The value of securities is too often affected by a hasty conclusion on the part of the public that a rise in prices will go wholly to profits, or that a drop in prices will be taken wholly out of profits. As an illustration of this fallacy I reproduce here an article published in the beginning of 1908 in the Engineering and Mining Journal on the Vanishing Point of Profits: Concurrent Fluctuation of Costs and Prices. "The Federal Mining and Smelting Company's report for 1907 shows a net profit of $2,232,249 after taking out a 'development account' of $300,000. This came from 130,373 tons of con-- centrates containing 3,689,298 oz. of silver (worth 68 cents per ounce, or $2,508- 722.64) and 59,746 tons of lead (worth $116 per ton, or $6,930,536), the total gross value being $9,439,258.64). On this output the profits amount to 23.6 per cent, and the costs must therefore be 76.4 per cent., giving an apparent cost for lead of 4.43 cents per pound and for silver of 51.95 per ounce. "At first thought one is apt to assume that with costs the same the company would receive no profit unless the prices were above 4.43 cents for lead and 51.95 cents for silver. How false such an assumption would be appears from the following: "The Cceur d'Alene mining companies, of which this is one, do not smelt their own concentrates but sell them to smelting companies under contracts somewhat as follows: The smelter pays for 90 per cent, of the lead at 90 per cent, of the New York price, or 81 per cent, of the full quantity and price when lead sells at 4.10 cents per pound or under. When the price rises above 4.10 cents per pound the smelter pays 81 per cent, and one-half the additional price. Thus if lead sells at 4.50 per pound the smelter pays 81 per cent, of 4.10 plus one-half of 0.40 = 3.521. The smelter pays for 95 per cent, of the full value of the silver. A freight and treatment charge of $16 a ton is deducted from the value of aver- age concentrates. Applying this rule to the output for 1907 we find that the cost of producing concentrates was $23.39 a ton, thus: Selling price Contract price Lead 5.80 4.171 Silver 68.00 64.60 916.54 Ib. lead at 4.171 cents $38.23 28 . 298 oz. silver at 64.60 cents . . 18 . 28 Total value per ton 56 . 51 Freight and treatment charge 16 . 00 $40.51 130,373 tons at $40.51 $5,281,410.23 Profits 2,232,249.00 Total cost of production 3,049,161 .23 $3,049,161.23 = $23.39 cost per ton produced 130,373 18 THE COST OF MINING "Now let us see what would happen To the Federal Mining and Smelting Company were the prices reduced to the point where profits apparently vanish according to 1907 experience. The concentrates contained: lead, 45.827 per cent., 916.54 lb., and silver, 28.298 oz. per ton. The value is figured as follows: Selling price Contract price Lead 4.41 3.426 Silver 51.95 49.353 916.54 lb. lead at 3.426 cents $31 .40 28.298 oz. silver at 49.353 cents 13. 97 Total value $45.37 On this our costs are : Freight and treatment charge $16. 00 Mining and milling 23 . 39 $39.39 " We have a profit remaining of $5.98 per ton. This on 130,373 tons would be $779,630.54 or 34.9 per cent, of the profit at 1907 prices. On this basis we may figure the real vanishing point for lead as follows: "Let the silver price remain stationary and we shall have in our concentrates silver worth $13.97. Our cost is $39.39; therefore, 916.54 lb. of lead must be worth $25.42 or 2.773 cents per pound. But as this is only 81 per cent, of the selling price the latter will figure 3.421 cents. It would seem, therefore, that we have reached the vanishing point of profits as far as the Federal Mining and Smelting Company is concerned with lead at 3.421 cents and silver at 51.95 cents at New York. "But this deduction may also be wrong, for the company has a chance to select its ores and produce a higher grade product. Suppose it produces from its more favorble mines only 65,000 tons of concentrates instead of 130,373 tons, and that the selected concentrates carry 56 per cent, lead and 38 oz. silver. Sup- pose this ore cost 10 per cent, more for mining and milling and 12.5 per cent, more for freight and treatment and we have a cost of Mining and milling $25 . 75 Freight and treatment 18 . 00 43 . 75 'But the ore will be worth as follows: Lead, 1120 pounds at 2.773 cents $31.06 Silver, 38 ounces at 49.353 cents ... 18 . 75 $49.81 "Thus we still have a profit of $6.08 per ton or $395,200, and in addition the company is keeping in its mines a very large amount of ore that may be available at better prices. With the above grade of concentrates, supposing that silver remains the same, the vanishing point of profit on lead will be reached at 2.230 cents by contract or 2.753 cents at New York. "Even yet we have not reached the limit of the company's resources. It is VALUE OF MINING PROPERTY 19 safe to say that if lead had to be sold a^8 cents per pound, supplies to the mines would be cheaper and wages could be reduced." General Principles of Relation of Cost to Price. A simpler explana- tion of the point explained here may be taken from the following con- siderations: A normal price for copper may be assumed to be 15 cents a pound. Let us suppose that a company under ordinary conditions can produce copper for 10 cents a pound, making, therefore, a normal profit of 5 cents. Let us suppose that copper goes up to 20 cents a pound and analyze roughly the conditions which would take place under such a rise of price and the effect of those conditions on the cost of production. Such a considerable rise of price could only be due to a deficiency in the supply. Apart from the cutting off of important sources of supply by war or other calamity, generally this deficiency must be caused either by a shortage of ore or by a_shortage of labor or by both. In the case of an individual mine a shortage in the supply of ore would naturally mean either impending exhaustion or an insufficient amount of develop- ment. In an ordinary mine the volume of copper could be increased by utilizing some low-grade ores which would not ordinarily be worth working. Under the stimulation of a higher price the management would naturally utilize these low-grade ores which it could not work at 10 cents or even at 15 cents copper. It follows as a natural and almost inevitable result that each mine would, at 20 cents copper, undertake the working of a proportion of lower grade stuff at very much increased cost. But the mere undertaking of increased production implies an increased use of labor. Both the efficiency and the supply of labor are variables. The efficiency generally depends on the supply. Where an enterprise is well established and wages are high the number of miners is apt to exceed by a certain percentage the demand. In other words, ther is always a number of men looking for a job. The existence of a crowd of unemployed men always acts as a spur to the exertion of those who are fortunate enough to have jobs. The sudden expansion of the business will take away the surplus of labor. The men who come out of the shafts at night no longer see their employment threatened by competition. They accordingly take things easier and the immediate result is a lowering of efficiency. This means an increase in cost. Sometimes it means a very great increase of cost. If the enterprise is not paying a rate of wages sufficient to cause an over-supply of labor under normal conditions, then any attempt to increase the scale of operations will be immediately thwarted by lack of men to do the work. If the company finds it necessary under such conditions to increase its operations it must first secure an increased supply of labor. The usual way out of such a difficulty is to raise the wages. 20 THE COST OF MINING Furthermore, if copper is scarce and in great demand it is usually a corollary that other products are scarce and in great demand. Very likely the railroads will be congested with freight; manufacturers of machinery overcrowded with orders. These are all factors that increase cost. A mining company wishing to get out a large output of 20-cent copper, when it usually gets only 15 cents, finds itself under a drain of heavy expense, bidding up prices of labor and supplies of all kinds in order to accomplish its purpose. In extreme cases it is quite probable that the cost is so much increased by these factors as to absorb the whole advantage of the increased price. That a certain proportion will be absorbed may be considered inevitable. The phenomenon of such increases of cost through such conditions of trade as have been described is familiar to any businessman who has lived through one or two panics. When you see in the newspapers or in reports of industrial concerns complaints of a shortage of labor and the inefficiency of labor you may prepare for a panic. It is a corollary from the same considerations that in periods of depression costs will be reduced. Let us suppose that our copper com- pany which has been used to 15-cent copper finds itself unable to sell for more than 11 cents. This must mean that the demand for copper has diminished. It is no longer necessary to produce so much. There is no longer the necessity for active development. Copper that is needed can be produced from selected ores. Since fewer men will be needed^the work will be done by selected men who will work under a greatly increased stimulus of competition. Wages may be reduced. The cumulative effects of such conditions may mean that the company which has pro- duced copper normally at 10 cents may produce it for a period at 8 cents ^ or even less and of course find a considerable margin of profit. M c The Normal Profit of Mines. The recent war brought about such a disturbance of the commercial conditions which we were accustomed to consider as normal that doubts have arisen and still exist as to how soon, if ever, there will be a return to the former basis. That basis was not, of course, uniform or stable but represented the average of demand, production and prices which ebbed and flowed under the impulse of such industrial excitements and reactions as have just been enumerated like irregular and unpredictable, but recurrent, tides. There has always been the same difficulty in perceiving the average price of a metal as there is in perceiving the exact level of the sea: observers concern them- selves not so much with the level of any particular moment as with a record of the fluctuations from which they estimate an average as a mathematical conception. But a World War carries with it the possi- bility of being a human earthquake which may change the basis of com- mercial calculations just as a natural earthquake, which of course, is merely the expression of internal stresses in the earth's crust, may make VALUE OF MINING PROPERTY 21 a change in the level of the sea. We have had with this human earth- quake a tidal wave of high prices for labor and commodities. Is it merely a tidal wave which will flow back in its entirety, carrying the price level temporarily by sheer momentum down below normal? or is it a permanent advance? We know that prices will fall below the war peaks, for in most com- modities they have already done so; but a recession does not necessarily mean a return to the former average. The prices are never stationary; they are always rising or falling. The question is whether in the post- war period they are likely to rise and fall above and below a different level than before. There are apparently good reasons for expecting that the general level will be higher, at least for a considerable period. 1. Prices of commodities have some relation to the rate of wages. It is true that in all industrial countries there has been a steady increase in the output per man which justifies the raising of wages; but the effect of a war is to raise the wages without increasing the productivity, in fact actually decreasing it. There is a passive resistance on the part of employees to a reduction of wages and to a certain extent this resistance may not be overcome in the process of readjustment : they may succeed in getting more dollars but have the same amount of commodities as before, that is, wages will only seem to be higher and commodities will sell at higher prices. 2. The enormous national debts may have a considerable effect in holding up prices. Taxes are bound to remain greatly increased and wherever possible people will add the amount of taxes to the price of commodities. Indeed this is inevitable; for on the theory that prices are some function of the cost, that is, when costs increase prices increase, it is self-evident that increased taxes mean increased costs and higher prices. But as a practical matter the price level is probably less important to the producers than we are accustomed to imagine. The products of mines are staples, indispensable to the life of civilization. There is a constant demand for them. Some mines can produce more cheaply than others. The cheap producers are profitable; the higher cost pro- ducers are only profitable during temporary waves of sharp demand Following out this line of reasoning it is easy to see that the average profit of a mine is a measure of its advantage compared to other mines; in other words it is determined by competition with other mines. It will be found, for instance, that a given property is able to pay one quarter of its gross output in dividends. This simply means that three quarters of its output is consumed in costs, of one form or another, and that the remaining quarter goes to the stockholders. This proportion varies from year to year, but in the long run an average is established and maintained. It seems logical to believe that this proportion will remain 22 THE COST OF MINING as fixed as ever, whatever the level of prices. Thus we may believe that a copper mine which will pay 3 cents a pound if the selling price of the metal averages 12 cents will be able to pay 6 cents a pound if the metal is to average 24 cents. I am disposed to accept this proposition as a sort of general principle. Perhaps it is an important thing to bear in mind during the uncertainties attending the readjustment and reconstruction that must follow the war. There is, of course, some danger in confusing the changes in the condition of individual mines with the changes in industrial conditions. If this proposition is true it involves the following consequences: (1) That changes in price levels which affect all commodities alike are not of fundamental importance to producers, for it is nothing but a change in the value of a dollar. If wages are doubled, costs will be doubled, prices will be doubled and each producer will have the same amount of goods as before. (2) But a rise of prices is unfavorable to all forms of fixed income and a lowering of prices is favorable to fixed income. Thus if prices are to be double those of the pre-war period the general effect will be to repudiate, or cancel, half the bonds and mortgages of the world, including all national debts, except of course those that were floated during the period of inflation. The nominal value of the older debts, will remain the same of course, the real value will be reduced one half. (3) In the case of staples, including mines, mining dividends and mining stocks, the real value will remain the same, but the nominal value will be doubled. Thus it is reasonable to conclude that the question of a higher or lower level of prices for the future has a distinct bearing on allocating the cost of the war, and that the influences that control it wear a rather important aspect. In view of the uncertainty which obtains just now as to the effect of these influences (in reality merely an uncertainty as to the future pur- chasing power of the dollar) it seems logical to give considerable attention to the cost of commodities measured in the commodities themselves. This it seems to me is likely to remain nearly uniform so long as the natural factors remain constant. The output per man from a given de- posit will surely return to the average established by competition before the war and both costs and prices will return to about the same relation to the rate of wages. All this brings us to the conclusion that the results obtained up to the end of 1915 are much more valuable as illustrations of permanent influences than those of the three following years, and in the discussions which are to follow the records from which important con- clusions are drawn usually end with the year 1915; those of the following years being discussed mainly to illustrate the nature and degree of the interruption of normal conditions. The practical way to draw valid conclusions as to the value of mines is therefore to figure out the per- VALUE OF MINING PROPERTY 23 centage of the gross value that could be paid in dividends under the pre-war conditions, and assume that the same percentage could be paid under any level of prices which may become permanent. Reduction of Costs Per Ton not a Sign of Prosperity. Also we should not fail to note another general tendency in every important mining enterprise, and that is the tendency for costs to become reduced as timeli goes on. In part this tendency is due to general improvements in mach- inery and methods, new inventions, better transportation facilities, etc. which the individual enterprise shares with the industry at large. But the larger part comes from the settling down of the enterprise itself to a steady gait, to its better organization, to the better results secured from labor, and usually to a larger scale of operation whereby the unit cost of production is reduced by increasing the number of tons by which the fixed items on the cost sheet are divided. It is furthermore to be noted that a diminished cost per ton due to these causes hardly ever results in an increased profit per ton when the price of the product remains con- stant or even when it increases. Many reasons bring about this result, but the most important undoubtedly is the equally general tendency to a reduction with time in the metallic content of the ton of ore. This in many cases comes from an actual impoverishment with depth, which forces the adoption of better methods, resulting in lower costs through the inexorable necessity of diminishing returns. The Calumet & Hecla is a conspicuous example of the achievement of lower costs under the necessity imposed by a fall of one-half in the yield of its ore. But the enlarged scale of operation itself works in the same direction even more effectively. The mill or reduction works is nearly always overbuilt for the ore developed. To get a low cost per ton is must be operated to its capacity. This puts a strain on the mine, with the result that in order to keep up the tonnage certain stopes are worked which yield rock from which only a small profit or none at all is realized. Further- more, in many mines with ores of several grades the lowering of costs automatically, as it were, enlarges the available tonnage that may be handled with some profit, the effect being precisely the same as an in- crease in the price of the product. This result is shown very clearly by several of the newer Lake Superior copper mines, where an en- largement of the mill and of operations generally has resulted not only in a diminished cost per ton, but also in a diminished yield per ton. It is also conspicuously shown by most of the gold mines on the Rand. These considerations may be summed up in a few words. A di- minished metal content in the ton of ore makes it necessary to reduce costs, and a reduced cost per ton, which always comes with time and enlarged operations, permits the handling at a profit of lower and lower ' grade ore. Therefore, quite independently of the course of prices, we have a tendency for cost and metallic content per ton to fall together, 24 THE COST OF MINING and the net result of this tendency almost invariably is a diminished profit per ton. From these considerations it will appear that there is no great danger in calculating on average costs bearing a certain proportion to average prices. I feel like insisting that the only rational way of calculating mining profits is to consider both with the greatest possible care. In this connection I wish to point out that in calculating costs great attention must be given to capital charges as well as to operating charges. Undue attention to details of cost and too much attention to statements covering single months or years are apt to befog one's vision as to the real proportion of capital expenses. This is an error into which I have been particularly careful not to fall. In the discussion of costs to be presented in the following chapters I have given great attention to the problem of entering in capital or construction costs in due and fair proportions. It seems worth while to state at the outset that in the metal mines of the United States the total cost for the life of a mine is apt to exceed the operating charges from 20 per cent, to 40 per cent. Nature of Mining Investments. Mining companies may be divided into: I. Those which own a single mine confined to a single orebody or a definite tract. II. Those that own various mines each with its individual capabilities for expansion. III. Those that combine mining with other business such as transpor- tation, smelting, or manufacturing. It should be plain that these variations afford a great range of con- siderations from simple to complex, and that there is room for the exercise of much talent and experience in the -appraisal of the earning power of a property or of a company. In the case of a circumscribed property it is often possible to fix a valuation from purely physical considerations; but in the case of corporations doing a general mining business there are brought into prominence the technical and financial ability of the manage- ment and the financial state of the corporation. By the last considera- tion we mean whether it is in debt or not and whether its indebtedness can easily be disposed of, or whether the debts will drown the earning power of the property rendering the equity of it only nominal value. Now in the case of mining property of all kinds there is one salient fact that should never be forgotten for a moment, namely, that it is a wasting asset which is always in process of distribution. This is true whether we are to consider only a single producing unit or a vast aggregate of such units. A mine has been likened to a bank account. The analogy with an account in a going bank is imperfect, because such an account may be VALUE OF MINING PROPERTY 25 swelled by new deposits, while new ore cannot be added to that which a mining property already possesses, although the actual amount may not be known until the property is exhausted. With an account in a bank being wound up by a receiver, however, the analogy is absolute. The receiver, as he realizes on the assets, pays the account back to its owner in instalments which are called dividends. Dividends from mining property are of precisely the same nature, namely, they are not interest on capital which remains unimpaired, but are the capital itself distributed in instalments. When the last asset is realized, the payment of instal- ments ceases and nothing is left. It would be a considerable public service if one could make clear to investors the difference between an ordinary investment and a mining investment. What is an ordinary investment? The term may describe real estate, railroad securities, mortgages, etc., in which the property is permanent and in which it is assumed that the principal will remain intact. The question that determines the value of such property is: What annual income does it yield? In the case of a mining property two concurrent questions must be answered in order to determine its value : What will be the sum total of \ dividends?$hd)how long will it take to realize them? // f *-' Known and Unknown Ore Reserves. It must be confessed that many of the conclusions drawn by mining engineers in answer to these questions have been proved false. The explanation is that such engineers, like other people, are imposed upon by the fashionable opinions of a particular time. We have passed through a period in which it was an intellectual habit to lay too much stress on ore "in sight," the "estimation of ore- reserves," and to engage in a line of reasoning warped by a fundamental misconception and bound to lead to an incorrect result. A valuation of a mine based upon a given ore reserve must generally contemplate that the value of the property will decline year by year as those reserves are encroached upon. This indeed may, and does, happen. But there are innumerable cases where it does not happen and these cases are generally those of the best mines. There are plenty of mines that had, say, three years ore in sight twenty years ago, or ten years ago. If the ore in sight were a measure of their value these properties would long ago have been exhausted and forgotten : but in fact these very mines may be producing several times as much and may be worth several times as much as they were at the beginning of the period, and today they may still have the same three years ore in reserve. Almost all the greatest mines in the West are examples, specifically the mines at Butte, Coeur d'Alene, Park City, Tintic, Cripple Creek, Bisbee, Clifton-Morenci, Globe, Jerome, Cananea most of the great copper and lead mines of the country and of the world. Even the "Porphyry Copper" mines are no exception, nor are the copper and iron mines of Lake Superior. In short 26 THE COST OF MINING there has been so much confusion of ideas between the measuring of ore reserves and the other factors that determine the progress of mining that some discussion of the matter does not seem out of place. There are certain historical circumstances that have had an important bearing on the development of ideas on this subject. I remember some twenty years ago hearing Mr. W. E. Newberry, a well known mining engineer at that time, remark that if one would give him the first five hundred feet of a mine he would take that part in exchange for all the rest. Mr. Newberry's experience had been chiefly in the gold and silver- lead mines of Colorado and elsewhere. At that time his conclusion based upon his experience, was not in the least illogical. The facts were that up to that time the mining of lead, silver and gold in this country and throughout the world was conducted mainly in the zone of " second- ary enrichment" or oxidation. The processes in general use were those that dealt with such ores. Gold ores were expected to be " free-milling," that is amenable to the simple process of stamp-milling and amalgama- tion. Silver lead ores were quite generally found to be products of a natural concentration of lower-grade original masses of zinc, lead and iron sulphides. It was profitable to ship the small bodies of rich galena or carbonate to custom smelters; the cases in which it would pay to put up expensive plants to treat the mixed ores were at that time few and far between. The capital for such enterprises was not easily to be found and it was hazardous to advise the investment of it. The necessary development of the art of mining; the cyanide process, the flotation proc- ess, large scale application of power, adequate transportation, etc., was either not yet perfected or not generally applied. But this was not all: the zone of secondary enrichment very frequently increased the width of veins by causing depositions in the walls. Passing through this, one was confronted by three formidable changes lower-grade ore, diminished volume and a chemical composition different from that encountered before, requiring for utilization new processes which might either not exist or be commercially inapplicable. What more natural than to suppose that all these facts were equivalent to the actual "playing out" of the deposit? Instance could be piled on instance, in all parts of the world, where mines came to an abrupt end, as money makers, from these causes. Scientific theory seized upon these factors and gave weight to them to an extent far beyond the degree which subsequent developments have warranted. In the Lake Superior iron ranges, Van Hise perceived that the commercial ore bodies were concentrations of iron oxides coincident with oxidation proceeding from the surface. In other regions such oxida- tion had rarely been found to go below one thousand feet from the surface. What more natural than to assume that it would go no deeper in Lake Superior and that the iron ore bodies would go no deeper? The reasoning VALUE OF MINING PROPERTY 27 seemed so probable as to be almost conclusive; and geologists twenty-five years ago felt no confidence in those deposits extending much below the bottom of the mines as they were developed at that time. Mining men followed their example. In the great development made since that time innumerable instances have been found where Van Hise's expectation of a limited depth has been found to be true; for instance on the Mesabi Range where scarcely a deposit has gone below 500 feet. But in other districts, such as the Gogebic, Marquette and Menomince Ranges, his expectation was not true; great ore-bodies have been found at depths approaching 3,000 feet and the limit of commercial availability is still unpredictable. But it is easily seen that reasons, both of fact and inference, were very strong for an attitude of caution. Mining engineers were naturally anxious that the clients whom they advised should not lose money and the danger of losing it through a rash confidence in the persistence of ore- bodies to any great depth, or distance, beyond actual disclosures seemed very great. During the past ten years much has been done to show the inadequacy of the conclusions that would be based on this line of reasoning. In important districts where a portion of the earth's crust is permeated by an extensive mineralization the matter of finding ore is a perpetual and integral part of the process of extracting it. Before such a district is worked out the openings grow in length to hundreds, or thousands, of miles; and the cost of them grows into millions and scores of millions of dollars. To expect all this or even a respectable fraction of it to be done in advance of the extraction of ore is simply out of the question. The management that would venture to embark capital in such a project would involve the company in hopeless insolvency and a stock holder might reasonably ask for a receivership from the courts on the ground that funds were being misapplied. The objections to such a course would not be wholly financial either. In most cases there would be physical difficulties in finding the ore by a mere process of advance exploration, for unless some of it were removed the miner w r ould have no intelligent means of conjecturing where to look for the extensions. A body of ore in solid rock, we must remember, is enclosed not by lines or areas but by volumes. Suppose we have made a discovery of such ore and we wish to explore its continuation and form an idea as to its extent; suppose we enclose our discovery in an imaginary cube; do we not have to remember that a cube has six sides? If the ore body pursues an irregular and erratic course through the rock can it not go out of your cube through any one of those six sides? If so, what geometrical areas is it necessary to explore before you are sure that the ore body does not pass through one of those sides? Is it not better, instead of trying to traverse a cubic volume of rock with exploratory openings, merely to make the farther openings in the 28 THE COST OF MINING ore itself, and to find the continuation of the ore merely by the continua- tion of your profitable mining? All these questions inevitably answer themselves in the miner's mind before he has gone very far. He learns, but sometimes does not state very clearly, that if the mine is any good, it is impossible to do in advance development work that will take the measure of it. Instead of measuring the mine by the amount of ore he has in reserve, he learns how much work he must do and how much money he must spend in order to open up enough ore to keep up his output, and he does no more work and spends no more money than he has to. He studies the geology and tries to get as accurate an idea as possible of the distribution and manner of occurrence of his ore bodies, so as to save work and money in opening them up. Deliberately and intelligently he often defers looking for extensions of ore bodies until mining work has proceeded far enough to give him a good idea where to look. Thus development work to a mine maybe likened to food to an animal, if it is not supplied the mine will die of starvation. Just as an animal will die some time, even though it never suffers for want of food, so the mine will die some time even if it never suffers from want of development. A man does not concern himself much with a calculation of how much a horse will eat in its whole life, but rather with how much it requires every day. He does indeed take note whether his horse is young or old, strong or weak, and values him accordingly. He does the same with his mine, recognizing its stage of life and basing his expectation of its productive power on that recognition, but until it actually expires he never ceases developing it. He gives it the amount of development which he finds gives the best financial results, just as he gives his horse the amount and quality required to keep the horse in the best condition: that is, if he can afford it. If an owner cannot afford to develop his mine properly the mine suffers, just as his horse would suffer if he is not fed properly. In either case the question can be worked out, and is worked out in a practical way. Thus for instance; the Anaconda mines at Butte, where for many years the question of exploration has been studied scientifically and compre- hensively, yield about 120,000 tons of ore to each mile of development work; the Copper Queen at Bisbee, Arizona, about 50,000 tons per mile, the Chief Consolidated at Tintic, Utah, about 20,000 tons per mile; the iron mines of Michigan from 150,000 to 500,000 tons per mile, and so on. In each case mentioned, these mines or at least the districts in which they occur are forty years old, or more, and have been producing continuously on the same terms more or less but at an increasing rate. In the various instances mentioned the amount of ore blocked out in such a way as to be measurable varies between about six months and about five years production, and varies from time to time in each prop- erty. The satisfaction that comes to the owners from increased dis- VALUE OF MINING PROPERTY 29 coveries is almost invariably an increased output, not the assurance of a longer life. The difference of attitude which would be justified now in expecting continued life for many of these properties, compared to that which would have seemed to be justified twenty years ago is to be explained by the fact that many restrictions on the availability of ore deposits have been removed. This applies to large groups of mines. The steady improve- ment of the cyanide process of gold extraction has removed practically all the difficulties of working gold ore in the primary zone. The whole deposit is now profitable, not merely such part, often a small part, as might have been rendered available by the accident of one natural process having been superimposed upon another natural process. Similarly in lead, copper, silver and zinc, the oil flotation process and other improve- ments in concentration have removed difficulties that were then formid- able. There is seldom any longer an absolute dependence on natural alterations and concentrations and in general a mineralized mass may be worked so long as it contains enough metal, quite regardless of the chemical combination in which it occurs. Determination of Present Value from Known Factors. If these questions can be answered it is easy to arrive at the value of the property as an investment. The general principle at the root of the matter is that the annual dividends must yield a good annual interest on the sum in- vested, and also permit a certain sum to be set aside each year, which, securely invested at compound interest, will repay the investment when dividends cease on the exhaustion of the mine. If we take for an example the Miami Copper Company we shall find the facts approximately as follows : The number of shares is 747,114. After five years of operation this concern had invested capital as follows : For Mine Property $1,535,000 For Mine Development 1,417,000 For Mine Construction of plants 3,059,000 For Mine Working capital (less current bills) .... 3,000,000 Total $9,011,000 This represents a cost of say $12.00 a share. The amount of ore remaining in the mine, of the kind on which oper- ations were being conducted, was established at 18,000,000 tons, almost exactly 13 years life. According to five years experience the cost of producing copper was 10 cents a pound, the price received 15^ cents and the amount being produced annually 42,000,000 pounds. The investor believing these facts to be established might reason as follows: The annual income might fluctuate but it would average almost exactly $3 a share a year for 13 years. His actual investment is $12 a 30 THE COST OF MINING share. The amount required as net interest on this amount at 5% is 60 cents a year. The installment of capital required each year for thir- teen years, to be put into a sinking fund and invested in gilt edge securi- ties yielding 4% net annually, in order to restore the $12 invested at the end of that period, is 72 cents more. In other words the minimum re- turn that would satisfy his investment at 5% interest and also return his principal in 13 years, is $1.32 per share or 11%. That is a general figure. Any business limited to a life of 13 years must pay 11% for that period or the investor will suffer a loss either of his principal or of the normal rate of interest which he has every right to expect. But in this case the income promised was more than twice the amount required to cover his actual investment. In fact it was worth whatever amount the $3 per share per year would pay 11% on. This would be $27 per share; and this was actually the price of the stock in 1915, the year in which the record of the property stood as just described. This matter will be referred to more at length in a following chapter. CHAPTER III NATURE AND USE OF CAPITAL DISCOVERY OF ORE ELEMENT OP ITS VALUE INFERIOR VALUE OP DEFERRED EARN- INGS PLANTS ARE SELDOM ADEQUATELY DESIGNED IN ADVANCE TIME REQUIRED FOR LAUNCHING AN ENTERPRISE WORKING CAPITAL LENGTH OF LIFE REQUIRED TO JUSTIFY DOUBLING THE SCALE OF OPERATIONS EXAMPLE OF MlAMI COPPER COMPANY EARNINGS UPON INVESTMENTS IN PLANT TEND TO DECREASE FALSE INFERENCES FROM OCCASIONAL BONANZA EARNINGS. CAPITAL Rfr SOCIAL THEORIES ACCELERATION OF PUBLIC OPINION IN CERTAIN DIRECTIONS DURING WAR TIMES. TEMPORARY MEASURES SOMETIMES HAVE PERMANENT EFFECTS CAPITAL LOST OR GAINED ACCORDING TO FAILURE OR SUCCESS OF ENTERPRISE ITS TRUE MEASURE IS PRESENT VALUE OF PROPERTY. The price at which mine products are sold is not determined wholly by the cost of extracting them, but frequently by the difficulty of discov- ering them. Once found an ore-body is a prize, that is, if it is rich enough, and its value is established even if it lies in parts of the world remote from the centers of industry. It is obviously no test of the highest efficiency merely to make such a mine pay. The real test is to secure from it the greatest value possible. This problem involves not only the skill of the explorer and the miner, but also some consideration of the use and purposes of capital in ways not entirely obvious at first glance. DEFERRED PAYMENTS One of the first considerations of this nature is the plain fact that the promise of a dollar at some distant date is not as valuable as its immediate possession. This is just as true of incomes as of single payments. It requires little argument to convince a man that if he is to receive a total income of $10,000, he would be better off to get it in 10 years than in twenty, better off to get it in five years than in ten; still better to get it in hand at once. As a matter of fact, if interest on money is worth 5 per cent, a year, his $10,000 if paid in installments covering twenty years would be worth barely $6,000 at present; if he could get it in ten years it would be worth $7,500; in five years $8500; only if paid immediately would it be worth the full $10,000. If the same ultimate return should be spread over an indefinitely long period, say 100 years, his annual in- come would only be $100 and his capital, that is, the value of his posses- sion, would only be such a sum as $100 would be fair interest on; a paltry $2000. These are surely not considerations merely for the banker or the 31 32 THE COST OF MINING financier, but apply with equal or greater force to any one to whom the possession of goods, the acquisition of food, clothing and comforts, is a matter of importance. From this consideration it is a short step to perceive that an indefinitely long continuance of income which can never total more than a certain amount is not a good point but is distinctly a bad one, so bad that it would be excellent business to spend money to remedy it. These considerations have a very wide application in the mining business. An ore-body, the discovery of which is valuable, is invariably limited in extent. If it were not limited, either its discovery would not be valuable or, a single discovery would serve all future purposes, which would be the same thing. Therefore, the miner attacks his deposit fully convinced that it contains only a certain quantity of valuable prod- uct; that it is worth while for him to secure and enjoy this product as soon as possible instead of waiting indefinitely for a slow dribble of output; and that his problem is to explore the mine intelligently so as to equip it in order that its working may afford the maximum satisfac- tion to the owners. This problem may be reasonably stated as that of creating the greatest present value for the property. Present Value. From this point of view, to my mind a just one, it will be found that the business enterprise based on a limited deposit will have a life of maximum desirability. Many writers on the economics of mining, such as H. C. Hoover, Ross E. Browne and H. L. Smyth, have given examples which seem to show that discovered ore, or even the entire mine, should theoretically be worked out in a very short time, say from three to nine years. This is, of course, provided that there are no exterior obstacles such as the danger of over-supplying markets, to prevent it. It appears, however, that the length of life which will create the maximum__ present value is inherently a variable depending on the relative value of the capital required and the total value of the product, upon the rate of annual profit earned upon the capital used in constructing and operating \ the plant, and upon the time required to put the plants in operation. Where the annual return on the invested capital is high the life should be short, but when that return diminishes toward an amount such as will be only interest on money the inducement to invest further capital for the purpose of hurrying output diminishes until it finally disappears altogether. When the return on capital is a mere interest rate the life ' of the enterprise has to be indefinitely long in order to justify the invest- * ment at all. At this point indeed the argument for the investment of further capital would be the same as would induce investment in govern- ment bonds merely that one might have it to invest; and the effort and risk involved in initiating and managing an enterprise would go uncom- pensated. At this point of course there will be no inducement for enter- prise and there will be none. NATURE AND USE OF CAPITAL 33 Fundamentals of Enterprise. For several reasons that will be de- veloped presently, these considerations promise to have greater weight in the mining business of the United States, perhaps in the world at large, than they have had in the past and it seems worth while to dwell upon them. As a foundation for the discussion let us first note the general conditions of a mining investment. It naturally includes as essential elements, opportunity, time, effort and cash, the value of all of which can of course be expressed in money. Omitting from the question of opportunity the matter of ownership, we may put down as a minimum the occurrence of ores in paying amounts. It is a point quite often overlooked that there is an essential difference between merely knowing that an ore-body exists and having it so opened up that an output may be obtained from it. There are plenty of ores known to exist, from mere geological observation or inference, or from drilling or some other form of exploration. This information is absolutely essential to the initiation of an industrial investment and of course it must be paid for. Delays. Once the decision is made to follow up these discoveries a\ considerable time is necessary for opening up and equipping the mine, transportation system, mills and smelteries, in general terms the required , plant. In making and carrying out the plans for all this work there is abundant opportunity for mistakes, delays and the deficiency of human comprehension and foresight. These are factors that are quite generally optimistically minimized. Why is it that if you plan a house to cost $3000, and let it on contract at that price that you find when it is finished that it has cost you $4500? Simply because neither you nor your con- tractor could think of everything that had to be done. When the con- tract is finished you find the house is not finished. This involves you both in additional expense and in unexpected delay; for you will cer- tainly not be satisfied with an unfinished house, it will be nothing short of a desolate disappointment. If you cannot afford to go on with it you will have to confess it a failure. The next time you build a house, of course, you will be on your guard against these contingencies that you cannot foresee. You do not know exactly what the " unforeseeable " will turn out to be, but you know it is there. This homely comparison illustrates an element of every engineering project. It is particularly worth remembering that the industrial arts, including mining, have been for a long time, and stillare, in a state of evolution. There is no standardized plan or pattern of plant, operation or organization. Each new group of entrepreneurs may reasonably entertain hopes of improving upon their predecessors, in some respects at least, and in any event they invariably expect to make special adjust- ments for their own special conditions. Nothing is more common than to change plans even after actual construction has begun, even on large 3 '..., 34 THE COST OF MINING scale plants; indeed sometimes the changes take the radical form of\ increasing the whole scale of operations, perhaps to take advantage of] further developments of ore or to provide for working additional property. ! Thus while American engineering projects are generally carried out energetically and promptly and on a large scale, it is quite imaginary to* count upon them as being products either of invincible skill or of unerring^ judgment. They invariably cost more time and money than is foreseen and planned for. The large group of western mines known as the Porphyry Coppers is an excellent illustration of all these points. The time required to get a plant running from the moment of initiation was between three and seven years. The Inspiration Copper Company is of all these no doubt the greatest engineering success, but it is at the same time an example of all these causes of delay. Before it was finally launched as a going concern its properties were increased by various consolidations, its plants were designed for different outputs, and con- struction was interrupted in order to make a radical change in milling methods from water concentration to oil flotation. Time Required for Completion. Whatever may be said of starting a new plant may also be said of making radical additions to an old one ; indeed, unless the original plant was especially designed to be added to, the difficulties are actually greater, for the operating plants are quite apt to get in the way of the additions and to compel the engineers of the enlarged plant to put up with a scheme bound to be in some respects antiquated and unsatisfactory. Thus it seems that to change the scale of a mining operation is a matter requiring from three to seven years. We might approximate it at four years. Theoretically such a requirement seems unreasonable, but if we are to deal with the business as a practical matter of finance it is far safer to count upon the actualities of experience than upon the calcu- lations of theory. Of course not all plants require the same amount of time. The small and rude plants required for the shallow zinc mines of Southwest Missouri and Oklahoma may be built and started in a few months. But such plants are not only unrepresentative of the average ^ conditions in the mining business but they are, after all, only partial installations. The general tendency is toward elaboration of method and comprehensiveness of plan. If the operators in the Miami district contemplate their business in the aggregate, say as a matter of estab- lishing an output of 100,000 tons of spelter a year, they will perceive that this is no problem of starting to dig ore from a forty acre lease, but of exploring thousands of acres of land and of building smelteries and power plants. Such an operation would probably require the four years which we find has been required to start the average western copper mine. We may fairly assume that mines which may be quickly started, or quickly placed upon a new operating basis, are not really NATURE AND USE OF CAPITAL 35 complete industrial units but merely minor parts of a broader scheme already running. We might almost say they are not really mines, but slopes. Here then we find an abrupt practical limitation to theoretical calcu- lations of present values. If indeed a mine could be worked out to advantage in three years after a plant is running it is at least an embarrassment to have to wait four years before it can be started. Almost the same observations apply to the cost of plants as to the time required. A priori calculations are seldom adequate. The safest estimate will be the one based on the total expenditures that have been required for a similar plant. Working Capital. The working capital is something that it is easy to forget altogether. The amount required is usually equal to the cost of operating for between six months and a year. Thus a company which expends $500,000 a month, will need from $3,000,000 to $6,000,000 working capital. Let us take as an example the Miami Copper Company again. We found that concern in 1915 producing about 42,000,000 pounds a year. Its capital accounts stood as follows: Mine property $1,535,000 Mine development 1,417,000 Construction 3,059,000 Working capital 3,000,000 Total $9,011,000 If at that time it had been considered desirable to double this output from the same property we might estimate that the scheme would not have been completed before 1919 and the capital account for an output of 84,000,000 pounds would have stood about as follows: Mine property $1,535,000^ Mine development 2,834,000 Construction 6,118,000 Working capital y 6,000,000 Total capital required $16,487,000 Here we have an increase of capital amounting to nearly $7,500,000. In 1915 the normal earnings were about $2,250,000 a year and if the operations had been merely maintained on the same scale in the four years required for increasing the scale of operations the company might have paid $9,000,000 to its stockholders; but if the enlargement were to be paid out of earnings, it could only have paid $1,500,000 to the stockholders. What length of life would be required to justify this course? 36 THE COST OF MINING We have figured out (see preceding chapter) that in 1915 with a life of 13 years the stock was worth $27 a share. It is plain that the increase we are arguing about would not benefit the stockholders unless it would increase the present value of the stock, that is, the value in 1915. Of course any such increase would have to be figured into it from the ex- pectation of increased dividends to be obtained as the result of the project. It is easy to see how this would work out from the standard calculations of the value of a series of installments of income (see Chapter V on Partial and Complete Costs) . The four installments of reduced income totaling $1,500,000 equals 50 cents a share for four years. The expectation of these payments was worth in 1915 $1.75 per share. In 1919, the company would go on a basis of $6 a share for four and one- half years at which time the mine would be exhausted. By doubling the output we have not shortened the life of the mine by one-half, but merely from 13 years to eight and one-half years. This is the stumbling block to increasing value by increasing output; it has to be paid for by delay in receiving earnings. In 1919 the value of $6 a share for four and one-half years would be about $23. But this was not the value of these install- ments in 1915. Nobody will pay $23 for $23 to be paid four years hence. One would lose money unless he discounted the sum by an amount which would constitute interest on his payment for those four years. The actual value in 1915 would be about $19.16 to which would be added $1.75, the present value of the four minor installments, making a total value of $20.91. But the stock was worth on the former basis $27. There are many variations that could be introduced into such com- putations. For instance, we might take into consideration the final liquidation of the working capital which is an asset that would be worth lss to the stock on the long life basis than on the shortened life basis. But to go into such niceties is wasted time in view of the already obvious fact that the increased scale of operations is not warranted, but would involve less and wasted effort, and would be, in short, an engineering and financial blunder of the first magnitude. But there must be some volume of ore and some length of life that would justify doubling the output. We have been figuring on a total of 18,000,000 tons equivalent to 13 years life at 1,400,000 tons a year. Let us calculate the present value on that basis and On the doubled basis beginning in 1915 and assuming longer lives for both projects. SCALE 1,400,000 TONS A YEAR SCALE 2,800,000 TONS A YEAR WITH 4 YEARS DELAY Tons Life Value per share Life Value, 1915 21,000,000 15 $30 9^ $1 . 75 plus $23 . 00 = $24 . 75 28,000,00020 36 12 1.75 plus 31.55= 33.30 35,000,00025 40.50 14^ 1.75 plus 37.75= 40.50 42,000,00030 44.20 17 1 . 75 plus 45.00= 46.75 NATURE AND USE OF CAPITAL 37 Thus we perceive that it is not until the volume of ore is doubled will it pay to double the scale of operations. The inference is that the Miami mine was skillfully exploited in the first places These calculations must not be confused with other factors which might (and, as a matter of fact, do) enter into the situation. The output of the mine has actually been increased by one-half without any cor- responding increase of plant cost, but merely on the strength of minor alterations and adjustments. This fact does not enter into my argument, for the fact that such adjustments could be made means nothing more than that the capabilities of the plant had not been fully worked out and utilized. Any increase of output, without additional expense for construction, is pure gain. Anything short of running a plant at full capacity is uneconomical. The shortening of the life of a mine by such means, that is, without the use of additional capital, is so obviously ad- vantageous that any discussion of the arithmetic of it seems superfluous. / Earnings upon Plant Investments. The real point of this discussion remains to be brought out. It will be noticed that the earning power of the capital invested in plant and working capital on the Miami ores is 30 per cent, per year. The minimum life required to return this capital with 5 per cent, interest is 3.8 years. We have seen that it will not pay to double the scale of operations unless the life on this scale exceeds 25 years. At a smaller increase of capacity, say 25 per cent., we find that the present value will be increased slightly at a life of less than 25 years. It is plain that when the capital return is 30 per cent, and the time required for initiating an enterprise is four years, the scale of opera- tions to give the maximum value should be such as will give a life of between 20 and 25 years. A consideration of a variety of factors that might be introduced, such as the possibility of initiating plants in a shorter period than four years, would involve us in almost interminable arithmetic and would probably be tiresome without adding much to the clarity of the subject. It seems already evident that the time required for plant installations is an im- portant element in the problem of the intelligent use of capital not only in mining but in industry in general, and that where the return on capital is high and the warrantable life of an enterprise short the interference of delay becomes proportionately greater. Thus if the earnings upon capital are 100 per cent., if it requires four years to start a plant and if the capital required is in use an average of one-half the time required for its investment, it is plainly impossible to see any merit in an enterprise that will run less than two years after the plant is started. It is rare indeed that earnings will be so large, although there have been instances where they have been much greater. For example the Goldfield Con-\ solidated mining and milling plant probably cost about $2,000,000 in the aggregate, and required 2J^ years for completion, but it immediately 38 THE COST OF MINING began to earn profits at the rate of $6,000,000 or $7,000,000 a year. A single year's operation would be a recompense for both the investment, the time and the effort. But such instances are merely spectacular accidents which are less and less likely to be repeated. The whole tendency of the mining industry is toward less dependence upon the dis- covery of bonanzas and more dependence upon capital and sustained (industrial effort. The number of mining enterprises in this country "that are rich enough to warrant an operating life of less than five years would probably constitute only a minute fraction of the industry, certainly not worth public attention. There are of course many mines in the country where the earnings on the capital invested are still hand- some, say from 25 to 50 per cent., but the largest mining enterprises are already far below that figure. In the case of the United States Steel Corporation the capital invested averaged before the war no less than $140 per ton of finished product sold each year and the earnings only $8, or less than 6 per cent. If money is worth 5 per cent, interest the shortest justifiable life of such an investment is more than 40 years. If the earnings on capital are 10 per cent, the shortest justifiable life will be 15 years. It may be worth while to repeat for the sake of emphasis, that the shortest justifiable life is that which wiU_ merely return the capital with such interest as might be obtained merely by lending the money on good security. When we come to take account of the dif- ficulty of guarding against changes of failure such as lie in the over- estimate of the ore supply, underestimate of cost, unfavorable changes^ in prices, or in absolute accidents, it seems venturesome to count upori^ a return as low as 10 per cent, as a safe margin for investment. In order to justify it we should have to count on exterior factors, such as a prob- ability that the business would continue to expand indefinitely instead of being limited to an exhaustible deposit. Perhaps we shall not be far astray if we assert that the bulk of mining enterprises are based upon a return of between 10 and 50 per cent, on the capital required for development, plant and working capital; that these returns vary ac- cording to the relative abundance of the materials dealt with, and that the higher returns are obtainable only upon bonanza deposits in which the mere discovery is a matter of capital importance. Bonanza Earnings. These statements are liable to be misunderstood unless the basis for them is thoroughly explained. It is possible for one intent upon showing the extraordinary profits of the mines to take for an example some notable bonanza and explain to the public that its great earnings come from practically nothing. This is often done for" two diametrically opposite purposes. On the one hand the stock pro- moter uses these figures to tempt speculation; on the other hand theorists on social systems use them as examples to illustrate the inequalities and injustices of the distribution of wealth which lie in " capitalism." Both NATURE AND USE OF CAPITAL 39 representations are apt to be full of the errors of little knowledge, which Shakspeare describes as a " dangerous thing." Let us take as an illustra- tion the most remarkable mining bonanza of recent times, the United Verde Extension copper mine. This property was discovered by the present company at a cost of about $275,000. It immediately began shipping ore running more than 25 per cent, copper and within three years under war prices it was earn- ing at the rate of $12,000,000 a year. These facts sound exceedingly extravagant; but when we come to examine them in terms of the normal conduct of business we shall find modifications at once. In the first place, the expenditure of $275,000 was not really all the money put into this discovery. It was merely the amount required to put through the fortunate and decisive chapter of it, which was the re- organization and re-financing of an existing company. Exploration had previously been carried on for many years without success and large sums of money, I do not know how much, but certainly many hundred thousand dollars, were spent. The work and money thus spent were not lost but pom-ted the way to the ultimate success. Thus the actual cost of the discovery must actually have been near $1,000,000 instead of $275,000 as usually stated. Furthermore, the money spent by this company and on this property was only a small part of the amount spent on account of this very bonanza; for as soon as this discovery was made other explorations were undertaken right and left, in part by the very people interested in the Verde Extension, and millions were put in without resulting in the discovery of even a dollar's worth of ore. The real cost of the discovery, therefore, was not $275,000 at all but several mil- lions. If it were a matter of importance the real amount could be determined with fair accuracy. The next modification is that the apparent profits were for a time doubled by war prices. A further modification is that the sums stated as earnings have not been paid to the stockholders, but only a quarter of them. They never will be paid, for they have been used in the construction of a plant, the development of the mine, for workings capital and for war taxes. If there had been no war prices the earnings would have been, in 1916, 1917 and 1918, so much less that the dividends would have been certainly less than half of the $6,667,500 actually paid. Borrowed Capital. But the consideration that is really obscure to those who do not take the trouble to reason it out is the fact that whatever earnings that have gone to the stockholders really came from borrowed capital. The new bonanza mine had no equipment of its own to enable it to put copper on the market. Railroads have been built for other mines by which smelteries, also built for other mines, could be reached. The owners of the United Verde Extension had to pay a toll 40 THE COST OF MINING out of the richest of its ores for the use of that capital : it paid in the form of profit on freight and treatment. To ship those richest ores was only a fortunate and temporary expedient. The enterprise needed a plant of its own in spite of all the assistance of this kind that it could negotiate for. The construction of a smeltery, of a tunnel and railroad to connect it with the mine, of shafts, machinery, living accommodations for employee (these being nothing short of two townsites, one at the mine, the other at the smeltery), the purchase of land and the creation of a working capital have actually absorbed some $12,000,000 to $15,000,000. If the work had been done under pre-war conditions these requirements would have been smaller, by perhaps a third. But the mine cannot continue to ship the extraordinary ores that were obtained in these first years, and its earnings certainly will not average as much as 50 per cent, on the capital required to establish and operate it. The individuals who put through the reorganization of this company reaped extraordinary profits. They drew a capital prize in the lottery of nature by paying for only one of the tickets. It is equally true that they used this prize with skill and acumen and out of it built up an extensive industry by using a part of their prize as capital. It is a first rate example of adventure and success; the kind of enterprise that has been the very life of the mining industry, keeping alive the desire for fresh efforts, and lending zest and even romance to the development of the country. There are certain elements in our national situation which make it worth while to inquire whether this sort of enterprise is to continue freely or whether it is to be curtailed and discouraged. The importance of this question has been accentuated by the war through the increase of taxa- tion that is the invariable concomitant of wars. There is no question that the mining industry should pay its full share to support the government and every national enterprise in pro- portion to its income and profits. But it is exposed to the danger of confiscation of capital under the guise of " income" and " excess profits." The manner in which this may be done may readily be gathered from the preceding discussion and examples. The revenue law of 1918 was passed at the very time when the wave of enhanced profits due to high war prices was rapidly receding. Costs were rising by leaps and bounds and prices were either fixed or falling; profits were really not much above normal and promised soon to become sub-normal. The law carried a provision for taxing " excess profits" up to as much as 80 per cent., and the question of the amount of profit was to be determined not by the relation of the war earnings on an ounce of gold or a pound of copper to the normal earnings on an ounce of gold or a pound of copper, but was to be fixed by the nominal capital of the enterprise. For instance there was acute danger that according to this law the capital of the United Verde Extension would be put down at fifty cents a share, 10 per cent, allowed on this value NATURE AND USE OF CAPITAL ' 41 for normal profits and the remainder taxed 80 per cent, as " excess profits." In the meantime many persons had bought this stock at over $40 a share on an expectation of normal profits, that is, not counting upon war prices at all, and the actual profits were little, if any, above what might have been earned in ordinary times. According to the plan of the law 80 per cent, of the earnings would be swept away. On these terms four-fifths of the capital of actual investors would be confiscated. There were two questions that might logically be considered (1) what was the normal profit of the product of this industry? (2) what was the capital in this industry? Before proceeding with the second point it may be reasonable to interject that an excess profit tax on real excess profits, as a war measure, could hardly be objected to. It will be shown elsewhere in this volume that the United Verde Extension might under average pre-war conditions expect to make 10 cents profit per pound of copper. Now if it were making during the war 20 cents it would be not unreasonable to say that it was making 10 cents " excess profits." A tax of 80 per cent, of that amount even in addition to other ordinary income taxes would not be confiscation. But the question would not necessarily be disposed of even at that point for it would still be necessary to scrutinize the receipts and expenditures of all mines according to a uniform principle in order to fix the amount of profit fairly. There would, however, be no objection to the theory if it could be properly applied. It is hardly to be expected that the American nation will be influenced permanently by the psychology of a war period. There is no immediate prospect of more wars in the future than there have been in the past. Since the Revolution this country has been engaged in wars of greater or less importance about 7 per cent, of the time, and its ordinary dispo- sition is to dismiss the question of war as an abnormal and improb- able contingency. Nevertheless, steps are taken during these occasional wars that have unexpected results in times of peace. A tariff to provide war revenue may be converted into " protection, " a policy which may or may not merely favor some industries at the expense of other industries. A temporary stopping of brewing and distilling has been converted by war psychology into permanent and constitutional prohibition much sooner than would have been the case normally. Similarly the marked increase of taxation on incomes, as a war measure, may develop, or degenerate, into a deliberate and sustained attack on capital. Govern- ment administration of railroads as a temporary expedient, may be the chrysalis of government ownership. The net result may be to multiply the number of government employees, multiply the weight of the machinery of government and substitute for the independence of individual initia- tive a general dependence upon government employment. There are many wh regard all these tendencies as desirable, indeed look upon any- 42 THE COST OF MINING thing that can secure a majority of votes as not only desirable but sacred. It is hardly worthwhile to have fixed opinions as to the merits of such tendencies; it is more to the point to discern if possible how powerful they are and what forces lie behind them. To make such an analysis is en- tirely beyond the scope of this discussion, but it seems as if we cannot be far wrong in drawing a general conclusion that the mainspring of most of the tendencies of social, political, and economic legislation is faith in cooperative effort as against individual effort, and doubt as to whether this cooperative effort may properly be left to individual owners. The efficiency of great corporations has been demonstrated in many indus- tries; would not still greater corporations, even one all embracing corporation, the government itself, be still more efficient? Would not such an institution automatically make us all comfortable and relieve us of the terrors of making a living? Private Ownership a Fundamental Law. But this idea is still only a theory and will undoubtedly remain so. It is easy to see how the coopera- tive or integrating movement will reach absolute limits, in the form of intricacies of detail which would be beyond the power of any corporation to master. When the tendency to integration is forced by its momentum beyond its proper boundary it is bound to be overcome by the reaction of disintegration. The right of private ownership of property is still recognized by the fundamental law of the land. It is a natural desire of every man to have something of his own which he can alter, dispose of, or lend to suit his own whim. Whenever the theory of government inter- ference goes far enough to deny the whims of a large enough number of people, it will meet effective resistance. Thus far it has been easy to draw some distinction between aggregates of " capital," generally typi- fied in the name of some individual whom magazine writers have made as mythical as Hercules or Theseus, and private property. No person with a spark of ambition or initiative wishes to deny himself the right of owning property and increasing it. The world is not ruled by the passive and timid no matter how greatly they may preponderate in numbers; it is ruled by the aspiring and energetic. Now the mines of the country are not owned by a few rich and decadent beneficiaries of privilege but by a huge army of stockholders, investors great and small, whose capital is, by overwhelming preponderance, the fruit of their own efforts and their own virtues; of frugality, industry, enterprise and ability. These people have a decided interest in holding their capital intact and not having it reduced or dissipated by ignorant, perhaps malicious, taxation of " income." This might in the minds of theorists, whose number is apparently increasing, be a convenient way of meeting the increased expenses of the government. These expenses are to be permanently increased not only by the interest on war debts, but by the growth of government bureaus which has been greatly stimulated by NATURE AND USE OF CAPITAL 43 the war; and by a general expansion of the policy of the government which it will be difficult, no doubt, to .nullify. Capital is Present Value. What,' then, is the capital of mines? There appears to be no sure way of fixing capital, or of distinguishing it sharply from profits. Some may be disposed to argue that capital is the actual amount of money invested in a given project. This does not seem to fit the case except momentarily. When an enterprise is launched thej' amount of money put into it is, of course, the amount upon which a| return is expected, but it is always a mere accident if the return is justl equal to the amount required. It is far more likely to be either below or above that amount; if below, a portion of the investment is lost, because the enterprise does not yield an amount sufficient to return it to the owners; if above, a gain is made because the yield is greater than the amount required to return the investment. In one case the capital diminishes, in the other it increases, in neither case does it remain stationary. If an investment is disappointing no amount of argument will restore the capital, therefore everyone must admit that it involves a loss of capital. If we are to argue that the capital in a successful enterprise does not increase then we shall have to look forward to the extinction of all capital, for it is self-evident that if some enterprises lose capital and none gain it, the process of investment must be one of -destruction. ** Again, what is the amount invested? Must it be money drawn from a bank or can it be some other form of value? Take for instance a mine; one party contributes $1,000,000 in actual money for equipment, another contributes a tract of land, on which say $10,000 has actually been spent, but which nevertheless is accepted by the first party at a valuation of $2,000,000. That the transaction is made in good faith is proved by the fact that the party which contributes all the money is satisfied with only one-third of the property. In this case, a very frequent one, is the amount invested, the $1,010,000 which we may trace to actual money transfers or is it the $3,000,000 agreed upon as the basis of the property transfer? My assumption is that the investment is the latter sum. I would assume further that this sum is the capital put into the enter- prise at the time the bargain is made, but that it is not necessarily a permanent measure of the capital any more than the $10,000 in money put into the land was a final value of the value of the land. This train of argument leads to the conclusion that, if we are to admit , the existence of capital at all, we can only describe it as so much value. We must ignore the origin of that value and devote our attention to the practical matter of how to measure it. I believe this conclusion is one which has been upheld and will continue to be upheld by the courts as well as by financiers. It seems utterly absurd to argue that capital can be limited by the mere process of setting down certain figures. It is 44 THE COST OF MINING equally out of the question to attach any commercial significance to how much capital could be credited to an enterprise or to an individual at some past date. The fact that a rich man of today, was a penniless boy fifty years ago, has no bearing whatever on the amount of capital he may own. Similarly a mine yielding $1,000,000 a year is surely an asset, and that asset is capital, without any regard to the fact that it may have been started by prospectors by dint of manual labor and absolutely without a bank account. As to the process of establishing value, I have always argued that it must be traced to commercial transactions. We cannot attribute any theoretical value, for instance, to the metal lead. There might be, per- haps, some theoretical figures worked out for it, based, let us say, on its relative abundance compared with other metals, or some such considera- tions, but nobody would pay any attention to them. The value of lead is always established by its price in the open market. The value of a lead mine must rest on that price, and has to be figured from the amount that can be marketed, the cost of production and the time required to complete the operation. If these additional factors (quantity, cost and* time) are involved in uncertainty, as they usually are, it is obvious that the valuation of the mine is a much more intricate and less reliable matter than that of the metal. As a matter of fact grave mistakes are made. Properties are often accepted by the public at high valuations but turn out finally to be worthless. \ This is the argument for not accepting stock market quotations for the value of mining companies; although we must admit that in the majority of cases these quotations do give a reasonable approximation of the values. But we must remember that mines are not staples like the metals they produce and that market quotations upon them are of a different order from quotations on staples. Thus lead in a warehouse is always marketable. It is as good as any other lead. Its price varies between certain limits, of course, but the market value, whatever it is, is always there. But there is no such certitude or permanence about the stock of the mine. Today it may be in high favor; five years from now it may be worth twice as much, or nothing at all, and the quotations bear no definite relation to the price of the metal, but are influenced strongly, often decisively, by other factors. Again, we can never be certain that the valuation of stocks by market quotation represents thejsame_action in all cases. Many properties are not on the market at all. Of those actually before the public, some may be in high esteem, skillfully advertised and distributed among a large number of holders; others may be scarcely noticed, with few holders, few transfers, and the market may be merely nominal. It is conceivable that the highly advertised stock might bring twice the price of the obscure one, even though both have the same actual merit. I think these considerations are generally conceded to be convincing NATURE AND USE OF CAPITAL 45 reasons for subjecting the valuation of mines to a searching and independ- ent review every time such property becomes the object of any important transaction. I think the government should recognize this fact in its dealings with mines. In former times those dealings were from a financial point of view, of slight importance, but under present conditions the settlement of taxes is for prosperous concerns, a transaction of the first order. It follows that it is highly desirable for the government not only to permit but to encourage a rational method of valuation, which can be applied at any time at the instance of either party. If the purpose of a government is not to promote fair play among its citizens, then it must be prepared to exercise its forces regardless of fair play. This does not sound well, for the next inference is that if the organized powers of the government are not necessarily to be Used to secure justice, they may be used for oppression. An attitude of this kind, therefore, on the part of the government, is one tenable only as an excuse for a temporary jconfusion, and not as a real policy. It follows as a practical conclusion that the government must adopt a logical and equitable theory of distinguishing capital from profit. My conception of such a theory may be summarized as follows: 1. The capital is the present value that could be realized from the liquidation of an enterprise, through normal commercial transactions. 2. Profit is a fair interest upon the capital. 3. In the case of a property like a mine, in which a profit can be made only by using up its physical resources, income is never wholly profit.. In the case of an unprofitable enterprise, the income is merely a partial return of money actually invested. In the case of a profitable enterprise it is partly capital and partly a return on that capital. When such a property is short-lived the proportion of capital required each year is large. As the length of life increases, the annual installment of capital diminishes thus a property which is to be liquidated in three annual installments requires an annual return of capital equal to more than 31 per cent, of the total value, while one that is to be liquidated in thirty annual installments requires a return of only 2 per cent. Let us suppose that in each case, the income is $1000, and that in each case the interest rate is 5 per cent. In the three year property the present value is approximately $2790; the annual income is $930 principal and $70 interest or profit. In the case of the thirty year property the present value is $15,000, and the income is $250 principal and $750 profit. In the first case the capital return required is 93 per cent, of the total income, in the second only 25 per cent. (These figures are only approximate but they illustrate the point.) From this it is clear that as a matter of calculating income tax the question of the proportion of profit is more a question of expected life than of anything else. When the life is unlimited the capital installment is zero and all income is profit. CHAPTER IV FACTORS GOVERNING VARIATIONS OF COST WHAT THE COST CONSISTS OF FACTORS DIVIDED INTO EXTERNAL AND INTERNAL GROUPS EXTERNAL FACTORS: LABOR SUPPLIES, CLIMATE, TRANSPORTATION, WATER INTERNAL FACTORS: OREBODIES, ATTITUDE, CONCENTRATING QUALITIES, SMELTING QUALITIES MINING AND METALLURGICAL LOSSES AND THEIR EFFECTS UPON COSTS ELEMENTS OF A COMPLETE COST STATEMENT CHARACTER OF ACTUAL REPORTS MANAGEMENT How RICH MINES ARE MORE COSTLY TO OPERATE THAN LOW- GRADE MINES HOOVER'S THEOREM ON THE RATIO OF TREATMENT CAPACITY TO ORE RESERVES ECONOMY AND SPEED PRIVATE MANAGEMENT AND PUBLIC INTEREST. IT is necessary first to define what we mean by the cost of mining. It may be divided into three parts : (A) The use of capital in acquiring the opportunity to mine, i.e., ownership of ground, or leases. Since the value of this kind of property is only a speculative anticipation of profits to be won by operating, and is moreover often appraised in a fanciful or even dishonest way, I prefer to leave this element out of the discussion. I am quite aware, however, that as a matter of practical finance this cost must generally be considered. (B) The use of capital for equipping and developing a mine, for pro- viding mills and smelters. (C) Current operating costs, including taxes, the maintenance of company organization, insurance, litigation, etc. For present purposes I select B and C and my definition is: The complete cost of developing, equipping, and working out a mine, allowing interest on the capital required for these purposes until it is returned in dividends. As any one with the most meager acquaintance with the subject must know, the cost of mining at different places is subject to great variations. I am not sure that the factors governing these variations have been fully stated. A general division may be made between factors that are external or fortuitous and those introduced by the internal make up of the orebodies. It is evident that no quality in the deposit itself can influence any of the following groups of conditions : (1) The cost and quality of labor and supplies. (2) The climate, altitude, or distance from populous centers. (3) The hardness of surrounding jocks, the amount of water, the depth from surface. 46 FACTORS GOVERNING VARIATIONS OF COST 47 (4) The facilities and cost of transportation to milling or smelting centers or markets. All of the above conditions vary from place to place and introduce differences in the cost of mining, though not such great differences (as will be shown later)^ajij(^a\ caused by the inherent qualities of the orebodies themselves. Cost of Labor and Supplies. The wages in the mines of the United States varied in 1908 between 20 and 60 cents an hour, now perhaps between $0.40 and $1.20 per hour. Usually the difference is partly made up by the varying efficiency of the men. Where wages are low the supply of labor is meager, the best men are constantly leaving for more favorable localities^ those employed are not subject to the spur of keen competition, and the results are constantly disappointing. On the other hand, where wages are high, the most ambitions and intelligent men are attracted and they compete with each other for the places. It is hard to fix any figure for the compensation thus effected, but it would perhaps be safe to say that one-half of the apparent difference is made up. Some authorities will say it is nearly all made up. Messrs. Taylor & Brunton tell me that in operating sampling mills at Cripple Creek Colo., where the wages are 40 cents an hour, and at Salt Lake City, where the wages are 25 cents an hour, there is but little difference in the labor cost per ton sampled. If we assume that while the difference in wages is represented by 20 and 60 and the- difference in cost efficiency by 40 and 60 (or 70 and 100), we find that the variation in labor cost is only about 30 per cent, from the maximum. Since the labor accounts generally are about 60 per cent. of the total current cost of mining, differences in wages are not likely to account for a variation of more than 18 per cent. 1 In the world at large, outside of the United States, there may be in- stances where the differences in wages are more important^than within the United States. Nevertheless, in the few important mining districts 1 The experience of the war period has demonstrated a modification of this general- ization. It would be better stated that high wages do not cause high costs under competitive labor conditions. When the demand for labor exceeds the supply workmen are merely tempted to change from one industry into another with which they are not familiar and in which their efficiency is at first necessarily less. The depletion of .the labor in the first industry soon causes an effort to tempt men back again at still higher wages. Finally large groups of men become careless of their jobs, the more so, perhaps, the higher the pay, certainly in some proportion to the ease with which a new job may be obtained. They will frequently change about for trivial reasons such as curiosity to try something new, desire to see the country or to show their independ- ence. As the numbers of such a group -increases their example becomes fashionable and demoralizes the standards of more conservative men. Without any concerted plan therefore efficiency diminishes, production diminishes; the demand for output is further than ever from being satisfied, the economic unbalance is intensified and costs increase without ascertainable limit. 48 THE COST OF MINING of which I have any knowledge, such as the Transvaal, India, and Mexi- co, where native labor is employed very largely at very low rates, it is well known that the costs are not lower than in the United States for simi- lar work. It appears that where labor is very low there is little or no acquaintance with machinery and the performance per man is corre- spondingly low. Where large numbers of natives, ignorant of all civilized mechanical appliances, are employed at a large plant, they must be super- vised by white men who do little actual work and get wages higher than those they receive at home. In the English-speaking countries where mining is an important in- dustry, it may be said that the conditions as regards labor are almost identical with those of the United States. It does not appear probable therefore, that my conclusions regarding the variations caused by wages in the United States need to be essentially changed when applied to the important producing centers of the world at large. Extreme variations must be confined largely to isolated and abnormal localities. The cost of supplies affects the cost directly. The important supplies are fuel, timber, explosives, steel, and tools. In the United States the price of these commodities does not vary enormously among the important mining centers, certainly not much more than 50 per cent, from the maxi- mum. Since the collective cost of the various supplies is rarely more than 20 per cent, of the total current mining cost, a variation of 50 per cent, in the price will produce a difference of only 10 per cent, in that cost. The cost of supplies in the world at large is apparently subject to about the same degree of difference as the cost of labor, but it is to be remarked that in any country, such as India and South Africa, where the price of labor is nominally low, the cost of supplies is usually distinctly higher than in the United States. In the Transvaal for instance, Ross E. Browne estimates that the additional cost of supplies as compared with California accounts for approximately 10 per cent, of the total cost of mining. Underground Conditions. The hardness of the rock is likewise a comparatively unimportant factor. In any case the hardness affects only one division of the underground work; namely, breaking the ground. The stability of the ground is much more important than the hardness. Timbering is often an important item. Increase in depth adds something to the cost of hoisting and pump- ing, but it is to be remembered in this connection that if a mine is only 100 ft. deep, machinery must be provided for these purposes and a com- plement of men employed to operate it. As depth increases, the only change that comes in is the requirement of heavier machinery and addi- tional power. The increase of cost, therefore, is far from being propor- tional to the depth. One consequence of extreme depth that might easily be overlooked is the daily cost of transporting the men to and FACTORS GOVERNING VARIATIONS OF COST 49 from their working places. In the case of the Calumet & Hecla, the hoisting engines are in use two hours each shift in lowering the men and hoisting them out again. Not only does this represent a considerable expense in itself for mere hoisting, but the greater part of the time of the workmen for this period is lost to the company. The temperature of underground workings often becomes a matter of considerable importance. A high temperature may be caused by the climate, or by great depth, or by the presence of hot waters or heat- producing chemicals. It is only in the last case that the heat can be called an inherent quality of the orebody itself. There have been cases of such high temperatures in mines as almost to prevent working alto- gether, but ordinarily temperatures of 80 or 90F. are about the limit reached in important mines. Such temperatures affect the energies of the men adversely, although men grow accustomed to them and suffer no ill consequences in the way of health. The importance of this factor is extremely difficult to appraise in figures, although in the case of the Calumet & Hecla, Anaconda, and United Verde, to cite conspicuous examples, the loss of effectiveness in labor through this cause must repre- sent annually a very large sum. These remarks are intended to apply only to underground mines. Where the work is done wholly upon the surface, the facilities for working are so much superior that mines of this character must be considered separately. Climate, Altitude, and Population. The influence of climate, though indirect, is powerul through its effect on human life and effort. Some- times in places where there is an excessive rainfall or excessive heat or unhealthful conditions, the effect may be to limit the scope of operations. For instance, in Ecuador, South America, a plant has been running 35 years, but on account of the climatic influences it was for 30 of those years impossible to secure more than about 60 effective miners, although the economical management of the property required the employment of several times as many. Excessive altitude, and great distance from lines of transportation, place similar limitations upon enterprise. Where several factors of this kind are present at the same locality, the aggregate effect is to place al- most unsurmountable difficulties in the way of successful operations, but as a general rule in places where important mines have been discovered, most of these difficulties have been overcome. For instance, in the San Juan region of Colorado, and in the Cerro de Pasco in Peru adequate transportation facilities have been provided and the only adverse condi- tions still remaining are the altitude and disagreeable climate which have in both instances a pronounced ill effect upon the performance of the labor. J Transportation and Marketing the Product. Transportation facili- ties may be described as adequate when they are sufficient to handle the 50 THE COST OF MINING output of a mine and to deliver with promptness the necessary supplies; but adequacy in this sense does not mean cheapness. Transportation is in very many cases one of the most vital elements in the cost of mining. This is particularly the case when the products have to be shipped consid- erable distances. In the case of coal and iron it is a matter of common knowledge that transportation is often the all important factor, and even in the case of precious metals sometimes the cost of transportation to mills and smelters equals, if it does not exceed, the cost of actual min- ing. The intimate bearing of this fact upon mining methods and results aside from the mere question of transportation cost in themselves will be described later on. Another factor that is often of considerable importance is the commer- cial matter of marketing the products. This is sometimes done by con- tracts with selling agencies; and sometimes by the company itself. In either case there is to be taken into consideration, in addition to the cost of marketing, the success achieved in disposing of satisfactory quantities of the product. It is in this respect particularly that the cost of mining may be greatly influenced by this factor in determining the volume of operations. Coincidence of External Factors. One would scarcely expect that these various factors would move in unison, i.e., that they should all be equally bad in one place and equally good in another. So far as the natural conditions such as rock hardness, depth, and amount of water to be pumped are concerned, it is indeed extremely unusual that such factors are at a given place at either extreme; but it must not be forgotten that the remaining external factors have their effect through the efforts of man himself. If the mine is situated far from populous centers the reason is apt to be that the climate or the altitude is unfavorable. This generally means that labor is dear and inefficient, supplies costly, transportation difficult and expensive. These factors are likely, therefore, to be affected together, and if one is favorable they are all likely to be favorable and vice versa. The sum total of cost variations that may be due to the coincidence of these external factors is therefore considerable and is sufficient to pre- vent the working of abundant yet valuable products such as coal, iron ore, or salt at places where these conditions are all bad. It may be said that the above factors are those which as a rule govern the variations in the cost of low-priced and bulky mineral products. Internal Factors. The internal factors are: (1) The size and attitude of the orebodies; (2) the relation the valuable material bears to the en- closing gangue or material; (3) the problems involved in metallurgical treatment. These factors introduce immense differences of cost. For instance, in gold mining we find that the Alaska-Treadwell has mined, treated, and mar- FACTORS GOVERNING VARIATIONS OF COST 51 keted its ore for $1.48 per ton, while the Camp Bird in Colorado producing gold ore subjected to the same process costs $12.50 per ton. The wages are the same, the rock is of the same hardness, the water is no problem in either case, the method of mining even is practically the same. The general management of the Treadwell is probably more economical than that of the Camp Bird, but the difference is not to be laid to this score. The difference comes in the factors mentioned above and those factors are so important that they are worth a more extended consideration. If we have a body of homogeneous material more than four feet thick and continuous, it is evident that the mine openings can be made very largely, if not wholly, in the stuff to be extracted. ^Practically every blow struck produces ore. But reduce the thickness to be mined to one foot and we are at once confronted with the necessity of taking out three feet of worthless material for one foot that is valuable, besides having to take pains to keep them separate. Here we introduce at once an enor- mous proportion of wasted expense that must be borne by the valuable ore. Now break the continuity of the deposit and it is evident that open- ings have to be made entirely through waste material merely to find and open up the scattered bodies. This evidently increases the cost still more. Now, since it costs about as much to handle one kind of rock as another, it is very evident that the cost of handling narrow and non-continuous orebodies may be many times greater than the cost of mining orebodies large enough to afford room to work in. A sort of dead line is estab- lished by a thickness of approximately four feet. Orebodies thicker than four feet are only moderately cheaper to handle than those of about that thickness. The attitude of an orebody has a great deal to do with the cost of extracting it. For instance, in the anthracite coal-fields, in Pennsylvania, and in various other coal-fields, the beds are thrown into a succession of folds with constantly varying slopes. The effect of this is double. First it renders more difficult the taking of the material from the working places to the haulage roads, and secondly it renders necessary a large amount of dead work in order to reach the various parts of the beds and also prevents regular systematic working. These two factors are sufficient to introduce a great increase of cost over that of mining a flat and unbroken seam. 1 1 The importance of this factor is not sufficiently emphasized in the text. In a flat deposit work may be conducted permanently on one level. The shaft, once sunk, is completed and requires no further attention; the pumping and hoisting equipment are not complicated by any necessity of adapting them to a changing base, i.e., remov- ing pumps from one level to another and getting more powerful and larger hoisting engines to provide for increasing depth. Still more important is the comparative absence of deadwork, of the constant extension of horizontal openings on new levels, of the awkwardness and effort required to hoist materials, timbers and men up ver- tical or inclined slopes, and of the work of building chutes or other appliances for 52 THE COST OF MINING Homogeneity of Ore. The homogeneity of the ore is a factor of great importance. This quality determines whether it is necessary to sub- ject to metallurgical treatment the whole or only a part of an orebody. If only a part need to so treated we have a concentrating ore. The man- ner in which the valuable mineral lies in the enclosing rock determines how the concentrating must be done. In any case the process of concen- tration involves loss and expense, and the question of how far this loss and expense is justified depends on the cost and character of the subse- quent metallurgical treatment. The cost of the metallurgical treatment depends primarily on the proportion of ore that must be treated. This proportion varies at dif- ferent mines from 2 to 100 per cent. Obviously, where only 2 per cent, must be treated the cost of treatment as applied to the whole orebody will be less than where all is treated. The inherent metallurgical prob- lem is therefore only reached when the question of selection is settled. Low Costs in Mining May Mean Greater Expense Elsewhere. The above seems a sufficient explanation of the fact that it is necessary to a discussion of mining to include a consideration of the processes by which the ore is to be treated. It is not possible to run a mine intelligently with- out achieving whatever economy there may be in dressing the ore so that the further handling will be facilitated. Efforts to make " records " of low costs per ton have in many cases actually resulted in good mines being run at a loss. In this connection I can no better than repeat some remarks from an article published in the Engineering and Mining Jour- nal some years ago on " Mining Costs at Cripple Creek." "Let us take as a practical example a body of 10,000 tons of ore, running 1 oz. gold per ton. This ore can be shipped without sorting at a handsome profit, as follows: Gross value of ore $200,000 Cost of mining 10,000 tons at $3 per ton $ 30,000 Freight and treatment, $8.25 82,500 Total cost $112,500 Profit $ 87,500 transferring ore or rock to a haulage line. The cost of mining a vertical or inclined deposit may be two or three times as great as it would be to mine the same deposit if it were flat. It appears that the least favorable inclination is one of from 15 to 25 degrees, such that the rock will not slide down, but yet the steepness prevents ordi- nary tramming. . Faulting of the beds or veins and the occurrence of barren patches introduce complications similar to those caused by folding, but very much more variable in their nature. The folding of the formation is invariably regional and is felt rather uni- formly by all of the mines in a given district, while a series of faults may affect only one mine in a group and while that mine may have just as good ore and as much of it as its neighbors its costs will be higher. FACTORS GOVERNING VARIATIONS OF COST 53 "But suppose we reject half of this ore by sorting. By so doing we throw away 5,000 tons that will average $2.50 per ton, or $12,500. The cost of sorting, at 50 cents per ton, will be $2,500 more. Then our shipment will be as follows: re. inen our snipi C^ . . -x. 1* 5,000 tons, at $37.50 per ton. . . . x .C.r. . $187,500 Cost of mining and sorting, $$.50 per ton $ 32,500 Freight and treatment, $11.25 $ 56,250 Total cost $ 88,750 Profit $ 98,750 "In other words, the gross receipts in this case have fallen $12,500. The cost of mining per ton is more than twice as great; the cost for freight and treatment per ton is $3 greater. The apparent showing by the superintendent is very bad; but nevertheless he has made for the company $11,250 clear profit on the trans- action. "In the first case our total cost for mining, freight, and treatment is only $11.25 per ton; in the second case it is $17.75 per ton, but there is more money in the higher cost. This is an example that has been worked out in practice." A false economy often results also from mining too much in a mere attempt to produce a greater output than the development of the mine really warrants. This invariably results in mining waste at a dead loss, but as this loss is on the same basis as the above, there seems no need to follow the discussion further. Effect of Losses in Determining Costs. Mining, milling, and smelting losses often foot up to a total that is simply alarming. Now since it is almost self-evident that crude methods involving high losses may be cheap as regards operating costs, there is always likely to be a question whether there is any economy in low costs obtained at the expense of undue waste, or whether, on the other hand, high efficiency of methods may not be at the expense of excessive cost. I think it has seldom been considered that there are such substantial losses in each department of the business. If we hear a discussion of mill losses in a given district it is to be noticed that the question of mine losses is apt to be ignored ; if attention is called to mine losses there is apt to be silence on the subject of smelting losses. It seems desirable, therefore, to draw attention to some of the salient facts in regard to losses. There never was a mine from which all the available ore was extracted. The ore is exposed to wastage from a variety of causes. If the orebody is large, soft, and homogeneous, as in the Lake Superior iron mines, ore is lost through absolute failure to mine it. Some is forgotten until the openings to it are caved and lost. Some ore is constantly being mixed with sand or rock and left because its grade has been lowered. Some is surrounded by the caving of the overburden into the mine openings in such a manner as to be irrecoverable. System, care, and expense 54 THE COST OF MINING will do much to diminish these losses. It may happen that beyond a certain point the cost of perfecting the extraction may increase very rapidly, may indeed necessitate a different and more costly method of mining. Since mines are worked for the profit and not for the gross value of their output it may be more economical to choose a cheap method in which the waste of ore may be great. For instance, suppose an ore worth $2 a ton can be mined with a 90 per cent, extraction for $1.25 a ton, but that by another method at a 75 per cent, extraction, it can be mined for 90 cents a ton. One hundred tons of ore in the ground would in the two cases yield the following results : ORE WORTH $2 PER TON Tons Cost Velue Profit First case 90 $112.50 $180.00 $67.60 Second case 75 67.50 $150.00 82. 50= $15 gain. ORE WORTH $5 PER TON Tons Cost Value Profit First case 90 $112.50 $450.00 $337.50 Second case 75 67 . 50 375 . 00 307 . 50 $30 loss. It is evident, therefore, that even in the most homogeneous materials the cost of mining is directly affected by the value of the product. The proportion of the deposit that may be sacrificed to obtain lower costs increases as the margin of profit diminishes. When that margin becomes zero, obviously its value is zero and the whole deposit being un- workable is left in the ground. Other Causes of Loss. In flat deposits in hard rock it is nearly always necessary to leave some ore in pillars. Where the deposits are steeply inclined some ore is usually left in pillars unless the body is exceedingly small. In the case of very large bodies of low-grade ore, like the Alaska- Treadwell, large amounts are left in this manner, not only to insure the safety of the mine but also to insure cheapness of working. In every case where pillars are left there is a likelihood of portions being ultimately lost. Where ores are sorted, i.e., where they are not homogeneous, some good material is always rejected through ignorance or carelessness. Where filling is introduced into a stope there is invariably a certain amount of good ore that falls in with it and is lost. Where low-grade ores are sorted out and stowed underground because they cannot be shipped and treated except at a loss there is a great loss of metallic value, but since it cannot be said that such material is payable i r t cannot under present conditions be called a loss. These mining losses are, I believe, seldom measured. More or less accurate guesses are made by the engineers on the ground, but the losses in mining are almost never seriously reported. In a general way we may place mining losses at from 5 to 30 per cent, of the developed ore. FACTORS GOVERNING VARIATIONS OF COST 55 Losses in Milling and Smelting. Milling losses are in some localities painfully and accurately studied; in other places they are casually guessed at or ignored. It is usually fashionable to guess the extraction at 80 to 90 per cent, for concentrating and at about 95 per cent, for cyaniding or chlorinating. Sometimes, as a matter of fact, losses in concentration amount to 40 per cent, or even more. When the milling is not systematically and accurately checked the losses as a rule are much higher than the owners imagine. Little definite information is to be had. Smelting losses are probably determined much more accurately than either mining or milling losses, but they are almost never mentioned in reports to stockholders. In this department of the business it is necessary to take more or less general statements of metallurgists. The importance and economic bearing of the losses sustained in some representative districts are shown in an accompanying table. Much care must be exercised in the interpretation of these figures for economic purposes. The values thrown away are theoretical values. The practical limit of extraction invariably falls short of 100 per cent. The real purpose of the table is to show in current practice the debatable ground in which the curtailment of losses is confronted by a rising scale of costs. PROPORTIONATE RECOVERY AND LOSSES IN 100 TONS OF ORE IN SOME IMPORTANT MINING DISTRICTS Pittsburg coal Lake Superior iron S. E. Missouri lead S. W. Missouri zinc _o 08 Cripple Creek gold Gross value in the ground $110 88 $800 $600 to 760 550 to 744 $460 400 $300 to $340 270 to 332 $500 $375 to 475 187 to 300 163 to 260 $280 246 186 180 $100 64 $1000 $850 to $950 782 to 912 840 to 940 Gross value recovered by mining Gross value recovered by milling Gross value recovered by smelting. . . . Gross aggregate losses Per cent, recovered $22 80 $56 to $250 70 to 93 $128 to $190 58 to 72 $240 to $337 33 to 52 $60 to $160 78 to 94 The aggregate losses represent the maximum of additional operating expense theoretically justi- fiable by the extinguishment of losses. It has been shown in the case of Cripple Creek ores how a mining cost may be too low, and it may be shown in the same way that milling and smelting costs may be too low. As a matter of fact they are very apt to be too low; rather more often too low than too high. Neverthe- less it is perhaps well to point out that the economical cost is always a function of the value of the product. Of the various products of mines gold is the only one whose value is fixed. Where the product is variable in price the proportion of the losses is constantly changing, and the amount of expense warranted by the pursuit of such losses also varies. 56 THE COST OF MINING Since the operation of a mine, mill, or smelter is usually a thing that does not lend itself to a ready adjustment, we find that refinements of methods designed to limit losses are fixed to those that will be economical at rather low prices. For instance, we find copper plants are planned to make savings that will be economical at 13-cent copper instead of at 25-cent copper; lead plants are planned for 4-cent lead and not for 6-cent lead, etc. Waste in Exploitation. At this point it may be pertinent to remark that questions of mere economy and profit may come into conflict with public policy. Much has been said about the necessity of conserving the forests of the United States. A forest when denuded is not beyond the possibility of ultimate replacement; an orebody or a coal seam, on the other hand, once destroyed is gone forever. It is very likely out of the sphere of the Government to interfere in the disposition of properties that have passed to private ownership, but it is quite feasible for the Government to take measures to prevent undue waste in the exploitation of the lands that it still retains; and it seems fully worth while for large private proprietors to consider the future as well as the present and to take measures to prevent some of the shameful wastes that are going on. For instance, no one will deny that ultimately the world will need every ton of coal that can be had. Future generations will be very glad to mine coal from 2-ft. seams, many of which are now utterly de- stroyed by the working out of thicker seams not far below them. Simi- larly, it would seem worth while for land owners to bring pressure to bear in the working of metal deposits like those of southwestern Missouri where there is a waste of at least 50 per cent, of the zinc, and at Lake Superior where there is an enormous waste of low-grade iron ores which have been caved in and left behind during the extraction of richer por- tions. Wherever the introduction of these economies in material can "be effected without financial loss, their introduction can do the operators no harm and will certainly be a benefit to the land owners and to the public at large. Statement of Mining Costs. A true statement of mining costs, there- fore, should with due consideration of the above factors fall under the following headings : (1) General expense of the company 1 Exploration and development 2 (2) Mining (3) Milling (4) Smelting, refining and marketing. . Stoping cost 3 Stoping and sorting losses 4 Amortization of mining plant 5 Transportation to mill 6 Operating costs 7 Losses 8 Amortization of milling plant 9 Transportation to smelter 10 Operating costs 11 Losses 12 Amortization of smelting plant 13 FACTORS GOVERNING VARIATIONS OF COST 57 Unfortunately it is impossible to treat the subject so comprehensively owing to the absence of adequate reports. Most companies are igorant of both their costs and their losses; some know their costs but do not know their losses; very few know both. Some of the most scientifically managed concerns, like the American Smelters Securities Company, issue very few reports, although the management of this company does publish one report, that of the Esperanza Limited, which tells the whole story, but even in that model statement there is no specific reference to the amortization costs nor to mining and smelting losses. Where a company does not own a mill or smelter it cannot, of course, state details for any amortization charges or operating costs or losses for those departments. Nevertheless, these things cannot be ignored either scientifically or commercially. Charges for them are fixed by contract. When a mine sells its ore to a smelter it pays commercially for amortization and operation of the smelter under treatment charges and for the losses by arbitrary deductions. In the absence of such reports as will give the essentials the most feasible plan of treating the subject seems to be to divide the costs into three main headings: (1) Mining, including development; (2) milling, including transportation from mine; (3) smelting, refining, and marketing, including transportation from mill and to markets. Generally the reports, or reliable information, are sufficient to give a fairly close approximation to the costs. It is seldom indeed that any statement can be found showing the charge to be made under each of these headings for amortization of plants, but there is usually some means of getting an idea of it. This can be done many tim.es by simply ignoring credits to capital on construction accounts over a considerable period of years. This can be done on the logical principle that since the construc- tion is all for the benefit of the operation of the mine it should all be absorbed in operating accounts. It will hardly be advisable to give in all cases the sources of information on which the cost estimates are based ; but it is possibly worth while to assert that the figures are not far from the truth in spite of certain differences from published statements. Management. In discussing the factors that determine the cost of mining I have touched thus far only upon the tangible and definite ones of whose importance we can get a more or less logical measure; but the discussion would not be complete without some mention of the intangible and unmeasured but important factor of management. I wish to apply the term in its broadest sense and include in it the financing of an enter- prise, the determination of its scope, the selection of its methods, and its administration. To begin with, it is noticeable that enterprises in a given district have much in common and are apt to differ in methods from the enter- prises of other districts. For instance, in Cripple Creek it is rare for a 58 THE COST OF MINING mining company to treat its own ores, while in Butte most companies have done so; in the Lake Superior copper mines the underground work is done largely by contract with the miners, while in Arizona this is exceedingly rare, and so on. Each district has its own peculiar methods. There is a probability that the methods of a given district are pretty nearly correct because they are inevitably the result of experiment, or evolution, and the fit have survived. It is logical to expect this. When a man comes into a district that is new to him and says that the industrial methods in use there are wrong, he does nothing less than declare that the thousands of people who have developed those methods are either ignorant or stupid or lacking in enterprise. Once in a thousand times he may be right; in 999 cases he doesn't know what he is talking about. To illustrate how profoundly true this principle is even in the face of reasons to the contrary, I may be pardoned for relating an experience of my own: While traveling on the slopes of the Andes in Ecuador ten years ago I noticed that my traveling companion, a Spanish-American, did not wash or bathe, but carried in his vest pocket a small bottle with which he occasionally rubbed his nose. Whenever we came to a stream I would very likely take a bath. To this Rodriguez objected vigorously, saying, "If you want to live in this country without getting the fever, you must observe two rules, namely, sleep in a closed room, and don't bathe out of doors." I told him, and thought that the true laws of health demanded fresh air and cleanliness, and probably every Anglo-Saxon would have said the same thing. But, on returning to this country a few months later, I heard of the mosquito theory of malaria and saw a new light. Rodriguez, was right. Observation had taught the natives empirically two ways of keeping off mosquitoes and fairly effective ways. They could not give the reasons but they got results. It is quite true that a mosquito net is just as good as a coat of dirt to ward off the fever- bearing insect, and that by means of it one may also enjoy the luxury of fresh air; but the point is the mosquito must be kept out. The person who does not realize this is running a risk of death from sheer ignorance. The same thing may be said of superficial criticism of customs in general and of mining customs in particular. There is very apt to be a "joker" in the game of the rash innovator and he may find himself and his new methods up against a hand of five aces. I feel, therefore, that, as a general rule, it is unfair and stupid to measure the methods of one district by the standards of another, but this does not mean that the methods in use are always the best. Among operators in the same district, where all are equally conversant with the governing factors of the situation, we will invariably find some "who get better results than others. We will find, running side by side mines that show great and apparently inexplicable differences in cost. We will find in any district examples of mines that have failed under one / FACTORS GOVERNING VARIATIONS OF COST 59 management and succeeded under another. While the effect of man- agement is well understood by every one, it does not lend itself to ex- pression in figures; nevertheless there are some things that may be said of it of a nature pertinent to this discussion. On thing has been noted as a rule; viz., rich mines cost more to run than low-grade mines. It is generally conceded that this is to be ex- plained by the liberality of the carefree. There is something more than this. Suppose two deposits are found 20 miles apart, one of ore worth $5 a ton, and the second worth $2 a ton. The first is opened up by the first method that occurs to the owners, the ore is shipped and it is discovered that is costs $3 a ton to mine it. The owners congratulate themselves on their 40 per cent, profits. Their business is established; they are making lots of money; to make changes and improvements is laborious, expensive, may involve delay in marketing the product and may not turn out well after all. Why not leave well enough alone? The second body of only $2 ore, after being opened up, is left alone for a while. It is considered too low-grade to pay. But some enter- prising person at last comes along who thinks it may be worked. He chooses for a superintendent, not the first man he meets, last of all some friend or relative, but some one he thinks able to get results. All possible methods are studied in order to choose the cheapest. All possible precautions are used to avoid unnecessary expenditures on plant. Every employee is impressed with the necessity of efficiency. After the enterprise is finally going it proves that the ore is being mined at $1.20 per ton and the triumphant owner of the $2 ore also secures 40 per cent, profit on his product. Logical Reason for Rich Mines Costing More. There may be no physical reason for this difference in cost; there may be no intentional .liberality on the part of the owners of the richer property. Nevertheless, i there is a logical ground for a difference in the selection imposed by J necessity, In the rich mine there is no necessary selecton; ergo there is no selection. We may, therefore, count on a certain increment, some- times very large, sometimes very small, of additional expense in mining rich ores as compared with poorer ores. Necessity may work vast economies in the same mines. The Cham- pion iron mine at Beacon, Mich., was producing ore in 1892 at $2.50 a ton. It had then been running 25 years and was reputed to be a very well managed mine. In 1899, the mine was deeper, the orebodies smaller, wages the same, the plant the same, the management the same, but the ore only cost $1.25 per ton. Necessity had worked this change through the panic of 1893. Similar changes were wrought in other mines. Hoover's Theorem. The economic ratio of treatment capacity of ore reserves is a question that has been brought up by H. C. Hoover and vigorously discussed by many prominent engineers. Ross E. Browne 60 THE COST OF MINING ("Working Costs on the Witwatersrand ") has recently brought addi- tional evidence to bear out the correctness of Mr. Hoover's conclusions that economically mines should be worked out with great rapidity and that additional plant should be provided for the extraction of discovered ores within periods of from three to six years. There seems to be no doubt of the mathematical correctness of this conclusion, but it seems to apply logically only to gold mines where there is no practical limit to the sale of the output. In the mining of products other than gold it seems that a limitation is put upon the output by the market. In the case of Lake Superior iron ores, for example, there are fifteen hundred million tons in sight. To work these all out and convert them into pig iron in six years is not only a physical impossibility, but would be econom- ically absurd. It is not at all absurd, however, for an isolated operator among many to apply this principle to his own profit. It may be that the application of this very principle has resulted in the formation of gigantic trusts. It seems probable that the growth of the Carnegie Steel Company in competition with its neighbors may have been largely due to the application of this idea to steel manufacturing; but in course of being fully worked out, the result was the formation of the United States Steel Corporation which now controls 75 per cent, of the iron ores of Lake Superior and from mere extent of growth has landed in a position where the application of Mr. Hoover's principle is no longer possible. 1 Economy and Speed. It is to be remarked in this connection that a wide-awake manager may see his way clear to overlook questions both of a high percentage of extraction and of cheap work to reap the benefits incident to speed. Take, for example, a body of soft iron ore of limited cross-section pitching rather steeply into the earth. The requirements of thorough extraction and cheap working would very likely be satisfied by the use of the slicing system of mining, but in such a case the volume of product would be limited because the area on which slicing can be con- ducted is practicaly limited to a single horizontal section of the orebody. This limitation of the product during years of high prices might be a very serious handicap and it would probably be wise to adopt a different system, perhaps less effective and more costly, but which would allow the working of a number of levels at once and the turning out of a large output at an advantageous time. The management of large properties may come into conflict with public economy in the following way: Large sums of money are locked up in the purchase of great tracts of mineral lands, far in excess of the requirements of the immediate future. The sums thus invested are usually raised by bond issues and the interest on these, together with taxes, amount annually to large sums which the public must pay. These 1 These were the figures in 1908. Since then changes and developments have altered the proportions somewhat. FACTORS GOVERNING VARIATIONS OF COST 61 charges are inevitable, and are quite independent of any desire on the part of such holders to raise prices through the opportunities afforded by the existence of partial monopolies. Conspicuous examples of this state of affairs are afforded by the United States Steel Corporation, es- pecially since it has absorbed the Tennessee Coal, Iron, and Rail- road Company, and by the Philadelphia & Reading Coal and Iron Company. Both of these great corporations have mineral lands sufficient to guarantee their product far into the future, but they represent invest- ments on which charges of many million dollars a year must be paid without any immediate return. CHAPTER V PARTIAL AND COMPLETE COSTS TERMINOLOGY AND METHODS OF ANALYSIS PARTIAL AND COMPLETE COSTS OPERAT- ING, MAINTENANCE, DEPRECIATION, AND AMORTIZATION DIVIDEND COSTS AND SELLING COSTS EXAMPLES OF DEPRECIATION ANALYSIS OF COST STATEMENTS AMORTIZATION TABLES TABLE OF PLANT COST PER ANNUAL TON AND LIFE OF MINES INVESTORS' PRECAUTIONS. I KNOW from experience that many operating men, though deep in details, are acquainted only with partial costs. Their point of view does not reach the tout ensemble. For instance, a man may be in charge of a mine and called manager or superintendent. His business ends when the ore is delivered into cars to be shipped to the mill. Up to that point he thinks he is familiar with the costs. Probably he is not, though he may be. It is more likely that he knows little or nothing about the capital invested in the mine and the average annual value of it. He is probably full of information about the current operating costs of his one department the mine. He does not know what is involved in transportation to the mill, in milling, in smelting, in general expense. His knowledge of the business as a whole is very limited. In talking with other mining men he may be elated or depressed at learning that his costs are lower or higher than theirs, but he may find out later that he has reasoned from false premises. He is really talking about a segment of the business to men who are also talking about segments of the business, and the segments may be, and are very likely to be, different in each case. Now such a man is very apt to graduate into a mining engineer and to examine mines and report on them without once giving consideration to the limitations he is under. He repairs by experience some of his mis- apprehensions, but his conception of the business is very likely to remain only a partial conception; at the best he is clear about only a part and hazy about the rest. The costs reported to stockholders and investors are very apt to be only partial costs. They are almost never so expressed as to give one a true understanding of the business. This may not be intentional; merely a narrow view of the financial realities. In the following chapters I shall review the statements of many mining companies and it will be seen that I have reconstructed nearly all of them, putting my own inter- pretation upon their figures and in many cases rejecting their figures as inadequate and substituting others. I would not be rash enough to do such things without reason. It is in every case merely drawing an 62 PARTIAL AND COMPLETE COSTS 63 irresistible conclusion, such conclusions as no two men would argue about so long as they had the same point of view. I propose here to describe my method and point of view in cost analysis; but first I shall define certain expressions that are in common use in this discussion. There is a certain confusion in the use of the terms, operating, main- tenance, depreciation, and amortization. In this book I intend to have a perfectly clear meaning for three of these terms. Maintenance is a term to which I attach little importance. It is simply the cost of keeping things in good order and is an undeniable operating item. I shall assume under all circumstances that maintenance is included under the head of operating. Operating, or current operating, charges are those that relate to the obtaining of product. It includes all the labor, salaries, and supplies used on the actual yield of a mine for a limited period, but excludes all charges that may be a preparation for a yield to be obtained later. Note that I say "for a limited period;" for I make it a cardinal and self- evident axiom that whenever we extend our point of view to the whole life of a mine or property, we immediately abolish the difference between operating and capital costs. Then all expenses are operating expenses. The capital charges of depreciation and amortization are only suspense accounts intended to exhibit the difference between operating for a short period and operating for the whole period. Now unless we are holding a post-mortem examination on a dead mine we never know just what the difference is. These items then are estimates, and I feel it necessary, in order that one may understand my cost analyses, to explain carefully how I make these estimates. Frequent reference will be found in coming chapters to dividend costs and to selling costs. By selling cost I mean the real or complete cos.tr the cost at which the product must be sold to justify the enterprise. It includes all capital employed, with interest for the whole period of operating. Obviously, if these total expenditures amount to say $10,- 000,000 and the total return is only $9,500,000, the enterprise is not a suc- cessful one. But suppose that of the ten millions spent, the sum of three millions is represented by two millions spent on initial plant and one million for interest on that sum at 5 per cent, for 10 years during which there were no dividends. These three million dollars are not operating charges, at least they are no.t the current daily operating charges that the mine manager knows about. His operating charges are only $7,000,000 while the proceeds are $9,500,000. Here we have $2,500,000 to be paid in dividends. Here our selling cost is $10,000,000. The enterprise is really a failure unless our returns equal that amount. But the dividend cost is only $7,000,000. This sort of a difference is practically universal in mining cost statements. I never knew of one in which the real selling cost was calculated. 64 THE COST OF MINING As a general rule the cost of production is understated much more than it would be in this case if it were given at 7 instead of 10; because 7, the dividend cost, is in itself a composite figure. It consists of two elements: (a) those costs that plainly belong to merely getting out the pro- duct, and (6) some other costs that seem to be creating something perma- nent, but really are not. These things are apt to be euphemized into " capital charges." In the hypothetical case 7, being the dividend cost, is very apt to be made up of the figures 5 and 2; the first being "working charges " and the second being "construction." This construction seems to be permanent; it is "doing great things for the property," "working wonders." In fact it is absolutely essential; but it must be paid for before dividends appear, and therefore is included in the dividend cost: but our euphemistic report gives the working cost, the cost of production, at 5. Remembering that we found at the very beginning that the real cost was 10, we must explain that the difference is made up of amortization and depreciation. Amortization accounts for the difference between 10 and 7, depreciation accounts for the further difference between 7 and 5. The omission of these sums may not, possibly, be of any injury to any one; but it certainly results in an outrageous underestimate of costs. By depreciation, then, I mean current construction costs; improve- ments. Until a mine is dead and ready to be buried in a watery grave there are always expenses of this kind. Depreciation means literally the process of losing value: practically it means the exact opposite; it means expenses undertaken to counteract loss of value. It may be asked, why is this not maintenance? It is maintenance. It only seems not to be maintenance because the items that compose these charges have the appearance of being new plant, not merely replacements of old plant. I shall give some examples. Let us suppose a mine to be started on a very large tract of land (to avoid all complications except natural ones, let us get rid of our neigh- bors), with a vein running north and south and dipping vertically. Two shafts are started, a mill erected and the property put in operation. At the depth of 500 ft. the south shaft runs out of the ore; but the north shaft is in good ore at 700 ft. Every level goes farther in that direction than the one above it. A new shaft must be sunk, No. 3, further north. It must be sunk 1500 ft. at a cost of $150,000 before it produces anything. Such an expenditure is often set down as "capital," but this would be frequently misleading. The construction and equipment of No. 3 shaft is pure depreciation an expenditure that should be written off to operat- ing as fast as it is made. No. 3 does nothing but take the place of the south shaft. PARTIAL AND COMPLETE COSTS 65 Again, the original north shaft has reached the bottom of the ore. "We have again been disappointed. It was unfortunate that we equipped No. 3 as we did, " I might quote from an imaginary, but very frequent report, " because certain unforeseen conditions have arisen that make it evident that a different plant would have served our purpose better. It is found now that the ore shoot has a pitch averaging 54 to the north along the plane of the vein. Evidently a shaft inclined to the northward at that angle would follow the ore. A single shaft like that would accomplish our purpose as well as a number of vertical ones, or a series of long drifts from a single vertical one. Moreover, we find that at the 1500-ft. level of No. 3 shaft the vein, instead of standing vertical as it has above, is now dipping to the west at an angle of only 45. After mature consideration it has been decided that our best course will be to put a curve in No. 3 shaft and change it into an incline below the 1500-ft. level, following the oreshoot in a northwesterly direction. This will necessitate changing our equipment. Our flat rope hoist, designed for handling cages in a vertical shaft, must be replaced by a round rope engine with a drum. We must install skips, for which our engineers assure us it will be best to cut undergrouud loading pockets." It is useless to proceed further. It is the same problem that caused the sinking of No. 3 shaft. The solution, however, appears new. One might cite "capital charges/' "construction" or whatever it is called, in hundreds of cases like the above. The same thing appears in all kinds of disguises. There are always expenditures going on that appear to be for permanent improvements, really are for permanent improvements, but which are really nothing but expenses required to keep the property from depreciating; in other words, to enable it to be a good plant and not get antiquated, or no longer adequate to changed requirements. Money is even spent uselessly, often merely for fashion; for fashion is so far from being confined to women's finery that it reaches the methods and appliances in the depths of mines. Sometimes construction that amounts to nothing but depreciation is combined with construction that does make a real addition to capacity and earning power and is truly capital. It is necessary, therefore, to explain that in the analyses of cost in the following chapters I have not followed any exact rule. The analysis is founded on the circumstances exhibited by the reports. These, however, fall into two general groups: rich mines that have built up their plants entirely out of profits or in which at least there has been a continuous growth so that the original capital is only an insignificant fraction of the total investment; and low- grade mines not rich enough to start themselves and not profitable enough to make the original investment soon disappear. In the first case I make no attempt at calculating amortization, but adopt the much simpler method of writing off all expenditures, over as long a period as I can 66 THE COST OF MINING get figures for, to the cost of the production. In the second case I charge all expenditures of every kind to capital up to the time when the mine is producing. After it is producing I charge to capital those expenditures made to increase the capacity until the mine has reached what appears to be an average production. Then this total is written off, with inter- est, over a period that seems reasonable, by charging up each year a sum calculated to retire the investment within the required time. This charge is the amortization of capital. Ordinarily I put the period of initial capital expenditure as far back as possible and, unless the increase of capacity is very considerable, I charge off the yearly new construction to operating and call it deprecia- tion. In most cases those who are interested will see from the cost analyses themselves the method adopted. A word further about amortization. When the sum to be written off is determined it is necessary to fix two further elements; the rate of interest to be charged and the period in which the principal must be extinguished. The first I have taken in all cases at 5 per cent. The sec- ond is the great field where judgment and experience come into play; wherein the mining business exhibits its peculiarities and where it is different from any other form of commercial enterprise. We must discuss it fully, but first let us show the methods by which amortization may be calculated. One way is shown by the following table in which a sum of money is returned to the investor in equal installments, which which are supposed to be part interest and part principal. The part that represents the return of principal for each year is deducted from AMORTIZATION TABLE. 5 PER CENT. Showing number of years in which $1,000 is cancelled at 5 per cent, annual interest and 5 per cent, amortization, or $100 annual installment. Years Amortized Interest Balance due 1 50.00 50.00 950.00 2 52.50 47.50 897.50 3 55.12 44.88 842 . 38 4 57.88 42.12 784.50 5 60.77 39.23 723.73 6 63.81 36.19 659.92 7 67.00 33.00 592 . 92 8 70.35 29.65 522.57 9 73.87 26.13 448 . 70 10 77.56 22.44 371.14 11 81.44 18.56 289.70 12 85.51 14.49 204.19 13 89.79 10.21 114.40 14 94.28 5.72 20.12 15 98.99 1.01 0.00 PARTIAL AND COMPLETE COSTS 67 the original sum, and for the next year interest is calculated only on the diminished principal; but, since the yearly installments are equal, as the yearly interest requirements diminish the part applying to the return of principal will increase so that the extinction of capital becomes progressively more and more rap'd. Another method of extinguishing capital by annual installments is by creating a sinking fund which will increase by investment. The sum of the investment of annual installments with accrued interest is supposed to equal the capital at the end of the required period. The following tables designed to exhibit this method are taken from Hoover's Principles of Mining. PRESENT VALUE OF AN ANNUAL DIVIDEND OVER YEARS AT PER CENT. AND RE- PLACING CAPITAL BY REINVESTMENT OF AN ANNUAL SUM AT 4 PER CENT. Years 5 per cent. 6 per cent. 7 per cent. 8 per cent. 9 per cent. 10 per cent. 1 0.95 0.94 0.93 0.92 0.92 0.91 2 1 . 85 1 . 82 1 . 78 1 . 75 1.72 1.69 3 2.70 2.63 2 . 56 2 . 50 2.44 2.38 4 3.50 3.38 3.27 3.17 3.07 2.98 5 4.26 4.09 3.93 3.78 3.64 3.51 6 4.98 4.74 4.53 4.33 4.15 3.99 7 5.66 5.36 5.09 4.84 4.62 4.41 8 6.31 5.93 5.60 5.30 5.04 4.79 9 6.92 6.47 6.08 5.73 5.42 5.14 10 7.50 6.98 6.52 6.12 5.77 5.45 11 8.05 7.45 6.94 6.49 6.09 5.74 12 8.58 7.90 7.32 6.82 6.39 6.00 13 9.08 8.32 7.68 7.13 6.66 6.24 14 9.55 8.72 8.02 7.42 6.91 6.46 15 10.00 9.09 8.34 7.79 7.14 6.67 16 10.43 9.45 8.63 7.95 7.36 6.86 17 10.85 9.78 8.91 8.18 7.56 7.03 18 11.24 10.10 9.17 8.40 7.75 7.19 19 11.61 10.40 9.42 8.61 7.93 7.34 20 11.96 10.68 9.65 8.80 8.09 7.49 21 12.30 10.95 9.87 8.99 8.24 7.62 22 12.62 11.21 10.08 9.16 8.39 7.74 23 12.93 11.45 10.28 9.32 8.52 7.85 24 13.23 11.68 10.46 9.47 8.65 7.96 25 13.51 11.90 10.64 9.61 8.77 8.06 26 13.78 12.11 10.80 9.75 8.88 8.16 27 14.04 12.31 10.96 9.88 8.99 8.25 28 14.28 12.50 11.11 10.00 9.09 8.33 29 14.52 12.68 11.25 10.11 9.18 8.41 30 14.74 12.85 11.38 10.22 9.27 8.49 68 THE COST OF MINING PRESENT VALUE OF AN ANNUAL DIVIDEND OVER YEARS AT PER CENT. AND RE- PLACING CAPITAL BY REINVESTMENT OF AN ANNUAL SUM AT 4 PER CENT. Continued Years 5 per cent. 6 per cent. 7 per cent. 8 per cent. 9 per cent. 10 per cent. 31 14.96 13.01 11.51 10.32 9.36 8.56 32 15.16 13.17 11.63 10.42 9.44 8.62 33 15.36 13.31 11.75 10.51 9.51 8.69 34 15.55 13.46 11.86 10.60 9.59 8.75 35 15.73 13.59 11.96 10.67 9.65 8.80 36 15.90 13.72 12.06 10.76 9.72 8.86 37 16.07 13.84 12.16 10.84 9.78 8.91 38 16.22 13.96 12.25 10.91 9.84 8.96 39 16.38 14.07 12.34 10.98 9.89 9.00 40 16.52 14.18 12.42 11.05 9.95 9.05 Annual rate of dividend Number of years of life required to yield per cent, interest, and in addition to fur- nish annual installments which, if re-invested at 4 per cent, will return the original investment at the end of the period. Per cent. 5 per cent. 6 per. cent. 7 per cent. 8 per cent. 9 per cent. 10 per cent. 6 41.0 7 28.0 41.0 8 21.6 28.0 41.0 9 17.7 21.6 28.0 41.0 10 15.0 17.7 21.6 28.0 41.0 11 13.0 15.0 17.7 21.6 28.0 41.0 12 11.5 13.0 15.0 17.7 21.6 28.0 13 10.3 11.5 13.0 15.0 17.7 21.6 14 9.4 10.3 11.5 13.0 15.0 17.7 15 8.6 9.4 10.3 11.5 13.0 15.0 16 7.9 8.6 9.4 10.3 11.5 13.0 17 7.3 7.9 8.6 9.4 10.3 11.5 18 6.8 7.3 7.9 8.6 9.4 10.3 19 6.4 6.8 7.3 7.9 8.6 9.4 20 6.0 6.4 6.8 7.3 7.9 8.6 21 5.7 6.0 6.4 6.8 7.3 7.9 22 5.4 5.7 6.0 6.4 6.8 7.3 23 5.1 5.4 5.7 6.0 6.4 6.8 24 4.9 5.1 5.4 5.7 6.0 6.4 25 4.7 4.9 5.1 5.4 5.7 6.0 26 4.5 4.7 4.9 5.1 5.4 5.7 27 4.3 4.5 4.7 4.9 5.1 5.4 28 4.1 4.3 4.5 4.7 4.9 5.1 29 3.9 4.1 4.3 4.5 4.7 4.9 30 3.8 3.9 4.1 4.3 4.5 4.7 PARTIAL AND COMPLETE COSTS 69 Let us now return to the problem of fixing the time for the amorti- zation of invested capital. As remarked above, this is easy in the case of a worked-out mine. To do it accurately in the case of a living and prosperous mine is, frankly, impossible. But as this is a vital question for every investor it is absolutely necessary to give an answer, be it cor- rect or not. For, whether the investor realizes it or not, he is always staking his capital on the probability of having it returned within a cer- tain time. In other words, he is gambling on the life of the mine. If a man invests money in a mining stock which yields only 5 per cent, on the price he pays for it, and if at the same time he can get 5 per cent, on a well-secured bond, he must calculate that the mine is as permanent as the bond. If he gets a dividend of 10 per cent, and calculates that 5 per cent, is a sufficient interest on his money, it follows that he is counting on a life of at least fifteen years for the mine. It happens that the prdbable life of mines varies between wide limits. In the case of coal, building stone, cement, iron ore (and in sporadic cases among precious metal ores), it has been proved possible to find enough ore in a few years to assure the life of the enterprise twenty or more years in advance. Of course the period of activity in sight is the minimum amortization period; the longer the period the more stable the investment, because the longer the life the greater the probability of equalizing vicissitudes. But in general the mines that can see ahead twenty years or more are rare. Many profitable ones have not a single year's ore in sight and yet the probabilities may be in favor of a consider- able life. The only means by which one may form an opinion of the probabilities are acquaintance with the history of mines and ore deposits, and acquaintance with the state of development of the property, the rate of extraction, the ore in sight, and the soundness of the management. The cardinal point for the reader's attention is the varying life estimate for various types of mines, and the highly variable rate of amortization that this estimate imposes. How These Figures Interest the Investor. The question is often asked, What bearing do these theoretical or half-forgotten questions about capital originally invested, and its theoretical retirement, have for the investor who buys or sells stocks in mining properties at valuations that have not the slightest reference to the original investment or how it is disposed of? To this various answers may be given. I have already pointed out, but may as well repeat (it cannot be repeated too often), that exactly the same considerations apply to the extinguishment of the price paid for a share of stock, which is the form in which investment is made by the average man, as apply to the capital used to build a mill. It is no argument to say that mining shares are mainly used as counters in a game. That it is true at all is due only to the fact that a portion of the public is imposed upon by false analogies; they are often induced to 70 THE COST OF MINING buy highly speculative mining stocks on the same income basis as they buy the soundest securities. The very mining shares that I have called " highly speculative " might in many instances at a sane valuation be just as ." sound " as the soundest. A sound business must be a paying business; one that is good for both interest and principal. The great fault with the mining business from the point of view of the moderate investor is that it is very easy for the sake of a fair amount of interest to lose the principal. There is no need of this. By studying out the vital question of the life of a mine with its concurrent rate of amortization, and by steadily refusing to believe that the current construction is "capital," one may eliminate overvalued properties pretty rapidly. It is a good rule not to buy stocks in concerns that are too wise to issue full reports. If there is any business in the world where a full knowledge of certain elemental facts is necessary for a safe and sane investment it is surely mining. Furthermore, at the last analysis the price of a commodity must be governed by its cost. It is highly important, therefore, to know when prices are excessive and therefore unstable. It is one of the objects of this book to show what the cost of production on a grand scale in various important products of mines really is. In such computations the capital charges are a vital factor and I have thought it desirable to explain as fully as possible my conception of a proper treatment of them in order that the reader may be able to judge for himself the justness of my conclusions. One rather curious fact should be borne in mind i.e., that depreciation will vary not according to the original cost of a plant but according to the prevailing level of prices. The analogy of an automobile is perhaps clearer to the average person than that of a mine, but I am satisfied that it is as true for the latter as for the former Suppose a man bought an automobile in 1917 for $2,000. If the price level were the same he might have sold this car and obtained a new one for $1000 additional. That would have been his depreciation. But in 1919 a car of the same class might sell for $3000 and his first car might have value in proportion, say $1500. But his depre- ciation would be $1500. Thus in many cases sums set aside for depreciation in pre-war times must now be insufficient. CHAPTER VI COAL IMPORTANCE OF COAL REMARKS ON ITS ORIGIN CYCLES OF GEOLOGIC HISTORY THE PALEOZOIC COAL FIELDS MESOZOIC TERTIARY STATISTICS OF COAL PRODUCTION. Modern civilization is propelled by the annual combustion of upward of 1,500,000,000 short tons of coal. This vast use of power other than human or animal muscle is the basic fact in the mightiest revolution in industry, in art, and in habits that the human race ever experienced. Every time we press a button to turn on an electric light, every time we enter an elevator or a street car, we participate not only in a human revo- lution, but in a great geologic fact; for the mining and destruction of coal removes some of the important strata of the earth's crust. Coal mining is the basis and dependence of other kinds of mining just as it is of other industries. And farther, since coal mining is one of the simplest and commonest of mining operations, it serves as a standard by which the complexity and cost of other kinds of mining may be appraised. If coal were not so abundant and widespread its use could not, of course, be so extensive and fundamental. The fact of its wide distribu- tion is the most powerful element in the conduct of the business. If coal were not cheap it could not be so extensively used; it would not, there- fore, be so valuable. But because it is cheap it is often wasted; it is cheap because it can be offered in the market by innumerable competitors, whose aim is not the wise use of coal, but ready money profit from it. Hence this most valuable of mineral resources has been in considerable measure crudely and greedily exploited. The subject of the origin, history and distribution of this substance is simple enough to be understood easily by any one willing to give it at- tention; but at the same time it involves facts about the changes that have taken place, and are still taking place, on the earth's crust that are hard to grasp. Coal is being formed at the present day in immense quantities over immense areas. The present age is therefore a coal form- ing age, but whether conditions are favorable for burying it under accumulations of sediment so that the coal now being formed may be preserved indefinitely in the earth's crust, and whether the formation of coal is more general in this age then in past geological ages, or less so, are questions not so easily answered. Coal is nothing but buried peat; 71 72 THE COST OF MINING coal formations are nothing more than a series of swampy land surfaces that were finally buried in a variety of ways under sediments. People living in certain areas of the Anglo Saxon world, for instance, those of the southwestern half of the United States, of the whole of Aus- tralia and South Africa may never have seen a peat-bog or have any clear idea of what it is like. To these it may be a matter of surprise to learn that the natural surface of the earth north of a line drawn across North America from Vancouver Island to New York City, and across Europe and Asia from Paris to Moscow to Vladivostok, is occupied to a considerable percentage of its area by peat-bogs. How large the per- centage is I do not know: to find out would be a question of mapping some 8 or 9 million square miles of land in a solid block occupying the sub-artic and north temperate zones of the northern hemisphere. In all this vast space, wherever the climate is damp enough or wherever the low lands are partially flooded, mosses and semi-aquatic trees like cedar, tamarack and alder spread over the surface, holding and absorb- ing water like a sponge. The trees and plants live and die partially immersed in water. When they fall they are in large part covered with water which preserves them indefinitely from decay. A woody, or at least a vegetable, mass accumulates for ages until it finally forms a muck of almost indefinite depth, always completely saturated with water under the spongy covering of moss. The moss indeed seems like a carpet spread over the surface of a lake; the traveler sinks in it to his knees, and while he sees before him the prospect of a wide plain or mea- dow he finds its surface trembling under his footsteps for yards around. If he has the bad luck to step into a water hole, or break through the mossy carpet, he instantly mires in the vegetable coze which may be a hundred feet deep. Such are the " tundras" of Siberia and Alaska, the "muskegs" of Canada, the "tamarack swamps" of Michigan, the bogs of Massachusetts and of Ireland and the marshes of Germany and Russia. I am sure that the area of these swamps is far greater than that of all the coal fields of the world put together. The vegetable ooze and the mat of preserved wood is peat. It is incipient coal. It constitutes in itself an unspeakably great potential fuel supply, at present only casually used because it cannot compete with the more convenient and desirable fuels that may be cut from the forest or dug out of the rocks. These northern marshes are not the only places where peat accumu- lates. The cypress swamps of Arkansas and Louisiana, the dismal swamp of Virginia, the mangrove swamps of tropical tide flats are also receptacles for such vegetable ooze; but in general the south temperate and tropical zones are not very favorable for them. The hot sun quickly dries up a swamp unless it is replenished by a constant supply of water. Even an occasional drought will expose the vegetable mass to rapid destruction by oxidation or rotting; in a dry climate therefore, or in one COAL 73 in which the rainy seasons alternate with prolonged droughts the process is impossible except under very unusual circumstances. That is why so many people may live and die without knowing what peat is, although it is really so abundant. The mere growth of peat on the surface does not lead to the formation of coal. To complete the process it is necessary to bury the peat under sediments. The conditions that favor such burying are not by any means so common as those which permit of the accumulation on the sur- face. Undoubtedly most of the peat that forms is eventually destroyed again without ever being buried. A change of climate, or of drainage, easily puts it in the way of destruction. The manner in which peat swamps may be effectively buried is well worth a moment's consideration. It is really a matter of common geography. Every school boy knows about the dykes of Holland and the levees of New Orleans; that these dykes are to protect large areas from overflow either by the tide or by the river floods or by both. Both tracts are in the deltas of large rivers the Rhine and the Mississippi. When a river builds a delta into the margin of the ocean it raises a flat pile of mud higher and higher and the river itself debouches right on top of the pile and usually sends its waters trickling in smaller or larger streams down the sides of it in all directions. The banks of the main river and each branch are invariably higher than the country between the branches, at least they become so sooner or later. Eventually a stream will break through one of these banks and start a new channel in the hollow between old channels and eventually fill it up with silt higher than the old channels which in their turn become low ground. Suppose such hollows were filled with peat swamps; these swamps would sooner or later be covered by the river muds and the peat would become a coal bed. The Rhine delta is actually in a peat forming climate today and if it were not for the interference of civilization nearly the whole of Holland and a good part of Belgium and Friesland would be a coal forming region on no mean scale. All that would be necessary would be the continuance of the present climate and a maintenance of the present sea level; or, better still, a slow substance of the delta at approximately the rate at which the river can fill it up. The peat swamps might grow deeper indefinitely always keeping their surface up to the level, or slightly above the level, of the river channels, thus helping to maintain these channels for long periods. In this manner the rivers would slowly build their beds and banks higher and higher, and build out deltas further and further. The waves and shore currents would spread the mud in bars and beaches along the shores of the delta and enable the beaches to creep further out into the sea. As they crept out the peat bogs would follow them. Thus the whole area of the delta between the river channels and the sea beaches would be filled with enormous accumulations of peat interrupted, of course, by 74 THE COST OF MINING occasional patches where overflows would pour in mud, by other patches where the water would become too deep for the swamp plants and thus make lakes, or by sand dunes blown up from the beaches. If the sub- sidence of the delta should become too rapid for the river to maintain it the sea would finally break through the beaches and begin flooding the swamps with salt water, killing the growth and immediately commence to cover the peat with beach sands and sediments. The shallow bottoms of the bays would be occupied by marine animals and plants: if the water were not muddied by a constant supply of fresh silt, a limestone might be deposited instead of mud. Still further a portion of the peat bogs might be rapidly covered by a march of sand dunes blown from the beaches. Thus in the case of a large river delta in a damp, cool climate we can see how there might be very deep and very extensive deposits of peat and how these deposits would, in the course of time, under stable conditions be covered either by river mud, marine sediments or by wind-blown sand. It is also easy to see how a whole delta might be covered over by an ac- celeration of the subsidence, but when the subsidence ceased, or slowed up, a new delta would form right on top of the old one and as it grew out would cover up the old one to the new level of the sea, or of the new delta. New peat swamps would form on the new surface, which, by the way, would also extend further up the river valley and back over the lower slopes near the shore. Thus the process would go on until some radical change in the earth's crust would put an end to the formation of the delta, or change the climate so that peat swamps would no longer grow. If Louisiana had the climate of Michigan we should see all these operations going on in this country on a huge scale. From Cairo, Illinois, to the Gulf and for vast stretches along the Gulf in Texas, Louisiana, Mississippi, Alabama and Florida there would be interminable peat deposits, all in process of gradual burying in the ways I have indi- cated. So far as I can see such deposits might easily be on a scale equal to anything known in the great coal beds of the world. For instance the Pittsburgh coal seam is believed to have been continuous over an area of 10,000 square miles. It is reasonable to expect that with no change whatever in conditions other than to substitute the climate of the Great Lakes a continuous peat swamp would form on the Mississippi Delta over even a greater area. The total area of lowlands in which swamp formation would be continuous and active must be more than 100,000 square miles. If this climate and these conditions were to continue indefinitely and if the weighting of the delta caused a slow subsidence the coal forming process would eventually spread over an immense area. A subsidence of 500 feet, an extremely moderate earth movement, geologically speaking, if accomplished slowly would cause the active delta and the peat forming area to march progressively up the valleys COAL 75 beyond Kansas City, Chicago and Pittsburgh, leaving behind in the lower basin innumerable deposits of peat at different levels covered by a deep and ever deepening mass of sediments. Over the site of New Orleans limestone beds would now be forming and beneath them great coal measures, and no doubt oil and gas rocks also, would be securely locked. Such a development would be the counterpart of the great coal formation of the Carboniferous period, not, of course, on the same places but on an equivalent scale. This, of course, is only a rule sketch of the major features of a coal forming period; there are innumerable variations of details of all kinds; but in general one may see in any coal mine an actual record of just such happenings. I have said that any observer who gives the matter atten- tion can readily grasp the general features of this process; but there ought perhaps to be added one qualification, or explanation. The pro- cess of giving the matter attention is largely that of dissociating one's imagination from the limitations of human experience. It is difficult to picture the life scale of the earth instead of the life scale of a man. A gen- eration seems a pretty full cycle and it is hard to get fully away from that conception of time; but to think effectively of geological processes one must banish that limitation completely. The span of human life or even the whole period of recorded history is such an insignificant fraction of time that the geological processes have made only trivial changes in geography during the whole of it. A coal forming epoch such as I have attempted to picture must be measured in millions of years rather than in thousands and yet it constitutes only a modest portion of geological history. In North America we are fortunate enough to have the coal left, and remarkably well preserved too, by three such general coal forming periods all on a truly collossal scale, besides several others of minor importance. The publications of the U. S. Geological Survey and of many of the State surveys are full of information about all this, a bulk of literature indeed too great for digestion, but for a general view one may read two volumes, Bulletin No. 38 of the U. S. Bureau of Mines by White and Thiessen, and Professional Paper 100 A, of the U. S. Geo- logical Survey by Marius R. Campbell, on the Coal Fields of the United States. Even these discussions are scarcely adequate for they deal only with this country. A general review of the coal resources of the World was made by the International Geological Congress at the Mon- treal meeting in 1913. These publications are not easily had by the casual reader. Since all other mining is very largely built upon coal a comprehension of the characteristics and location of the principal coal fields is necessary for an understanding of the economics of mining. I am attempting to give in a few further paragraphs some further generali- zations on this most interesting subject. " Technically at least" says David White, Chief Geologist of the U. S. 76 THE COST OF MINING Geol. Survey, "coal is found in the Ordovician and Cambrian, and probably even in the pre-Cambrian sedimentary series, where it is now represented by bedded graphite." " Well developed coal has been found in the strata of every period since the Silurian." "At present coal is commercially mined (in the United States) from rock of basal Mississip- pian (Lower Carboniferous), Pennsylvanian (Upper Carboniferous), Triassic, Lower Cretaceous, Upper Cretacceous and Tertiary ages. Some mining for fuel has been done in the Jurassic of Alaska." Thus the formation of coal is shown to be one of the regular geological processes and it has gone on persistently in all times since plant life has existed on the globe. But it is only occasionally that conditions have occurred favorable to the preservation by burying as well as for the formation of peat on a grand scale. It is found that these conditions accompany cycles of world history which have repeated themselves in general terms though not in precise detail. These cycles have a singular bearing on the formation, preservation and exposure of metal deposits also. While it is a little far-fetched to assert that a study of these broad geologic processes has an intimate bearing on the practical every day pursuits of mining, it is not extravagant to say that it is important to those who wish to have a rational vision of economic resources; or to expect that it will have increasing weight in future explorations for min- erals. One may be positive that with industries organizing on an ever more comprehensive scale and governments undertaking projects to harmonize and further them these major geologic facts will have some weight in the locating of manufacturing enterprises and of trade routes. At any rate the subject is interesting. A century ago as soon as the observations upon the earth's crust had become extensive enough to afford a basis for generalized description, geologists (mainly English at that time) perceived that almost everwhere the sedimentary rocks were separated into several natural groups by abrupt differences of sodidity and attitude. The older, harder and more tilted or contorted rocks they called Primary, an intermediate group they called Secondary, and the more recent and less solidified group the Ter- tiary. These divisions have been found by the more exhaustive and far reaching researched of all later geologists to be established with about the same definiteness all over the world. Broader and more detailed mapping has since added a fourth and older group obscure to the earlier geologists because less generally exposed, but now established with the same distinctness as the others; so that now the principal sedimentary rocks throughout the world (omitting the recent unconsolidated materials called the Quaternary) are divided into four great groups generally named as follows : 1. The Algonkian or Eozoic containing the recognizable earliest vestiges of life. COAL 77 2. The Paleozoic, or Old Life group, Primary 3. The Mesozoic, or Middle Life group, Secondary 4. The Cenozoic, or Later Life group, Tertiary It must be borne in mind that these divisions are not in the least arbitrary or conventional but are clearly marked by nature. Is it not remarkable that the same differences should appear in all the continents and in both hemispheres? What has mud being washed down into a bay in Australia to do with mud in a lake in Montana? What should not the entire series of rocks in Australia be laid down without any refer- ence to what may happen in Montana? It appears that each of the great groups of stratified rocks represents a cycle of world history in which conditions were comparatively stable and uniform. This does not mean that minor and differential changes did not occur during and throughout these periods; the sea level oscillated more or less just as it is doing at this moment, the processes of erosion brought about their progressive changes at all times; but during these periods these agencies proceeded along the same general lines with reg- ional or local instead of world wide interruptions. In general the progress was toward the wearing down of continental masses, the filling up of depressions, the formation of vast plains and the development of equable climate through the leveling of those barriers, such as lofty mountain ridges, which cause abrupt changes. In each of the great cycles the last stage was the one favorable to the formation of coal on a great scale. The continents were not only worn down pretty flat but the wearing down of them had filled up the conti- guous shallow parts of the ocean, tending to raise the comparative level of the sea. Minor oscillations or warpings of the surface would thus flood or expose large areas of flat lands. The climate being equable was also stable for long periods and an area wet enough to promote the formation of peat would remain so. Thus the conditions, briefly outlined above for the creation of extensive coal deposits reached perfection. For reasons very dimly, or not at all, understood, these cycles of quiescence and equilibrium were interrupted finally in each case by world wide convulsive movements of the earth's crust, called " Revolu- tions." These revolutions were not cataclysms in the sense of being sudden and overwhelming disturbances, although they were sufficiently rapid to exterminate innumerable forms of life and to produce great changes in living conditions for both plants and animals. There were no doubt violent earthquakes, always abundant volcanic activity; but in general these revolutions were progressive and differential. The leveling forces were overcome by the forces of upheavel. Great mountain chains and plateaus were thrown up, frequently new ones, the continents in general were raised and took new forms, the ocean beds were deepened 78 THE COST OF MINING and the sea level retreated. In other words there were immense changes of geography and of climate. Thus in the Southern Hemisphere at the close of the Paleozoic, the mild climate of the coal forming Carbon- iferous period was succeeded by a formidable refrigeration so that in Permian time ice fields covered portions of South America, Australia and Africa on a scale exceeding that of the recent glacial period of the Northern Hemisphere. This is merely an example. The revolution having worked itself out, the conditions of compara- tive equilibrium returned, the erosive forces proceeded again with the work of leveling the uplifted continents; in short a new cycle parallel to but not identical with the old one was under way. The major coal formations were therefore laid down toward the end of these cycles when the continents were maturely eroded and flattened when climate was equable and stable, and the earth's crust free from disturbance. How far these processes were carried may be gathered from a paragraph or two on the geography of the principal coal formations of North America. 1. The Paleozoic coal fields extend from central Oklahoma to Mass- achusetts, 1500 miles in a straight line, and from Birmingham, Alabama, to Cedar Rapids, Iowa in greatest breadth, 750 miles. This area contains only the remains of the original deposits, but it gives some idea of the huge low swampy plains, so near sea level that they were repeatedly flooded by gentle oscillations of the level. This area was traversed by rivers which in all probability carried more water than the Mississippi system of today. In fact the lowlands alone, those subject to periodic or occasional overflow by the rivers or the sea, amounted to 1,000,000 square miles in a solid block. It is not reasonable to suppose that this great tract was all of the same level or that coal was either formed or buried simultaneously over the whole of it; rather that through the progressive changes of sea level the whole area was affected by delta and peat forming conditions which at any given time would form a broad strip immediately back of the sea-coast. The actual deltas probably extended up the rivers hundreds of miles, just as the Mississippi delta of today extends up to Cairo, more than 500 miles in a straight line from the mouth of the river, although for the greater part of that distance the delta covers only a strip on each side side of the river. Whenever the sea level rose those delta strips would retreat inland; whenever the sea level retreated the deltas would advance. Such oscillations did take place, but on the whole the basin was subsiding, for during the period the sediments, containing numerous separate beds of coal accumulated to a depth of several thousand feet, the surface during all the time required for this remaining practically at sea level, varying from one or two hundred feet above to one or two hundred feet below. To get an accurate idea of the appearance of the whole COAL 79 country within the area mentioned, one needs to do nothing more than to take a look at an uncleared tract near New Orleans. The plants were actually different but to a casual observer they would not have appeared so. As to the geography outside of this plain we can have only a general idea. Toward the north there was a large area of higher land extending unbrokenly from central Minnesota to Labrador and perhaps beyond. To the southeast in Georgia, South Carolina, North Carolina and Virginia there were, no doubt, land areas, probably large islands of moderate elevation and maturely eroded surface. Toward the west a shallow sea of clear water extended from central Texas, Oklahoma, Kansas and Nebraska. To say that this sea covered the Rocky Mountains is in- accurate. There were no Rocky Mountains to cover. There had been mountains in that region to be sure, but they were different mountains entirely, which had been worn down to a plain and finally immersed in the sea we are talking about. Just where this sea ended toward the north and northwest I do not know, but it certainly covered nearly the whole of New Mexico, the northern part of Old Mexico, the whole of Arizona, southern California and Nevada, and most of Utah, Colorado, Wyoming, Montana, and South Dakota. Such was, dimly, the Pennsylvanian epoch in North America at the close of Paleozoic time. Marius R. Campbell estimates that the remains of the coal left on these delta plains amounts to 1,088,000,000,000 tons, a trillion, enough to maintain the total present output of the United States for 1500 years. This coal is all of good quality and high rank, varying from bituminous to anthracite. This tract contains more coal by far than the whole continent of Europe, possibly more than the whole of Asia. The coal fields of Europe are at present the most important, economic- ally speaking, outside of those of North America. The most valuable ones were formed during the same epoch and under a parallel set of conditions. A similar delta plain extended with possible, or probable interruptions from Ireland through Great Britain, Germany, Poland and Russia to the sea of Asov. "The number of workable seams" says Chamberlain and Saulsbury ' ' is large in many places . Thus in Westphalia the number of workable beds is said to be 90. The aggregate (maximum) thickness of the coal in Lancashire is 150 feet, and in Westphalia, 274 feet. Here as elsewhere, beds of marine origin alternate with those which were deposited on land, in marshes, etc." 2. But in North America it is quite a mistake to focus attention too exclusively upon the Paleozoic coalfields. At the end of the next, or Mesozoic, world cycle, in Upper Cretaceous time, there was a still greater coal development. We might repeat almost the same description of continental and climatic conditions but when we come to geography we 80 THE COST OF MINING must migrate. An immense, flat, subsiding plain so near sea level that it was repeatedly flooded with sea water, extended from the Gulf of Mexico to the Arctic Ocean right over where now are the highest mountains and plateaus of the Rocky Mountain system. The plain terminated in higher land to the eastward on a line from east central Texas to Duluth to Winnipeg; on the west on a line from northwestern Arizona through western Utah and southeastern Idaho, northwestern Montana and eastern British Columbia toward the mouth of the Mac- kenzie river. This great plain was, therefore, 3500 miles long and up to 1000 miles wide. How much of it was generally under sea water and how much above during the coal forming age is pretty hard to say, but it contains every kind of sediment in great volume, shales, limestones and sandstones. The coal seems to have formed principally in the central portion of this tract, from which we may guess that in this area the erosion of the chief land areas to the west was sufficient to keep the basin nearly full of mud. Coal was formed on a scale quite equal to that of the Pennsylvanian time. It remains now in New Mexico, Colorado, Utah, Wyoming, and Montana. Mr. Campbell estimates the amount available at a depth of less than 3000 feet at 1400 billion tons of coal of sub-bituminous and bituminous rank with some anthracite. Lying at a depth of from 3000 to 6000 feet he estimates 666 billion tons more, so that the Upper Cretaceous has left us a total of over two million million tons in the United States alone. Possibly a third as much more lies in Canada. Much of this coal is of excellent quality for all purposes, including large amounts suitable for good metallurgical coke. 3. At the end of this wonderful period another world " revolu- tion" occurred, or perhaps more accurately, began. Great geographical changes took place. Australia was permanently separated from Asia. In North America the great Cretaceous trough began to split from end to end along the line of the Front Range of the Rocky Mountains, where blocks of the hard underlying rocks were pushed up through the Creta- ceous sediments like flat irons through pan-cakes, raising portions up bodily and crumpling other portions along their flanks. The process of slow subsidence was thus reversed and the great trough humped up in the middle so that the whole became rather a plateau, the eastern half left undisturbed other than by a gentle tilting which made a wide slope of the Great Plains, the western edge of which are in places nearly 8000 feet above sea level. The western half became an area of mountains and plateaus in which the strata are generally disturbed and exposed by fault- ing and folding, and intruded by volcanic rocks, some of which are enormous batholiths. But while this post-Cretaceous change was extensive enough at once to produce an abrupt unconformity between those rocks and the succeed- COAL 81 ing Tertiary formations, it was not extensive enough at first greatly to change the climate. Portions of the great trough remained lowlands and were partially filled by fresh water lakes along which coal formation continued. The largest of these areas was in North Dakota, Montana, and Alberta, where the deposits were on a truly imposing scale. But these coals were never deeply covered by sediments, nor have they been affected by earth movements such as would compress and alter them. They are therefore still lignites, the first stage removed from peat, and are coals of low rank and poor quality. They would be in other countries, however, a wonderful fuel supply. Mr. Campbell estimates in this field 965 billion tons in the United States alone, much of it occurring in thick seams. While this lignite will not make metallurgical coke it will make gas and power. It will not stand transportation or storage very well, but it can be used on the ground for electrical generation, whenever a demand shall rise for it, to good advantage. But with this exception the Tertiary coals were formed in smaller detached lake basins, or in isolated tracts along the coasts. They occur in Alabama, Mississippi, Tennessee, Arkansas, Louisiana, Texas, Cali- fornia, Oregon, and Washington. The aggregate amount in these fields is great, but in all the Southern States the coal lies in unconsolidated sediments and is a soft low grade lignite. It is only in the state of Wash- ington that a large Tertiary field has been so affected by earth movements as to reach bituminous and sub-bituminous rank. Owing to its position on the great harbor of Puget Sound and to the general scarcity of coal along the Pacific, this is apparently a field of marked economic importance. Mr. Campbell estimates for it some 65 billion tons of which probably about 80,000,000 tons have been mined. STATISTICS OF COAL PRODUCTION GROWTH OF THE COAL INDUSTRY IN THE UNITED STATES PRODUCTION OF THE DIFFERENT STATES TOTAL PRODUCTION TO END OF 1917 PRICES OF COAL COAL RESOURCES OF THE COUNTRY COAL PRODUCTION OF THE WORLD. The following discussion on the production, growth, prices, and resources of the coal-mining industry of the United States is taken, with a few comments, from the pamphlet issued by the United States Geological Survey on the Production of Coal in 1917. It is not likely that any other statement to be had gives a truer perspective of the es- sential features of this business, which may justly be said to be one of the great fundamental elements of the prosperity of the nation. Nothing can be more important than that the public at large shall be acquainted with the real condition of this industry, for it is not unlikely that good public policy will require some changes in the conduct of it, and without the support of public opinion nothing beneficial can be done. 82 THE COST OF MINING COAL STATISTICS "The production in 1917 of 551,791,000 net tons of bituminous coal and of 99,612,000 net tons of Pennsylvania anthracite established new high records in both industries. The increase in the production of bituminous coal over 1916 was 49,271,000 tons, or 9.8 per cent., and in anthracite it was 12,033,000 net tons, or 13.7 per cent. For bituminous coal 1917 marks the third successive year of increase following the depression of 1914; for anthracite it marks the first increase following three years of decreasing output after the previous high record of 1913. During the past several years the development of the anthracite indus- try has in no way kept pace with that of bituminous coal. In 28 years the pro- duction of anthracite slightly more than doubled; that of bituminous coal increased fourfold. The reason for this discrepancy is found primarily in the limited reserves of anthracite as compared with the almost boundless resources of bituminous coal, but is also lies in the fact that anthracite is essentially a domestic fuel whose production has followed more closely the increase in popu- lation, whereas bituminous coal is the fuel of industry and has kept pace with industrial expansion in the country. Furthermore, the yearly variations in the production of anthracite are largely the result of weather conditions; but the yearly variations in the production of bituminous coal follow the curve of in- dustrial expansion and depression. The following discussion, retained from the first edition gives a perspective of the growth of this industry. "The combined production of anthracite and bituminous coal in the United States in 1907 amounted to a little more than 480,360,000 short tons. "With an average of 30 cars of coal to the train, and of 50 tons to the car, the number of trains required to transport this product was 320,300, and the combined length of these trains would extend two and two-thirds times around the world at the equator. The hole left in the ground by the extraction of this fuel is equal to 17,585,000,000 cu. ft., and if the entire quantity of coal extracted were built into one cube, it would have the dimensions of 2605 ft., or nearly half a mile on each edge. A rectangular column with a 1000-ft. base to represent the coal pro- duction of the United States in 1907 would extend nearly 3.4 miles into the air." "An interesting fact presented by the statistics of the production of coal in the United States is that in each decade the output has been practically doubled. Up to the close of 1865 the total production had amounted to 284,890,055 tons. In the decade from 1866 to 1875, inclusive, the production amounted to 419,425,- 104 tons, making the total production up to the close of 1875, 704,315,159 tons. In the following decade, from 1876 to 1885, inclusive, the production amounted to 847,760,319 tons, something more than double the total production up to the beginning of that decade. At the close of 1885 the total production amounted to 1,552,075,487 tons and the production for the 10 years ending with 1895 was 1,586,098,641 tons, and the total production at the close of 1895 amounted to 3,138,174,119 short tons. In the decade ending December 31, 1905, the total production amounted to 2,832,402,746 short tons, and the grand total from the beginning of coal mining amounted to 5,970,576,865 short tons. The average annual production from 1896 to 1905 was 283,240,275 short tons, compared with which the average production in 1906 and 1907 (447,260,351 short tons) shows an increase of 164,020,076 tons, or 58 per cent. This great increase in the production of coal, when considered with the in- COAL 83 crease in the population, furnishes some further interesting comparisons. Going back for a period of a little over 50 years, or to the middle of the last century, and comparing the statistics of coal production with the increased population, it is found that in 1850, according to the United States census for that year, the pro- duction of coal amounted to 6,445,681 tons, when the population of the country amounted to 23,191,876 persons. The per capita production of coal in that year is thus seen to have been 0.278 ton. In 1860, or 10 years later, the population was 31,443,321 persons, and the coal production amounted to 16,139,736 tons, or an average of 0.514 ton per person. At the census of 1870 the population of the United States amounted to 38,558,371 ; the coal production in that year amounted to 36,806,560 short tons, a per capita average of 0.96 ton. Ten years later, when the population was 50,189,209, the coal output amounted to 76,157,944 short tons, or 1.52 tons per capita. In 1890 the population had grown to 63,069,756, an increase of 25 per cent, over 1880, while the coal production had grown to 157,770,963 short tons, or a per capita output of 2.52 tons. At the taking of the Twelfth Census, in 1900, the increase in population amounted to 22 per cent., the total number of persons reported being 76,303,387, while more than 70 per cent, had been added to the coal production, with a total of 269,684,027 short tons, or an average of 3.53 tons for each inhabitant. In other words, while the population from 1850 to 1900 showed an increase of 230 per cent, the production of coal increased 4084 per cent. The Director of the Bureau of the Census, Hon. S. N. D. North, estimates the population of the United States on June 1, 1907, at about 85,500,000 persons, making the per capita production in that year 5.6 tons; that is, in less than 60 years the per capita production of coal in this country has increased from a little more than a quarter of a ton to 5% tons. It is true that in the earlier years the proportion of wood used for fuel was larger than it is to-day, but the actual consumption of wood at this time is little, if any, less than it was 50 years ago, and is probably greater. It must also be re- membered that in addition to the great increase in the consumption of coal per head of population there has been a great increase in the use of oil for fuel purposes, while natural gas still remains an important factor in this regard. "The total number of men employed in the coal mines of the United States in 1907 was 680,492, against 640,780 in 1906 and 626,035 in 1905. Of the total number of men who were employed in 1907, 167,234 were employed in the an- thracite mines of Pennsylvania, while the bituminous and lignite mines gave employment to 513,258 men. In 1906 the anthracite mines gave employment to 162,355 men and in 1905 to 165,406 men. The bituminous workers numbered 478,425 in 1906 and 460,629 in 1905. The average number of days worked in the anthracite region in 1907 was 220, against an average of 195 in 1906 and 215 in 1905. The bituminous mines worked an average of 234 days in 1907, 213 days in 1906, and 211 days in 1905. The foregoing statements were written in 1908 but they convey the essential facts as well as if they were written in 1919. The tables of production are, however, changed to show the figures for more recent years. Some remarks may be of interest. It appears that while the production of coal per capita is still increas- ing in this country, it is not doing so at the former rate. The increase between 1897 and 1907 was from about 2.77 tons per capita to about 5.6 84 THE COST OF MINING tons per capita; from 1907 to 1917 the increase was only from 5.6 to 6.5, It might appear from this that the desire of the population for fuel is nearly satisfied. We may reckon with certainty that a time will come when the consumption of coal will increase only in proportion to the increase of population. The same facts are shown by the total output of the country to date. It will be remembered that up to 1907 the production was doubling each decade so that between 1897 and that year it was nearly equal to the entire production of the country previous to 1907. From 1907 to 1917 the production was only 75 per cent, of the previous production. Still more noticeable is the failure of the number of men employed in coal mining to increase at the former rate. In 1897 the number was 397,- 000; in 1907 it was 680,000, an increase of 283,000 for the decade; but in 1917 the number had risen only to 750,000, an increase of only 70,000 foi the decade. The statistics show a remarkable uniformity of conditions in the coal industry up to the end of 1915. In that year the value of all coal at the mines was estimated by the U. S. Geological Survey at $1.29 per ton, almost exactly the same as shown by the tables for the years 1903-1907 THE WORLD'S PRODUCTION OF COAL IN SHORT TONS Country 1914 1915 1916 1917 1918 United States Canada Chile 513,525,477 13,594,984 1,198,000 312,897 (d)53,396,400 18,423,897 33,360,885 270,594,952 297,698,617 2,160,543 861,265 36,414,560 4,897,360 404,143 (a)10,199,200 440,905 18,430,974 608,660 21,700,572 9,461,674 391,394 11,663,865 2,548,664 1,180,825 68,130 357,515 691,640 531,619,487 13,269,023 1,291,000 318,563 (d)52,679,712 15,627,858 19,908,892 259,139,786 283,570,560 2,534,284 1,042,748 31,158,400 5,414,475 454,432 (0)19,800,000 485,158 19,156,404 708,000 22,596,750 9,275,083 458,934 10,582,889 2,208,624 1,147,186 66,000 321,066 588,104 590,098,175 14,461,678 1,563,000 357,346 50,801,602 16,458,816 23,670,000 272,099,000 287,110,153 2,879,000 1,439,538 28,962,724 6,055,727 457,262 (a)24,000,000 539,816 19,324,826 (o)856,000 22,189,969 11,208,400 491,532 1,262,420 2,527,991 1,016,654 62,244 337,709 463,074 651,402,374 14,046,759 396,132 42,278,850 18,587,942 31,847,000 (c)281,429,000 278,319,149 3,370,000 1,898,334 (0)30,047,000 6,261,124 487,914 (a)910,000 20,398,468 29,220,897 11,628,870 614,856 9,288,011 2,316,629 1,174,290 71,021 678,211,90' 14,979,21, 35,738,08 15,308,30 30,864,00* 273,930,00( 255,040,32* 5,277,81, 2,393,53 7,897,31 445,87' (a) 1,000,00( 23,209,10 (a) 30,600,001 11,937,68: 550,24, 10,160,00( 1, 101,171 67,38 Peru Austria-Hungary. . Belgium France Germany. Great Britain Holland Italy Russia Spain Sweden China Dutch East Indies India Indo-China Japan Union of So. Africa Rhodesia New South Wales. New Zealand Queensland Tasmania Western Australia Victoria Total (c) 1,332,000,000 (c)l,312,000,000 (c) 1,401,000,000 (c)l,476,000,000 (a) 1,468,000,00 (o) Estimated, (c) Approximate, (d) Hungarian production estimated at 10,000,000 short tons NOTE. This table is based on a compilation of the U. S. Geological Survey, supplemented by som< later statistics. Most of the figures given are obtained from other sources and represent the bes information available at this writing. COAL PRODUCTION OF COAL IN THE UNITED STATES IN SHORT TONS 85 ] 916 1917 1918 Quantity Total value Quantity Total value Quantity (e) Alabama 18,086,197 $24,859,831 20,068,074 $45,616,992 21 280000 Alaska 13,073 52,317 53 955 265 317 70 000 1,994,915 3,836,845 2 143 579 5 492 777 2 228 000 California and Idaho 7,240 15,367 6,423 14 791 6 000 Colorado . . . . 10,484,227 16,964,104 12,483,336 27 669 129 12 485 000 Georgia Illinois Indiana Iowa 173,554 66,195,336 20,093,528 7,260,800 310,093 82,457,954 25,507,246 13,530,383 119,028 86,199,387 26,539,329 9,965,830 301,391 162,281,822 52,940,106 21,096,408 101,000 91,263,000 27,325,000 8,240,000 Kansas 6,881,455 12,252,723 7,184,975 16,618 277 7 292 000 Kentucky 25,393,997 30,193,047 27,807,971 60,297 653 29,690 000 Maryland 4,460,046 6,947,623 4,745,924 11,667,852 4,759,000 Michigan 1,180,360 2,653,182 1,374,805 4,426,314 1,385,000 Missouri. 4,742,146 9,044,505 5,670,549 13,755,864 5,605,000 Montana New Mexico North Dakota Ohio. 3,632,527 3,793,011 644,912 34,728,129 6,286,197 5,580,369 946,082 40,150,907 4,226,689 4,000,527 790,548 40,748,734 8,919,136 7,455,166 1,425,750 100,897,148 4,276,000 4,241,000 813,000 46,464,000 Oklahoma 3,608,011 7,525,427 4,386,844 12,335,413 4,785,000 Oregon 42,592 113,976 28,327 95,663 39,000 Pennsylvania, bituminous... South Dakota 170,295,423 8,886 221,685,175 18,021 172,448,142 8,042 421,268,808 23,346 183,712,000 7,000 Tennessee 6,137,449 7,522,445 6,194,221 13,592,998 6,916,000 Texas Utah Virginia 1,987,503 3,567,428 9,707,474 3,092,663 5,795,944 10,261,424 2,335,815 4,125,230 10,087,091 4,177,608 8,531,382 20,125,713 2,260,000 5,535,000 10,100,000 Washington West Virginia 3,038,588 86,460,127 6,907,428 102,366,092 4,009,902 86,441,667 10,727,362 200,659,368 4,056,000 91,350,000 Wyoming 7,910,647 12,239,707 8,575,619 16,593,283 9,600,000 Total bituminous Pennsylvania, anthracite. . . . Grand total 502,519,682 87,578,493 590,098,175 665,116,077 202,009,561 876,125,628 551,790,563 99,611,811 651,402,374 1,249,272,837 283,650,723 1,532,923,560 585,883,000 98,826,000 684,709,000 (e) Estimated. 86 THE COST OF MINING 0/rQ =3^ CO x-*b- COCOO5COrHrHCOrtO5COrHlO( JrHb-b-CN' 1 " P CO b- rH rH Q 00 ! -02 '"'(NINO IOC <00"*S IN* CiCO'rHrHCDrH rH CO'rH O~ ' (N~ O iO IO Tt* (N CO CM CO Tf O CO rH O5 O5 b- b- b- TP CO CO Oi b- (N O ^ (N COrH CC O OOO b- rH CD O5 lO 00 CO O5 rH CO rH b- 00 CO O 00 CC O b- iO (N O5-^rH CN (N OCD CDOO rH CD rH CDCOrH COlOO 'is.i-HOQCrOi **^C-IOOOCO CD" 10 OS CO* wf bT (N" b-CD "SS S 03 o g P Q I o o C 01 a-Z "Sog-g s 5 b- . . CO< 3 : : :%l .b- -C5 .CCO50010 CO -CO rH O3CDCN b- .iO .COCO>OCO :

O +> m irisg l> O (N O O rH Tt< Tj( l> O O rH ^ O5 1> rH O Tt< b- 00 >O 00 rH O5 rH rH CD Tj< O5 O iO O O: CO t^. I-H CO CO O Tf r^. CO O5 O (N O5 iO 0 CO -t O5 O5 O5 l> l> TJH O (N rH lO t- . CD CO rH (N CO O5 * 5CNTfCNi-HO'^ l OOO'OO5CDcOO'* | CNt^'-HiOOOCNOO>OCOCOTt< O5iOOOOO500O5Ob-OOOb-^b-COCOO^O5GO'^ H O5^t l OC s 4COOO5GO COCSrH CO C0_ CN b- O ^ l> CD O G* CO O5 GO rH lO b- t^. CO CO CO * CO lO >O IN C^I O5 O5 t^. Tf CO IO CO CO rH Tf IO t~ Tf* t^ CD O5 O5 IO ^ rH Is. O5 CO >O CO l>- CO CO CO CO COb^CO rH COIN IN CO O5 "tf O O 00 CO(MOO^ 10 rH tO "# COI>OOO OOCO- CO O O 00 rH CO rH rH rH COCO^CO " o" co' i>T t>T T-H" GO" GO" (N O5 CO CO tO rH CO CO~ CO O CO rH s ^ oT rHOOCO (M^COlO OOCOOC5 tOt^fMCO rHIOOiCO COO5COO 10 O OO (NCO I> O 05 CO O5 to ^ rH O5 05 ~ ' GO CO !> t> -^ CO O O CO O5 O rH rH O5 (M S S N CO r^ b- 00 CO CO rH O oo" N g OicOC^ICO O^rf^OO !"> Oi IQ i"H CO CO ** rH O CO d 05 TtH C^ rH ^ thra tons COST OF MINING COAL 105 Public Policy in Coal Mining. It has often been pointed out that coal in the earth is a natural resource, the use of which is important not only to the owners of the coal lands, but to the nation at large, and that since the supply of coal is limited by nature, wisdom demands that it should be wisely handled. This is a fact that has been recognized by many governments from the earliest times, and the policy of treating mining rights as public rather than as private property has been adopted by probably the greater number of nations. These ideas have been so widely discussed that they are already known to the majority of people, and I wish to call attention only to some considerations that may have a practical value. Causes of Waste in Coal Mining. An interesting paper 1 contributed by Mr. George S. Rice to the Transactions of the American Institute of Mining Engineers at the Chattanooga meeting, October, 1908, calls attention to the fact that the percentage of yield in Illinois from the coal seams is only from 50 per cent, to 95 per cent., and that the losses are from 5 per cent, to 50 per cent, of the available coal. It would be in- teresting if space permitted to quote Mr. Rice's article in full, but since that is not feasible I shall call attention to some of the principal conclu- sions developed. Mr Rice summarizes the causes of mining waste as follows: (1) Cheapness of coal "in place;" that is, in the seam. (2) Low market prices resulting from extreme competition. (3) Character of the seam, roof, and floor as determining the method of mining. (4) Surface subsidence due to mining. (5) Interlaced boundary ownerships. (6) Carelessness in mining operations. Mr. Rice says: "The first two factors taken together are the con- trolling ones in most mining operations, in influencing the choice of a mining system." This statement is so true that too much emphasis cannot be laid upon it. It has been pointed out in Chapter II that economy may demand the sacrifice of considerable portions of low-priced mineral products in order to secure a sufficiently low mining cost; and it will be pointed out in various places in succeeding chapters that the value of the material mined is always one of the greatest factors in the cost of mining. So pre-eminent is this factor that it is almost possible to say that it is the only one of real consequence in determining percentage of waste; for it is self-evident that were the product sufficiently valuable, a system or method would be found to prevent the loss of it. The prevention of losses, therefore, as a matter of public policy, is simply a question of dollars and cents. If the public wishes the coal to be mined * Mining Wastes and Mining Costs in Illinois. 106 THE COST OF MINING cleaner, it must be willing to pay a sufficient price to make clean mining profitable to the operator. It is also self-evident that common sense must be invoked to place a limit on efforts to secure this kind of economy. A reference to Mr. Chance's chart discloses at a glance that, as the thickness of the coal seam diminishes, the cost increases without limit in mathematical language, approaches infinity. It is preposterous, therefore, to attempt to save all coal, because a seam one inch thick would cost $50 a ton; a seam two inches thick would cost $25 a ton ; in each case at the mine. Such costs would preclude the possibility of using coal for anything like the ordinary purposes. Efforts toward the prevention of waste, therefore, must be confined strictly within limits that can easily be agreed upon as reasonable for any given district. For instance, in Illinois it might be agreed that coal seams down to a thickness of two feet should be worked. Such a decision might have far-reaching consequences in the conduct of the coal-mining business. For instance, suppose an operator had one seam 6 ft. thick and another seam 2 ft. thick. If we imagine that (1) a price is fixed that would allow the mining of a 2-ft. seam without loss and at the same time without profit, and (2) that the law requires the operator to mine his 2-ft. seam or else lose the right to mine the 6-ft. seam, it is evident that the operator would be willing to mine the coal according to all requirements; because the 6-ft. seam would be so profitable that the mining of the 2-ft. seam without profit would not be a serious in- convenience. If, however, it were a question of mining a 2-ft. seam without profit, in connection with a 3-ft. seam with a very small profit, the operator would probably feel that the returns of the enterprise would be too small and he would not undertake it. The question of effective economy in coal mining as regards waste, therefore, is a question precisely like the productive tariff so far as its effect on the public at large is concerned. In the case of the tariff, however, the public is found to subject itself readily to loss because it is quite possible to make the majority of the voters beneficiaries of the tariff. If this is not actually the case a majority think themselves benefited, believing that it is of more consequence to them to get a higher price for the products they have to sell than to pay a higher price for the products they have to buy. In the case of a proposal to raise the price of coal in order to prevent waste, it is not at all evident how the public could be imposed upon by such considerations. Granted that the coal miners would find such a policy an unqualified benefit, it is not clear how the public at large could be induced to pay a higher price for one of its chief necessities for no object except an altruistic regard for future generations. It seems as if the only rational way to prevent wastes and at the COST OF MINING COAL 107 same time to secure better operation all around, with a saving of human life as well as of coal, is to permit a carefully guarded monopoly in each field of the business of coal mining. Monopoly is a disagreeable word, but it is the only one that conveys the meaning in plain English. It would have to take the form either of a consolidation of ownership or of a pooling of interests under government supervision. My own conviction is that the interests both of the public at large and of the coal-mining business itself demand such an arrangement. The business in the United States is suffering wofully from over- competition. A vast amount of capital is invested in coal mines that is put in extreme jeopardy through the failure to secure a reasonable price. It is just as disastrous from an economic standpoint for the coal business to be over-developed as to be under-developed. The under- development of coal mines means, of course, high prices through failure of the supply and consequent loss to the public. Over-develop- ment, on the other hand, means a loss, through a part of the public's money being tied up in useless enterprises. It does not seem unreasonable to hope that in each mining district the government might fix a price for the sale of coal, simply on the basis of an actual cost of mining down to a certain thickness. Such a regula- tion of the coal-mining business would not be inherently different from the regulation of freight rates by the Interstate Commerce Commission. If such an arrangement were made all that the government or state inspectors would need to do would be to look out for the clean mining of the thinnest seams; the thick ones would be well taken care of without urging. New Capital Required in Coal Mining Operations. A glance at the figures in Chapter VI reveals the fact that in the ten years between 1 897 and 1907 the production of coal rose from 200 million tons to 480 millions, equal to an average increase of 28 million tons a year. Without going into details we may assume that the equipment of the mines for this production must cost, on an average, at least $1.25 per annual ton. Under the most favorable conditions the cost of equipment and develop- ment is $1 per annual ton for flat bituminous coal seams; for the more dif- ficult forms of mining, such as anthracite, the cost per annual ton is at least $2.50, and for coke production as much or more. The average amount of new capital going into the coal business, therefore, is at least $35,000,000 a year and $40,000,000 is a more probable figure. This is an exceedingly important fact to bear in mind in considering any possible consolidations in this business. Changes in Recent Years. The following extract is from a press bulletin of the United States Geological Survey on the Coal Industry in 1917. 108 THE COST OF MINING THE COAL INDUSTRY IN 1917 The inventory of the nation's resources that the war made necessary brought to light many new facts about coal mining which will be of lasting value to the industry and to the public. As long as the war lasted these incidental lessons were lost sight of under the pressure of meeting the emergency created by the shortage of fuels, but with the return of peace the experience gained during the war is|being gathered together in a series of reports on the industry, the first of which, "Coal in 1917," by C. E. Lesher, has just been published by the United States Geological Survey, Department of the Interior. The period from 1914 through 1917 and 1918 and into 1919 may be regarded as a distinct epoch in the coal industry, of which the year 1917 represented only one section, but a section which, if not the most remarkable for its achievements, was at once the most chaotic and the most momentous in the history of the industry. It is not difficult to marshal the events and factors that mark 1917 as unusual: An extraordinary demand, increasing after April, when this country entered the war, and unsatisfied throughout the year; high prices and speculation in "free" coal; the first effort at regulation of prices through the Committee on Coal Pro- duction; the Pomerene amendment to the Lever Act and the fixing of prices and appointment of the Fuel Administrator by the President; labor troubles; priority orders; car shortage and other difficulties in transportation; severe storms in December that blocked the railroads; the withdrawal of ships from the coast- wise trade to New England; unequal distribution of coal and constant fear of a fuel famine in many sections; reluctance of many producers and distributors of coal to accept governmental regulations in general and the program of the Fuel Administration as it was developed in particular. In response to the unprecedented demand the bituminous mines produced 551,790,563 net tons, or nearly 10 per cent, more than the output of the year before. The anthracite output was 96,611,811 net tons, an increase over 1916 of 13.7 per cent. The total output of both hard and soft coal was thus over 650,000,000 tons. This record output was accomplished by a labor force of 603,143 men in the bituminous and 154,174 in the anthracite mines. In spite of the draft the number of workers in the bituminous industry was greater in 1917 than in 1916. Material progress was made during the year in the introduction of the eight- hour day. Whereas in 1916 about 41 per cent, of the bituminous workers were employed in mines where the standard working day was longer than eight hours, in 1917 the number in such mines had fallen to 21 per cent. The change was largely the result of reduction in working hours in Kentucky, Maryland, Pennsylvania (bituminous), Tennessee, Virginia, and West Virginia, particularly in the larger nonunion fields. In response to numerous inquiries statistics were collected regarding the thick- ness of vein which it is profitable to mine. Many people will be surprised to learn that in 1917 more than 20,000,000 tons of soft coal was mined from beds less than 3 feet thick. The percentages drawn from each thickness of seam are shown in the following table: COST OF MINING COAL 109 PERCENTAGE OF TOTAL OUTPUT OF BITUMINOUS COAL AND LIGNITE PRODUCED FROM BEDS OF DIFFERENT THICKNESS IN 1917 Under 2 feet 06 2 to 3 feet 32 3 to 4 feet 13 4 to 5 feet 17. 5 to 6 feet 19. 6 to 7 feet 13. 7 to 8 feet 9 8 to 9 feet 5^3 9 to 10 feet 5.6 10 to 20 feet 2.0 20 feet or more 0.3 Thickness not reported 8.5 100.00 The gradual and finally rapid change in the cost of producing coal since 1908 are shown by the records of a company producing from 4,000,000 to 6,000,000 tons a year in West Virginia. Mining General Taxes Depreciation Selling price Total cost 1903 67 1909 0.60 0.09 0.01 0.02 0.85 0.72 1910 0.62 0.07 0.01 0,02 0.88 0.72 1911 0.69 0.10 0.01 0.02 0.84 0.82 1912 0.68 0.10 0.01 0.02 0.88 0.82 1913 0.69 0.11 0.01 0.02 0.93 0.83 1914 0.66 0.12 0.01 0.02 0.96 0.81 1915 0.60 0.11 0.02 0.02 0.93 0.75 1916 0.70 0.13 0.02 0.02 1.14 0.87 1917 1.04 0.18 0.04 0.02 2.16 1.28 In 1918 and 1919 it is probable that these costs rose to about $1.70 or $1.80 per ton. In the midst of the vast amount of statistics published by the govern- ment on coal production I have not thought it worth while to enter into any further analysis. It may be stated confidently that the same forces have operated almost equally in all fields and in all departments of the business, for example in anthracite mining and in coke manufacture. CHAPTER VIII THE INDUSTRIAL CLEARING HOUSES AND STATISTICS OF IRON PRODUCTION LIMITED AREAS OP IRON MANUFACTURE THEIR ECONOMIC HEGEMONY ITS RECENCY REASONS FOR THE RESTRICTIONS OF IRON MANUFACTURE TO AREAS OF CONVEN- IENT DISTRIBUTION POLITICAL IMPLICATIONS PROBABLE PERMANENCY OF THE INDUSTRIAL CLEARING HOUSE AREAS THE SUPPLIES OF COAL AND IRON OF THE PRINCIPAL NATIONS WORLD PRODUCTION OF PIG IRON AND STEEL PERSPECTIVE OF DEVELOPMENTS SINCE 1850. Nine tenths of the world's output of iron is persistently made in two limited areas. If we construct a triangle the points of which are at Boston, Milwaukee and Birmingham, Ala., we shall include an area of some 275,000 square miles, within which practically all the iron of the Western Hemisphere is produced. To get the proportion of things let us remember that the area of this hemisphere exceeds 15,000,000 square miles. In Europe, if we take the island of Great Britain south of Glasgow and a territory on the continent roughly inside a line drawn through Havre to Paris to Strasburg to Vienna to Warsaw to Stettin to Hamburg, we find an area of about 325,000 square miles, within which is manu- factured more than eighty per cent, of the iron of the Eastern Hemisphere, the area of which is more than 35,000,000 square miles. In these two fields there is a population of about 175,000,000 at least a tenth of all the people of the world in about one ninetieth of the land surface. Within these two tracts are found the six largest cities, the chief universities, libraries, works of art; the radiating points of literature, fashion, opinion; the seats of political, social, military and naval power; likewise the seats of finance, of manufacture and of industrial organization. In the raising of the U. S. Liberty Loans, the area mentioned, with forty per cent, of the population of the country, was allotted seventy per cent, of the subscription. The arithmetic of this is that each person within this area was expected to subscribe two and a half times as much as a person outside of it. The same proportion of things holds true in Europe, perhaps still more strikingly. I take it that, in the United States, at least, these facts do not indicate that the average man in the indicated area is much richer or lives more comfortably than the man outside of it, still less that he is a person of superior gifts and energy; rather that for powerful economic reasons, a preponderance of the financial interests owned outside are lodged in and managed from within it. 110 THE INDUSTRIAL CLEARING HOUSES 111 It seems appropriate to call these areas the industrial clearing houses. It is these regions that buy the surplus foods from the rest of the world, hundreds of millions of bushels of wheat, hundreds of millions of pounds of meat, sugar, coffee and tobacco, and establish the price for them. Likewise wool, cotton, diamonds, gold, copper, tin, lead, zinc, practically all the staples of commerce, except such as may be utilized by the local handicraftsman, go to these regions for manufacture, distribution and market. This state of affairs is of recent growth. The recorded history of great civilized communities, many of whom were more skilful in certain arts than the people of the present day, goes back at least 4000 years. Go back one tenth of that space, 400 years, and what do we find? Con- stantinople was then more influential than London, Rome than Berlin, Madrid than Paris. Mexico and Cuzco were seats of empire and organization, while New York was a leafy island and Chicago a swamp, both in a wilderness supporting only a few savages whose culture was that of the old stone age. It is true that in Europe, the English, the Flemings and the Germans had long been known and had made them- selves felt; they had made some progress in the arts and had even in- vented printing, but they were chiefly known to the outside world as formidable trouble makers and fighting men, rude in manners and in speech : taking their crude ideas of fashion, learning and art by imitation of the peoples of the Mediterranean. Even much later than this, in 1685, according to Macaulay, England had a population of some five, or five and a half, million people of whom nearly one tenth were in London. That metropolis had a death rate similar to that of Ashanti. It had no sanitary appliances or regulations whatever. Its streets were ill paved, or not at all. Gentlemen wore swords and pistols in the streets with which to defend themselves. Ladies going out at night were carried in litters, accompanied by troops of armed guards and by servants carrying lanterns. An enterprising citizen had just begun to light the streets by hanging oil lamps at a few places. Outside of London there was not a town of 30,000, and the two largest were Norwich and Bristol. Of the latter place travelers mentioned with astonishment that one could stand in the middle of the town and see nothing but houses. Liverpool, Manchester and Glasgow were villages of some three of four thousand each. The entire shipping of the kingdom measured some 70,000 tons, of which Liverpool owned one or two per cent. The roads were of the crudest sort. Coaches of noblemen and ambassa- dors were frequently stuck in the mud within a few miles of London, though drawn by six horses and often pushed by a crowd of servants or retainers that rode with them. Ordinary long distance travel was by horseback. The wages of agricultural laborers was from 4 to 6 shillings a week; of artizans in factories a shilling a day. The price of wheat was 112 THE COST OF MINING about the same as it is today (or as it was before the war) ; the common people rarely ate it, but lived mainly on oats and barley. Macaulay, writing in 1850, reviewed with satisfaction and amazement the progress that had been made and thought it not unreasonable to suppose that by a continuance of it some future generation would see carpenters earning 10 shillings a day. Thus England, only two hundred years ago or so, was in precisely the same economic state as the remoter parts of Russia are in now; where railroads and even turnpikes are unknown, where grain is cut with the sickle, where reading and writing belong only to the favored few. But just as rural Russia in the nineteenth century was able to produce its Tolstoi and its Veres tchagin, so rural England in the seventeenth had its Isaac Newton and its John Milton. A certain nobleman, the Earl of Worcester I believe, considered a bit crazy ,by his friends, persisted in experimenting with a "fire," or steam engine, from which he predicted wonders. Coal was brought by ship from Newcastle to London where it was extensively used for household purposes, and because it came by sea it was called "sea coals." It was precisely in these latter facts that lay the germs of the future wealth and power of the Anglo-Saxon race. To the accustomed pursuits of agriculture and small trade the inquiring minds of England were beginning to add some knowledge of physical science and her artizans were beginning to burn coal in their forges and furnaces. Americans have always been in the habit of calling their country "new;" England is the "old" country. They do not realize fully that the comforts and establishments that distinguish modern life from that of former times are new in all countries, that England only preceded the United States by a few years in most of the pursuits and accomplishments which we have wished to import and imitate; and that in fact many of the conspicuous changes in modern life have originated in America as much as in Europe. It has been the habit to suppose that certain industries are peculiar to "old" countries and that the reason why such industries are not found in "new" countries is simply that those regions have not grown up. Thus I suppose many people imagine that iron manufacture may successfully be practiced anywhere as soon as people "get around to it." But this does not seem to be the case. It is true that iron manufac- ture on a large scale has migrated from England eastward into Germany and westward into the United States. It is true also that it will probably flourish in other regions in the course of time. A considerable beginning has been made in southern Russia, and a still greater industry may spring up in China, some day. But one essential fact must not be overlooked; this industry has only migrated as far as, and to those regions in which, the conditions in the British Isles are duplicated or improved upon. THE INDUSTRIAL CLEARING HOUSES 113 The reasons which anchor the industry within such limits are strong ones and lie in a combination of natural, commercial and financial circum- stances that are not easily or quickly altered. We concede that human affairs are mutable and that the splendors of today are merely the ruins of tomorrow and still we shall find reason to believe that the present general relations of the industrial world are pretty firmly established; quite firmly enough to form the true basis for the political thought of the present age. It is scarcely worth while to dwell upon such commonplaces as that iron is the most abundant and most useful metal used by man, that its manufacture requires large supplies of fuel, ore and labor. Other factors are equally important and upon moderate consideration, equally obvious. 1. The heat, power and labor that will make iron effectively may be applied with equal effectiveness to other manufactures. It follows that wherever these supplies are such that iron can be manufactured cheaply, other commodities may likewise be manufactured cheaply. 2. Iron goes into a multiplicity of uses and a multiplicity of forms, each requiring special appliances and even a special plant for its produc- tion. Thus the industry is tremendously specialized. For instance a factory in Pittsburg employs 2500 men just making bolts and nuts. Such manufactures can only flourish in centers from which great consum- ing populations may be supplied. To illustrate this point let us imagine the establishment of an iron industry on the Pacific Coast, say at San Francisco, to supply iron to the state of California. Let us imagine that adequate supplies of ore and fuel are to be had, which is not of course the case. The people of California might consume about 1,000,000 tons of iron a year, but in what forms? Why in all forms. They would need steel rails, structural forms, castings of all descriptions, tools, machines, nails, barbed wire, galvanized iron, bolts and nuts, and many other kinds of iron each of which requires a special plant. Each product would have to be supplied in about one fortieth as great a quantity as that in which it is made in the eastern district. Now the initial cost of a plant contains a certain constant expenditure whether the plant be small or great. There must be a site, buildings, power plant, machinery and facilities for transportation. It is only after this foundation is laid that the appli- ances for producing the specialty may be added at a cost which will be in a fixed ratio to the product. Is it not evident that to build a complete iron industry in California will require much more capital per ton of prod- uct than will be required in Pennsylvania? The actual cost of plant per ton produced annually in some departments of this business must run up to $200 to $500. The use of such capital and the depreciation of such a plant would be, say, 10 per cent, equal to $20 to $50 a ton. If it should cost twice as much capital to start a similar plant in California, where one fortieth as much product could be marketed, such a plant 114 THE COST OF MINING would have to stand additional overhead charges of $20 to $50 a ton. Such sums are more than enough to pay the cost of transportation to almost any place in the civilized world. The figures are imaginary but they are within reason and illustrate the principle. 3. The facilities for manufacture are not the only advantages pos- sessed by the chief industrial areas. They are also above the average in natural agricultural and trading resources. The manufactures support a population that is merely superimposed upon populations that would be there anyway. This adds to the marketing facilities and becomes a factor in building up trade from the mere effect of momentum. The widest opportunities for business lie where the greatest number of people to do business with may be found. The ambitious, the enterprising and the able flock to the great industrial centers to try their fortunes; and bring with them capital and organizing power that grow into imposing volume. In such centers, hundreds of specialized employments are found which scarcely are known elsewhere. Indeed the greatest cities are largely made up of them. New York, for instance, is not supported by any great industry so much as by the specialists of all industries. People often wonder why cotton grown in the South is not manufac- tured in the South. The explanation is very simple. Our Southern States produce enough cotton to supply twenty times the population of those states. Nineteen twentieths must therefore be exported. The baled cotton is scarcely more bulky and can be handled more easily than the manufactured cotton. It all has to go to the distributing centers for market: if, in so doing, the cotton reaches localities where it can be manufactured more cheaply, advantageously and skilfully than at home, that is the natural place for its manufacture. That is precisely what happens. Within a hundred miles of New York nearly as many people live as in all the cotton growing states a population infinitely richer in skilled and specialized artizans, with infinitely superior commercial advantages. Exactly the same thing is true of other staples; metals for instance. Why try to manufacture copper in Arizona when it has to go to New York or Europe anyway? Copper is used in conjunction with iron for the general manufacture of machinery appliances and structures. Eighty-three pounds of iron are used for each pound of copper. Does not this fact chain the copper market to the iron produc- ing locality? We may go through a long list of other such staples and find that the same circumstances apply to them all. It now becomes clear why so much more money is to be found within these clearing house areas than outside. The commercial, industrial and financial transactions the market of most of the staples from the outside, as well as of those originating inside, are conducted in these centers. It is these transactions that involve the principal use of money. THE INDUSTRIAL CLEARING HOUSES 115 The performance of all this business in the industrial clearing houses is not an exaction upon the rest of the world as some frequent ranters beset with half information urge us to believe but a service. It is a plain matter of mutual advantage. I have hinted at a political implication; we have now arrived at it. The service performed by these clearing house areas depends upon the free access to and free interchange with all of the outside world. Arti- ficial barriers, such as national antagonisms, which interfere with it, are a handicap and a hardship both upon those within and upon those with- out. But the people without are not so vitally affected as those within. The industrial areas are over-populated. A stoppage of their trade means starvation and disaster in the acutest form. A mere strike on the transportation systems leading to New York would bring that metropolis to discomfort in a week and to black calamity in a month. It is the province of true political organization and adjustment to recog- nize this fact. In America the clearing house area is securely backed by the political structure of a great continent. Its intercourse with an immense feeding and trading area is as well assured as human institu- tions can make it. The United States is big enough to command it. But it is the misfortune of Europe that the fortunes of the great indus- trial nations may be at any time endangered by the jealousy of rivals. The exploitation of such jealousies is the most formidable cause of war. The actual fighting in such a war produces only a small part of the suf- fering involved in it; the major part lies in the economic distress thrust upon hundreds of millions. It remains to add that the interests of the industrial areas are the interests of Capitals. They are the industrial, social, financial capitals of the world, made so by the inevitable and proper working out of economic forces. They should be accorded the political privileges of capitals also: and just as their position as com- mercial capitals rests upon mutual advantage, so should their position as political capitals rest upon mutual advantage. How firmly is this state of affairs rooted in natural conditions? In other words, how permanent is it? ALLOCATION OF IRON AND COAL The International Geological Congress meeting in Stockholm, Sweden in 1910 made a survey of the iron ore resources of the world and in Mon- treal, Canada, 1913, a similar survey of the coal resources of the world. It must be admitted that neither of these reports can pretend to great accuracy (1) because many fields of both coal and iron are only slightly developed and therefore the tonnage estimates are largely conjectural, (2) because the elements of known fact and conjecture are not reported in the same way for the different fields and (3) because the commercial 116 THE COST OF MINING factors which in every case put some limit upon the exploitation of re- sources are very imperfectly considered. But in spite of these limita- tions certain broad features of the world wide situation stand out clearly enough as follows: COAL 1 . The resources in both coal and iron are distributed very unequally among the nations and races. Thus the Latin speaking nations both in Europe, America and Africa have very inferior supplies of coal both in quantity and quality. 2. The territories occupied wholly or almost wholly by English-speak- ing white populations, amounting in all to less than one-tenth of the human race include not less than three quarters of the probable coal supplies. The preponderance of the remaining supply is in China. 3. On the continent of Europe, that is, excluding the British Isles, 71 per cent of the probable resources are in the former German Empire. 4. Disregarding the hazy and uncertain estimates of probable and possible coal supplies and considering only those portions that are put down as " actual reserve," the great coal producing nations are un- doubtedly well equipped for the future. Thus Great Britain has enough coal in actual reserve to maintain its present output for approximately 500 years, Germany for 400 years and the United States, though its resources are not estimated in the same way, is undoubtedly much better off still. Thus in regions where coal is of the best quality and demonstrat- ed to be of present commercial importance, the output can certainly be maintained and increased for a period of at least 100 years, that is, well beyond the limits of reasonable human foresight. 5. On the other hand France has only enough coal in " actual re- serve" to maintain her comparatively modest output for 90 years, Italy has no supplies worth mentioning; Russia though credited with large potential supplies, has very little in actual reserve; Japan has only enough to maintain its present small output for 90 years, and India with its immense population has only enough for 30 years. IRON In iron the situation is as follows: The three greatest sources of high- grade ore, that is, carrying 50 to 66 per cent, metallic iron, are the Lake Superior region in the United States, northern Sweden and south-central Brazil. Immense supplies, measured by billions of tons of low grade ore running 25 to 40 per cent, metallic iron are found in Great Britain, France and Germany near great fields of good metallurgical coal. Numerous other occurrence of fair and good-grade iron ores occur in other THE INDUSTRIAL CLEARING HOUSES 117 parts of the world, as in Spain, Newfoundland, Cuba, Chili, Mexico, Venezuela, India, China, Australia and Russia, but these supplies are not great enough, rich enough or in situations favorable enough to give them at present commanding commercial or political importance. The following situations seem well established : 1. The United States has enough high-grade iron ore to guarantee its present maximum production of 40,000,000 tons of iron a year for about 60 years, and if we may include the resources of Cuba as falling into her field she has enough for at least 80 years. Of lower-grade ores there is an indefinite supply. By high-grade we must understand ores yielding at least 50 per cent, metallic iron on the average. In the Lake Superior district there is at least 2,000,000 tons of such ore perfectly developed and forming the back bone of the industry. These ores are situated at an average distance of about 900 miles from the greatest fields of metal- lurgical coal in the world, but connected with them by a singularly easy transportation route through the Great Lakes. This makes the natural meeting point of ore and fuel coincide with the center of population, and of natural trade distribution of the North American continent, and gives the industry based on these factors an unrivalled strategic position for controlling the greatest market of the world. This had led to iron being manufactured by larger productive units and no doubt under con- ditions which yield a greater output per man than is possible in any ACTUAL IRON ORE RESERVES OF PRINCIPAL IRON MANUFACTURING COUNTRIES Ore, tons Metallic iron Per cent. France 3,300,000,000 711,000,000 250,000,000 33,000,000 864,000,000 1,158,000,000 1,300,000,000 3,607,000,000 1,140,000,000 349,000,000 90,000,000 13,000,000 387,000,000 740,000,000 455,000,000 1,270,000,000 37, 50 ' 36 40 44 65 35 35 J Self flux. > Europe, 40% 100 years sup- piy- Self flux. Spain Austria Hungary " . ... Russia in Europe Sweden Great Brigain Germany Total United States 11,223,000,000 4,257,000,000 3,635,000,000 1,903,000,000 5,000,000,000 135,000,000 100,000,000 100,000,000 44,000,000 4,444,000,000 2,300, 000,000 53% Newfoundland 1,961,000,000 ] 856,000,000 f 3,000,000,000 J 73,000,000 65,000,000 60,000,000 28,000,000 For export only. For export only. 60% Practically unex- plored. Cuba Brazil Australia British Isles Chna Japan 118 THE COST OF MINING other field. Under these conditions the United States should be able to command a considerable exportation of iron to countries in which iron manufacture is either imperfectly developed or not feasible. 2. Germany or at least the territory in which German is spoken has supplies of ore averaging only about 35 per cent, in metallic iron, but having the three great advantages (1) of being mainly self fluxing, (2) of having a favorable texture for both cheap mining and cheap smelting and (3) of being close to great fields of metallurgical coal. Of these ores she had within her previous borders enough to maintain her maximum output of 20,000,000 tons a year for 60 years. If we may credit the Germans with ability to import half the Swedish supply, half the French supply (which is an immediate continuation of her own principal field) and one quarter of the Spanish supply, it is easy to see how she can main- tain her output under conditions approximately as favorable as the pres- ent for 100 years to come. Since this manufacture is near the center of European population, from which radiate favorable transportation routes both by land and water, the Germans seems well equipped to dominate the markets of central Europe indefinitely. It would seem as if these factors gave them the second position both as to natural conditions and as to markets. 3. Great Britain held the leadership of the iron trade until about 1890, but since that time she has been outstripped first by the United States and then by Germany. It is thought that she has been slow to adopt modern intensive methods of manufacture, but it is probable that her decline is based rather on the fact that her home market is less extensive than those of her chief competitors. In the export trade she is still a formidable competitor for any rival. Her natural factors seem to be rather superior to those of Germany in coal and rather inferior in iron and her access to over sea markets is more secure than that of Germany, even in peace times. Her indigenous ores are estimated to guarantee her present output of about 10,000,000 tons a year for 45 years and if she can import half of the Spanish supply, one quarter of the Swedish supply and a fair amount from Newfoundland, it is easy to see how Great Britain also can maintain her present output under conditions practically as favorable as the present, for 100 years. From these brief analyses I take it to be a fair conclusion that the three great industrial nations are well equipped, so far as the basic raw materials, coal and iron, are concerned, to maintain their present lines of development well into the immediate future. It remains to analyse the situation of other nations to see how far they are likely to challenge the industrial position of the present leaders. For a probable source of such a challenge it is natural to turn first to Russia. This great country possessed in a solid block one-sixth of the land surface of the world and one-tenth the population. While that popula- THE INDUSTRIAL CLEARING HOUSES 119 tion is probably less homogeneous than that of the United States, we may assume that it is much more homogeneous than several other great empires. When we come to its resources we find that it is more nearly analogous to Canada than to the United States. At least one-half of its area is north of a line beginning at a latitude of 60 North at the western frontier and ending at 50 North at the Pacific. This area is no more capable of maintaining dense population than that part of Canada which lies north of a line beginning at Skagway, Alaska and ends in Labrador. Another large part of its area is the desert, or semi-desert lying east of the Caspian. Thus from the standpoint of habitability Russia is a long monotonous strip of plain, widest at its extreme west and gradually narrowing between the encroachments of an arctic climate on the north and mountains and deserts at the south, until before Asia is crossed it comes to an end. Outside of these limits Russia presents various conditions varying from those of our Nevada deserts to those of Cockburn land. Thus in agricultural land and possibly in forests Russia is about twice as big as Canada; but in commercial routes, and in those resources which promote industrial activity it is relatively inferior. According to the investigations of the International Geological Congress Russia both in Asia and Europe has scarcely one-sixth as much coal, and if we may include Newfoundland with Canada, less iron. Though her iron-ore reserves are ample to maintain her present output for 100 years, she is relatively no better off than the present industrial leaders. The known ore reserves average about 44 per cent, metallic iron. These conditions do not indicate that Russia is in a position to bring about any revolutionary change in the industrial world. Her production of coal and iron as compared with other countries has not been improving very fast. Thus in 1850 Russia with an output of 230,000 metric tons of pig iron was the sixth in the list of producers, in 1913 the last year in which figures are available undisturbed by the war, with 548,000 metric tons, she was fifth. In 1850 the United States producing 573,000 tons was second on the list; in 1913, with 31,482,406 tons she was first. In 1850 Germany produced 354,000 tons and was fourth; in 1913 she produced 19,292,000 and was second. Thus while Russia has increased her production 20 fold, the United States and Germany have each increased theirs 55 fold. From 1900 to the out- break of the war Russia had increased her output more than 55 per cent., the United States and Germany each 126 per cent., France 95 per cent., Canada 1074 per cent., Belgium 144 per cent., and Great Britain has remained practically stationary. These figures represent Russia's industrial progress, I should imagine, as well as any others; for modern industry means the use of machinery and the manufacture of iron the manufacture of machinery. That a country with such resources is able to do more than it has in the past may be taken for granted but 120 THE COST OF MINING how much more is questionable, particularly in view of the present and prospective political and industrial unrest, and the disintegration of the country into smaller units. And when we consider how long a road she must travel to equal even the present industrial activity of the great western nations, one is tempted to doubt if we are warranted in ex- pecting it. I feel almost convinced that Russia will never be able to match either of the three great leaders, and certainly not the United States. In Japan we find an energetic and intelligent people living upon an already over-populated group of islands and exceedingly ambitious to join in competition with the industrial nations of Europe and America. So far as reserves of coal and iron are concerned we see from the tables given herewith that she is hopelessly inferior to any of the big com- petitors just discussed. However, in Korea, Manchuria and China she may find the raw materials for industrial expansion. Whether she can so utilize the enormous coal resources of China and the probably great iron resources of eastern Asia that she can build up an industrial system to match those of Europe and America (no doubt a possibility from the standpoint of natural and human material, and routes for assemblage and distribution with reference to a great population which might one day afford a great market) is an enormous problem of politics as well as of economics. It will be a fascinating and exceedingly difficult task and well worth the effort for only by success in this direction, whether under the leadership of the Japanese or of the Chinese, can we see any hope of rescuing the great yellow races from the distressing poverty which now holds their great inherent energy inertly anchored to thfe soil. Capital, intercommunication, education, freedom, organizing capacity and political power all spring from the same source, productive power. Once securely growing we may imagine that industrial energy in that field may acquires enormous force. We must remember that national growth and power are not wholly measured in military terms, though I have shown that military power to be stable must be based upon industrial power. The greatest value of industrial power lies in the fact that it means prosperity. The owner- ship of vigorous industry is not wholly dependent upon natural resources, because human ability can overcome obstacles, but that ownership is exceedingly important. The virile nations of the present day and of the immediate future will undoubtedly scrutinize their mineral resources, among other things, with closer attention than ever. WORLD'S PRODUCTION The world's production of iron and steel, so far as data are available, is noted in the accompanying tables: THE INDUSTRIAL CLEARING HOUSES 121 PIG-IRON PRODUCTION OF THE WORLD (In metric tons) Year Austria- Hungary Belgium Canada France Germany Italy Japan 1908 1,650,000 1,206,440 572,284 3,391,150 11,813,511 112,924 1909 1,958,786 1,632,350 686,886 3,632,105 12,917,653 207,800 1910 2,010,000 1,852,090 726,471 4,032,459 14,793,325 215 000 1911 1912 2,095,000 2,312,689 2,046,280 2,301,290 832,376 920,636 4,426,469 4,871,992 15,280,527 17,852,571 302,931 379,987 53,065 56 341 1913 2,369,864 2,484,690 1,024,424 5,311,316 19,291,920 426,775 56 663 1914 2 020 000 1 454 400 710 481 5 025 000 14 389 547 385 114 74 055 1915 1,960 000 68 150 828 920 4 750 000 11 790 199 377 510 64 984 1916 2 418,322 127 825 1 060 787 1,447 000 13 314 238 467 005 77 283 1917 7.990 1,063 084 1,684 000 13,142 247 471 180 1918 nil . 1,084,642 1,297,000 11,754 542 313 576 Year Russia Spain Sweden United Kingdom United States All other countries Total 1908 2,748,000 403,500 563,300 9 438 477 16,190,994 550,000 48,640,419 1909 2,871,332 389,000 443,000 9,818,916 26,108,199 550,000 61,217,064 1910 3,042,046 367,000 604,300 10,380 723 27,636,687 525,000 66,210,720 1911 1912 1913 3,521,000 4,197,638 4,548,376 408,667 403,243 424,773 633,800 701,900 735,000 9,718,638 8,751,464 10,481,917 34,027,940 30,202,568 31,482,406 485,000 485,000 495,000 73,831,693 73,443,043 79,133,124 1914 1915 4,261,008 3,696,560 425,000 439,835 635,100 767,600 9,005,898 8,793,659 23,721,115 30,414,817 420,000 415,000 62,536,718 64,367,234 1916 1917 1918 3,737,593 3,000,000 497,726 357,699 386 550 737,300 821,200 749 800 9,193,656 9,572,190 9 184 974 40,092,043 39,243,018 39 677 728 425,000 73,595,778 STEEL PRODUCTION OF THE WORLD, (In metric tons) Year Austria- Hungary Belgium Canada France Germany Italy Japan 1908 2 025 182 1 065 500 534 631 2 727 717 10,480 349 537,000 1909 1910 1,969,538 2 1 RR ^71 1,370,000 1 449 500 684,677 745 971 3,034,571 3 506 497 12,049,834 13 698 638 661,600 635 000 1911 1912 1913 2,363,008 2,785,105 2,682,619 2,192,630 2,515,040 2,466,630 800,504 868,811 1,060,503 3,680,613 4,078,352 4,686,866 15,019,333 17,301,998 18,958,819 736,000 801,951 846,085 10,222 12,451 13,728 1914 2,190,759 1,396,300 751,738 2,655,854 15,619,719 796,152 15,386 1915 2 686 226 98,820 926,157 1,087,700 13,237,646 1,009,240 16,766 1916 3,340,000 99,371 1,295,707 1,951,892 16,182,520 1,269,486 23,861 1917 2,920,000 9,530 1,583,786 2,231,651 16,587,360 1,331,641 1918 1,763,745 10,540 1,699,886 1,807,931 13,756,813 992,523 122 THE COST OF MINING Year. Russia. Spain. Sweden. United Kingdom. United States. All Other Countries. Total. 1909 3,071,000 309,479 310,600 5,976,322 24,338,302 325,000 53,499,974 1910 3,479,000 316,301 468,600 6,477,110 26,512,437 315,000 58,656,312 1911 3,870,000 322,981 456,500 6,565,645 24,054,918 315,000 60,387,354 1912 4,498,000 317,880 508,300 6,904,546 31,751,324 325,000 72,668,758 1913 4,827,000 365,118 582,700 7,787,264 31,822,555 325,000 76,157,262 1914 4,732,000 382,044 500,600 7,918,243 23,904,914 300,000 61,163,709 1915 4,900,000 387,314 588,800 8,687,670 32,686,887 300,000 66,613,226 1916 4,696,000 322,931 717,600 9,344,520 43,462,336 320,000 83,026,332 1917 3,000,000 470,241 681,700 9,909,338 45,786,083 350,000 84,894,119 1918 303,206 524,800 10,434,059 45,178,307 PRODUCTION OP PIG-!RON IN PRINCIPAL COUNTRIES IN 1850, 1890, 1900, AND 1910-1912, IN LONG TONS Country 1850 1890 1900 1910 1911 1912 United States 563,755 9,202,703 13,789,242 27,303,567 23,649,547 30,506,047 Germany 350,000 4,584,882 8,381,373 14,559,509 15,404,648 17,586,521 Great Britain 2,300,000 7,904,214 8,959,691 10,012,098 9,718,638 8,839,124 France 405,653 1,931,188 2,669,966 3,974,478 4,309,498 4,870,913 Russia 227,555 912,561 2,889,789 2,992,058 3,531,807 4,133,000 Austria-Hungary 250,000 910,685 1,472,695 2,153,788 2,056,839 2,276,141 Belgium 144,452 775,385 1,001,872 1,822,821 2,072,836 2,307,853 Canada 19,439 86,090 740,210 824,368 912,878 Sweden 150,000 483,155 518,263 594,385 624,367 688,757 Spain 176,598 289,315 367,423 402,209 a400,000 Italy 14,094 23,569 347,657 298,144 373,960 Japan 186,794 o200,000 o200,000 Other countries 10,000 80,000 100,000 a250,000 a200,000 a200,000 Total 4,401,415 26,994,904 40,181,865 63,304,788 63,342,901 72,566,084 a Estimated. Estimate for 1913, 76,000,000 long tons. CHAPTER IX LAKE SUPERIOR IRON. OLD RANGES AREA OF LAKE SUPERIOR IRON REGION THE HURONIAN OR ALGONKIAN CYCLE OP WORLD HISTORY THE POST ALGONKIAN MOUNTAIN RANGE DISTRIBUTION OF THE IRON FORMATION ITS EXTRAORDINARY VOLUME OUTPUT OF VARIOUS RANGES ECONOMIC RESULTS IN THE MICHIGAN DISTRICTS. Patches or " Ranges" of silicious iron bearing rock of Algonkian age are scattered over a large area, from Escanaba on Lake Michigan west- ward to beyond the Mississippi near Brainerd, Minnesota, 350 miles; and from Baraboo in southern Wisconsin to Gunflint Lake on the Canad- ian border of Minnesota, 300 miles. A line looped loosely around these points encloses an area of some 75,000 square miles, a good deal of which is occupied by the waters of Lake Superior and by small lakes. Within this area the natural exposures of the iron formation or even of the rock formation, the Huronian series, that contains them, are small, he Huronian rocks are covered in large part by the lakes, and equally by the volcanic masses of the Keweenawan copper bearing series, also pre-Cambrian in age, by Paleozoic sediments, and by glacial drift with its accompanying bogs. They have also been worn through in many places exposing the still older Archaean cores of old anticlines. These circumstances added to the fact that these rocks are metamorphosed and contorted in violent contrast to those that occupy the surface of the adjacent regions, are a sufficient explanation of the obscurity and diffi- culty of the geology. The unraveling of it has been a slow process in which observers have often been unable to dissociate theories from the facts. There has been intensive study of particular districts in the effort to unravel special complexities and only an occasional attempt to describe the geology of the region as a whole. I shall try no more than to set down a few of the salient facts that are not open to controversy. The Algonkian plainly represents, as mentioned above in the chapter on coal, a major cycle of sedimentation and quiescence, sharply marked from the preceding Archaean and the following Paleozoic by world wide crustal readjustments or " revolutions." Both in this region and in other parts of the continent the observer is soon convinced of their grand scale; perhaps there is a tendency to be over-impressed by it. Only in the Appalachian border on the east and in the Great Basin border on the west does the Paleozoic succession equal the imposing sedimentary masses of the Huronian series of the Lake Region, or the Belt series of the 123 124 THE COST OF MINING west, which are no doubt more or less coeval. But I think we may safely conclude that the great thickness of the Huronian and Belt strata are due to precisely the same reason that makes the Paleozoic thick in Penn- sylvania and the Cretaceous thick in Colorado they are remnants of great troughs or continental borders of active sedimentation and sub- sidence. The deeper portions of these troughs are in general the portions LAKE SVPERIOR IRON. OLD RANGES 125 that are preserved and exposed, and to which attention has been partic- ularly drawn; the scantier Algonkian sediments that probably were formed elsewhere having been more generally removed by erosion, and, either much less observed, or probably in many places confused by ob- servers with later formations. The Huronian of Lake Superior is in general very much like the Paleozoic of the Appalachian trough; the resemblances preponderate greatly over the divergences. The Paleozoic does not represent a continuous deposition of sediment; it is interrupted by several unconformities or erosion intervals. The Huronian in the iron region is exactly the same; it is interrupted by two erosion intervals or moderate unconformities which affect different parts of the area very differently and change the succession of rocks from place to place. The rocks are such as are usually found in areas of persistent and active sedi- mentation, consisting in both cases very largely of sandstones and shales with limestones rather subordinate in volume. The Huronian is not nearly so rich in limestone as the Appalachian trough, but it contains nevertheless large masses of it. Within the area we are considering the peculiar "iron formations" were deposited apparently exactly in the manner of normal limestones, making huge masses of strata as much as 1400 feet thick, undoubtedly in lenses the largest of which may have covered originally 10,000 or 15,000 square miles. Many attempts have been made to explain the formation of these iron bearing sediments, but none seems to be wholly convincing; suffice it to say that they were certainly formed in clear sea water as limestones form; the deposition being interrupted occasionally by inva- sions of mud, which in some cases represent wide-spread suspensions of the iron deposition, perhaps from failure of the supply of iron bearing material; or perhaps representing a proximate filling of the basin so that waves and currents had more power to spread silts. At any rate in each case the clear-water basins were finally filled and great shale deposits, apparently of delta mud, were formed over them; just as in many other places great masses of shale have formed over lime-stones, representing the substitution of low plains or muddy shore lines for shallow clear- water seas. Many of the Huronian shales are exceedingly carbonaceous, containing beds of graphite, so that it is not improbable that the old deltas contained peat swamps, although the vegetable forms have been obliterated by the widespread metamorphism. The original position of the Huronian trough is largely guess-work. The present distribution of the rocks, not improbably, was determined more by the later mountain-building forces than by the original deposi- tion. Still there is fair reason to believe that the longer axis of the trough ran approximately east and west, for numerous fragments of it occur all the way from Sioux Falls, South Dakota, to north central Quebec, thirteen hundred miles, but the greatest width indicated is only 126 THE COST OF MINING 300 miles north and south. Indeed there is nothing radical in the suppo- sition that this trough extended westward north of the Black Hills, into Montana, Idaho, and California, on the west and to New Jersey, where there is a thick mass of Algonkian limestone, or perhaps more directly to Newfoundland, to the east. This extension at the greatest would not make it as large as the Upper Cretaceous trough which extended from the Gulf to the Arctic Ocean. At any rate it is clear that in some such area there was a broad low-lying plain never far above and never far below sea level, that was filled partly by chemical deposits in shallow sea water, but principally by shore sands and river silts washed in from one or both sides. The peculiar chemically-deposited iron formations seem to have been either cherty iron carbonates or unstable iron silicates, in all cases con- taining at least 50 to 60 per cent, silica and averaging from 25 to 35 per cent. iron. While the geography of Huronian deposition is decidedly conjectural, the succeeding " re volution" presents some points that are well estab- lished; the earth movements affected the whole world, the North Ameri- can continent was elevated and suffered a period of erosion more prolonged and widespread than in any time since. However, the differ- ences between this event and succeeding ones may easily be exaggerated ; in fact it is hard to point to anything that has not been repeated or paralleled in later times. It is perfectly plain that a first class mountain building movement cut through the heart of the former trough. Very possibly the new mountain range split the old basin longitudinally as the Front Range splits the Cretaceous trough, but that point is doubtful; it may cross it at an angle. At any rate a mountain range comparable to any of the present great mountain ranges, the Alps for instance, was formed along an axis that runs some distance south of Lake Superior, almost parallel to it, in an E-W or E-N-E direction. The mountain building axis was of course not a line but a broad belt sweeping across the northern part of Wisconsin and Michigan. The edge or front of this range can be accurately located today for a considerable stretch, namely from the Huron Islands at the mouth of Keweenaw Bay, through L'Anse, Lake Gogebic, and along the Gogebic iron range to its west end, 160 miles. North of this line there is merely a basin in which the rocks are gently folded, apparently by mere subsidence; south of it there is a broad belt of intense folding, faulting and batholithic intrusions. The whole mass of Huronian sediments on the Gogebic Range is merely tilted up against the side of the uplift and thus marks its position just as plainly as the tilted Cretaceous sediments, along the Front Range mark the edge of the Rocky Mountains. Along the mountain range itself the uplift was sufficient to bring the underlying Archaean above the level of subsequent erosion over a good LAKE SUPERIOR IRON. OLD RANGES 127 part of the range. The iron bearing rocks within the ancient mountain zone are found only in a series of synclines which in each case represented at one time a longitudinal mountain valley. These folds are very sharp, and metamorphism has been in places complete, so that now many of the sediments have become crystalline schists. The whole country, by the way, was almost base-leveled by erosion before upper Cambrian, or Ordovician, times and has remained singularly quiescent ever since. There is nothing mysterious or unprecedented about any of these facts: for instance the Ordovician strata (which in Lake Superior are completely undisturbed) on Manhattan Island are metamorphosed into the " Hudson Schists" which every stroller sees in Central Park, and these rocks are as tightly folded, as thoroughly crystalline, as com- pletely base-leveled, as any in Lake Superior and represent a similar mountain system. Jurassic strata, much later still, are just as thoroughly affected along the Coast Range, and the Sierra Nevada in California. Perhaps the nearest parallel afforded by later geological structures to the present Huronian of Lake Superior is the mid-Paleozoic mountain range, now pretty effectively base-leveled, that extends from New York City northward through western Connecticut, Massachusetts, and Vermont, past Lake Champlain to the neighborhood of Quebec, for a length of 500 miles, and an unknown distance south along the present Atlantic border. The iron deposits are not peculiar to Huronian time, for some of them belong to the antecedent Archaean. Algonkian rocks in other areas are as free from iron as any others. The iron ores, therefore, belong to the region much more emphatically than to the age. There has been decidedly too strong a tendency to assume that jaspery masses containing hematite or magnetite^in the pre-Cambrian regions of Canada are " Huronian." Some of them may be, but I have seen many of them in various places belonging to various ages that seem to be vein-like silicifications, and of course have not the slightest connection with the great sedimentary formation of the Algonkian. It seems worth while to emphasize that the sedimentary character of this series is not only unmistakable, but quite normal, so that every rock and every attitude in it can easily be duplicated in the formations of later times in all parts of the world. It is only the extraordinary volume of the iron that is unique. 1 The Iron Ores. I have ventured to give this rough sketch of the geological history of the Huronian believing that it would give a more comprehensive idea of the country in a few words than could be conveyed by a description of the various mining districts that are found in it. 1 In the following references to Lake Superior geology, I am following the recent conclusions of R. C. Allen, until recently head of the Michigan Geological Sur- vey. So far as I am warranted in having a personal opinion I believe this work of Dr. Allen's to be sound and his deductions essentially probable. 128 THE COST OF MINING These districts are called " Ranges," quite appropriately in some cases, not so much so in others. All of these ranges, omitting the unimportant one at Baraboo, Wisconsin, and the Vermillion in Minnesota, which is not of Huronian age but Archaean, lie in a zone running from Escanaba, Michigan to Grand Rapids, Minnesota, 350 miles in a straight line. All the occurrences of iron formation, of any consequence are found within 50 miles north or south of this line. There is thus some suggestion that this zone may have been the locus of the peculiar iron deposition, especially in the more important middle Huronian division of it. The middle line I have mentioned passes immediately along the Menominee Range where the iron formation occurs in a number of sharply compressed folds, goes through the heart of the Crystal Falls and Iron River districts where it occurs in a lens or lenses included in folded carbonaceous slates, bisects the immense mass of the Gogebic Range, a monocline dipping under thousands of feet of overlying slate and more thousands of feet of copper bearing eruptives at an angle of 60 toward Lake Superior, and cuts into the western end of the still greater mass of the Mesabi. These ranges might therefore be called the central ranges and they produce almost 90 per cent, of the ore of the whole field. The Marquette Range, some fifty miles to the north, produces most of its ore from a large fragment of the Huronian iron formation, similar in all respects to the main formation of the other ranges, but eroded more extensively before the succeeding upper series was laid down upon it. It occupies an E. W. syncline about six miles in maximum width running westward some forty miles from Marquette, on the shore of the lake, between boundaries of Archaean granite until it debouches into a large folded area of Upper Huronian slate. In this district the iron formation occurs principally in the patch of " Middle Huronian" in the central part of this trough; that in the upper series occurs probably as isolated or marginal lenses in carbonaceous slates toward the west end of the trough. The Cuyuna Range is only partially developed. It lies 40 or 50 miles south of the axial line and it too shows great masses of iron formation enclosed between slates and plicated in various E-N-E folds. The Gogebic and Mesabi Ranges are by far the greatest and the simplest of all. They do not lie in compressed folds at all like the others but merely dip under the great Lake Superior trough from opposite sides the Gogebic steeply to the north, 60 or more, the Mesabi nearly flat, say 5 to the south. Although these masses are 140 miles apart at their centers there is reason to suppose that they may be the same beds. If so the amount of iron contained in the intervening basin under the western prong of Lake Superior is simply staggering. The area of this section is some 8,000 square miles, at that only a part of the original deposit, and if it ^averages only 400 feet thick, this bed would contain about LAKE SUPERIOR IRON. OLD RANGES 129 8,000,000,000,000 tons, an astronomical figure. That is more ore than all the coal in the world could smelt; at its supposed grade of 30 per cent, metallic iron, it would make 2,400,000,000,000 tons of pig iron, enough to maintain the present output of the United States for 60,000 years. The supposition that the Mesabi and Gogebic may be one and the same bed is based on the identity of the rock succession which persists down to almost all details. In each case a basal sandstone (now a quartzite) is overlain by a solid mass of iron formation 400 to 800 or even 1200 feet thick, followed by a huge mass of shales or slates. In each case in the middle of the iron formation there is a thin but persistent slaty seam or horizon which has an important influence on mining. At any rate whether the Gogebic and Mesabi are identical or not the volume of the Huronian iron formation is enormous. I have mentioned the amount in trillions of tons to bring home the fact that the 900,000,000 tons already mined, added to the 2,000,000,000 tons more in sight, is only a minute fraction of the mass. The mining is done wholly upon the decayed fringes of the original deposits, mere shreds of them where the process of leaching and oxidation have produced natural concentrates. Should means be found of converting the unleached formation into artifi- cial concentrates the iron ore supply of North America would be assured for more future time than the human animal has any reason to speculate about. This remarkable area has lately been producing about eighty per cent, the iron of North America and nearly, or quite, half of that of the World. Minnesota yields about two thirds; Michigan and Wisconsin the remain- ing third. Although there are six " Ranges" in all, the Mesabi in Minne- sota preponderates heavily over all the others combined. Thus in 1916, the year of record production to date, the output was as follows : Minnesota Michigan Long tons Mesabi 42,525,612 Vermilion 1,947,200 Cuyuna 1,716,218 Marquette 5,396,007 Menominee 6,364,363 i Gogebic 8,489,685 Total 66,658,466 The total production to the end of 1918 is approximately as follows: Mesabi, from 1892 490,000,000 Vermilion, from 1884 43,000,000 Cuyuna, from 1911 10,000,000 Marquette, from 1855 130,000,000 Menominee, from 1877 115,000,000 Gogebic, from 1885 110,000,000 Grand Total.. 898,000,000 130 THE COST OF MINING These ores are high grade, averaging about 50% iron in thier natural state that is with the moisture, and about 56 per cent. dry. In the former edition of this volume little was said about mining on the "Old Ranges" i.e., all except the Mesabi and Cuyuna, but in 1911 a survey published by the State Board of Tax Commissioners of Michigan gave a great deal of information on the subject. Since this is the only authoritative data to be had on a very large group of mines, I am adding a summary of it. It will be seen that the figures about to be given represent the mining on all the Ranges except the Mesabi and therefore account to date for more than 400,000,000 tons. Perhaps all these mines taken together have been worked out to an average depth of 1000 ft. Their production is about 400,000 tons per vertical foot. If all these ore-bodies, constitut- ing no less than 200 mines, were put together they would make one grand body the horizontal cross section of which would only be about 120 acres in area. Some ore bodies are worked jointly by two or more mines; but not commonly enough to alter radically the conclusion to be drawn from the statement just made i.e., that the ore-bodies are not exceedingly large and are scattered over a very large territory. There are indeed some very large deposits among them, or aggregates of ore bodies, for when large they are seldom simple. Of such the largest is the series of bodies worked by the Norrie, Newport and Ashland mines on the Goge- bic. These have been followed to a depth of about 2400 feet and have yielded about 60,000,000 tons in 35 years. The next largest individual mine is the Chapin on the Menominee Range, which has produced in 40 years some 21,000,000 tons. There is scarcely an individual deposit on the Marquette Range that has yielded 10,000,000 tons during the 60 years life of that district. These conditions are reflected in the relation of "ore in sight" to production. Ore reported in sight 1911 Ore shipped 8 years 1911-1918 inclusive Per year Gogebic Marquette . . . 17,354,000 50,288,000 45,660,000 32 870 000 5,700,000 4 109,000 Menominee 20,579,000 39,800,000 4,975,000 Total 88 221 000 118 330 000 Average output per year 14 790 000 From this table it will appear that these mines do not differ very much from fissure-vein sulphide mines in the matter of blocking out ore. They seem to keep only 3 or 4 years supply developed. The Marquette Range is an exception; there ore indicated by drilling was reported, chiefly by the Cleveland-Cliffs Iron Company. Even here the reserve was only 12 years life. LAKE SUPERIOR IRON. OLD RANGES 131 I have not inquired closely into the discoveries of new ore in these districts since 1911, but judging from the way they maintain or increase their output the date of exhaustion must be a long way off. One or two important new mines and several important ore bodies have been dis- covered on the Gogebic and there is no doubt that this range will greatly exceed any expectation I was able to hold for it in 1911. Whether the others will exceed expectations similarly remains to be seen, but I regard it as probable. Construc- tion, de- District Tons General velopment Mining Total Total expense and ex- per ton ploration No. 1. Gogebic Range 15,711,053 $1,558,705 $4,083,864 $21,207,105 $26,849,675 $1.72 No. 2. Iron County 3,999,457 352,688 3,574,038 5,211,894 9,138,622 2.28 No. 3. Crystal Falls 6,777,255 437,288 1,789,786 6,565,400 8,792,475 1.28 No. 4. Menomince Range. . . 10,052,564 971,447 1,915,320 11,289,470 14,176,237 1.42 No. 5. Baraga County 744,603 48,919 159,844 951,722 1,160,486 1.56 No. 6. Marquette riard Ores 4,078,863 582,605 1,173,335 6,801,080 8,557,021 2.10 No. 7. Marquette Soft Ores. 11,354,811 1,395,899 2,140,866 15,107,981 18,644,746 1.64 No. 8. Swanzy 2,095,723 112,674 307,771 33,312,786 3,793,231 1.81 No. 9. Scattered Low Grade . 1,293,658 59,960 279,101 845,056 1,184,119 0.92 Total 56,107,987 $5,580,185 $15,423,925 $71,292,494 $92 296 612 Cost per ton $0.10 $0.275 $1.27 $1.645 $1.65 This table shows the total output and costs of all Michigan iron mines for five years 1906-1910 inclusive, in long tons. The external operating conditions are about the same throughout the field; rigorous winters, cool summers a vigorous population, and reasonably cheap living. I believe it is correct to say that a considerable portion of the "General Expense" and "Construction" in this table is represented in the discussion of the U.S. Steel Corporation's business 1 as general expense and deprecia- tion; that is, as overhead or capital charges. These figures are un- doubtedly complete in the aggregate, but it is not possible to do more than generalize roughly on the details because the different companies did not report their expenditures in the same manner; one would group all construction in a lump, perhaps even include it all under the general head of " mining," while others would separate it in detail; but still those who did this might employ different groupings. If construction represents in general the depreciation of fixed equipment, and if the depreciation is 6 per cent, a year, we may arrive at the conclusion that the capital thus employed in the Michigan iron mines is about $2.50 per annual ton. Fifteen cents per ton seems to be about the amount of actual construction. Other details will appear in the tables for the separate districts. The total number of men employed was reported at 16,024, with some apparently not very important omissions. The average output was 1 See following chapter. 132 THE COST OF MINING 11,200,000 tons so that the output per man was 700 tons per year. The total cost per man per year was $1150 at the mines; the actual wages and salaries $730 per man per year, being about 64 per cent, of the total cost, and averaging $2.40 per working day. Under the conditions of 1918 it is probable that these factors indicate average costs at the mines of $3 per ton, or more, and total costs (about $1.70 freight added) at the lower lake ports approaching $5. DISTRICT No. 1. GOGEBIC COUNTY, MICHIGAN Number of mines and explorations reported . . 20 Wages and salaries paid $16,632,296.40 Per ton General expenses (not including taxes) $1,558,705 . 93 $0. 098 Construction, development and explorations. . 4,083,864.20 0.260 Mining expense 21,207,105. 10 1.355 Total cost at mine $26,849,675.23 $1.72 Rail freights paid 6,002,288.37 0.40 Lake freights paid 10,585,921 . 64 0. 71 Commissions paid 695,520. 57 0. 046 Total expense $44,133,405.81 $2.876* f.o.b. Cleveland. Total tons sold 14,183,842 Total tons shipped 15,393,642 Total tons mined 15,711,053 Total tonnage reported in sight . . . 17,354,100 Receipts from sale of ore $65,694,536 . 07 Total operating profit of 12 mines 21,944,683. 57 Taxes 992,272.42 Proportion taxes to operating profits (per cent.) 4.55 Royalties 5,960,403.65 Profit to companies (12 mines) 15,212,854 . 39 Total profits 12 mines including royalties 20,957,419.53 Total loss to three mines (exploration and de- velopment properties not included 678,579 . 85 This district is about the best and most profitable among the "Old Ranges." Its ores are prevailingly Bessemer and run about 62% metallic iron, dry, and from 51 to 56 % natural. These facts are reflected in the profits which, including royalties aver- aged about $1.33 per ton, or 30% of the average selling price at Cleveland. DISTRICT No. 2. IRON COUNTY, MICHIGAN Number of mines and explorations reporting. 29 Wages and salaries paid $ 4,411,151.48 General expenses (not including taxes) 352,688.21 Construction, development and explorations.. 3,574,038.89 Mining 5,211,894.90 Per ton $0.087 0.895 1.30 Total cost at mine $9,138,622.10 * The average cost per ton includes mines worked at a loss. $2.282 LAKE SUPERIOR IRON. OLD RANGES 133 Rail freights paid 1,279,487.98 $0.40 Lake freights paid 1,609,055. 90 0. 54 Commissions paid 260,351.01 0.067 Total expense. 12,287,516.99 $3.289* f.o.b. Cleveland. Total tons sold 3,848,325 Total tons shipped 3,820,308 Total tons mined 3,999,457 Total tonnage reported in sight 10,169,213 Receipts from sale of ore $12,740,286. 82 Total operating profit of 9 mines 2.044,106. 72 Taxes 103,907. 11 Proportion of taxes to operating profit (per cent.) 5.5 Royalties paid 844,038.89 Profits to companies (7 mines) 1,395,354. 01 Total profits 9 mines (including royalties) . . 1,952,543.49 Total loss to companies (10 mines) 1,912,320 .91 This district produces only non-bessemer ores of rather low grade, seldom running over 56% dry and about 50% natural. The profits are only 15% of the selling price. DISTRICT No. 3. CRYSTAL FALLS Totals Per ton Number of mines and explorations reporting 25 Wages and salaries paid $ 4,756,223 . 68 General expenses (taxes not included) 437,288 . 47 $0. 064 Construction, development and explorations 1,789,786.65 0.26 Mining 6,565,400.84 0.956 Total cost at mine 8,792,475.96 $1.28 Rail freights paid 2,374,293.64 0.40 Lake freights paid 3,267,453. 98 0. 57 Commissions paid 548,504. 29 0. 09 Total expense $14,982,727.87 $2. 34* Total tons sold 6,050,662 Total tons shipped 6,119,177 Total tons mined 6,777,255 Total tonnage reported in sight 1,233.900 Receipts from sale of ore $20,861,190.27 Total operating profit (10 mines) 6,361,951 . 98 Taxes 131,493.43 Proportion of taxes to operating profits (per cent.) . 2.6 Royalties paid 1,611,190. 15 Profits to companies (8 mines) 4,846,463 . 22 Total profits (10 mines) including royalties 6,238,753. 13 Total loss to companies (6 mines) not including ex- plorations 710,684.40 While this district produced only low-grade ores, such as those of district No. 2, the mines were remarkably profitable owing to some very low costs. The profits averaged over 26 per cent, on the selling price. * Includes unprofitable mines. 134 THE COST OF MINING DISTRICT No. 4. OLD MENOMINEE RANGE Totals Per ton Number of mines and explorations reporting 12 Wages and salaries paid $ 9,322,449.20 General expense (not including taxes) , . 971,447 . 21 $0. 097 Construction, development and explorations 1,915,320.33 0. 192 Mining 11,289,470.33 1.128 Total cost at mine 14,176,237.87 $1.417 Rail freights paid 3,483,420.04 0.40 Lake freights paid 5,369,237. 62 0. 60 Commissions paid 66,661 .27 . 07 Total expense 23,096,556.80 $2.487 Tons sold 9,391,360 f.o.b. Tons shipped 9,335,812 Cleveland Tons mined 10,052,564 Total tonnage reported in sight 9,177,348 Receipts from sale of ore $34,103,131.46 Total operating profit of ten mines 11,040,230. 75 Taxes 795,696.22 Proportion of taxes to operating profit (per cent.) . 7. 24 Royalties paid 2,395,619.41 Profit to companies (9 mines) 7,885,624. 86 Total profit (9 mines) (including royalties) 10,249,066 . 96 Total loss to companies, two 69,365 . 83 This district produces generally fairly hard ores, partly Bessemer and partly non- Bessemer. The costs average low, both for local expenses and for freight, and ore was delivered at Cleveland for only $2.48 per ton for all operating and construction charges. The average profit, including royalties, was $1.10 per ton, 30 per cent, of the selling price. DISTRICT No. 5. BARAGA COUNTY, MICHIGAN Totals Number of mines and explorations reporting Wages and salaries paid $ 565,969.48 General expenses (not including taxes) $ 48,919. 32 Construction, development and explorations 159,844 . 44 Mining 951,722.56 Total cost at mine $1,160,486.32 Rail freights paid . Lake freights paid Commissions paid. 228,479.12 398,492.21 40,147.35 Total expense $1,827,605. 00 Tons sold 657,370 Tons shipped 657,370 Tons mined. 744,603 Tons reported in sight 1,864,185 Per ton $0.065 0.214 1.28 $1.56 0.35 0.61 0.06 $2.58 LAKE SUPERIOR IRON. OLD RANGES 135 Receipts from, sale of ore $1,807 495 98 Total operating profits, three mines 45,377. 44 Taxes 7,331,05 Proportion of taxes to operating profit (per cent.) 16. 2 Royalties paid 136,601 . 62 Profits to companies (3 mines) None Total profits three mines (including royalties) 36,046.39 Total loss to companies, three mines 98,555 . 23 This district is in the upper Huronian at the west end of the Marquette Range. It is of slight importance. DISTRICT No. 6. MARQUETTE COUNTY, MICHIGAN Totals Per ton Number of mines and explorations reporting 11 Wages and salaries paid $ 5,296, 704 . 30 General expenses (taxes not included) 582,605 . 38 $0. 14 Construction, development and explorations 1,173,335.39 0.29 Mining 6,801,080.83 1.67 Total cost at mine $ 8,557,021 . 60 $2. 10 Rail freight paid 1,230,335.82 0.40 Lake freight paid 2,359,387 .30 . 60 Commissions paid 59,900 .93 . 02 Total expense $12,206,645.65 $3. 12 Tons sold 3,873,785 Tons shipped 3,888,557 Tons mined 4,078,863 Tons reported in sight 11,134,355 Receipts from sale of ore $17,015,407. 56 Total operating profit, 6 mines 5,246,934. 10 Taxes 496,505.01 Proportion of taxes to operating profit (per cent.) ....... 9. 45 Royalties paid. .' 262,329. 14 Profit to companies, 6 mines 4,723,752. 76 Total profits, 6 mines (including royalties) 4,866,081 . 90 Total loss to companies, 2 mines 572,825. 00 This district includes many of the oldest and most famous mines in the Lake Superior District the "hard ore" mines of Marquette, such as the Republic, Cham- pion, Lake Superior and Cleveland. These ores occur along the unconformable con- tact of the Middle Huronian iron formation and the basal quartzite of the Upper Huronian. Very probably this ore represents oxidation and concentration on an ancient land surface at least to a considerable extent. DISTRICT No. 7. MARQUETTE COUNTY, MICHIGAN Totals Per toh Number of mines and explorations reporting 20 Wages and salaries paid $12,011,515.90 General expenses (not including taxes) 1,395,899 .35 $0 . 12 Construction, development and explorations 2,140,866.05 0. 19 Mining 15,107,981.23 1.33 Total cost at mine.. $18,644,746.63 $1.64 136 THE COST OF MINING Rail freight paid 3,064,947.71 0.32 Lake freight paid 5,424,983.28 0.65 Commissions paid 134,029.88 0.01 Total expense . $27,268,707.50 $2.62 Tons sold 10,744,791 Tons shipped 10,830,611 Tons mined 11,354,811 Tons reported in sight 35,961,538 Receipts from sale of ore $39,605,117.47 Total operating profits, 15 mines 12,467,025. 65 Taxes 865,028.59 Proportion taxes to operating profit, per cent 6. 98 Royalties paid 1,859,944. 05 Profit to companies, 13 mines 9,867,181 .86 Total profits, 14 mines (including royalties) 11,654,992.00 Total loss to companies, 4 mines 255,584 . 53 This district covers most of the soft ores of Marquette; bodies formed by leaching from the surface along channels of free circulation of water. They are concentrations in the body of the Middle Huronian iron formation, generally upon some impervious rock layer bent into a trough-like form. DISTRICT. No. 8. Totals Per ton Number of mines and explorations reporting , 13 Wages and salaries paid $2,158,212.35 General expense (not including taxes) 172,674. 60 $0. 082 Construction, development and explorations 307,771 .22 0. 148 Mining 3,312,786.07 1.580 Total cost at mine $3,793,231.89 $1.81 Rail freights paid 311,706. 73 0. 32 Lake freights paid 418,475.85 0.65 Commissions paid Total expense $4,523,414.47 $2.78 Tons sold 1,669,737 Tons shipped 1,670,263 Tons mined 2,095,723 Total tonnage expected 6,746,158 Receipts from sale of ore $5,682,757.47 Total operating profit, 6 mines 1,267,967. 36 Taxes 99,687. 11 Proportion of taxes to operating profit (per cent.) 7.9 Royalties paid 540,348. 62 Profit to companies, 1 mine 1,047,803 . 59 Total profit,2 mines (including royalties) 1,219,975. 79 Total loss to companies, 3 mines 528,496. 32 This is a small outlying basin of the Marquette Range, known as the Swamzy district. Presumably its geology is some variation of that of district No. 7. LAKE SUPERIOR IRON. OLD RANGES 137 DISTRICT No. 9. VARIOUS SCATTERED LOW-GRADE MINES. Totals Per ton JS1 umber of mines and explorations reporting 11 Wages and salaries paid $ 620,145. 06 $0. 44 General expenses (taxes not included) 59,960. 53 $0. 045 Construction, development and explorations 279,101 .91 0. 22 Mining 279,101.91 0.22 Total cost at mine $1,184,119.36 $0.925 Rail freights paid $ 454,062.59 $0.40 Lake freights paid 502,930. 70 0. 60 Commissions paid 72,834 .61 0.10 Total expense $2,213,947.26 $2.025 Tons sold 1171,024 Tons shipped 1179719 Tons mined 1,293,658 Tons reported in sight 1,323,074 Receipts fom sale of ore $2,261,830. 18 Total operating profit, 4 mines 386,208. 35 Taxes 21,327.20 Proportion taxes to operating profit (per cent 5.45 Royalties paid 154,427 . 35 Profit to companies, 4 mines 278,364. 85 Total profit (including royalties) 374,323 . 47 Total loss to companies, 5 mines 406,235 . 48 These mines are not a district, but partial concentrations in various places. If this set of figures represents the average proportion of things in the iron mining business of the Old Ranges we find that the average profit, including royalty, is about 12 per cent, of the value of the contained pig iron at Pittsburgh. A large proportion of the mines are leaseholds, paying royalties to the owners of the fee. Where royalties are paid on average ore they will be perhaps 30 cents a ton. Vaue of ore at Cleveland $3.80 Cost of mining, construction, exploration $1 . 65 Transportation 1 . 07 Taxes , 07 All costs $2. 79 Gross operating profit 1.01 Royalty 0. 30 Profit to leaseholder $0.71 Average content of ore in iron (natural) 54 per cent. Value of this pig iron in Pittsburgh about $8.64. Value of ore at Cleveland compared 138 THE COST OF MINING to the value of its metallic contents made into pig iron at Pittsburgh, about 44 per cent. Profit on capital invested in plant about 28 per cent. The entire capital invested must be very much greater than that represented by the plant. It would have to include either the cost of finding a mine by exploration, or else a purchase price for a developed mine, or both. It must of course be reiterated that none of these figures represent the costs ruling in 1919 which are no doubt 40 to 50 per cent, higher than those given. Under present conditions the price of these ores should be about $6.00 a ton to maintain the business in approximate equilibrium. TABLE I. LAKE SUPERIOR IRON-ORE SHIPMENTS (In Long Tons) 1916 1917 1918 Escanaba 7,457,444 7,156,854 6,774,969 Marquette 3,858,092 3,207,145 3,457,054 Ashland . 8,057,814 7,597,841 7,565,608 Two Harbors Superior. . . 10,735,853 12,787,046 9,990,901 13,978,741 8,723,472 14,068,341 Duluth 21,837,949 20,567,419 20,567,288 Totals by lake 64,734,198 62,498,901 61,156,732 Totals all rail (est.) 1 924 268 1 938 102 2 000,000 Total shipments 66,658,466 64,437,003 63,156,732 TABLE II. MONTHLY PRODUCTION OF COKE AND ANTHRACITE PIG IRON IN THE UNITED STATES, BEGINNING JAN. 1, 1914 (In Long Tons) 1914 1915 1916 1917 1918 January February March April. . . . 1,885,054 1,888,670 2,347,867 2,269,655 1,601,421 1,674,771 2,063,834 2 116494 3,185,121 3,087,212 3,337,691 3 227 768 3,150,839 2,645,247 3,251,352 3 334 960 2,411,768 2,319,299 3,213,091 3,288,211 May June. 2,092,686 1,917 783 2,263,470 2 380 827 3,361,073 3 211 588 3,417,340 3 270 055 3,446,412 3,323,791 July 1 957 645 2 563 420 3 224 513 3 342 438 3 420 988 August September October 1,995,261 1,882,577 1,778 186 2,779,647 2,852,261 3 125 491 3,203,713 3,202,366 3 508 849 3,247,947 3,133,954 4 303 038 3,389,585 3,418,270 3,486,941 November December 1,518,316 1,515,752 3,037,308 3,203,322 3,311,811 3,178,651 3,205,794 2,882,918 3,354,074 3,433,617 Totals (a). 23,049 752 29 662 566 39 039 356 38 185 981 38,506,047 (a) Totals do not include charcoal pig iron. Figures secured from Iron Age. LAKE SUPERIOR IRON. OLD RANGES 139 TABLE III. PIG-!RON PRODUCTION (a) FOR 15 YEARS (In Long Tons) 16,497,003 1909 25,795,471 1914 1910 27,303,567 1915 1911 23,649,547 1916 1912 29,726,937 1917 1913 30,966,152 1918(6).. 1904 1905 22,992,380 1906 25,307,391 1907 25,781,381 1908 15,936,918 (a) American Iron and Steel Institute. (6) Estimated. 23,332,244 29,916,213 39,434,797 38,621,216 38,820,000 TABLE IV. PIG-IRON PRODUCTION BY GRADES 1917 1918(a) Long tons Per cent Long ton Per cent Basic 17,671,662 45 8 18,361,860 47 3 Bessemer 13,714,732 35 5 12,810,600 33 Foundry 5,328,258 13 8 5,357,160 13 8 Malleable 1,015,579 2.6 1,281,060 3.3 Forge .... 345,707 9 427,020 1 1 Spiegeleisen 171,675 5 194,100 5 Ferromanganese 281,425 7 310,560 8 All other 92,168 0.2 77,640 0.2 Totals 38,621,216 100 38,820,000 100 (a) Estimated. CHAPTER X COST OF MINING LAKE SUPERIOR IRON MESABI RANGE AND U. S. STEEL* IMPORTANCE OF THE DISTRICT GENERAL STATEMENT OF THE COST PROBLEM THK UNITED STATES STEEL CORPORATION CAPITAL EMPLOYED IN MINING, TRANS PORTATION, AND BLAST FURNACES WORKING CAPITAL TREATMENT OF CAPITAL CHARGES IRON MINES AND ROYALTIES COST OF MINING OLD RANGES AND THE MESABI RANGE COST OF OPEN-PIT OPERATIONS ENGINEERING AND MANAGE- MENT TAXES ECONOMY OF CONSOLIDATION ESTIMATE OF AVERAGE MINING COST TRANSPORTATION ESTIMATES OF SELLING COST OF PIG IRON AT PITTS- BURGH STATISTICAL RECORD OF UNITED STATES STEEL CORPORATION ITS CAPITAL CHARGES AND INCREASED CAPACITY ITS PROFITS ITS PLANTS AND PROPERTY REVIEW OF OPERATIONS OF STEEL CORPORATION 1909-1918. When people speak of the output of metal mines in general they mean the gross selling value of the refined metals of New York. Now the value of Lake Superior iron ores is never given in mass. You hear of the value of bessemer, or non-bessemer, old range or Mesabi ores at the mines or at Cleveland, but you do not hear of average values nor of gross values in pig iron. But if we make a correct comparison of the importance of various districts on the basis of the value of their products in New York in 1918, we shall see that Lake Superior pig iron transcends them all. Lake Superior copper $ 53,000,000 Southeast Missouri lead 25,000,000 Southwest Missouri zinc 32,000,000 Butte copper 80,000,000 Southwestern copper 210,000,000 Transvaal gold 179,000,000 Lake Superior iron 1,150,000,000 Mesabi Range alone 760,000,000 The business is profitable, one of the most profitable in the world, on account of its volume, but it is not easy to give precise figures concern- ing it. Much has been written on the various problems involved, such as the caving system of mining, the systems of accounting, mining open pits, blast-furnace practice, etc., but each of these is only a link in the chain. I have never found any comprehensive discussion of the subject as a whole. I have, therefore, endeavored to work out on an *The first part of this chapter was written in 1909, the latter part in 1919. Some of the comparative figures may be somewhat out of date to-day, but I hope not to a great enough extent to convey any serious false impression. 140 COST OF MINING LAKE SUPERIOR IRON 141 original basis a statement of the cost of operating this vast business. It may be interesting to explain the method. General Statement. The first thing to decide is what to include in the cost. At present, it is not a matter of any particular interest to have details of the mere cost of extracting ore from some particular iron mine and dumping it on the surface, although before the absorption of most of the mines by the various steel and furnace corporations the local mining costs were indeed a subject of interest. There were then many companies which only mined the ore and sold it at the pit mouth. At the present time by far the greater part of the ore is mined by con- cerns which use it to make pig iron and, in many cases, finished manu- factured steel or iron products. To describe this industry in parallel terms to those used in the case of other metals it seems to me that we should find the cost of pig iron delivered at New York. It is quite true that New York is not the greatest market for pig iron, but since I have discussed other metals on the theory of their delivery there it is reasonable to follow the same plan with iron. The reason for stopping with the production of pig iron is simply the analogy of other metals. Pig iron is the basic commodity of iron manu- facture. It bears the same relation to the making of steel rails or pocket knives as blister copper slabs bear to the making of copper wire or brass door knobs, or as pig lead bears to lead pipe or buck-shot. As I shall try to show what it costs to produce from various districts copper lead, and zinc ready for manufactures, so I shall try to show the cost of bringing Lake Superior iron to the same stage. 1 Complexities of the Problem. When we give this problem some attention we soon find it rather complex. The ore comes from scores of different mines, each producing its own particular grade at its own particular cost. But the cost of getting ore out of the mine is con- siderably less than that of transporting the ore from the mines to the furnaces, although the cost of transportation varies considerably according to the situation of the mine. We find that in some cases large royalties are paid to fee owners and in other cases the mining company owns the ground. These various factors are bewildering. Furthermore none of the companies gives its costs. The United States Steel Corporation, however, issues very good 1 In this chapter I have assumed in regard to the United States Steel Cor- poration that the profits on ore hauled by others will be counterbalanced by profits earned by the coporation on ore hauled for others, so that the final result with regard to this transportation will be the same as if all the ore mined by this company were transported by the company. I have also assumed that the making of pig iron at Pittsburg is representative in cost, and that pig iron can be made at Pittsburg and sold at New York for as low a price as pig iron made at other points and shipped to New York. All tons are of 2240 pounds. 142 THE COST OF MINING reports. These and various isolated data published by the U. S. Geo- logical Survey, and such information as I could get from personal observa- tion, are the sources from which my conclusions are derived. The Steel Corporation is fully as much a manufacturing as a mining concern and even buys some of its pig iron from others. It does not stop with pig iron. It makes steel rails, sheets, wire, rods, and even spelter and cement. It is the greatest of all industrial enterprises, employing in good times more than 200,000 men. Naturally the reports of such a corporation must be condensed. As a matter of fact no operating data of any kind are given. The omission is in this case quite proper. The production, the earnings, the capital expenditures, the property holdings, are all given. This information seems at first insufficient for any definite statement of costs, but it is all that can be had. On two recent trips to the Mesabi range, I saw a good deal of the mines, but I enjoyed no confidences. My inquiries were such as any one could easily make. I make this explanation in order that no one may be under a misappre- hension. The basis for the statements I am about to make is what I believe to be common sense. Activities of the United States Steel Corporation. The operations of the Steel Corporation are undoubtedly representative of the Lake Superior iron business far more so than those of any other concern. It mines and ships 55 per cent, of the whole product. It owns two of the three ore railroads in Minnesota and the shipments over its roads are 52 per cent, of the whole Lake Superior output. Just what proportion of the ore is transported on the lakes by the company's boats I do not know. When we come to pig iron we find that the company produces an amount equivalent to 55 per cent, of the probable content of Lake ores. It seems to have about 75 per cent, of the known ore reserves of the region. We may conclude, therefore, that this company performs about 55 per cent, of the business all along the line, and that its costs would be approximately the same if it did all the business. One might argue that the costs of the Steel Corporation are radically different in some respects from those of the independents. For instance, an independent may have to pay 80 cents a ton for freight that costs the Steel Corporation only 40 cents. It is for this very reason that the Steel Corporation is most representative. Its business is complete; that of the others, fragmentary. Just as the independents expect a profit on the ore that they own, so they must expect to pay a profit on the transportation that they do not own. It would be next to impossible to work out the real cost of pig iron if we tried to discover and weave together the obscure and disjointed costs and profits of a chain of discordant operators. Capital Employed at Iron Mines. Fot the purpose of this article the capital employed is one of the most vital elements to consider. Re- membering that we are to obtain our costs on pig iron and not on finished COST OF MINING LAKE SUPERIOR IRON 143 products, we must segregate the capital used in manufacturing from that used in mining and smelting. This can be done only approximately. Probably no one could make the division with absolute certainty, for it is necessary to remember that transportation, fuel, and power facilities owned by the company are used for the joint purpose of manufacturing steel products and of producing pig iron. I am, therefore, compelled to make a division on my own judgment, and in order to enable the reader to estimate the legitimacy of this judgment, it is necessary to show the method of arriving at it. The corporation owns in the Lake Superior region 72 iron mines of which 10 are on the Marquette range, 10 on the Menominee, 6 on the Gogebic, 6 on the Vermilion, and 40 on the Mesabi range. Neglecting the purchase price of the properties, and considering only the actual money invested in the plants for the machinery, developments, etc., I make a rough guess that the total capital employed would be somewhat as follows : Old ranges, each $2,500,000 $10,000,000 Mesabi range 25,000,000 Invested in extensive exploration and developments in the whole Lake Superior region 15,000,000 Total investment $50,000,000 Capital Employed in Transportation. The Duluth & Iron Range railroad and the Duluth, Missabe & Northern railroad with a total of 363 miles of main line would be indispensable to the conduct of this busi- ness, even if it did not extend beyond the production of pig iron. We may calculate the value of this property at $50,000 to the mile, or in round numbers $18,000,000. The Elgin, Joilet & Eastern railroad and various small lines near the manufacturing plants, with a total length of about 295 miles, may be estimated to belong half to the production of pig iron and half to manufacturing. I would charge, therefore, $7,000,000 in round numbers for these lines. The Bessemer & Lake Erie railroad, with 205 miles of lines, I would charge entirely to the production of pig iron, and capitalize it at $10,000,000. This figures up a total of $35,000,000 for railroad tracks. In addition to this we have the railroad equipment which I estimate at $52,500,000, out of which $40,000,000 would be necessary for the production of pig iron alone. We have then a total for railroads and their equipment of $75,000,000. The marine equipment consists of 76 steamers and 29 barges. Many of these steamers are the largest and best upon the lakes, and some of them undoubtedly cost $700,000 or $800,000 each. I should say that the total equipment must be worth $40,000,000. Capital Employed in Coal and Coke Properties. We have in the Connellsville and neighboring regions 62,253 acres of coal lands and 20,471 144 THE COST OF MINING coke ovens. I believe it would be conservative to estimate the capital employed there at $30,000,000. In the Pocahontas district there is a lease on 65,947 acres on which are 2151 coke ovens. This property must have cost somewhere in the neighborhood of $10,000,000 for its development. There are in addition 31,928 acres of steam-coal ground in Penn- sylvania, West Virginia, and Ohio. I would estimate the valuation of the plants employed on these properties to be at least $5,000,000. We have then a total of $45,000,000 for coal and coke plants. Of this I should say $35,000,000 would be necessary for the conduct of the pig-iron business of the corporation. Capital in Blast Furnaces. The corporation owns, exclusive of its properties in the South, 100 blast furnaces, many of them the largest and best in the world. This property may be estimated at $110,000,000. For the handling and shipping of iron ore, coke, and coal, the corpora- tion owns a large number of extensive docks, the total value of which I would guess at $20,000,000. Capital in Inventory and Surplus. At the end of 1908, the inven- tory of the Steel Company was given at $143,000,000, of which nearly $66,000,000 was in ore. It seems to be a fair deduction from this, if its business were only making pig iron one-half the grand total would be necessary say $70,000,000. At the same time the surplus was given at $133,000,000, of which, however, $78,000,000 had been invested on plant account, leaving a cash balance of something over $50,000,000. We may assume that, inasmuch as the selling price of pig iron is about one-half of that of the finished products one-half of this cash surplus would be required in the business of making pig iron say $25,000,000, making a total working capital of $95,000,000. Summary of Capital Used. We may summarize the capital as follows : Iron mine plants and development $ 50,000,000 Plants for transportation of iron ore 115,000,000 Coal, coke, and quarry plants 35,000,000 Docks and dock equipment 20,000,000 Blast furnaces 110,000,000 Total fixed capital $330,000,000 Working capital in inventory and surplus 95,000,000 Total capital $425,000,000 It is to be noted that this estimate does not include the purchase price of lands or good-will, but only such capital as would be required is the opportunity to conduct this business were a free gift. Capital so employed is worth in round numbers 5 per cent, interest plus a sinking und, calculated to retire the principal in about forty years. Such a COST OF MINING LAKE SUPERIOR IRON 145 fund is equal to about 1 per cent, additional. We must calculate the use of this capital then at 6 per cent., and this is not profit. It is merely the actual value of the money employed such a return as can be secured by an investor without burdening himself with the management of an enterprise. In the case of the Steel Corporation by far the greater portion of this capital is actually represented by 5 per cent, bonds to be retired by a sinking fund substantially on the terms indicated above. We must therefore include as an operating cost of this business an annual installment of 6 per cent, on $330,000,000 equal to $19,800,000. On an output of 10,000,000 tons of pig iron a year this is $1.98 a ton. In addition to this we must make a charge for depreciation which is usually represented by new construction. It is generally believed that depreciation on the kind of property in question will amount to some 6 per cent, per annum. But in this case the entire plant is not in use. The above investment provides capacity for nearly 15,000,000 tons of pig iron a year, but as we are calculating on a product of only 10,000,000 or two-thirds capacity it seems fair to charge depreciation only on two- thirds of the capital invested or $220,000,000. Six per cent, on this amount will make an annual installment of $13,200,000. The working capital should be charged with an average rate of in- terest say 5 per cent. This on the $95,000,000 calculated to be the amount makes an annual installment of $4,750,000. The cost, then, of making pig iron should be charged with the following sums for amortization of fixed capital : For amortization of fixed capital $19,800,000 For depreciation 13,200,000 For interest on working capital 4,750,000 Total capital cost per annum $37,750,000 Equal to $3.77 per ton on the assumed output. 1 1 These figures are different from those calculated in an article on this subject of which the present chapter is substantially a reprint. In that article the total capital was estimated at $475,000,000, on which an amortization charge of 6 per cent, or $28,400,000 was made. Further investigation has revealed some inaccuracies in this calculation, principally in the items of working capital and in the value of blast- furnace property. Furthermore, the present treatment of the subject seems more logical and more in accordance with the calculation of smilar costs of our other industries, treated in other chapters. In the article mentioned I assumed a royalty charge of 40 cents per ton. In this chapter this has been cut down to 20 cents, the estimate made by Mr. Carnegie as the actual payments made on the present arrangements by the corporation on all its ores; the change is made on the theory that the amortization of capital and the depreciation of the plants calculated for the mining properties are sufficient to cover the royalty that a company legitimately charged itself with. In other words, I am trying to account for the expenditures which it seems the company actually makes. 10 146 THE COST OF MINING The Iron Mines. Let us return to the source of operations and con- sider what iron-ore resources the company owns. According to the reports of the Minnesota Tax Commission the various properties owned by the Oliver Iron Mining Company on the Mesabi range have in sight 920,000,000 tons. This, I believe, is an estimate only of those ores which are at present merchantable. The large quantities of lower-grade ores on the western portion of the Mesabi range, which depend upon concen- tration for their utilization, have not, I believe, been reported. The discoveries of this kind of ore are very extensive, and as experiments have gone to the point of demonstrating the practicability of concentrating them, these ores should be considered as a resource. What the total volume of such ores may be I can only guess, but I should say that it would not fall far short of 300,000,000 tons of concentrates, making a total of probable ore on the Mesabi range of 1,220,000,000 tons. As to the ore resources on the old ranges I have no means of making an estimate. It is to be remembered that these mines extend to great depths and that the exploration of them in advance is not easy, but on the other hand many of them are exceedingly persistent and have already been worked for a great many years with no signs of exhaustion. As- suming that these mines may be counted on to produce as much in the future as they have in the past, we get an estimate of 114,000,000 tons for the old ranges, that is, outside of the Mesabi range. Therefore, I would estimate, in round numbers, the total ore resources of the Steel Corpora- tion in Lake Superior at 1,300,000,000 tons. It will be seen that I have estimated for the exploration and finding of these ores, outside of cost of mining plants in operation, $15,000,000. This seems to be an extremely moderate estimate of cost for putting in sight such enormous reserves, but as far as I can judge by the inquiries that I have made the sum is somewhere near the mark. Explorations on the Mesabi range have been extraordinarily fruitful, and the cost for drilling seems to be not much over 1 cent per ton developed. Royalties. A very large proportion of the ores controlled by the Steel Corporation is not held in fee, but under leases on which the company pays a varying rate of royalty. This royalty has shown a constant tendency to increase. Many of the earlier leases provide for a royalty of only 25 cents per ton and the leases were made for periods of 20 years or more. In some cases these leases are already near termination and new leases will have to be made at an advanced royalty. Some of the latest leases provide for royalties of 85 cents per ton on standard ores with provision for still further increases. It is probable that under present conditions the company pays an average of not over 20 cents per ton, because a good deal of its ores are mined from its own lands, but it is manifestly unfair to the Steel Corporation not to allow for its own land a royalty equal to that which COST OF MINING LAKE SUPERIOR IRON 147 it must pay to other owners. On this basis it is probable that the actual royalty allowable on the ore should be about 40 cents per ton. On the theory that I have adopted for these articles, royalty is not wholly an operating cost, but is in a large part a profit paid to the owners of lands out of their exploitation. Accordingly I charge in this estimate only the 20 cents per ton actually paid to other owners and make up the difference to the Steel Company through the amortization of capital invested in its iron mines and explorations. Cost of Ore from Old Ranges. At present about two-thirds of all the ore from Lake Superior comes from the Mesabi range, but in the case of the Steel Corporation the proportion is over 74 per cent. It is probable that we would not be far wrong if we adopted a proportion of 70 per cent, from the Mesabi range and 30 per cent, from all the others. By making the above division we may make a reasonably close estimate of the cost of mining in the Lake Superior ores in general. On the old ranges the problem is essentially uniform. That is to say, there is no great difference in mining ore on the Menominee range, or on the Vermilion range. In all cases the work is done entirely under- ground, usually at depth between 500 and 1500 ft. Individual mines, of course, show great variations. In some cases the ore is extremely hard and in other cases extremely soft. Some mines have one large body of soft ore; others have a number of comparatively small bodies of hard ore, but these individual differences occur about equally on all the ranges. The cost may be estimated as a function of the output per man per day. In the case of the hard-ore mines, the output per man is as low as 2% tons per man, while in some of the most favorable soft-ore mines the output exceeds 5 tons per man. Now, the average wages in the Lake Superior region for all men employed may be calculated at $2.60 per day. We may further estimate that wages account for approximately 60 per cent, of the cost at the mines. It is probable that the actual operating cost may be calculated at the rate of $4.25 per man employed. On this basis, if a mine gets out 2% tons per man, its operating cost will be $1.70 per ton; if it gets out 5 tons, its cost will be 85 cents. I believe the actual figures on the average would fall about half-way between these extremes, and that the average output for the old range mines would be somewhere near 3^ tons per man. This would give a cost of about $1.15 at the mines, exclusive of taxes. Costs on the Mesabi Range. The cost of mining on the Mesabi range is determined almost absolutely by the depth of the surface cover- ing. If the orebody is thin and the overlying surface deep, it is necessary to mine the ore by underground methods. In this case the cost of mining on the Mesabi will be approximately 90 cents per ton, the average output per man being 4% tons. 148 THE COST OF MINING Open-pit mining varies greatly in cost. This work is now done universally by means of steam shovels and the difficulty varies according to the proportion of overburden to ore, the texture of the ore, the pro- portion of boulders and tongues of country rock in the orebody, and the amount of water to be pumped. These various factors cause abrupt variations in the cost. We may calculate that the removal of stripping costs 32 cents per yard. If one yard of stripping uncovers a yard of ore we will have one yard of ore containing 2% tons mined at a cost of removing 2 yards of material, or 64 cents, making the mining cost 25.6 cents per ton of ore. To this cost, however, must be -added the interest on capital invested in preliminary stripping and other costs of preliminary development of the mine, the cost of pumping and of certain general expenses that do not occur on the ground, so that when equal amounts of stripping and of ore are removed, I calculate that the cost will be decidedly over 30 cents per ton. This estimate does not include the taxes which I shall presently discuss separately. It is evident that the proportion of stripping to the ore does not vary directly according to the relative thickness of the surface and the under- lying ore; it is a function of these factors combined with several other factors. The glacial material is usually much more uniform in thickness than the orebodies underneath. The latter are usually trough-shaped with many irregularities at the sides and bottom. Furthermore, pits must have sloping sides so that in cases where the depth of the ore is equal to that of the overburden there will still be a considerably larger volume of overburden removed from the pit than there will be of ore. These considerations induce a good deal of caution on the part of operators in the question of deciding upon open-cut mining where the overburden is deep. Open Cut vs. Underground Mining. When the exact proportion of stripping to ore can be worked out, it is a simple question of arithmetic to figure where it will pay to adopt underground mining instead of open pits. As the cost of underground mining is about 90 cents per ton, when open-pit operations are cheaper than that, theoretically the mining should be done by the latter method. But a good many considerations come in to interfere with carrying this method to its logical limits. Among these may be pointed out the necessity of investing a large amount of money in excavating the over-burden before mining can be undertaken. In the case of companies that are financially weak this is a matter of considerable importance. In many cases where open-pit mining would have been much cheaper, the ore has been mined underground because the mine could be opened more rapidly and a certain profit more quickly realized even though the operators knew that they were not securing the best costs. This argu- COST OF MINING LAKE SUPERIOR IRON 149 ment does not apply to the Steel Corporation, of which the capital is abundant for undertaking operations in the most comprehensive way. As a matter of fact, it is in many cases resorting to open-pit methods at mines where formerly, under other owners, the work was done under- ground. Exigencies of Open-Cut Operations. At first glance it would seem as if when a yard either of ore or of waste can be dug out by steam shovels for 32 cents, that the cost per ton would be approximately 13 cents, and that, therefore, it would be as cheap to mine almost 7 tons in an open pit as it is to mine 1 ton underground. In other words, 6 tons of stripping might be removed to secure 1 ton of ore. This would be the case were there no expense involved in mining except the actual digging. As a matter of fact, there are other expenses that amount to considerable. One of these, the interest on the money thus locked up in stripping, I have already pointed out, but a still more important cause for hesitation in adopting open-pit mining to its full apparent limit is the considerable variation in the cost of steam-shovel work in different parts of the same mine. Where the ores are soft and uniform a steam shovel will undoubt- edly dig a large amount of ore. In some mines the cost of digging ore for a period may go as low as 6 or 7 cents per ton, but this may be fol- lowed by another period when the costs may be several times as high. For instance, in 1906, at the Mountain Iron mine an output of 2,560,000 tons was obtained with a force of 500 men. The bulk of the work was done in eight months,. say 200 days. At an average cost of $4.25 per man per day we get for this period a total cost of about $425,000. Supposing that for the remainder of the year one-half the force was occupied, we must increase the estimated cost by about $125,000, making a total for the year of $550,000. This equals 21 cents per ton. In 1907, with an output of 1,973,000 tons, 1200 men were empoyed. This indicates a cost of more than 65 cents per ton. A part of the increase was due, no doubt, to an additional volume of the stripping undertaken, but a considerable part of the increlase cannot thus be explained. In the orebody itself changes were encountered that not only diminished greatly the output per steam shovel, but also greatly increased the number of men employed per shovel. Up to 1906 the total number of men required in shops, train crews, track laborers, etc., per steam shovel never exceeded 75; since then it has been 100. The reasons for this are: (1) The ore itself has become much harder, frequently breaking into great slabs and chunks that have to be sledged to make them suitable for reduction in the blast furnace. (2) Owing to the irregularity of the bottom of the deposit it is often impossible to provide adequate working faces for the steam shovels, so that along the bottom and sides the shovels frequently have to take shallow cuts, and sometimes the shovels suddenly run into worthless bars of rock. 150 THE COST OF MINING When the last occurs, the machine must be moved to a new working place. (3) Boulder-like masses of worthless country rock occur in the ore which must be removed as waste. In a word the excavation of ore by steam shovels, after the stripping is all done, may be much more expensive than is popularly believed. Unwatering the Open Pits. The cost of pumping must be fully as high for open-pit as for underground mining and must be kept up just as steadily. The great pits form catchment basins, often many scores of acres in extent, and in the event of heavy rains, which are far from un- common on the Mesabi range, the volume of water is often so great as to cause work to be suspended. Fortunately the ore is porous so that the pumping may all be done from a single shaft so located as to provide for the drainage of the entire orebody for all times. The volume of water ejected from a single orebody is frequently 5000 to 6000 gal. per minute. I estimate that when 5000 gal. per minute is pumped from a depth of 300 ft. and the output is 1,500,000 tons per year, the cost of pumping will be 7 or 8 cents per ton. I suppose this is about a maximum cost for the Mesabi. Now, returning to the question of where open-pit work should end and underground mining should begin, we find that the conditions are about as follows: The actual cost of digging ore in a pit where the ore is hard and sorting is necessary may run up as high as 40 or 50 cents per ton. This cost will be reached when a steam shovel with a crew of 100 men at an average cost of $4.25 per day digs 20 cars, or between 800 and 1000 tons per day. The cost will not exceed 50 cents per ton, because ore can be sorted and loaded as cheaply as that by hand without any steam shovel. Let us then put 50 cents per ton as a maximum cost for digging. The cost of administration, interest on development capital (largely stripping), and of pumping, is, of course, variable. Where 500,000 or more tons are mined in a year, all these expenses combined are not likely to exceed 15 cents. At the worst, then, we have 65 cents per ton as the cost of mining in open pits, outside of stripping. Now, as under- ground mining will cost 90 cents per ton, we have the difference between 90 cents and 65 cents to invest in stripping. This 25 cents will remove 2 tons of overburden. I therefore conclude that it will pay to remove 2 tons of overburden to 1 ton of ore, under the least favorable mining conditions. Under the most favorable conditions, where both the ore and the overburden are soft and uniform, the economical proportion may rise as high as 4 or even 5 to 1. Average Cost of Mining on the Mesabi Range. This is a point on which no one can get exact information without access to the cost state- ments of at least fifty different properties, but in a general way I think COST OF MINING LAKE SUPERIOR IRON 151 we can get a rough estimate that will be sufficient for practical purposes. It will appear that the actual mining cost of the ore at the mines is not, after all, one of the greatest factors in the final cost of producing pig iron. Returning to our output per man per day as a basis for calculating costs I find that during 1907 the mines of the Steel Corporation in the Hibbing district produced approximately 9,000,000 tons of ore. This ore came largely from great open-pit properties, but some of it came from underground mines. I am informed that the total number of men employed was about 4500 with 60 steam shovels. Supposing that the whole of this force was employed for eight months, and half of it for the remaining four months of the year, and assuming that 26 working days constitute a month, we get an equivalent of 260 days with 4500 men, each costing $4.25. This gives us a total of approximately $5,000,000, or in round numbers, 55 cents per ton. This estimate is open to doubt on several points, two of which are whether the amount of stripping that was done kept pace with or ex- ceeded the amount of ore extracted, and whether the rough figures of labor employed are actually near the truth. As to these facts I have no means of judging except the most general impressions, but I am satisfied that at the worst my information is not far enough astray to make the cost hopelessly inaccurate. In a general proposition of this kind no one attempts to get down to niceties, and there is no occasion for it. When I state that the average ore mined in the Hibbing district costs 55 cents per ton, I may be 15 or 20 per cent, astray this year, and next year I may be right. The mines of Hibbing undoubtedly are the most favorable on the Mesabi range for cheap costs. They have the largest, softest, and most uniform orebodies, and are worked on the largest scale. It does not seem improper, therefore, that if we estimate the cost at 55 cents per ton at Hibbing, we should increase this to 60 cents for the whole range. I therefore estimate that the average cost of mining on the Mesabi range for both underground and surface is about 60 cents per ton, exclusive of taxes. Taxes. The laws of Minnesota tax mining properties for what ore they have in sight. The tonnage developed is reported by the mining companies to the assessor, who puts a valuation upon it according to the quality and accessibility of the ore. For purposes of taxation, discovered ores are placed in five or six different grades with a minimum valuation of 8 cents per ton and a maximum of 33 cents. Roughly, the ore devel- oped seems to average about 15 cents per ton in valuation. This valua- tion is taxed just as any other assessed property is taxed, the levy being somewhere in the neighborhood of lj^ per cent. Since the Steel Corporation has in Minnesota on the Mesabi and Vermilion range about 930,000,000 tons on the assessors' lists, it would 152 THE COST OF MINING appear that the total valuation would be somewhere in the neighborhood of $140,000,000 and the taxation approximately $2,000,000. On this basis we find that the company must pay on its present output of approxi- mately 18,000,000 tons, more than 10 cents per ton on its actual shipments. This taxation is a recent development. I do not believe that the company has as yet actually paid so much, but on a basis of present and future conditions it does not seem like an excessive estimate. The fair- ness of this mode of taxation it is not my present purpose to discuss, but it is very evident that a company with large ore reserves and a small output may be taxed much more than a company with a large output and small ore reserves. For instance, if the Steel Corporation had only five years' ore in sight instead of 50 years, its taxes in its present tonnage would be only 1 cent per ton instead of 10 cents. For this reason there are probably vast differences in the tax rates of various companies in the Mesabi range, and I suppose the Steel Corporation undoubtedly pays more taxes per ton of output than any of the others. Explorations and Maps. It may be interesting to digress for a mo- ment to consider the value of combination in the operation of these mines. Since its organization the Steel Corporation has pursued a most complete, scientific, and satisfactory plan of exploring and mapping its ore reserves. It has employed expert geologists and engineers for this purpose. It has secured as much land as it could for exploration and has explored it to the point of determining, before any mining is done, the situation, volume, shape, and economic characteristics of the ore- bodies on large tracts. In other words, the process of drilling and test-pitting has been carried on until the depth of surface, the quality of the ore, its probable admixture with boulders and tongues of barren rock, and its thickness have all been determined. This information is expressed on maps which show the contours not only of the surface of the land, but also of the sur- face of the orebody underlying the glacial drift and the contours of the bottom of the orebody. The information permits the planning of the mining work in such a way that there shall be no duplication of effort. The drainage of an orebody can be provided for with a single shaft so situated that it reaches the bottom of the deposit. The problem of mining is solved beforehand. In other words, the propriety of mining in open pits or underground is predetermined. The location of pits, of dumping grounds, of railroad tracks and of all equipment is established once for all. Drawbacks of Individual Management. Now, suppose these same orebodies were to be mined by different companies as was, or would have been, the case twenty years earlier. The orebodies are sometimes a mile or even two miles in length and quite irregular in outline. The ordinary course of the longest axis of an orebody is northwest and south- COST OF MINING LAKE SUPERIOR IRON 153 east, so that it would cross the subdivisions of the land diagonally. Such an orebody would inevitably occur on several sections, quarter sections, or 40-acre tracts. The land ownership is scattered and irregular. It is seldom that any tract belonging to a single owner is larger than 160 acres and many tracts are only 40 acres in area. As a matter of fact most of the great orebodies on the Mesabi range belonged originally to five or six different companies. In such a case it is evident that each company would have its indi- vidual management, its own problem of finance, and its own requ're- ments in the way of output. The mine located on one particular 40-acre tract might find the surface only 20 ft. deep, and it would plan an open pit. Since the neighboring ground was seldom thoroughly explored, the waste from this open pit might very likely be, and indeed was in many cases, dumped on ground afterward proved to be ore-bearing. The next mine on the same orebody might find the surface to be locally 100 ft. deep, and if the operating company were poor and in a hurry for ore, it would undoubtedly open up its mine underground. The result of this would be that large sections of the surface would be caved down into the middle of the ore, thus preventing forever the suc- cessful stripping of that part of the orebody. Economy of Large Ownership. But if this whole orebody were in the possession of the Steel Corporation, its explorations might show that the surface averaged about 50 ft. and that it might be economical to mine all the ore by an open pit. A single pump shaft would be suf- ficient. No waste would be dumped on neighboring ore-bearing ground. In short, a vast amount of duplicated expense would be avoided. This is where the value of such a combination comes in. The Steel Corporation cannot get its work done any cheaper than anybody else. If it has to sink a shaft, for instance, it cannot do it any cheaper than any one of the half dozen mines that it might replace, but it could on the average sink one shaft for one-sixth the expense that it would cost other people to sink six shafts. It is worth remarking in this connection that the Steel Corporation has been magnificently managed. It has not striven for minute and near-sighted economies. It has not tried to outdo its rivals in points of local rivalry, but it has kept in mind the broad outline of its operations and has tried to make use of its capital and opportunities in ways that every fair-minded man would recognize as legitimate. The company can do this only as long as it is Well managed, but up to the present it is only fair to say that its activities have been well directed and that its economies are such as to be certainly of no disadvantage to the public at large, but on the contrary in many ways a great benefit. Total Cost of all Lake Superior Ores. In order to keep the proportion of things in mind, even at the expense of some repetition, we may state 154 THE COST OF MINING that the cost of mining Lake Superior iron ores is for Mesabi ores, $0.60; old range ores, $1.15 a ton. Since the Steel Corporation mines about 7 tons of ore on the Mesabi range for over 3 tons mined on the old ranges, we may calculate that the actual cost of 10 tons would be $7.65 or 76 J^ cents. To this we must add taxes which on the Mesabi range are not far short of 10 cents per ton. In order to make a round figure we may state that all Lake Superior ores would cost on the ground about 85 cents per ton, including taxation. To this we may add 20 cents per ton for royalty, making the total cost of Lake Superior iron ores at the mine, ready for shipment, $1.05 per ton. Transportation of Ores. The ores which are mined on both shores of Lake Superior, either in northern Wisconsin and Michigan or in Minnesota, must all be transported to the region lying south of the Great Lakes for smelting. The region of iron manufacture extends from the neighborhood of Chicago and Milwaukee at the northwest, eastward in a widening belt to Pittsburg and Buffalo and thence east to the neigh- borhood of New York City. The factors which dictate the production of pig iron in this region are two, namely, the presence of coal and facilities for distribution. If we take Pittsburg as the most active and central point in iron manu- facture to represent average conditions we find that the ores must be transported about 1000 miles in three sections: (1) There is the land haul from the mine to Lake Superior ports; (2) the lake haul from Lake Superior to Lake Erie; (3) the land haul from Lake Erie to Pittsburg. The first division of the work is covered by five or six different roads three in Minnesota and the remainder in Michigan and Wisconsin. The length of haul is variable; from Ely, Minn., on the Vermilion range to Two Harbors, the distance is about 90 miles. Most of the ore from the Mesabi range has to be hauled from 70 to 100 miles, so that I suppose an average distance for the north shore roads is perhaps 80 miles. Most of the ore on the Marquette range is less than 20 miles distant, while that on the Menominee range is bout 50, and from the Gogebic range the distance is only about 30 or 40 miles to the harbor. The published rates on ore from mines in Minnesota to the lakes is uniformly 80 cents per ton; from the Gogebic range to Ashland, 40 cents; from the Menominee range to Escanaba 40 cents, and from the Marquette range to Marquette, 25 cents. In the case of any company other than the Steel Corporation it would be necessary to take these rates at their face value, but in this case there is reason to believe that the transporta- tion is the most profitable part of the business. The company does not own any railroads on the southern shore, but its two railroads on the northern shore, namely, the Duluth & Iron Range and the Duluth, Missabe & Northern, haul about 52 per cent. COST OF MINING LAKE SUPERIOR IRON 155 of the ore produced in the entire region. The corporation also owns a fleet of boats on the lakes, probably sufficient to transport an equal amount. It also owns the Pittsburg, Bessemer & Lake Erie railroad, which hauls most of the ore to Pittsburg. I think we shall not be far wrong if we assume that so far as costs go the results are the same as they would be if the company transported all its own ore from the Minnesota mines to the furnaces. While the freight on ores from the south shore to Pittsburg is un- doubtedly less than that from Minnesota, it is also true that the Steel Corporation must pay on ore transported from those ranges a profit to independent railroad companies which it does not pay in the case of Minnesota ores. Its profits on Minnesota ores which it hauls for other companies probably more than counterbalance the amount it pays in profits to others on the Michigan ores. Automatic Handling of Ore. Iron ore is about the most easily handled material in the world. Its specific gravity is high, so that the ton does not occupy much bulk, and it is absolutely uninjured by the roughest treat- ment. As a matter of fact, it is loaded directly into dump cars either by the steam shovels or directly from the mine shafts. It is made up in trains of approximately 2000 tons of net freight and hauled over roads of very slight, or no adverse gradients to the lake docks. There it is dumped by gravity right into the hold of the ship and transported in large cargoes on waters that are generally tranquil, and unloaded by machinery at the lower lake ports, to be again delivered to the dump cars and carried as before to the furnaces. I believe the operating cost of hauling such material by rail cannot exceed % cent per ton per mile. On this basis transportation from the mines to Duluth would cost about 20 cents, and from Lake Erie to Pitts- burg about 40 cents per ton, making a total for rail haul of 60 cents. The lake freight in all probability will cost, including unloading, an average of about 40 cents. Thus we have a total transportation cost of $1 per ton from the mines to Pittsburg. This, of course, is merely operating cost, and does not include the necessary return on the capital invested in the transportation properties, but this item I propose to con- sider as a lump to be added to the cost of pig iron so that I will not discuss it here. We have, then, ore delivered at the furnaces at Pittsburg at a total cost of $2.05 per ton, distributed as follows: Mining, 85 cents; royalty, 20 cents; transportation, SI. Cost of Coke. Without going into details, I think it would be fair to estimate the cost of Connellsville coke to the Steel Corporation at about $1.40 per ton. This is on a basis of 70 cents per ton for mining the coal and using 1^ tons of coal per ton of coke at a coking cost of 35 cents. The freight rate from Connellsville to blast furnaces at Pittsburg is 156 THE COST OF MINING 75 cents per ton, so that we may calculate coke delivered at the furnace at $2.15. Cost of Producing Pig Iron. It is not probable that the average Lake Superior ore of to-day will yield much over 50 per cent, in pig iron before moisture is deducted. Since the tendency is toward a gradual reduction in the grade of the ore, it does not seem far out of the way to assume that two tons will be required for each ton of pig iron. We may now calculate, when an average output of 10,000,000 tons of pig per year is made, the cost to be as follows: Use of capital, $3.77; 2 tons of iron ore at $2.05, $4.10; 1.2 tons coke at $2.15, $2.58; limestone for flux, 50 cents; labor and maintenance at furnaces, $1.40; general expense, 25 cents; total cost at Pittsburg, $12.70; freight from Pittsburg to New York, $2.60; total cost at New York, $15.30. An interesting commentary on the correctness of these figures is the testimony of Judge Gary in the tariff hearings before the Ways and Means Committee of the House of Representatives. Mr. Gary gives costs for the year 1906 for all the furnaces of the United States Steel Corpora- tion. His figures are those not of actual cost, but of market prices for fron ores, coke, and transportation. The figures are as follows: Iron ore at $4.70 per ton; cost of ore used in a ton of pig iron, $8.62; coke at furnace, $3.93 per ton; coke used in making a ton of pig iron, $4.15; limestone per ton, $1.06; limestone in pig iron, 49 cents; scrap, cinder, and scale, 27 cents; labor and main- tenance at furnaces, $1.37; depreciation of furnaces, 40 cents; total cost of making a ton of pig iron, $15.30. From these figures Mr. Gary makes the following deductions for net profits: On ores in pig iron, $2.04; on coke in pig iron, 60 cents; on transportation, $1.07; total deductions, $3.71. Subtracting this amount we have by Judge Gary's estimate $11.59 per ton as the cost of pig iron at the furnaces. MR. GARY'S FIGURES IN DETAIL Actual cost of iron mining at all mines $ . 73 Actual cost of coke at ovens 1.21 Actual cost of iron ore at furnace 2 . 83 Actual cost of coke at furnace 3. 39 Pig Iron: Iron ore per ton pig 5 . 50 Coke per ton pig 4.07 Limestone . 49 Cinder and scale 0.27 Operating blast furnaces 1 . 38 $11.71 Depreciation of blast furnace . 40 $12.11 COST OF MINING LAKE SUPERIOR IRON 157 There is, however, some doubt as to the exact application of the figures presented by Mr. Gary. Any one who is familiar with testimony taken at a hearing will understand why this is so. I have gone over the evidence and put together the figures in another way. I do not know which is the most accurate. These figures omit general expenses, which, it is explained, are kept in a separate account. It will be noted that with this explanation the sum total of Mr. Gary's figures are not far from my independent estimates. It is to be pointed out, however, that Mr. Gary's figures are for all the furnaces of the company, while mine are for Pittsburg alone. This fact will make a divergence in the details unavoidable. Furthermore, my figures are for general conditions as they are, while Mr. Gary's are exact state- ments for a single year. After giving the matter considerable thought I have decided to leave my estimates as originally made. They will at least serve to show something of the logic of calculating costs, Statistical Record of the U. S. Steel Corporation. It was stated in the foregoing that the Steel Company is as much a manufacturing as a mining concern. While the principal motive of this work is to obtain figures on the cost of mining, it will be interesting, nevertheless, to give some idea of the entire business of this company, including the data upon which the above discussion is based. The following table gives the total production of the various products since the beginning of the company: Tenn. C. and I. not included Products 1902 to 1907 inclusive, tons Average, tons Iron Ore Mined: From Marquette range 7,806,000 1,301,000 From Menominee range 11,340,000 1,890,000 From Gogebic range From Vermilion range 9,766,000 10,129,000 1,628,000 1,188,000 From Mesabi range 64,421,000 10,736,000 Total 103,462,000 16,743,000 Coke manufactured . . . 66,744,000 11,124,000 Coal mined, not including that used in making coke 9,786,000 1,631,000 Limestone quarried .... 11,126,000 1,854,000 Blast- Furnace Products : Pig iron 53,767,000 8,961,000 Spiegel . . 789,000 131,000 Ferro-manganese and silicon 327,000 54,500 Total 54,883,000 9,146,500 158 THE COST OF MINING TABLE Continued Steel Ingot Production: Bessemer ingots 41,387,000 6,894,000 Open-hearth ingots . 24,536 000 4 089 000 Total . . . 65 923 000 10 983 000 Rolled and other Finished Products for Sale : Steel rails 10,541,000 1,757,000 Blooms, billets, slabs, sheet, and tin plate bars 5,317,000 886,000 Plates 4,068,000 678,000 Heavy structural shapes 2,370,000 395,000 Merchant steel, skelp, hoops, bands, and cotton ties .... Tubing and pipe ... 6,006,000 5,277,000 1,001,000 879,000 Rods 1 151,000 192 000 Wire and products of wire 7,640,000 1,273,000 Sheets Black, galvanized, and tin plate Finished structural work 5,390,000 3,077,000 898,000 513,000 Angle and splice bars and joints 873,000 145,000 Spikes, bolts, nuts, and rivets 344,000 57,000 Axles 840,000 140,000 Sundry iron and steel products 270,000 45 000 Total... 53 164,000 8 859 000 Spelter 167 000 28 000 Copperas * (sulphate of iron) 111,000 18 000 Universal Portland cement . . Bbls. 7,611,000 Ibis. 1.268,000 Production. The production of the several subsidiary properties for the year 1908, in comparison with the results for the year 1907, is shown in the subjoined table. In order to make the comparison upon relatively the same basis, the production figures of the Tennessee Coal, Iron & Railroad Company for the entire year 1907 have been included in the results shown in table on the following page for that year: Products 1908, tons 1907, tons Iron Ore Mined in Lake Superior Ore Region : Marquette range 830,087 1,170,496 Menominee range. . 1,021,598 1,625,358 Gogebic range 1,078,025 1,425,457 Vermilion range 927,206 1,724,217 Mesabi range 11,272,397 16,458,273 Iron Ore Mined in Southern Ore Region: Tennessee Coal, Iron & R. R. Go's mines 1,533,402 1,576,757 Total 16,662,715 23,980,558 COST OF MINING LAKE SUPERIOR IRON 159 Products 1908, tons 1907, tons Coke Manufactured: Bee-hive ovens 7,591 062 12 716 013 By-products ovens 578,869 828,751 Total 8 169 931 13 544 764 Coal mined, not including that used in making coke 3 008 810 3 550 510 Limestone quarried 2 186 007 3 201 222 Blast- Furnace Products: Pig iron 6 810831 11 234 447 Spiegel. . 74,716 130 554 Ferro-manganese and silicon 48861 57 794 Total 6 934 408 11 422 795 Steel Ingot Production: Bessemer ingots 4 055 275 7 556 460 Open-hearth ingots 3,783,438 5 786 532 Total 7,838,713 13,342 992 Rolled and Other Finished Steel Products for Sale: Steel rails 1,050 389 1879 985 Blooms, billets, slabs, sheet, and tin plate bars 551,106 761,195 Plates 312,470 894 364 Heavy structural shapes 313,733 587 954 Merchant steel, skelp, hoops, bands, and cotton ties Tubing and pipe 577,591 654 428 1,338,833 1 174 629 Rods. 93,406 126,095 Wire and products of wire . . 1,275 785 1 481 226 Sheets Black, galvanized, and tin plated 770,321 1,070,752 Finished structural work 403,832 719 887 Angle and splice bars and other rail joints 84,669 195,157 Spikes, bolts, nuts, and rivets 40,252 67,991 Axles 24,057 189,006 Sundry steel and iron products 54,893 77,463 Total 6,206,932 10,564,537 Spelter 28,057 31,454 Sulphate of iron 26,411 24,540 Universal Portland cement Bbls. 4,535,300 Bbls. 2,129,700 The corporation has been engaged from the beginning not only in managing and operating the plants with which it began, but in adding thereto and expanding its business. The table on the following page, from the report for 1908, shows the estimate put upon the increase of capital by the officers of the company. Regarding these increases of capacity, it will be observed that no esti- mate is made of the increase for the property as a whole. In blast- furnace products the increase is 100 per cent.; in steel ingots over 80 per cent.; in finished products, 66% per cent.; and in cement, 1100 per 160 THE COST OF MINING COMPARATIVE ANNUAL PRODUCTIVE CAPACITY April 1, 1901, and January 1, 1909 . . . , Capacity April 1, 1901, tons Increase since April 1, 1901 Capacity January 1, 1909, tons By purchase of Union and Clairton Cos., tons By purchase of T. C., I. & R. R. Co., tons Due to addi- tions and im- provements made by the companies after their acquirement by U. S. Steel Corpn., tons Blast-furnace products Steel ingots Rolled and other steel and 7,400,000 9,425,000 1,228,000 1,258,000 1,000,000 500 ; 000 5,322,000 5,887,000 14,990,000 17,070,000 iron products for sale .... Cement . . 7,719,000 Bbls. 500,000 1,103,000 400,000 3,678,000 Bbls. 5,600,000 12,900,000 Bbls. 6,100,000 cent. Which of these is most representative of the business of the corpo- ration? No statement is made as to the increases in natural resources. Considering the fact that the company's business as a finality resolves itself principally into the sale of finished iron and steel products, it seems most reasonable to take the increase of capacity in that particular as representing most nearly the increase in the company's whole business. Let us assume, therefore, that the producing capacity of the properties has been increased by two-thirds since the organization. What this increase has cost is exhibited by the following table: " Since the organization of the corporation there have been expended for additional property and construction (exclusive of the cost at date of acquire- ment of Union Steel and Clairton Steel Companies, and of the stock of Tenessee Coal, Iron and Railroad Company) the following amounts : For account of the Gary, Indiana, Plant, including the building of the city of Gary and terminal railroad work $ 42,797,229. 57 For account of the manufacturing properties (including expendi- tures by U. S. Steel Corporation) 116,155,559. 41 For account of the coke and coal properties 20,056,764.27 For account of the iron ore properties 23,120,539. 17 For account of the transportation properties 49,026,895.81 For account of the miscellaneous properties 4,340,999. 14 Total capital expenditures $255,497,987. 37 During the same period there was expended for extraordinary re- placements and betterments the bum of . . . 92,534,952. 12 Total $348,032.939.49 COST OF MINING LAKE SUPERIOR IRON 161 "On account of the foregoing expenditures there were issued and disposed of, bonds, mortgages, and purchase obligations of subsidiary companies to the amount of $39,172,863.37, leaving a balance of expenditure of $308,860,076.12, the funds for the payment of which have been provided from the current earnings and surplus of the organization. There have also been paid off through opera- tion of the bond sinking funds, and by discharge upon their maturity $85,871,- 019.36 of bonds, mortgages, and other capital obligations which were outstanding at the time of organization of the U. S. Steel Corporation." The statement leaves in doubt the exact meaning of the expenditures for extraordinary replacements and betterments. It seems most pro- bable that such expenditures should be charged off to depreciation. Making this deduction, we find that the capital expenditures have been $255,498,000 plus the cost of the Union and Clairton Steel Companies and the Tennessee Coal, Iron & Railroad Company. The sum total of which appears to be in the neighborhood of $94,000,000. A round figure for all capital expenditures since the organization we may take as $350,000,000. On the assumption that these expenditures have increased the total productive capacity of the concern by two-thirds, it is easy to deduce the conclusion that the actual capital invested in the enterprises at the beginning of the organization was $525,000,000, and that at present the total invested capital can be calculated at $875,000,000, a sum which may be compared with the total obligation of the company in preferred stock and bonds of the corporation, which amount in par value to $958,315,000. The cash surplus of the corporation is kept in round numbers at $50,000,000, the remainder of the surplus, which is stated to be $133,000,- 000, having been expended on the various plant investments. The working capital may be safely assumed to be represented by the inven- tories which were, at the end of 1908, $143,180,000 plus the cash, making a total sum of $193,000,000. Adding this to the foregoing estimate of fixed capital investments, we arrive at a total of $1,068,000,000 as the actual capital employed in the enterprise. This sum plus the natural enhancement of the value of its properties is what the stockholders of the corporation have to show for their money. Analyzing this matter a little further we find that the obligations in the preferred stock and bonded indebtedness amount to $958,000,000, so that the common stock represents the equivalent of $110,000,000 invested capital plus all of the enhancement in the value of the property a state of affairs with which the stockholders should be satisfied. The following table shows the disposition made of the earnings of the company since the beginning : n 162 THE COST OF MINING NET PROFITS AND SURPLUS OP UNITED STATES STEEL CORPORATION AND SUBSIDIARY COMPANIES AT CLOSE OP EACH OF THE PERIODS NAMED (Includes only Surplus received or earned on or subsequent to April 1, 1901} Period Net profits for period available for dividends Surplus at close of period before declaration of dividends 1 Dividends on U. S. Steel Corporation stock for respective periods Written off account of capital ex- penditures, for special funds and for sundry adjustments and accounts Balance of surplus Nine months ending Dec. 31 1901 $60,600,109.05 90,306,524.25 14,891,989.64 23,987,950.22 49,684,774.49 2,230,775.78 4,606,593.70 9,082,563.81 7,617,906.85 10,143,836.95 12,178,326.35 16,875,599.99 16,977,532.04 22,653,287.55 22,371,919.85 24,536,025.28 23,543,749.98 27,767,393.02 27,031,008.20 30,843,512.61 28,758,142.27 18,614,416.20 8,854,297.37 9,042,027.55 13,998,455.19 13,739,899.00 $85,600,109.05 133,927,464.55 92,766,586.69 102,741,592.66 109,816,596.23 102,040,612.11 68,099,358.51 69,700,504.29 73,831,323.75 77,378,489.44 71,826,602.51 82,537,094.61 90,322,263.92 100,142,623.70 102,570,244.10 110,636,708.48 118,444,038.26 124,657,647.29 118,256,429.88 131,134,185.12 140,376,218.82 138,173,190.89 127,092,583.20 125,937,322.46 137,506,368.22 142,167,611.33 $41,979,168.75 56,052,867.50 14,012,944.25 12,609,770.92 10 006 759 90 $43,620,940.30 77,874,597.05 78,753,642.44 90,131,821.74 99,809,836 33 Year ending Dec. 31, QUARTER ENDING March 31, 1093 June 30, 1903 September 30, 1903 December 31, 1903 March 31, 1904 6,482,260.84 6,304,919.25 6,304,919.25 6,304,919.25 6,304,919.25 6,304,919.25 6,304,919.25 6,304,919.25 6,304,919.25 8,846,321.75 8,846,431.75 8,846,431.75 8,846,431.75 8.846,431.75 8,846,431.75 8,846,431.75 8,846,431.75 8,846,431.75 8,846,431.75 8,846,431.75 8,846,431.75 $29,461,668.91 66,096,682.36 61,794,439.26 63,395,585.04 67,526,404.50 61,365,445.69 62,221,683.26 68,732,175.36 77,517,344.67 84,738,340.67 83,223,812.35 88,780,176.73 98,597,606.51 97.720,714.35 94,909,998.13 103,877,753.37 116,529,787.07 122,645,243.62 118,246,151.45 117,090,890.71 128,659,936.47 133,415,214.17 June 30, 1904 September 30, 1904 December 31, 1904 March 31, 1905 June 30, 1905 September 30, 1905 December 31, 1905 March 31, 1906 9,708,124,50 3,300,000.00 7,500,000.00 6,500,000.00 9,099,253.78 10,500,000.00 13,000,000.00 11,000,000.00 18,090,501.19 14,500,000.00 18,500,000.00 15,000,000.00 6,681,515.52 Cr. 94,034.59 June 30, 1906 September 30, 1906 December 31, 1906 March 31, 1907.. . June 30, 1907 . . September 30, 1908 December 31, 1907 March 31, 1908 June 30, 1908 . September 30, 1908 December 31, 1908 SUMMARY APRIL 1, 1901, TO DECEMBER 31, 1908 Capital surplus provided at date of organization $25,000,000. 00 Aggregate net profits as above $560,938,617. 19 Less, amount included therein representing accrued profits on inter-company ma- terials on hand in inventories $10,371,8 3.25 Net charges against profits made at close of fiscal years, not applicable to particu- lar quarters 7,119,665. 15 Reserved for fund to cover possible failure to realize advanced mining royalties. . . . 2,800,000.00 20,291,468.40 Balance of profits earned 540,647,148. 79 $565,647,148.79 1 Includes Capital Surplus of $25,000,000 provided at date of organization, also Undivided Surplus of Subsidiary Companies representing accrued profits on Inter-Company materials on hand in in- ventories. COST OF MINING LAKE SUPERIOR IRON 163 Dividends paid on U. S. Steel Coporation Stocks, viz.: Preferred, 54 per cent $218,975,274 . 66 Common, 15 per cent 78,765,032 . 50 297,740,307.16 Leaving a surplus of $267,906,841 . 63 Brought forward $267,906,841 . 63 Of the foregoing surplus there has been appropriated for payment of construction and capital expenditures and special charges, per sixth annual report, page 8 162,827,364. 16 Balance of surplus December 31, 1908, exclusive of subsidiary companies' inter-company profits in inventories $105,079,477.47 Undivided surplus of subsidiary companies on December 31, 1908, repre- senting profits accrued on sales of materials to other subsidiary com- panies and on hand in latter's inventories 28,335,736. 70 Total $133,415,214.17 It seems legitimate to make the following comments on this statement : The actual profits were $540,647,000 derived from the sale of ap- proximately 67,500,000 tons of finished steel products and about 12,000,000 t " barrels of cement. Let us figure only on the tonnage of finished iron and steel products, and there appears a profit of $8 per ton. Of these earnings $297,740,000 has been paid in dividends or ap- proximately $4.40 per ton. The remaining $242,000,000 has been added to plant or used to increase the cash surplus, only $25,000,000 or some 40 cents a ton being used for the latter purpose, the remainder, over $217,000,000 or $3.20 per ton, being used for the expansion of the business. Under ordinary circumstances there would be in one's mind a great doubt as to whether the sum thus expended for plant extensions should be held as an addition to capital or whether it should be written off to depre- ciation. But in this remarkable case there seems to be no doubt what- ever that the circumstances justify the treatment of the whole amount as a true capital expenditure. It is not necessary to dwell on this point further than to point out that the expansion of the producing capacity of the concern by 66% per cent, shown above is a more than sufficient justification. We are led then to believe that the profits reported by the company are really profits, namely, $8 per ton, and that this is over and above all requirements for interest on bonds and building up of sinking funds, besides depreciation. This means that the sum of nearly $70,000,000 per annum has been earned by the preferred and common stock of the corporation. The full dividends of 7 per cent, a year have been paid on the preferred stock, absorbing $219,000,000 1 in the seven and three-quarters years. The remainder, $321,000,000, has all gone to the benefit of the com- 1 In 1903 the preferred stock was diminished by $150,000,000 by conversion into an issue of bonds. The present preferred stock amounts to $360,281,100 on which the annual dividend is $25,215,672. 164 THE COST OF MINING mon stock and has been used to pay dividends to the amount of $78,765,000, and the building up of equities to the amount of some $242,000,000. It is probably true that at the beginning the commonstock represented little or nothing more than a speculative possibility. But the success of the company during the last eight years has created most substantial values for it. It must be remembered that the great constructive enterprises of the corporation have as yet yielded little return. That is for the future. If we calculate that the probabilities of the future contain nothing more than a realization on the expansion already ac- complished, the earning powers of the concern seem fairly prodigious. If it has now reached a point where it can pay out as dividends the earn- ings on a product equal only to the average of the last eight years, without counting on any increased product, we find that the earnings available for dividends are equal to $45,000,000 a year on the common stock, approximately 9 per cent. There are only two grounds for doubting that this will be realized, namely, that the prices and costs of the future may not be the same as in the past, and that the management may de- teriorate. How far these elements may weaken the position of the cor- poration only the future can tell. But its record to date, and especially for the past five years, makes it a conservative statement that this concern is the greatest and promises to be one of the most profitable enterprises that the world has ever seen. IRON ORE MINES Developed Iron Ore Mines Owned by Subsidiary Companies, December 31, 1908 IN THE LAKE SUPERIOR ORE REGION Marquette Range Marquette Range (Con't) Menominee Range (Con't) Hartford Mine. Winthrop Mine. 1 Hilltop Mine. 1 Queen Mine (% int.). Champion Mine. Chapin Mine. Section 16 Mine (% int.). Aragon Mine. Section 21 Mine (% int.). Menominee Range Cundy Mine. 1 Hard Ore Mine (% int.). Mansfield Mine. Iron Ridge Mine. 1 Hematite Mine (% int.). Michigan Mine. Pewabic Mine (% int.). Moore Mine. 1 Riverton Mine. Stegmiller Mine. Cuff Mine. 1 The foregoing part of this chapter is retained because, in spite of the fact that many of its figures are now out of date, it throws into perspective a portion of the experience of one of the most characteristic of American industrial organizations. The succeeding ten years show some results that are worth noting. The investment of capital has gone on undiminished in all depart- ments of the business. Since 1908 the gross profits have been 1 Inactive at present time. COST OF MINING LAKE SUPERIOR IRON 165 $1,108,000,000 after the payment of bond interest, war taxes, etc. Of this amount $602,925,000 has been paid in dividends, that is, about 55 per cent. The remaining 45 per cent, has been retained for investment and is employed chiefly as additional working capital, in inventory and cash, and in various constructive enterprises. The total amount of finished steel products marketed in the decenniuni was 120,000,000 tons. It is worth observing that the dividends have averaged just $5 per ton, against $4.40 per ton in the preceding peiiod. The grand total production for 17 years and 9 months life of this corpora- tion up to the end of 1918, was 187,500,000 tons of finished steel products for sale, and the dividends $900,665,000 being $4.80 per ton. The investment of all this capital has permitted a decided increase of output but that output has not kept pace with that of the other steel and iron producers of the country. Nevertheless the increase has been considerable rising from an average of 8,700,000 tons for the first ten years to just 12,000,000 for the succeeding ten 38 per cent. The largest output of course was during the last three years of the war, but the effect of this was hardly great enough to make much difference in the grand averages; for in two years before the war, 1912 and 1913, the output was above the average for the ten year period. We are warranted in supposing that had there been no war the regular course of industrial expansion would have brought at least a year or two of high figures. If the rate of growth is to be maintained we may expect for the coming decade an average output of 16,500,000 tons finished steel products and dividends approximating $80,000,000 a year, which would be 7 per cent, on the preferred and 10 per cent, on the common stock. By gleaning the reports for all these years it is possible to get some additional figures which throw a good deal of light on the conduct of this business. These figures relate to the employment of capital and of labor. From the standpoint of the mining business some of the facts are clearer than they were ten years ago. The total investment account reaches the immense sum of $1,871,- 000,000 which probably represents the first cost of the properties, plus the capital investments that have been added. The latter amounts come to $800,000,000 in actual cost, although the books show only $710,000- 000. The difference is due to writing off $92,000,000 during the war period on account of the " excessive cost of construction." From this we may conclude that the company tries to place its assets at a normal replacement cost. The only means available for estimating the original cost of these properties is to assume that it corresponds to the rate of the investments made since the purchase. Those investments are a shade over 40 per cent, of the total "investment account" as published, and 38 per cent, of the amount shown on the books to have been actually spent. From 166 THE COST OF MINING this we may assume that, in round numbers, the first cost represents 60 per cent, and the additions 40 per cent, of the present investment account, Proceeding in this way we can form an estimate of the disposition of the entire invested and working capital. The manufacturing properties include blast furnaces, rolling mills, wire mills, tin plate mills, etc. Since 1901 the great new plant at Gary, Indiana and a considerable one at Duluth have been built in entirely. The Tennessee Coal and Iron Co., and the Union and Clairton Steel companies have been purchased outright but the figures for improvements are exclusive of these purchases. These concerns however contribute to the dizzying total of the manufacturing plants. I shall not try to specify them further than to remark that there are 145 works, 124 blast furnaces, 38 Bessemer converters and 334 open hearth furnaces. The amount expended on all these plants has been $508,000,000, from which I conclude that their original cost was about $750,000,000 and their present value about $1,250,000,000. Of this amount I suppose the 124 blast furnaces must represent pretty close to $250,000,000. Similarly we find that the coal and coke properties have cost .$92,000- 000, for improvements and that their present value is estimated at $230,000,000. That this is not unreasonable is attested by the fact that there are included some 330,000 acres of the best coal land in the country, with 71 coke plants and 31 additional coal mining plants, with 22,000 bee hive ovens and 2558 by-product ovens. The iron ore properties have been improved and developed at a capital cost of $48,000,000 indicating a total value of $120,000,000. This figure does not seem unreasonable for it includes 110 mines in the Lake Superior region and 21 in the Southern fields. These properties have shipped a maximum of 33,355,000 tons of ore in a season (1916). The capital value is therefore only $3.50 per annual ton at maximum capacity and $4.30 for their average production for ten years. The transportation properties include 1000 miles of main-line rail- road, with branches, second tracks and sidings amounting to 2400 miles or more; 1421 locomotives, over 60,000 cars, and 106 large steamers and barges on the Great Lakes and the Ocean, besides 202 river barges. On these properties no less than $127,000,000 has been spent since the incorporation, indicating a present value of $300,000,000. Miscellaneous properties include water supply plants in the coke region, natural gas and oil property and forwarding and receiving docks for ore and coal. On these some $19,000,000 has been spent indicating a value of about $45,000,000. If we group all these figures we may get a rough approximation of the amount both of capital and labor required for the production of pig iron. It is of course impossible to separate accurately from the informa- tion given in the annual reports, the coal, coke and transportation used COST OF MINING LAKE SUPERIOR IRON 167 only to bring the metal to the pig-iron stage, from that required in sub- sequent manufacture; but certain conclusions may be drawn. It appears that the coke required to make pig iron only is about ton for ton. From this we conclude that nearly nine-tenths of the coke produced by the corporation is used for that purpose. The steam coal is not so extensively used in making pig-iron as in later manufacturing; but some must go into it. When we recollect that out of a grand total average production of 28,400,000 tons of coal no less than 20,000,000 tons is required to make the 13,500,000 tons of coke used in the blast furnaces, we may reasonably conclude that at least three quarters of the investment in coal and coke properties should be apportioned to pig iron. All of the iron ore investments belong to the making of pig iron. The transportation properties are chiefly used for the assembling of raw materials. Manufactured products no doubt are also handled, but necessarily only to a minor extent; they must be shipped from the fac- tories in all directions and must go mainly on the common carriers. Materials in process of manufacture are of course transported from plant to plant, but in general they probably go only short distances. But if it is conceded that the pig iron is transported in equal proportions with the materials used in making it we should have the following comparison. Tonnage of ore. . 25,800,000 Coal 21,300,000 Limestone 5,000,000 Transportation required for pig iron only. Tonnage of pig iron 52,100,000 13,250,000 Required for manufacture. Total 65,350,000 Proportion required for pig iron only, 80 per* cent. We may then charge 80 per cent, of the capital in the transportation system to the making of pig iron. To cut the discussion short we may tabulate the distribution of capital required for making pig iron only and that required for subse- quent manufacturing as follows : Pig iron Manufacturing Manufacturing plants $1,000 000,000 Blast furnaces . . . $250,000 000 Coal and coke 172 500 000 57 500 000 Ore properties . . . 120,000,000 Transportation properties. . . 240 000 000 60 000 000 Miscellaneous 35,000,000 12,000,000 Total $817 500,000 $1 149,500,000 168 THE COST OF MINING But the grand total of these sums is $1,967,000,000, which has been written down to $1,871,000,000. If we distribute this shrinkage between the two groups we shall have for pig iron approximately $780,000,000, for subsequent manufacture, $1,090,000,000. These figures are for the end of 1918. To get the average capital required for the output of the ten-year period we should go back about half way, i.e., charge to the production of the period only the amount that had been finished in time to participate in making the actual output and not that which provides for an increased future output. Without going into details, we arrive by this correction to the conclusion that the actual investment required to make 13,523,000 tons a year was about $700,000,000, say $53 per annual ton. By a similar process of reasoning we may deduce the distribution of labor. We must do some guessing, but I think the amount of it will not be sufficient to cause much doubt as to the proportion of things. It appears that prior to 1916 the cost of operating the blast furnaces was about $1.40 per ton of pig iron. This would mean an annual ex- penditure for labor, power, etc., of about $19,000,000. The labor alone would be perhaps $13,000,000, and would indicate the employment of about 16,000 men. With this start we may apportion the labor. Pig iron Manufacturing Total Mining iron ore 13,214 13,214 Coal and coke 16940 5 646 22 586 Transportation . . 16 700 4,176 20,876 Miscellaneous 2,000 978 2,978 Blast furnaces 16000 16 000 Other labor. 145,807 145,807 64,854 156,607 221,461 This distribution indicates that the proportion of the corporation's labor required for the production of pig iron is less than 30 per cent, of the total, while the capital employed for the same purpose is about 40 per cent, of the total. According to these figures each employe produces about 208 tons of pig iron a year. Under the pre-war conditions, say up to the end of 1915, the average cost of this labor was less than $900, rising from $780 per year in 1909 to $925 in 1915. The cost therefore of mining, preparing and assembling raw materials and operating the blast furnaces was roughly as follows : There are certain other charges, the amount of which is not so clearly indicated. The Corporation's facilities for assembling raw materials, COST OF MINING LAKE SUPERIOR IRON 169 Cost of pig iron Labor, $850, producing 208 tons $4 . 20 Other operating expenses 75 per cent, additional 3. 15 Thirty per cent, of Corporation's administrative expense . 45 Forty per cent, of taxes . 40 Total direct operating cost $8.10 though extensive, are not all-embracing. A large portion of the pig iron is made in the Chicago district and coke must be transported thither chiefly from the Pittsburgh region. But the principal item is the de- preciation of $700,000,000 capital which is taken care of under various headings called "ordinary repairs and maintenance," " extraordinary repairs" and " depreciation." How much of these expenses is covered by the Corporation's working force and how much is done by outsiders by contract is again not clear. If the depreciation averages 6 per cent, of the cost of the properties the amount will be $42,000,000 about $3.20 per ton. It seems safe to say that the sum total of all such expenditures must fall under $4.00 per ton, and that the complete cost of making pig iron must have been less than $12.00. It will be observed that this grouping of figures brings us to about the same conclusion arrived at in 1909. In the general rise of prices in late years the cost per unit of labor and supplies has remained about the same, but in dollars and cents it has risen at times quite to double the figures given above. Some details may be of interest. In the coal and coke properties during the year 1918, 28,378 men mined, 31,748,135 tons of coal, from which they made 17,757,636 tons of coke, using for that purpose 25,393,155 tons of the coal. Presumably some 5000 to 6000 of the men were employed in burning the coke. There would be left, say, 23,000 men to mine the coal. Each man would pro- duce some 1380 tons per year, over 4J^ tons per working day. Under pre-war conditions such an output would have meant a total cost of less than 90 cents per ton; but in 1918, doubtless, at least $2.00. In the iron ore properties, 28,332,959 tons was produced by 12,619 men; no less than 2246 tons per man, 7J^ tons per man per working day. This is an extraordinary output which indicates that a large part was produced by steam shovels; also probably that for that season some of the usual development work was postponed in order to economize labor for war demands. For the ten year period the average output per man in the iron mines was 1950 tons per year, about 6^ tons per working day. Either of these figures indicates remarkably low costs and, incidentally, the great superiority of the mines. It will be remembered that during the years 1906-1910, the total cost in the mines of Michigan was $1.65 per ton with an output of 700 tons per man per year. If the same pro por 170 THE COST OF MINING tion holds good with the Steel Corporation's mines, its cost should have been only 60 cents a ton. The great output per man is explained almost wholly by the ease with which ore is produced from the bonanza mines of the Mesabi Range. The following figures will be an illustration. In 1916 the entire Corpora- tion mined 33,355,169 tons of iron ore with only 12,624 men. Of this, 13,000,000 tons came from the Hibbing district on the Mesabi Range and was produced by 1800 men more than 7000 tons per man per year, ten times the yield obtained at the underground mines. In the Virginia district, of the Mesabi, where a number of the other steam-shovel mines of the company are found, 1400 men produced 4,250,000 tons. On the Western Mesabi similar productions are made. We may believe that in 1916, 24,000,000 tons was mined on the Mesabi by not over 4400 men a yield of some 18 tons per man per day for all the properties on it. De- ducting this production we find that 8000 men produced about 9,000,000 tons from other properties, 1125 tons per man per year. This last figure again shows how the Steel Corporation has obtained the best mines of the Lake Superior region. Its output from the under- ground mines seems to be at least 50 per cent, better than the average obtained by its competitors. CHAPTER XI OCCURRENCE, PRODUCTION AND PROSPECTS OF COPPER ECONOMIC CLASSIFICATION OP COPPER MINES COST OP PRODUCING COPPER PROM DISSEMINATED ORES FROM QUARTZ-PYRITE ORES FROM SMELTING ORES THE COPPER BUSINESS IN 1909 THE OUTLOOK IN 1919 COPPER MINERALS WORLD'S PRODUCTION GROWTH AND DISTRIBUTION OF PRODUCTION IN THE UNITED STATES PRODUCTION OF DISTRICTS PLANTS REQUIRED CONCENTRATION SMELTING REFINING DIVIDEND s. General Considerations. We may divide copper mines into three classes, each presenting a different economical problem: (I) Dissemi- nated ores in which concentration is the all-important thing, smelting being applied only to a fraction of the material mined. (II) Quartz pyrite ores in fissure veins in which the ratio of concentration is tow, the proportion smelted considerable, making the costs usually high. (Ill) Ores that cannot be concentrated and must be smelted in bulk. I. DISSEMINATED ORES The first class contains the Lake Superior copper ores in which native copper is disseminated, either in porphyry or in conglomerates derived from porphyries, in the proportion of from 1 to 4 per cent. These ores are concentrated in the mills (with 20 per cent, loss in milling) to from 1 to 4 per cent, of their original volume. This is the proportion smelted. The disseminated ores are discussed in following chapters. The salient facts regarding the cost 1 of mining disseminated ores may be expressed in the accompanying table: COST OP MINING DISSEMINATED ORES Low High Mining! OP 61 ^ $0 - 50 K \ Underground 1.25 $2.50 Concentrating . 40 1 . 00 Smelting, refining, and marketing 0.15 1 . 30 Open Pit $1.05 $4.80 Underground 1 . 80 At the average price of 15 cents for copper, these figures mean that under the most favorable conditions a Lake Superior ore, if it could be mined from an open pit, might meet expenses with a yield of only 7 Ib. per ton. If mined underground about 12 Ib. is the minimum; while under the most unfavorable conditions a yield of 32 Ib. may be required. 1 Under the present scale of prices these cost figures are too low but the pro- portions are as true as ever. 171 172 THE COST OF MINING Cost of Producing Copper From Disseminated Ores; The average cost of producing the entire output of copper is hard to determine, because a respectable fraction is sold by obscure mines which may not always be profitable, and whose records are not to be had. I have taken the ground that the price must be controlled by the leading and profitable producers which sell the bulk of the output of each district. In order to form some idea of the cost to such leaders, I have compiled the following information, the justness of which will be evident to any reader. The Calumet & Hecla Mining Company had produced up to June, 1908, approximately 2,040,000,000 Ib. of copper, on which its earnings were approximately $115,000,000 net. This mine had built up its enormous plant almost entirely out of earnings, so that for its forty years of activity its real and complete cost of production must equal the selling value of its output, less the profits. The actual price received for Lake Copper in the last forty years has been almost exactly 15.3 cents per pound. Now the profit of $115,000,000 from 2,040,000,000 Ib. is equal to 5.63 cents per pound. Subtract this from 15.30 cents, and we get 9.67 cents as the cost of the entire product. Similarly, the Quincy mine has produced 413,000,000 Ib. at a total cost of $45,500,000, equal to 11 cents a pound. The Copper Range mines, Baltic, Trimountain, and Champion, had produced, up to 1907, 209,000,000 Ib. for $27,316,000, equal to 13.07 cents a pound. The Wolverine had produced, up to 1907, 87,000,000 Ib. for $7,783,000, equal to 8.9 cents a pound. This entire group has produced 2,740,000,000 Ib. for $275,364,000, equal to a trifle over 10 cents a pound. Looking to the future it is plain that the cost of copper from the Lake Superior district and from these same mines will exceed this figure. In some former article published in the Engineering and Mining Journal on this subject, I stated that the copper from disseminated, concentrating deposits could be produced for 9 cents. I was misled in making this statement by taking too narrow a view of the situation. The Calumet & Hecla in its ten most prosperous years, from 1897 to 1906, produced 855,000,000 Ib. at about 8*4 cents a pound. This figure, in the light of fuller consideration, appears to be quite 1.4 cents below the average for the life of the mine to date; and still more below the prospective costs. The situation is as follows: During the ten fat years mentioned above, the mine was in bonanza. The ore yielded quite 50 Ib. per ton. Nearly all the production was from the great conglomerate ore shoot, which has been quite exceptional among Lake Superior deposits in richness. But, according to testimony given by Mr. Alexander Agassiz, the president, and by Mr. James McNaughton, the manager of the Calumet & Hecla, in the Osceola lawsuit, it appears that by 1908 the average yield of the PRODUCTION AND PROSPECTS OF COPPER 173 conglomerate had fallen to 40 Ib. per ton, and the yield is steadily di- minishing. The experience of the Tamarack was that the conglomerate just below the Calumet & Hecla line yielded only 20 Ib. and was un- profitable. It appears probable, therefore, that the remaining ground on the conglomerate is likely to yield not more than a mean between 40 Ib. and 20 Ib., or 30 Ib. per ton. The testimony is that between 20 and 24 million tons of conglomerate will still be produced. This means only 600 to 700 million pounds of copper. It does not seem probable that this will cost less than 11 cents on the average. This is about what it costs on the Osceola lode where worked by the same company. When we remember that it has cost the Quincy 11 cents, that it is costing the Osceola Consolidated 12 cents, the Mohawk over 11 cents, it does not seem likely that there is any prospect of any great output below that figure. The Wolverine is indeed producing for less than 8 cents, but its output is so small as to have little effect. The Copper Range mines can hardly expect to fall under 11 cents for complete costs. Their product thus far has cost over 13 cents, but this includes the whole cost of equipment. A deduction of 2 cents a pound for the 209,000,000 Ib. produced by the Copper Range mines makes over $4,000,000, which seems to be all that should be charged to the future for plant. It seems, therefore, that if the Copper Range can cover all expenses for 11 cents, it will do very well. When we consider that these figures are for the best mines in the dis- trict, and that the factor of increasing depth increases both the cost and the danger of impoverishment, we may conclude, I think with safety, that there will be no real profits from the Lake mines under 11 cents, and very little under 12 cents. Among the Lake mines nothing had occurred up to the end of 1915 to disturb these conclusions. Among the disseminated ores of the west it will be shown I think that during the same period experience had shown that costs were about as follows: Annual out- put, pounds Cost per pound, cents Miami 50 000 000 10 Chino 75,000 000 9 Rav 80 000 000 11 Moctezuma 30,000,000 9 Detroit 20 000 000 11 Nevada 70,000,000 9 Utah 200 000 000 11 Inspiration 100,000,000 9 In each case the cost is such that I believe the remainder could safely be counted on for dividends, or at least for liquid assets. The figures 174 THE COST OF MINING strike so near to 10 cents a pound that it is hardly worth while computing an average. In fact it will be shown that the current costs in the Lake Superior district were exactly the same 10 cents. In each case an allowance of 3 cents is probably necessary to cover the amortization of equipment before a profitable selling price is arrived at. II. QUARTZ-PYRITES WITH Low CONCENTRATION Of quartz-pyrite ores I have given the conspicuous examples of Butte and of the Wallaroo and Moonta. There is substantial agreement on the following points: (1) A high mining cost owing to, a, high development cost due to searching for ore shoots through much barren vein material; 6, con- siderable selection of ore in the process of mining; c, soft ground re- quiring elaborate timbering and filling. (2) A high concentrating cost due in part to the use of hand sorting, but particularly to the careful milling methods required to prevent undue losses. (3) Smelting costs are high because, first, a low degree of concentra- tion gives a large proportion to smelt (from 25 to 50 per cent.) ; second, because the siliceous and aluminous character of the gangue renders smelting rather difficult; third, because the ore as mined is necessarily of fairly high grade. The external conditions in Butte are somewhat less favorable than at the Wallaroo and Moonta, but in neither case are the high cost due to them. I believe that high costs are inherent to quartz-pyrite ores in fissure veins. Australia Montana Mining $4.68 $3.78 Milling 1.00 Smelting, refining, and marketing 2 . 37 4 . 62 General expenses . 58 $8.63 $8.40 Applying to these costs the average price of 15 cents per pound copper, it is evident that such ores must yeild about 60 Ib. copper or its equivalent in order to pay expenses. With the impoverishment of the ores with increasing depth, costs have increased, until in 1908 the average Butte copper must cost more than 11 cents and perhaps 12 cents. At the Wallaroo and Moonta copper has averaged in cost almost exactly 10 cents, and lately as high as 15 cents. The last figure, however, was an incident of the boom of 1906, and must be considered abnormal. Other mines of this class are the Old Dominion and others on the great fault fissure of Globe, Arizona, and in part, at least, those of Can- PRODUCTION AND PROSPECTS OF COPPER 175 anea, Mexico. Whatever geological grouping may be appropriate, the economic results are similar to the illustrations given, and bear out emphatically the generalization that cupriferous pyrites with a highly siliceous and aluminous gangue, occurring in shoots in fissure veins, are essentially high-cost ores at every stage of the process. Cost of Producing Copper at Butte. Let us examine critically the record of the Anaconda Copper Mining Company to get some light on the past and future cost of metal at Butte. At the beginning it is well to explain that the record is only a broken one, there being no reports showing the exact condition of the company for a period of seven years, from 1898 to 1905. During this dark age there were indeed some scraps of information given out, but the output, even, has not been stated with authority. We have, however, enough information to enable one to make some fairly accurate deductions as to the past and future cost of production. The present company was reorganized and began business July 1, 1895. It had at that time little or no surplus in its treasury. Up to April, 1908, it had paid $39,500,000 in dividends, and had accumulated a surplus of $6,261,000. It seems fair to conclude that in 12^ years the earnings were $45,500,000. This had been obtained from an output which, as just mentioned, is not stated with authority but is approximately 1,228,000,000 Ib. copper, 45,365,000 oz. silver, and 196,000 oz. gold. The average price of metals for the period was 15 cents for copper, 57 cents for silver, and $20 for gold. It is not strictly accurate to apply these prices to the entire output, but as the output has been fairly uni- form for the period there is no likelihood of inaccuracy sufficient to throw our calculation far astray. Let us now convert the silver and gold into their equivalent in copper at 15 cents a pound. We find that 45,365,000 ounces silver at 57 cents equals 172,387,000 Ib. 196,000 ounces gold at $20 equals 25,968,000 Ib. Add the copper metal 1,228,000,000 Ib. We get the total copper equivalent 1,425,455,000 Ib. By dividing the profit of $45,500,000 by 1,425,000,000 we get the average profit per pound, which is 3.19 cents. Subtract this from the average price of 15 cents, and we have the cost, which equals 11.81 cents per pound. Of course if the value of gold and silver were deducted from the cost and the remaining sum only charged against the copper, the latter would be substantially cheaper, but that does not seem logical. Let us now leave the sphere of approximations and examine those parts of the record where exact figures are given. In the two years ending June 30, 1897, we find that the total output was as follows: 176 THE COST OF MINING Tons dry ore 2,681,623 Pounds refined copper 239,400,895 $25,041,240 Ounces silver 11,249,792 7,387,965 Ounces gold 38,680 798,000 $33,227,205 The copper equivalent is 317,660,000 lb., this being equal to 118.5 Ib. per dry ton. The total expenses for the period were $24,855,214.29 and the cost per pound for operating was therefore 7.825 cents. To this may be added a total increase of capital accounts of $967,641.70. If we write this all off to operating the cost is increased by 0.304 cents and the total becomes 8.129 cents per pound. The total cost per ton was $9.23. After making the reports of which the above is a summary, the com- pany issued no reports till 1905. We have satisfactory reports for the years 1905,1906, and 1907. This period represents the progress of the company for an average of nine years. For the three final years the record was Tons produced 4,075,725 Copper metal, lb 253,363,226 Silver, oz 8,098,139 Gold, oz 43,420 Equivalent in copper 286,136,000 Copper equilvanet per ton, lb 70. 2 Total receipts $50,089,139 Dividends paid 16,650,000 Net diminution of surplus 769,000 Actual profits 15,881,000 Net value per lb. copper, cents 17. 514 Net profit per lb. copper, cents 5 . 553 Net cost per lb. copper, cents 11 . 961 Total cost per ton $8 . 394 The meaning of these figures is so obvious as scarcely to require comment. We find the mines producing practically the same tonnage as nine years before. The cost per ton has diminished $1.24. The yield of ore has diminished from 118.5 lb. to 70.2 lb. per ton, in spite of the fact that the later production has been helped out a little by the re-working of slags from the earlier period. The diminution in the grade of the ore has far out-weighed the diminution of cost per ton, so that the cost of copper has risen from 8.129 cents to 11.961 cents, a net increase of 3.832 cents per pound. It is fair to remark that the costs in the latter period were adversely affected by the shortening of hours of labor, increased wages, and the general inflation of prices of a boom period; but it must be noted that these adverse conditions did not become PRODUCTION AND PROSPECTS OF COPPER 177 acute until the middle of 1906, and in any event cannot go far in accounting for the great cost increase. I am not fully qualified to express an opinion as to how far the experience of the Anaconda represents that of other Butte mines, but all indications are that it represents them pretty accurately. We find that at the earlier period the Anaconda was producing better ores than any other mines have recently produced. Some rich ore has been found in the lower levels, below 2000 ft. in depth, but not enough to arrest the decline in metal contents for the total output. There is, of course, no reason to doubt that by careful selection of ores the decline may be temporarily overcome, but this can only be by a proportionately rapid depletion of reserves. It seems perfectly certain that the selling cost of Butte copper in 1908 was fully 12 cents a pound and was constantly rising. The rise is not likely to be stopped by anything short of a diminution of output, which would be caused by the extensive selection of ores in order to bring them up to a higher grade. A good deal can undoubtedly be done to hold costs down. Whenever it is imperative wages can be cut. A diminished output at profitable cost is better than a large output without profit. The Anaconda mines are undoubtedly developed and worked somewhat in advance of the average of the district, because they are the oldest. How far in advance they are cannot be stated, but the logic of events to date is that in ten years more, if tonnage is maintained, this property will be no longer profitable. III. WHEN ALL ORE MUST BE SMELTED I have given as examples of the third class of copper mines; i.e., that in which all the ore must be smelted, Bisbee. Arizona, Tennessee Copper, Utah Consolidated, Granby Consolidated, and Mount Lyell. To this list might be added the Rio Tinto pyrite mines of Spain and Portugal, the mines of Shasta County, California, United Verde in Arizona, Cerro de Pasco in Peru, and others of less importance. Economically we may make the following distinctions in this class : (1) Cupriferous pyrites in an advanced state of alteration and reconcentration, so that only a small part of the original mass can be mined. In this case mining costs as well as smelting costs are inevitably high. Bisbee, Arizona, is a good example. (2) Cupriferous pyrites in their original state or moderately enriched. In this case there is usually presented a large mass of homogeneous ore easily mined and easily treated. Tennessee Copper, Utah Consolidated, and Mount Lyell are examples. At these properties the cost per ton is from $4.20 to $6. (3) Disseminated, self-fluxing ores not very pyritic. Granby Con- solidated is an example. 12 178 THE COST OF MINING Speaking generally, it must be admitted that mines of class III produce a goodly proportion of the world's copper. The list of big producers includes the Rio Tinto, the Copper Queen, Calumet & Arizona, United Verde, and many other mines not so big, but very profitable. Rio Tinto seems to produce the cheapest copper in the world, but I believe this is due to the fact that the sulphur is also utilized to an important extent. Leaving out this case, in which copper costs only 5 cents per pound, it does not seem probable that much copper from these ores is produced at less than 10 cents per pound. The approximate cost of producing from some of the larger districts which produce this kind of ore is Pounds Dividends Cost, cents Bisbee 2,500,000,000 $140,000,000 8 Jerome 1,000,000,000 50,000,000 9 These two districts are so far the most prominent of their class that it is scarcely worth while to tabulate the others. Undoubtedly these mines are the source of the cheapest copper to be had in this country. REMARKS IN 1909 It is very well worth remarking that where the original pyrite masses are highly altered and the payable ores concentrated into small portions of the original orebody, rich ores have often been developed out of material which was originally too low grade to pay. This is the case of Bisbee, Arizona, and in Shasta County, California, and probably at Cerro de Pasco. Such bonanza orebodies are sure to be variable in their output and may come to a sudden end. They are exasperating to the mining engineer who tries to calculate their possibilities, and dangerous to the investor. It is seldom possible to put much ore in sight, or to count with assurance on a long life for the property. Nevertheless they are often exceedingly profitable. There is some reason to modify this. See chapter on Bisbee. Where certain portions of the orebodies are enriched, but the original masses are still payable, the mines may exhibit painful varia- tions in costs and profits, but still remain prospectively valuable for a long time ahead. Such cases are the Utah Consolidated, which has had a bad year, Mount Lyell, and probably the United Verde. Where the pyrite masses are in their original condition they are apt to be uniform and reliable producers. Undoubtedly the Rio Tinto mine in Spain has a longer assured life and more stable operating conditions than any other copper mine in the world. The Tennessee Copper property is apparently the only mine of this class in America, but probably others will be developed. PRODUCTION AND PROSPECTS OF COPPER 179 The Price of Copper Estimate in 1909. I feel very confident that the analysis of costs demonstrates as valid the following conclusions: 1. No copper can be produced in North America under present economic conditions at a profit for less than 10 cents a pound. 2. At 11 cents a pound only half the present output can be produced. 3. At 12 cents many of the largest producers would only be getting a new dollar for an old one. 4. At 15 cents the business as a whole is prosperous and profitable only to an entirely legitimate degree. 5. As long as the demand increases as it has increased steadily for the past quarter century, it is safe to count for the next ten years on an average price of 15J^ cents, which has been the approximate average for the last ten years. Remarks on the Outlook in 1919. The above conclusions were fairly but perhaps not wholly borne out up to the end of 1915. Since that time the operating factors have gone up in price about 70 per cent. If 15 cents was a normal price before the war 25.5 cents should be the price now. It stands at about 18 cents. This means a comparative depression in the market. I believe however that if industry throughout the world were as unhampered and prosperous as it was before the war the price actually would under present cost factors average 25 or 26 cents. But we may have to wait a long time for that. The great producing power of the Americans can be absorbed only by a brisk demand from all sources. Europe can buy only what she can sell. With her working capital and raw materials depleted, her labor supply decimated, her morale dissipated, it can scarcely be anything but a slow process to regain her economic vigor. Europe has always taken about half, or more than half, of American copper. (See chapter on Gold, Wars and Prices.) While it is no part of the plan of this volume to discuss in detail the geological or mineralogical occurrence of ores, convenience seems to demand for the reader some general statement that will show where copper comes from and how it is obtained. Some reference to geological Per cent, copper Cupriferous pyrite . 5 to 4 Richer copper sulphides Chalcopyrite 34 . 4 Bornite 55 . 5 Chalcocite 79 . 7 Oxides and carbonates Red oxide 88 . 8 Black oxide 79.8 Azurite 55 . 2 Malachite 57 . 4 Silicate Chrysacolla 36 . 1 Native copper 100 180 THE COST OF MINING conditions will be found in following chapters illustrating the economic problems encountered at the various mines; so that no further descrip- tion will be attempted here. The entire output of the mines to be dis- cussed here is derived from the minerals listed above. These various ores are apt to be found derived from an original mineralization of cupriferous pyrite which is simply iron sulphide con- taining a small proportion of copper. The effects of the circulation of surface waters on such ores has resulted in an extensive and often pro- found rearrangement of the minerals. In general terms this is the origin of most commercially valuable copper deposits. There are, however, some very important exceptions. The native copper ores of Lake Superior have not been proved to have any connection with any original sulphide. The new porphyry deposits of Utah, Nevada, Arizona, and Mexico have no denned connection with solid masses of pyrite, although they are frequently secondary sulphides. Except in the case of cuprif- erous pyrite, which sometimes occurs in very large homogenous masses with little admixture of foreign substances, commercial copper is in- variably a mixture of the true ore with a large proportion of country rock or other minerals, technically known as "gangue." World's Production. The total production of copper in the world was 1,395,160 metric tons in 1918; in 1917 the production was 1,435,721 metric tons and in 1916 it was about 1,408,280 metric tons. In 1918 the copper output of the United States was 60.8 per cent, of the world's total production, in 1917 it was 60.3 per cent., and in 1916 it was about 62.6 per cent. If we add the production of Canada and Mexico, where the mines have almost invariably some connection with those in the United States, we get the total output of North America; which was, for 1917, 67.1 per cent., and in 1918, 70.0 per cent., of the world's product. WORLD'S PRODUCTION OF COPPER (a) Year Metric tons Short tons Year Metric tons Short tons Year Metric tons Short tons 1885 229,315 252,828 1897 412,818 455,147 1908 758,065 835,623 1886 220,669 243,295 1898 441,282 486,529 1909 854,758 942,408 1887 226,492 249,716 1899 476,194 525,021 1910 877,494 966,998 1888 262,285 281,179 1900 491,435 541,561 1911 879,751 969,750 1889 265,516 292,741 1901 529,508 583,517 ! 1912 ,011,312 1,114,769 1890 274,065 302,166 | 1902 542,606 597,951 1913 ,002,284 1,104,517 1891 280,138 308,862 1903 630,590 694,910 1914 934,888 1,018,395 1892 309,113 340,808 1904 693,240 764,758 1915 ,094,803 1,206,793 1893 310,704 342,562 1905 698,931 770,221 1916 ,408,280 1,552,347 1894 330,075 363,920 1906 715,510 788,492 1917 ,435,721 1,582,595 1895 339,994 374,856 1907 724,120 798,205 1918 ,395,160 1,537,884 1896 384,493 423,917 (a) The statistics for 1885-1891 are as reported by Henry R. Merton & Co.; 1892-1918 as per MINERAL INDUSTRY. PRODUCTION AND PROSPECTS OF COPPER 181 oo 05 o CO OO O CO 00 O CO co" V of CO * 1C CO O O Ol CO O 00 1C 1C Ol" O 1C 1C 00 rH -^ OS b- K j * * 11 1 '? i o co 1C 05 e of Henry R. As officially g O CO O rH CD CO rH CO O CO Ol 1C ii i i i 01 b- 3 M ca OS 1C GO Tj< O CO O 1C rH rH b- 1C C ; s" * s iC ^ 2 S * # 00 "*. Icfs CD Ol S5 i ii O CO O b- O 00 CO rH O CO GO Ol "* 00 O 00 Ol rH >C b Ol b CO O o oo oo co DO rH , o^g O5 Ol CO b- CO * * Ol GO 1C rH 1C O 1C CO Q b- CO S * ~ rH 01 IT rH CO * s^ f co H/ CD" ^* * 1 III 05 00 01 1C Ol 00 01 co co 1 of co" CO rH O O CO b- i> co of *" CO CO 00 Ol TJ< * O CO o co" o" of oo" co" ^ CO CO CO b- a * c* CO rH* CO"- rH CDrHOlClCrH001Cb- S Ol >> 05 < ~ rH m iij rt 9. of b." 1C rH ^ w " O CO 1C rH CO 01 Tt< Ol b- 1C "5" CO rH 1C Tj< CO CO CO rH CO b- 1C CO *C 1 I8 jS & <5 ^ 10 01 . If O Cf co v T^ rjt rH CO b- O) GO rH b- O CO Ol * CO * b- CD b- O OS O CO OO rH 01 CO CO CO -# CD 05 CO CO C Tfri 1C 00 if 1C rH Tf< If > CO b- 00 iC O > b- iC O O CO 00 OS 1C Tf* 01 01 CO S^" l-s 05 co : 5'|S ro 01 co S rH CD Cf rH 01 V : S ic ; CD o 01 S :| 01 ' C CO CO Ol CO ''f 1C CO H/I O OO issss sifggssss >c b- ' ^^ fl ^> . of of of ic" CO CO Ol Ol Ol rH CO Ol 1C CO rH O5 00 If w o. 1C CO ^ Ci OS OS So iM 3 s * o 2 co if q 5 c? 01 CD O O CO b* H^ rH 05 01 1C CO CO 00 1C Ol CO <* Tt< CO O b- O O CO 1C rH OTj*rHCOCOOlOOOO .OOrHlCOlCCOrHOOl OrHlCOCDOCOlCb- * os * ^ 8 g J*3 2^8 O5 ^ oo" S?**8 co"*o!"S2 CO rH O b- O ic co ^ ^-^ ^-^ os ^ ^ S S 8^ r&3 * a =8 ^ 53 J^J -^ i^^ ij ^ a^J 2 S oo 5 HI >> Is* 1 & O 3 O o 1 ' ill U _ 3 g 1 1 Australasia (a) Austria-Hungary (o) . . Bolivia (a) Canada (d) Chile (d) Cuba (d) Germany total (a) ... Italy (a) Japan (/) Mexico total (d) (Boleo) (a) Newfoundland (o) Norway (a) Peru (e) Russia (r) iiili I ' ( ??|i|g&-oS Miilllll M 1 cc H & p o (a) As reported by Merton & Co. is used, reported, (h) Henry I * Estimated. 182 THE COST OF MINING The following table shows the growth of the American copper industry from its beginning to the end of 1918: MAGNITUDE AND GBOWTH OF COPPER PRODUCTION IN THE UNITED STATES FROM 1845 TO 1918, INCLUSIVE Year Production Increase Average annual increase by decades Pounds Pounds Per cent. Pounds Per cent. 1845 224,000 1846 336,000 112,000 50.0 1847 672,000 336,000 100.0 242,400 50.0 1848 1,122,000 450,000 67.0 1849 1,568,000 426,000 40.0 1850 1,456,000 (a) 112,000 (a)7.1 1851 2,016,000 560,000 23.1 1852 2,464,000 448,000 22.2 1853 4,480,000 2,016,000 81.8 1854 4,990,000 510,000 12.5 1855 6,720,000 1,730,000 33.3 1,467,200 28.5 1856 8,960,000 2,240,000 33.3 1857 10,752,000 1,792,000 20.0 1858 12,320,000 1,568,000 14.6 1859 14,112,000 1,792,000 14.5 1860 16,128,000 2,016,000 14.3 1861 16,800,000 672,000 4.1 1862 21,160,000 4,360,000 20.0 1863 19,040,000 (a)2,120,000 (a)5.5 1864 17,920,000 (a) 1,120, 000 (a)5.9 1865 19,040,000 1,120,000 6.3 1,209,600 6.2 1866 19,936,000 896,000 4.7 1867 22,400,000 2,464,000 12.3 1868 25,984,000 3,584,000 16.0 1869 28,000,000 2,016,000 7.7 1870 28,224,000 224,000 1.0 1871 29,120,000 896,000 3.2 1872 28,000,000 (a) 1,120,000 (a)3.8 1873 34,720,000 6,720,000 24.0 1874 39,200,000 4,480,000 12.9 1875 40,320,000 1,120,000 2.9 1876 42,560,000 2,240,000 5.6 3,225,600 8.2 1877 47,040,000 4,480,000 10.5 1878 48,160,000 1.. 120, 000 2.4 1879 51,520,000 3,360,000 7.0 1880 60,480,000 8,960,000 17.4 1881 71,680,000 11,200,000 18.6 . 1882 90,646,232 8,966,232 12.5 1883 115,526,053 24,886,221 ] 27.4 1884 144,946,653 29,420,600 25.5 1885 165,875,766 20,929,113 14.4 1886 156,735,381 (a) 9, 140,385 (a)5.5 18,930,349 14.8 1887 180,920,524 24,185,143 15.4 1888 226,361,466 45,440,942 25.1 1889 226,775,962 414,496 0.2 1890 259,763,092 32,987,130 14.5 PRODUCTION AND PROSPECTS OF COPPER 183 MAGNITUDE AND GROWTH OF COPPER PRODUCTION IN THE UNITED STATES FROM 1845 TO 1918, INCLUSIVE Continued Year Production Increase Average annual increase by decades Pounds Pounds Per cent. Pounds. Per cent. 1891 284,121,764 24,358,672 9.4 ) 1892 344,998,679 60,876,915 21.5 1893 329,354,398 (a) 15, 644,281 (a)4.5 1894 354,188,374 24,833,976 7.5 1895 380,613,404 26,425,030, 7.4 34,635,407 9.4 1896 460,061,430 79,448,026 20.9 1897 494,078,274 34,016,844 7.4 1898 526,512,987 32,434,713 6.6 1899 568,666,921 42,153,934 8.0 1900 606,117,166 37,450,245 6.6 1901 602,072,519 (a)4,044,647 (o)0.7 1902 659,508,644 57,436,125 9.5 1903 698,044,517 38,535,873 5.8 1904 812,537,267 114,492.750 16.4 47,404,234 6.1 1905 888,784,267 76,247,000 10.6 1906 917,805,682 29,021,415 3.3 1907 868,996,491 (a)48,809,191 (a)5.3 - 1908 942,570,721 73,574,230 8.4 1909 1,092,951,624 150,380,903 16.0 1910 1,080,159,509 (a) 12,792, 115 (a) 1.2 1911 1,097,232,749 17,073,240 1.6 1912 1,243,268,720 146,035,971 13.3 1913 1,224,484,098 (a) 18,784,622 (a) 1.5 1914 1,150,137,192 (a)74,346,906 (a) 6.1 91,046,761 6.9 1915 1,388,009,527 237,872,335 20.7 1916 1,927,850,548 539,841,021 28.0 1917 1,886,120,721 (o)41,729,827 (a) 2.2 1918 1,908,533,595 22,412,874 1.2 (a) Decrease. SUMMARY Years Total production, pounds Average annual increase Quantity, pounds Per cent. 1845-1918 1845-1881 (First half) 1882-1918 (Second half) 27,106,589,103 799,624,000 26,306,965,103 24,808,750 2,034,333 43,895,108 12.2 17.2 8.5 The copper production of the various states of the United States for the past six years is given in the following table. 184 THE COST OF MINING PH 3 O O O PM O w (N CO (N t^OO (M CO r-M O3K3 (NCO OO5 TlH'toCJ (NOO(MT-i CC '-i OOfO >, 3 H PRODUCTION AND PROSPECTS OF COPPER 185 MINE PRODUCTION OF COPPER IN THE PRINCIPAL DISTRICTS "IN 1916, IN POUNDS District or region State Mine output Percent- age of total pro- duction Rank Butte Montana 349 500 000 17 42 1 Lake Superior Bingham , Globe-Miami Michigan Utah Arizona 269,794,000 223,619,000 220,000,000 13.45 11.15 10.97 2 3 4 Bisbee Copper River ....do Alaska 193,696,000 105 600 000 9.66 5 26 5 6 Jerome Arizona 102,000,000 5 09 7 Ely . Nevada . . 93,044,000 4 64 8 Ray (Mineral Creek) Arizona 76,700,000 3.82 9 Morenci-Metcalf do 75,900,000 3 78 10 Santa Rita (Central) New Mexico 74 228 000 3 71 11 Shasta County Ducktown . . . California Tennessee 39,700,000 14 556 000 1.98 73 12 13 Prince William Sound Pioneer Alaska Arizona 10,660,000 9,145,000 0.53 0.46 14 15 Burro Mountain New Mexico . . 9,392,000 0.42 16 Tintic Pima . . Utah Arizona 7,085,000 6,683,000 0.35 33 17 18 Foothills Belt Cochise California. Arizona 6,460,000 6,204,000 0.32 31 19 20 Alder Creek Idaho 5 499 000 27 21 Plumas California 5,150,000 0.26 22 Banner Arizona 5,041,000 25 23 Lordsburg Planet New Mexico . . Arizona 4,755,000 3,929,000 0.24 20 24 25 Big Bug do 3,612,000 0.18 26 Ketchikan Alaska 3,526,000 18 27 Courtland (Turquoise) Ophir Arizona Utah 3,250,000 2,702,000 0.16 0.13 28 29 San Juan-Ouray region Leadville Santa Fe Colorado do Nevada 2,640,000 2,620,000 2,547,000 0.13 0.13 13 30 31 32 Coeur d' Alene region ... ... Idaho 2,200,000 0.11 33 New Placer New Mexico . . 2,153,000 0.11 34 Oro Grande do 2,077,000 10 35 Helvetia Arizona 1,958,000 0.10 36 Peck. do 1,618,000 08 37 Trinity San Bernardino . California do 1,575,000 1,525,000 0.08 0.08 38 39 Patagonia Arizona 1,244,000 06 40 Copper Basin . . .do 1,225,000 0.06 41 Goldfield Nevada 1,165,000 06 42 Uinta-Summit (Park City) .... Utah 1,163,000 0.06 43 Bentley Arizona 1,064,000 0.05 44 Railroad Nevada . . . 1,012,000 05 45 1 958 216 000 All others 47,659,000 Grand total 2 005 875 000 186 THE COST OF MINING An interesting view of the broad features of the copper mining business may be had from the following table, which shows that of all the ores treated in the United States in 1916 one-ninth are smelted direct and eight-ninths concentrated. The concentrated ores are reduced to 8.7 per cent, of their original volume before smelting. Adding this to the amount smelted crude we find the total percentage smelted to be 17.5 per cent. The average copper yield of all ores mined was 34.0 Ib. per ton or 1.70 per cent. The yield from ores smelted direct was 94.4 Ib. per ton or 4.72 per cent. The yield per ton of concentrating ore was 25.6 Ib. per ton or 1.28 per cent.; while the resulting concentrates yielded 298 Ib. per ton or 14.9 per cent. A rough estimate of the plants required to perform the processes indicated is as follows : Mining, milling, and smelting plants with transportation facilities be- tween mines, mills, and smelters, at $4.50 per ton of annual capa- city for 50,000,000 tons of concentrating ore $225,000,000 Mining and smelting plants for 6,500,000 tons smelting ore at $7 per ton of annual capacity $ 45,000,000 Total plant required $270,000,000 This estimate was intended to cover only such transportation lines as are owned by mining companies, not the longer lines owned by rail- road companies that are used to carry ores, concentrates, matte, or bullion for great distances. The various refineries will perhaps bring up the capital in plants by an additional $50,000,000, making a total plant employed in the copper- mining business of at least $320,000,000. Thisestima te refers only to the successful and active plants. The addition of failures and discarded plants would undoubtedly show a largely increased figure. Computing the future life or the average mine at fifteen years, the amortization of capital is 10 per cent. To this we must add 6 per cent, for annual depre- ciation, so that a total charge of 16 per cent, must be made for the use of capital. On $320,000,000 this annual charge is $51,200,000, or nearly 3 cents a pound on the output of 1917. Under the conditions of 1919 this estimate would have to be increased 70 per cent. Of course, w\th the expansion of the business accomplished in 10 years the total figures would be much higher. It may occur to many readers that in the following chapters undue prominence is given to copper as compared with other mineral products. It will be found however that the copper mines are a convenient starting point for the discussion of all sulphide mines, and that includes almost all metal mines except iron. That copper mining and smelting is not an unimportant business is shown by the fact that up to January 1st, 1919 a list of 58 copper mining companies, certainly not a complete list, have paid $1,178,000,000 in PRODUCTION AND PROSPECTS OF COPPER 187 COPPER ORES CONCENTRATED AND SMELTED AND COPPER PRODUCED FROM EACH CLASS OF ORE IN THE UNITED STATES IN 1916 State Ore concentrated Ore smelted Quantity, short tons Concen- trates pro- duced, short tons Copper in concen- trates, pounds Per- cent- age of copper from ore Quantity, short tons Copper produced, pounds Per- cent- age of copper from ore Alaska 407,520 12,790,255 214,793 51,353 812,872 16,246 38,977,410 335,522,300 5,971,595 4.78 1.31 1.39 209,744 3,701,716 718,929 34,429 31,043 75,909 80,877,429 384,180,489 49,821,007 2,977,285 803,699 5,924,652 19.28 5.19 3.47 4.32 1.31 3.90 Arizona California Idaho 37,141 12,364,114 1,665 218,489 643,042 273,692,525 0.87 1.08 Michigan 124 587,501 171,702 103,544 165 35,409 3,580 482,495 2,081 732,680 1,318 29,578 6,063 18,200 52,382,319 16,364,531 7,400,263 9,800 3,580,496 544,484 14,679,794 99,569 29,962,228 148,372 1,913,507 2,610,622 7.34 4.46 4.77 3.07 3.00 5.05 7.60 1.52 2.40 2.04 5.63 3.22 21.53 5,610,477 3,975,254 3,349,366 1,929,232 531,573 280,434 290,282,734 88,234,979 80,193,232 2.59 1.11 1.19 Nevada New Mexico Pennsylvania, Mary- land, and Virginia. . Tennessee . . 200,950 8,844 793,096 0.19 Texas . . Utah 11,943,472 3,361 38,652 559,840 870 3,221 199,997,786 125,058 670,723 0.84 1.86 0.87 Washington .... Total and average . 50,935,355 4,414.639 1,315,104,480 1.28 6,928,010 654,298,746 4.72 dividends. A few of these concerns are in Canada and South America, but their aggregate dividends are certainly less than those of U. S. mines that are omitted a good deal less. The total output of copper credited to the United States is some 27 billion pounds. It is safe to say that the dividends in normal times have averaged about 4 cents per pound. The total profits compared to those in the iron business might seem to be small, but it must be remembered that none of the profits of the copper business come from manufacturing as is the case with most of the promi- nent steel companies. 188 THE COST OF MINING COPPER DERIVED FROM ORE CLASSED AS COPPER BEARING (COPPER, COPPER- LEAD, COPPER-ZINC ORES), AND TOTAL PRODUCTION OF COPPER FROM ALL SOURCES IN THE UNITED STATES IN 1916 State Ore treated, short tons Copper recovered, pounds Per- cent- age of copper Copper from all sources including old slags, smelter cleanings, and precipitates, pounds Alaska 617,264 119 854 839 9 70 119 854 839 16 515 151 720 572 546 2 18 712 833 169 933 722 55 792 602 2 97 55 897 118 Colorado & 37,558 3,276,524 4.36 8,624,081 Georgia 31,043 803,699 1 30 803,699 113,072 6,585,197 2 91 8,478,281 12,364,114 273,692,525 1 08 273,692,525 Missouri Montana d 124 6,238,087 4,149,802 18,200 348,978,298 104,799,723 7.34 2.80 1 27 386,200 352,928,373 105 116 813 3,453,971 87,701,873 1 27 92 747 289 165 9,800 3 00 9 800 35,409 3,580 496 5 05 3 581 886 204,530 1,337,580 32 1 337 580 482 495 14,679,794 1 52 14 679 794 Texas 2,081 99,569 2.40 99,569 Utah 12,685,797 230,519,968 0.92 240,275,222 4,679 273,430 2.92 273,430 68,230 2,584,230 1.89 2,645,022 6,063 2,610,622 21 53 2,610,622 57,953,357 1,977,771,515 1 70 2,005 875 312 Considerable copper was recovered from old slags and ores not classed as copper ores. 6 Most of the copper from Colorado is derived from ores classed as siliceous ores and lead ores. e Mainly recovered in dressing lead ores. * Considerable copper was recovered as precipitates from mine waters and from ores not classed as copper ores. A large quantity of copper was derived from ores classed as lead ores, lead-zinc ores, and siliceous ores. CHAPTER XII THE SOUTHWEST COPPER FIELD AREA AND IMPORTANCE CLIMATE GEOGRAPHY THE PLATEAU REGION MOUNTAIN REGION DESERT REGION TALUS SLOPES AND RESERVOIRS TRANSPORTATION POPULATION AND ETHNOLOGY. The greatest copper-producing region of the world may be described as a rough oval of about 40,000 square miles, measuring about 330 miles north and south and 165 miles east and west. Its most easterly extremity is at the Chino mine, near Santa Rita, New Mexico; its most westerly, at Ajo, Ariz.; its most northerly point is Jerome, Ariz., and its most southerly, Nacozari, Mexico. In New Mexico are the districts of Santa Rita and Burro Mountains; in Old Mexico, those of Nacozari and Cananea; in Arizona, those of Bisbee, Ray, Globe, Clifton, Jerome, Ajo, and a number of smaller ones. Thus, much the greater part of the field lies in Arizona, and, as nearly as may be estimated, this area produced 27 per cent, of the world's output of copper in 1917, 36 per cent, of the production of the two Americas, and an amount equal to 47 per cent, of that of the United States. Its actual production is shown in the table on the following page. The tables do not give an exact comparison of the field under dis- cussion with the other subdivisions of the world, because the whole of Mexico is included, and only a part of that country may properly be considered to be in this field. It is rarely possible for such data to be accurate in all respects; but, with the above explanation, the figures will serve their purpose. They are compiled from statistics published in the Engineering and Mining Journal, Jan. 12, 1918. This vast copper region deserves more than a passing description. Geographically it bears considerable resemblance to Spain and Morocco, corresponding fairly well to those countries in latitude and with regard to bordering ocean; and, therefore, to a large extent in climate and physical appearance. The central part is in latitude 32 N. and is about 180 miles from the Gulf of California. The region is arid to semi-arid, the rainfall varying from 6 to 8 in. annually at Ajo to 16 or 18 in. at Globe. The climate naturally varies according to differences of altitude, the local topography, which influences rainfall and winds, and, to a minor extent, to difference of latitude. The altitude is from 2000 ft. at Ajo to 6000 ft. at Cananea. A rough average of the whole may be found at Cochise, situated in latitude 32 N. at an elevation of 4250 ft. Here 189 190 THE COST OF MINING the mean temperature for the year 1916 was 60.5 F., with a maximum of 102 in July and a minimum of 6 in December. The normal pre- cipitation is 11.78 in., but it probably varies in different years between 8 and 16 inches. The latitude is sub-tropical, and, of course, the district is decidedly warmer than that of the more populous parts of the country; but popular fancy exaggerates the difference. Even Yuma, which is outside this area, practically at sea level, near the mouth of the Colorado River, and celebrated as the " hottest place in the world," or something to that effect, has not even an average tropical heat. The mean for 1916 was only 69.2, the temperature varying between 110 and 20. The hot- test month, August, had a mean of 86.5. At the Prescott Dry Farm, at an elevation of 5008 ft., the temperature varied in 1916 between 95 and 7. At Phcenix, elevation 1108 ft., the extremes were 111 in June and 24 in December, indicating, as compared with Prescott, a difference in the extremes of temperature of about 16 for 3900 ft. of elevation. TABLE OF COPPER OUTPUT IN POUNDS State 1914 1915 1916 1917 Arizona. . 387,978,000 444,089,000 692,630,000 692,924,000 New Mexico Old Mexico 64,339,000 80 000,000 75,515,000 67.000 000 83,013,000 112,000 000 101,952,000 90 000 000 Totals 532 317 000 586 604 000 887 643 000 884 876 000 Total United States . . 1,158,582,000 1,423,698,000 1,942,776,000 1,888,396,000 Total Western Hemisphere Total world 1,479,800,000 2,050,000,000 1,797,959,000 2,388,540,000 2,429,749,000 3,099,602,000 2,392,144,000 3,114,475,000 PERCENTAGE PRODUCED BY ARIZONA, NEW MEXICO AND OLD MEXICO 1914 1915 1917 1917 Of the United States Of the Western Hemisphere Of the world 45 36 26 41 33 26 45.7 36.5 28 6 47.0 36.2 27.8 PERCENTAGE OF WORLD OUTPUT PRODUCED IN WESTERN HEMISPHERE 1914 1915 1916 1917 72.2 75.2 78.4 77 The rainfall comes regularly in two rainy seasons : a winter season, culminating usually in January or February; and a summer season, in July and August. There are usually about five months, ineach'of which the precipitation is one inch or over; in the other seven months the fall is scant. Thus, at Cochise in 1916 the total for the year was 14.69 in., of which 12.99 in., or 89 per cent., fell in the five months of January, THE SOUTHWEST COPPER FIELD 191 July, August, September and October, the other seven months having only 1.70 in. or 11 per cent. The record of climatic observations at Cochise is given in the twenty- seventh annual report of the agricultural experiment station of the Uni- versity of Arizona, for 1916, and is shown in the table. F. L. Ransome, certainly one of the most brilliant of geological writers, has followed the classic example of Caesar with regard to Gaul by dividing Arizona into three parts the plateau region, the mountain region, and the desert region. Though the boundaries are in places somewhat in- distinct, in general the division is an apt and a true one. The mines are practically all in the central or mountain belt; but since the conditions of life, in these days of swift and improving transportation, are influenced by the region as a whole, as well as by the immediate local surroundings of the inhabitants, it is not inappropriate to take note of the climate and aspect of the three belts. One cannot but be impressed TEMPERATURE AND PRECIPITATION SOUTHWEST COPPER FIELD Month Temperature, degrees Precipitation, inches Maximum Minimum Mean January 71 80 86 89 95 101 102 97 91 86 85 74 14 18 28 29 37 42 58 56 43 32 22 6 45.2 51.0 56.3 58.6 64.6 76.2 78.0 75.2 70.8 60.7 49.5 40.1 2.20 0.48 0.63 0.08 0.28 0.00 3.78 4.10 1.55 1.36 0.00 0.23 February March April May June . . . . July August September October November December Year .... 102 6 60.5 14.69 11.78 Normal by the variety of scenes, and perhaps surprised at the inaccuracies of his geography. That was my experience. Having traveled extensively in the United States, sometimes upward of 40,000 miles a year 1 had fallen into the conceit of assuming that I knew the country. Travel had be- come a bore, and I had even come to feel interested only when I could get off the train; and I looked out of the windows solely because there was nothing else to do. Probably many like myself get into a rut of preoccupation and fail in a similar way to get satisfaction out of their opportunity, or through the necessity of travel. To find a place interest- ing is to be interested. Many mining men are of broad intelligence, able 192 THE COST OF MINING to take a big place in the world's affairs, as Mr. Hoover has, but I think there are many who see little in a mining country except the mines. There is also a good deal of literature published by fanciful persons who make their product a caricature of local color. From such "authori- ties" one gains impressions that the unusual is the usual. To quote my own experience once more, I had gained the impression, somehow, that Arizona was a monotonous expanse of dusty desert, sparsely covered with greasewood and grotesque cacti, relieved only by an occasional sandy wash where there would be streams if there were any water, and by lonely bare mountains well scorched by the sun. There are such stretches in Arizona, but they serve only to help give the state some of its variety and interest. Northern Arizona Plateau Land. The great Coconino plateau of northern Arizona is said to contain the largest reserve of uncut pine timber in the United States. Above it rise the San Francisco peaks, volcanoes recently extinct, nearly 13,000 ft. high and nearly always cov- ered with snow. Flagstaff, a lumbering town at their base, at an altitude of 6900 ft., has a climate like Minnesota. The mean average temperature is only 44. Its precipitation is greater than that of any place along the California coast south of San Francisco; greater, I believe, than at San Francisco. Government records, not mere rumors, show tem- peratures as low as 25 below zero, such as are not felt in New York once in a lifetime. This plateau is not a small part of the region, but a very large part, lying immediately north of the mining districts. The U. S. Geological Survey (Guidebooks of the Western United States, Santa Fe Route, Bull. 613, a most interesting and instructive volume, by the way) has this to say: From Isleta, an Indian pueblo on the Rio Grande, which -flows into the Gulf of Mexico, the railway begins its long journey across the interesting plateau country, which, with its bordering areas, extends almost to the Colorado River, which flows into the Pacific. This vast area of high, nearly level country lies between the rugged and generally higher ranges of the Rocky Mountains on the north and the alternating short ranges and deserts of the lower-lying north end of the Mexican plateau to the south. This is a land of varied landscapes, rocks and people. In places the plains and cliffs are vividly colored by natural pigments of red and vermilion. The rocks of the plateau are surmounted by two large volcanic piles, which stand far above the general level of the plain and which were master volcanoes in but compara- tively recent time Mount Taylor on the east and the San Francisco Mountains on the west. From the immensely thick and almost horizontal sediments that compose most of the mass of the plateau, layer after layer has been eroded away over wide areas, leaving remnants of harder strata which make picturesque hills and valleys and expose fossil forests which long ago were buried in the sediments of which these strata are made. Erosion has also carved many canyons, notably the majestic Grand Canyon of the Colorado. THE SOUTHWEST COPPER FIELD 193 Here and there in the rocky cliffs and canyons are the present and former com- munal homes of the aboriginal peoples, whose arts and religious ceremonies partly lift the veil of the past and reveal glimpses of the earlier stages of the human culture. These vast expanses were long ago the abode of aboriginal tribes; later they were explored and dominated by the mounted Spanish conquistador -es; and finally they have been made accessible to all by the comfortable railway of today. The plateau country and its approaches, in all their aspects geologic, ethnologic and historical form a region which will hold the attention of all passers-by in whom there exists a spark of appreciation for striking natural phenomena and significant human events. I quote further from the publications of the U. S. Geological Survey (Professional Paper 98-K, by F. L. Ransome) to get a broader description: The plateau region, which has an area of about 45,000 square miles in Arizona, occupies the northeastern part of the state and drains generally northward through the Little Colorado and smaller streams into the Grand Canyon. The general altitude of this region, which is a part of the great Colorado Plateau, ranges from 7000 to over 8500 ft. As Button graphically states: "Its strata are very nearly horizontal, and, with the exception of the Cataract Canyon and some of its tributaries, not deeply scored. Low mesas, gently rolling and usually clad with an ample growth of pine, pinon, and cedar; broad and shal- low valleys, yellow with sand or gray with sage, repeat themselves over the entire area." Here and there the Kaibab limestone (Pennsylvanian, late Carboniferous), the prevalent surface rock, is covered by flows of basalt or bears erosion remnants of younger strata; and above it, north of Flagstaff, rise the lofty extinct volcanoes of the San Francisco Mountains. The southwestern limit of the plateau traverses in a general southeasterly direction from the Grand Wash Cliffs, near the eastern border of Nevada, to the New Mexico line, a few miles northeast of Clifton. This boundary along much of its course is a single bold escarpment 2000 ft. or more in height; but elsewhere it is less definite and less simple, owing to a distribution of the total difference in relief among a series of great topographic steps, or to local accumulations of volcanic rocks, especially basalt. In general, the outer or lower line of cliffs separates nearly horizontal and undisturbed strata on the northeast from faulted and tilted beds on the southeast; and locally, as along the Grand Wash Cliffs, this line is itself a fault scarp, more or less modified by erosion. The Grand Wash cliffs rise precipitously 3000 ft. or more above the plains to the west. According to Lee, pre-Cambrian granite is exposed at their base and the Red wall limestone forms their crest and the floor of the adjacent plateau. About 45 miles east of the Music Mountains a second gigantic step, that of the Aubrey cliffs north of Seligman, carries the geologic section nearly to the top of the Kaibab limestone, which forms the surface of the Coconino Plateau, south of the Grand Canyon. South of the Music Mountains there is another ample terrace in the ascent from the valleys of the mountain region to the Colorado Plateau that of the Truxton Plateau. This bench, which lies between the Cottonwood and Aquarius Cliffs to the west and Yampai Cliffs and Juniper Mountains to the northeast, is described by Lee as a granitic peneplain partly covered with vol- canic rocks. 13 194 THE COST OF MINING South of Ash Fork the continuity of the plateau escarpment it interrupted by flows of basalt that poured down from the plateau to the valley of the Verde, forming a slope that has been utilized by the Santa F6, Prescott & Phcenix Ry. between Ash Fork and Jerome Junction. East of this railway and north of Jerome the edge of the plateau is in general a scarp (part of the Aubrey Cliffs of Gilbert) over 2000 ft. in total height, with deep reentrants and bold pinnacled promontories. Ransome in another place stops to say that the view from the mining town of Jerome itself perched on a steep escarpment 2000 ft. above the valley across the broad Verde Valley to these red cliffs, topped by a dark line of forest, all surmounted by the towering San Francisco peaks, is nearly, if not quite, as impressive as the Grand Canyon itself. East of Camp Verde a thick series of basaltic flows, with associated tuffs, has covered the edges of the nearly horizontal sedimentary rocks ; but these beds appear again at the head of Fossil Creek and continue eastward past Payson in the great southward-facing cliff that marks the descent of about 2000 ft. from the Mogollon Mesa to the Tonto Basin. From Fort Apache eastward to the New Mexico line, the plateau boundary becomes less distinct. Erosion has partly destroyed its continuity, and vast accumulations of volcanic rock have obscured the original plateau surface. The second topographic division, the mountain region, which adjoins the plateau region on the southwest, is essentially a broad zone of short and nearly parallel mountain ranges, among which are the Dragoon, Chiricahua, Whetstone, Pinaleno, Galiuro, Santa Catalina, Pinal, Superstition and Mazatzal (and many others), extending diagonally across the state from the southeast corner to Colo- rado River. The width of the zone may be taken as from 70 to 150 miles, but its southwest boundary is not susceptible of precise demarcation. Few of the in- dividual ranges exceed 50 miles in length or 8000 ft. in altitude. Their general trend is almost northwest, but near the Mexican border it becomes more nearly north, and the mountain zone as a whole coalesces with a belt of north and south ranges that extends through New Mexico, thus swinging around the plateau region and bordering it on the east also. Most of these ranges consist mainly of quartzites and limestones of Paleozoic or'earlier age, resting with conspicuous uncomformity upon granitic, gneissic and schistose rocks. All these rocks are cut by later intrusives, especially by diabasic and monzonitic rocks, and are partly covered by flows of lava. Struc- turally these ranges are characterized by the dominant part played by faulting as compared with folding. The great copper deposits of Arizona, so far as they are known, are all, except that of Ajo, within this mountainous zone. I have quoted these descriptions more fully, especially in the case of the plateau region, than would at first seem relevant to a discussion of the mines, none of which are found in that area. But the contrast of the two areas is of great interest to the mining man because it shows so clearly that the mountain region, in which the mines occur, is a pro- nounced zone of weakness in the earth's crust. The plateau is like a great floe of arctic ice, through which cracks run at occasional intervals, THE SOUTHWEST COPPER FIELD 195 but on the whole it is solid and uniform. The mountain region resembles a fringe of hummocks bordering the floe, in which great blocks have been broken and tilted, some portions sloping far down below the general level and others jutting their angular edges above it. At three different epochs since the Paleozoic age has this rupturing taken place, and each time igneous molten rock has been squeezed up between and through cracks in the unstable blocks. These huge fragments are parts of the same massive plateau. The hummocks, of course, have been attacked by erosion, and the spaces between are filled with the debris which is still migrating slowly into the hollows. The ore deposits, in all cases, are caused by gases or solutions escaping from the cooling igneous masses, carrying metals which they are able to dissolve while the heat and pressure are great enough, and depositing them when they lose some of their heat and pressure. This occurs when the gases escape into the inclosing rocks, or into such upper portions of the igneous masses themselves as may have already cooled. The relation between this action' and the lines of structural weakness in the earth's crust is a simple and definite one, when broadly considered, and well worth noting. It is seldom that such a relationship is so clearly expressed in the surface topography as it is in the examples noted. Although this belt is described properly as the mountain region, its average elevation is considerably lower than that of the adjoining plateau, the loftiest peaks being little, if any, higher than the plateau summit. The average altitude is probably between 4000 and 5000 ft. The drainage is nearly all westward through the Gila and its tributaries, although a considerable area in southeastern Arizona and northern Sonora drains into the Yaqui River. All the drainage of the mining region goes finally to the Gulf of California. Only on the higher summits will the Easterner see vegetation that looks familiar, with pines and junipers in abundance. The lower slopes and broad valleys take on varying aspects. Here, grassy plains and slopes littered with yellow gourds and interspersed with scattered live oaks; there, similar stretches clothed with a variety of thorny bushes, mesquites and greasewood; elsewhere, rocky knobs covered with ocatillas, palo verde and chollas the most formidable and picturesque of the cactus family. Bare hills are made to look still more barren by weird forests of towering sahuaros the giant cactus. Yuccas, in considerable variety, are found almost everywhere, with Joshua trees, Spanish bayo- nets, and soapweeds. Here and there one may see cottonwoods, black willows, hackberries, mountain ash, madrona, sycamore, black oak, manzanito, cherry, squawberry, ironwood, box elder, walnut, sage brush, and many others. The vegetation, of course, is not nearly so abundant, but seems quite as varied as in the well-watered countries of the east and north so varied, so highly characteristic, and so well adapted to soil 196 THE COST OF MINING and climate that it adds materially to the scenic wealth of the United States. " Adjoining the mountain region on the southwest," to quote Ran- some again, "is the third topographic division, the desert region, which also contains many short ranges of mountains of prevalent northwesterly trend. In this region, however, most of the ranges are separated by broad desert plains, underlain by fluviatile and lacustrine deposits of late geologic age, or by undulating granitic lowlands partly covered with gravels and flows of lava. The boundary between the mountain and desert regions is, as previously stated, indefinite, but may provisionally be taken as a curved line extending from Nogales, on the Mexican frontier, past Tucson and Phoenix to Needles, at the California line." Ransome might have added that this territory is lower, has been generally stripped by erosion of the Paleozoic sediments that once cov- ered it, and is characterized by a vegetation more emphatically desert- like than that of the mountain region. The giant cactus, the creosote bush, the cholla, the barrel cactus, the palo verde and similar weird and strange plants are found everywhere. Familiar vegetation has almost vanished, and the average white man feels himself to be in a strange land. The striking feature of desert topography and this is true of the mountain region to almost the same extent is the interminable talus slopes, made up of rock fragments that have cracked off the fault blocks or volcanic piles which form the projecting heights and^been carried into the lowlands by the gushes of water from occasional cloudbursts. Geologists have given considerable study to this phenomenon. It is a mistake to suppose that sedimentary beds are necessarily deposited in water. Desert regions generally are areas of deposition, and the streams are too feeble to carry onward all the debris that is offered them. Some- times there are no permanent streams at all; many desert regions are enclosed basins with no outlet to the sea. In both mountain and desert belts in Arizona, faults of recent geologic age have often formed lakes by interrupting the flow of streams. These lakes have been filled up in all cases, I believe, and the streams have surmounted or cut through the obstruction and resumed their erosion. The Roosevelt dam is merely the artificial replacement of a natural dam which had been thus cut through; and the new lake fills merely a part of an old one. In some of the depressions, the talus accumulations are surprisingly deep, attributable, no doubt, to recent faulting. The Miami Copper Co. drilled a hole 2000 ft. deep into the so-called Gila conglomerate, merely a talus accumulation of Quaternary age, without reaching the bottom. This depression is thus much deeper than any present channel of erosion, and indicates a great change of level in the geological yesterday. Here again is a fact, seemingly irrelevant to our main subject, but THE SOUTHWEST COPPER FIELD 197 really important. These great accumulations of talus, or wash, occupy the larger part of the area both of the mountain and desert regions. The loosely compacted mass of angular and subangular fragments con- tains at every level abundant pore space, which enables it to fill an ex- ceedingly valuable role in the conservation of the water supply. The occasional heavy rains pour floods from the mountains, which spread out over the talus slopes and playas. A large part sinks readily through the porous mass and reaches a level where its flow is impeded and often permanently stopped by barriers on the underlying rock surface. At the same time, this water is effectively protected from evaporation, and the lower portion of the accumulations is a succession of reservoirs of good water, which is utilized for mining, milling, and smelting plants as well as for towns, agriculture, and railroads. Thus the Gila con- glomerate at Miami, already mentioned, furnishes water for the Miami and Inspiration mining companies. Part of the supply comes from the Old Dominion mine, the workings of which extend out under the con- glomerate, and as a consequence are undesirably wet; but the heavy pumping consequently made necessary does not go entirely uncompen- sated, for the water is transferred to the Miami for use in that company's plants. The mines and town of Ajo are absolutely dependent on such a supply, as well as the large towns of Douglas and Tucson, with the various industries that support them. Many a valley is dotted with ranches which would not be there except for these talus reservoirs. In still another respect this feature promotes human occupation. If erosion were in control of the surface of such a region, its fault-block mountains would be rough surfaces of hard rock, trenched with tortuous ravines and deep canyons, destitute of soil, and, in the long droughts, ten times more parched and unwatered than they actually are. As a matter of fact, the depressions are pretty well filled up in long gentle slopes, which support vast areas of good soil, besides rendering the country infinitely more accessible than it otherwise would be. The railroads are not forced to follow crooked canyons cut in hard rock, but are able to dodge around the ends of the detached mountain uplifts and traverse the country in fairly straight courses and easy grades over the desert- made talus. In many places the upper, and, possibly, the lower portions of the wash are hardened by a lime cement, the exact origin of which is not exactly clear to me. Perhaps it is lime derived from the weathering of the feldspars in the granitic or volcanic detritus and spread over the surface by the flow of water after the heavy but intermittent rains, the lime taken into solution being precipitated by evaporation or by some other cause before it has traveled far, the flow of water not being abundant or persistent enough to carry it into a permanent stream and thus out of the country. However this may be, the process has evidently 198 THE COST OF MINING a considerable effect on the topography of the wash in those extensive areas which are now being eroded instead of being built up. Tracts hardened by caliche are more resistant and tand to stand out in the form of low ridges, domes, or mesas. The caliche supports a rather scanty soil except in places favorable for the accumulation of dust. Wherever this caliche is exposed and strewn over the surface for instance, in grading for streets and houses it presents the forlorn and desolate appearance of old mortar. Population and Ethnology. I have already remarked that Arizona is geographically somewhat like Spain and Morocco, more particularly the latter. The configuration of the land is different in some respects, but the effect of the sun, the ocean, and the major air currents seems to be almost exactly the same. This similarity is expressed to the eye in a resemblance of landscape, vegetation and even in human life and arts. The northern strip of Africa is a frontier for dark-skinned races, which fill the tropical regions of the south. The white races of Europe have at intervals for thousands of years attempted to establish themselves on this border, but with no lasting success. The dark-skinned popula- tion has always swallowed up the white immigrants, or invaders. At times the races of Africa have been superior in arts and organization to the Europeans and have surged over and occupied the Mediterranean islands and the tips of the Spanish and Italian peninsulas, to be expelled again, leaving only minor after-effects on the population. The copper fields of Arizona are in just such an ethnographic border- land. To the south is the dark-skinned Mexican race, upon which the Spaniards impressed their language and some of their arts, but not their color or their racial characteristics. To the north, in the colder plateaus, the white-American stock is rapidly swamping all racial com- petition and the Indian and Mexican population is already reduced to isolated fragments which have progressively less and less influence on their white neighbors. In the mountain and desert regions there is a racial deadlock. The organizing, industrial, and developing impulse comes from the white invaders, but there is no assurance that they will ever overwhelm the natives with their numbers. The Mexicans resist absorption in a variety of ways. Though most of them speak or understand English, it is not their familiar tongue. Even in the schools, where all the teaching is in English, the Mexican children set themselves apart from the white children and immediately fall into Spanish. This language is invariably spoken in the household, even by those Mexicans who speak English so perfectly that one might imagine they knew no other tongue. This difference of language, added to difference of color, helps to perpetuate difference in habit and point of view; and all these things tend to restrain social intercourse between the two races. Industrially, the inhabitants of the region are not on the THE SOUTHWEST COPPER FIELD 199 same level. The Mexicans do not produce anything like the same number of business leaders, professional men, engineers, or trained mechanics. They are, therefore, less highly organized, and their group efficiency is far lower; for it is group efficiency that promotes productivity. American and Mexican Methods. The difference between the Mexicans and the whites in this respect is generally expressed in a difference of wages. When such a difference is imposed upon individuals who do the same work as white men there is an apparent injustice which leads to dissatisfaction. I would not like to try to arbitrate the difficulties which arise under such a state of affairs. A thousand Americans in a mine may produce twice as much from it as a thousand Mexicans, yet each American shoveler may not load any more cars than each Mexican shoveler. If the American shoveler is paid twice as much as the Mexican shoveler receives, the latter is not likely to see the justice of it. I can see no line of argument that seems likely to convince him; the question is too abstruse. I am satisfied, however, that the laws of trade will inevitably impose a difference of wages. A mining organization of a thousand men, all Mexicans from the directors to the mule drivers, would almost certianly involve itself in mistakes of organization and engineering. I should expect that a white organization of the same number would avoid enough of those mistakes to enable it to produce twice as much ore with no greater effort. The result, in a competitive business, is bound to be the defeat and destruction of the Mexican organization. Only one thing can save it, and that is a willingness on the part of its members to accept low enough wages to allow the product to be sold at the price their competitor is willing to accept. The actuality, so far as the mines are concerned, is a compromise. The Mexicans do not complete with the whites in finance, organization, management, or engineering; probably avoiding thereby the severe consequences of defeat. They do furnish a large part of the common labor; and the laborers, though not paid as much as white men, do undoubtedly reap some benefit from the organizing ability of the whites, because they get much higher wages than when they work under Mexican employers. In some places they are paid the same as white men. It is easy to see, on the other hand, how the Anglo-Saxon imagination has been impressed by the sight of a Mediterranean civilization in an environment that is natural to it. Both the Spaniards and the Moors inherited much from the Romans, Phoenicians, and the predecessors of those peoples. Their architecture and their agriculture were developed to combat a blazing sun and long droughts. The word "rival" is a reminiscence of ancients quarrels over water rights. The fig, the olive, the orange, the date, and the grape are natural neighbors of the live oak, the yucca, the cactus, and the creosote bush. The massive walls of 200 THE COST OF MINING stone or mud, covered with stucco; the flat roofs, inner courts and gardens protected from wind and dust; the heavy porticos, or portales, refuges from the fierce sun all are so natural under such an environment that they seem inevitable. Several different races have invented them in- dependently. The architecture of the Pueblos and Aztecs bears a strong resemblance both in form and material to that of Morocco, Sicily, Syria, and Persia. The Americans have brought with them an architecture inherited from the rainy climate of northern Europe and the eastern United States; steep roofs to shed the rain, many windows to make the most of the scanty light, spreading lawns and stately trees outside the house to serve as grateful reminders of aboriginal meadows and forests. They have brought, also, many appliances for heating, lighting, cooking and com- munication products of their mechanical skill which are useful every- where. But in many respects the north European forms do not fit in with the southwestern environment, and they are being rapidly modified under the guidance of experience, and with the growth of wealth, education, and good taste, to conform with standards which long human use has shown to be appropriate. In other words, the Yankees are earning much from the Mexicans. CHAPTER XIII JEROME AND THE PRE-CAMBRIAN DESCRIPTION OF JEROME, ARIZONA SUGGESTION OF GEOLOGIC HISTORY UNCON- FORMITIES THE ALGONKIAN OR BELT SERIES IN THE WEST PARALLELS OF THE PRESENT DAY PROBABLE ORIGIN OF JEROME DEPOSITS DURING OROGRAPHIC REVOLUTION AT THE END OF ALGONKIAN TIME PARALLEL IN LAKE SUPERIOR STRUCTURE OF JEROME DEPOSITS THE UNITED VERDE THE UNITED VERDE EXTENSION ECONOMIC VALUE OF PRE-CAMBRIAN LAND SURFACE OUTPUT AND PROFITS OF MINES THEIR FUTURE DISCUSSION OF DEVONIAN GEOGRAPHY ITS BEARING ON THE MINES OF THE MAYER DISTRICT. EROSION OF A DOME DURING POST PERMIAN TIMES THE MAYER MINES REMARKS ON THE ENGI- NEERING OF PROSPECTS. Jerome is one of the most spectacular places in the United States. When an automobile road has been built direct from Prescott, it will be only 31 miles from that town. On that highway the tourist will come upon the Verde Valley first over the flank of Mount Mingus, and will find himself looking down over an escarpment 4500 ft. high. The picture will give him a thrill. Even after months of looking at it, much is found that has previously escaped notice. It is more than a scene of relief and color; it is a vast exposure of present-day geological processes, vol- canoes, and erosion, and of important geological facts reaching back to the earliest recorded ages. By collating all these features, one finds that the panorama builds up an interest even exceeding that of the Grand Canyon. Fifteen or twenty miles away, straight in front across the valley, is the same great mass of colored strata that appears in the Can- yon, but here forming only the front of the great plateau. On the sum- mit 60 miles away, are the San Francisco peaks, looking like Mount Shasta. In the bottom of the valley are glimpses of the river, amidst clouds of smoke from two great smeltery stacks, which, at this distance, look like pipestems. In the discussion of this district, I am venturing to explore some of the dim realms of geological speculation which mining engineers usually avoid. I would have no desire to do this if there were not reason, more or less vague and hardly capable of clear expression, for thinking that these speculations follow a line which may lead to practical results. No longer can there be any doubt that the study of ore deposits, from the point of view of pure science, has become part of the essential equip- ment of a mining man. Secondary enrichment, the magmatic origin of ore deposits, the effects of contact and regional metamorphism, the indi- 201 202 THE COST OF MINING cations of such action in rock alteration, and many similar things are absorbed by hosts of men who have never consciously studied geology. It is far from impossible that a study of the history of earlier continental geography may lead to further knowledge of the areas of mineralization. Familiarity Often Breeds Misunderstanding. Nothing is more com- mon than for people to assume that they understand things because they see them often. A view of the moon through a good telescope is, to the average man, an astounding revelation all the more so. the greater the man's intelligence although nearly everybody sees the moon every month, and the average man has read of it and has a fair idea of what it is. There is nothing difficult about it. He may see the moon as plainly as he can see the house across the street: mountains and plains, bright sunlight and impenetrable shadow; lofty mountain pinnacles whose summits are aglow with the rising sun; a clear view of a sphere, not a flat disk a huge object with an area greater than the United States and all its outliers. But did he realize it? He will probably have to confess that he did not. But, once he does, he will have no doubt that it is worth while, although the knowledge will never bring him a cent. Similarly, how many stop to realize that the unconformable parting of two rock formations is a record of great events and changes? That dividing plane is, at once, the surface of an ancient continent and the floor of an ancient sea. The fact is perfectly intelligible; it requires no extraordinary effort of the imagination. The only obstacle to overcome is the habit of not observing and thinking about such things. Geologic Unconformities at Jerome. One of these unconformities is so conspicuous at Jerome that it serves as a starting point for the mining operations. The miners in half the district are exploring, not the present land surface, but the surface of a continent that was buried many millions of years ago. In a way, it is part of another world; not wholly inaccess- ible, like the moon, but probably less understood. Fragments of the pre-Cambrian surface are exposed at different places, but rarely more than its edges are brought to light. It is just as important to realize that this old surface may be destroyed by deep erosion, so that its most valuable and interesting features are lost, as it is to realize that the larger part of it is inaccessible because it is buried; more so, in fact, because there is a chance that part of the buried portion may be exhumed. In these tattered edges of the old continent are many valuable ore deposits the iron mines of Michigan and Minnesota, the zinc mines of New Jersey, the old iron mines of Southeast Missouri, the gold mines of the Black Hills, and, no doubt, many others. Exploration, groping along this old surface, prompted by geological speculation, led to the discovery of the wonder- ful copper bonanza of the United Verde Extension. This single incident justifies a lot of speculation. Of course, there is no profit in letting one's imagination run riot, JEROME AND THE PRE-CAMBRIAN 203 creating pictures which are nothing but dreams. It is, however, possible to use the imagination as a searchlight to explore the dark world of possibility. In that way it may lead to many a solid fact. Study of the mines of Jerome reveals a setting of impressive facts which point the way to some equally impressive conjectures. 1. The ore deposits were developed (geologically) into their present condition during the erosion of a continental area. This period of erosion continued for an exceptionally long period, speaking even of geologic time, for it resulted in wearing the continent down to a nearly level plain (peneplain), which was finally submerged slowly and quietly by an inva- sion of the sea. This submergence persisted during long ages of Palae- ozoic time with no greater disturbance than occasional gentle oscillations, of level. The period of erosion had followed a period of mountain build- ing which was, in all probability, exceptionally severe and widespread and was accompanied by volcanic or batholithic action on a grand scale. It appears, then, that the period of erosion, as well as the succeeding era of deposition during Palaeozoic time, represents a long epoch of quiescence and^extremely slow differential subsidence, following a period of disturb- ance during which the mountain-building forces in this part of the world had exhausted themselves. 2. The ore deposits are a part, or result, of almost the latest pre- Cambrian igneous action to be seen. The rock masses most intimately associated with them are not highly metamorphosed or disturbed; they are markedly less so than any of the older-pre-Cambrian rocks which occur in the neighborhood. 3. Neither the ore deposits nor the rocks in which they occur differ in any essential respect (unless age is an essential) from deposits in nearby districts which were formed during the later mountain-building periods that brought to an end the long-continued submergence, sea invasion and marine deposition of Palaeozoic, and again of Mesozoic, time. 4. The period of deposition which immediately preceded the pre- Cambrian continental uplift was an active and extensive one. It is represented by the Belt series of rocks, which are thick masses of sandstones or quartzites or conglomerates, shales and limestones all prevailing ripple-marked or sun-cracked, and containing some sparse remains of animal life thought to be chiefly fresh-water forms. At any rate, the evidence is positive that most of the Belt rocks were formed either on land surfaces or in shallow water, and were probably piled up in river deltas, playas, lakes, estuaries, and perhaps shallow arms of the sea or tide flats. Characteristics of Belt Rocks. These Belt rocks were tilted, faulted, folded and metamorphosed during the latest great pre-Cambrian conti- nental uplift, but they were not generally distorted or metamorphosed to anything like the extent to which still earlier rocks had been. In fact, 204 THE COST OF MINING they are found to lie upon them in positions of nonconformity as abrupt as that which separates them from the succeeding Palaeozoic rocks. Some of these still older rocks are also, without doubt, sedimentary; that is to say, they were once sands or muds. The separation between the Belt rocks and the still earlier ones therefore took place during a prior period of continental uplift, mountain building, and erosion which had followed upon an even more primitive age of quiescence, subsidence and deposition. The Belt rocks are thus so characteristic that they may be recognized with fair certainty wherever they are well exposed. They are found in large patches, some of them areas of thousands of square miles, ex- tending from not far north of Roosevelt Dam, in Arizona, to central British Columbia, northwest of Banff a distance of 1300 miles north and south, and within a strip about 500 miles wide east and west. Jerome lies about 100 miles northwest of large exposures described by Ransome in the Tonto Basin and about 75 miles slightly east of south of other large ones in the bottom of the Grand Canyon. About 200 miles northeast of the latter are large exposures in the Needle Mountains, in southwestern Colorado; 200 miles northwest of the Needle Mountains, across vast masses of later sediments, are found similar great exposures in the Wasatch Mountains of Utah; 75 miles further northwest, they occur along the Bear River, in Utah; and 225 miles further north begin the great areas of Belt rocks in western Montana, which extend thence far northwesterly through the Cceur d'Alene region of Idaho into British Columbia. Due west of Jerome in the Inyo Mountains of California are further exposures. Deductions from Acknowledged Facts. I have recited these facts in order to show the broad basis for the following conjectures, which appear to me to be reasonable : 1. The Belt formation is the filling of a great epicontinental depres- sion or trough which was either filled as fast as it sank or sank because it was filled, so that during the whole process its surface was fairly level and low. One cannot be sure, of course, that there were not two or several basins with interruptions between; but even if so, the conditions in all were substantially the same. This parallelism of conditions over so wide an area could have been induced only by a dominant influence sufficiently potent to dwarf local influences. It is noticeable that the Belt rocks contain stupendous quantities of fine sands, grading in fineness down to true silts, and alternating. Coarse pebbly sands, to say nothing of heavy conglomerates, are rare. It is, therefore, plain that these materials must have been transported far enough to break up effectually all the coarser products of erosion; but at the same time the detritus was de- livered into the settling area constantly and in great volume. It seems to me that such conditions of combined uniformity and JEROME AND THE PRE-CAMBRIAN 205 volume over such extended areas must indicate the neighborhood of a great mountain chain, or at least an extensive belt of highlands on one side or both sides of the trough. It is not necessary to call upon a direct effort of imagination to find an explanation; the geography of the present day offers a number of examples from which to choose. The great uplift of the Himalayas is bordered on both sides by similar areas of deposition. On the south side is the Ganges flood plain, covering 300,000 square miles, in which recent sediments borne by the Ganges and Brahmaputra are known to be over 2000 ft. deep and may continue to accumulate in the future almost without limit and without pronounced change in their character. The vast plains bordering the Sea of Aral are a similar field, being filled with detritus brought down by the Oxus and the Jaxartes, and with dust and sand swept in by desert winds. Parallel Instances in North America. Or one may turn to North America to find several other examples; namely, the Gulf of California, the upper end of which has already been filled across by the detritus of the Colorado River, so that its northern extension has been cut off and the water there has evaporated, leaving a large area below sea level. This trough is 800 miles long, 100 to 150 miles wide and is receiving sands and silts of both rivers and winds from a vast area of erosion. The valley of California, 400 miles long and 75 miles wide, between the Sierra Nevada and the Coast Range is being filled with detritus of the same nature, already known to be over 2000 ft. deep, and is sinking as it fills. Still another example, on a scale and of a nature sufficient to make a parallel with the Belt rocks, is the great coastal plain of north America beginning at Long Island and extending along the coast through Georgia Florida, Louisiana, and Texas into eastern Mexico a distance along a gently curved line of fully 2000 miles, with a width up to 500 miles, and receiving the detritus of all the rivers on both sides of the Appalachian Mountains, and from the Rocky Mountain uplift for 2000 miles, from Tampico to Alberta. It receives the sands migrating down the Missouri and the Arkansas, the Rio Grande, the Nueces, the Guadalupe, the Brazos, the Red River, the Mississippi, the Ohio, the Alabama, the Flint the Savannah, the Potomac, the Susquehanna, and the Hudson 513,000- 000 tons a year of sand and mud, besides 270,000,000 tons of salts in solution. This whole coast is an interminable stretch of fine sands, assorted by waves and shore currents, piled up on the shore in dunes This mass has been accumulating and slowly shifting without striking interruption since the beginning of Upper Cretaceous times, and no one knows how deep it is. At any rate, the Belt rocks represent some such scale of grand con- tinental features, great mountains and great rivers, debouching upon a huge subsiding basin or slope for ages under conditions generally as and stable as those on our Gulf Coast today. In this^great basin there 206 THE COST OF MINING was little volcanic activity. It is probable that there was some, but it certainly was hardly more prominent than it has been along the coastal plan no greater than that in the valley of California in recent times. Volcanic Activity Follows Period of Slight Action. When this cycle of deposition came to an end, however, there was an outburst of moun- tain-building energy on a great scale, accompanied by volcanic activity and batholithic action. Before this ended, the Belt rocks were hardened, tilted and folded, and finally subjected to erosion so widespread and long continued that the enormous accumulations of rock were wholly swept away over large areas, until they remained only in depressed tracts or synclines; such, for instance, as one found in the bottom of the Grand Canyon, where sediments not less than 12,000 ft. thick are found as a mere remnant protected from the general destruction through having been squeezed into a trough that extended below the level of effective attack. At the tops of these troughs the tilted beds of quartzite often project some distance into the overlying rocks, showing that before the erosion had been completed they had become harder and more resistant than the neighboring granites and schists, and had formed low hills and ridges in the rolling plain which was the expression at once of a worn- down continent and of a cycle of recurrent geological agencies. Theories of Formation of Jerome Deposits, From this assemblage of fact and inference, I believe it is possible to make an intelligent con- jecture that the ore deposits of Jerome were formed from igneous action which accompanied the uplift and mountain building that occurred at the end of the Belt period of deposition. The diorites of Jerome in which, or along which, the orebodies occur are comparatively fresh and massive. This fact is marked enough to make it seem certain that they had not participated in the metamorphism, deformation and erosion of the conti- nent that preceded the Belt rocks. The fact that the Belt formations contain practically no interbedded volcanic material, both in general and in the areas nearest Jerome in particular, is good and almost positive evidence that this extensive igneous activity did not take place during the period of Belt deposition. It is possible, therefore, to come naturally to the conclusion that the Jerome rocks appeared during the uplift which brought the Belt period to an end. Under this assumption, I can see no difficulty whatever in picturing the succession of events. As was the condition with the Belt rocks, the Jerome intrusives suffered the long- continued erosion and oxidation which continued in the mountains of the post-Beltian and pre-Cambrian continent. Like the Belt quartzites. they finally projected as low hills, covered with reddish soil hills so low that they would have attracted little attention in the slightly rolling landscape. There are no Belt rocks at Jerome and none are known nearer to it than the Grand Canyon. These supposed relations between the Jerome JEROME AND THE PRE-CAMBRIAN 207 ore deposits and the disturbances which ensued upon the termination of the Belt period of deposition are not based, therefore, upon direct evidence but rest upon conjecture, or, to call it by a more dignified name, upon a process of reasoning. But it diminishes the scope for guesswork, and adds something to the probability of my conjecture, to find that in the bottom of the Grand Canyon there are copper deposits which have precisely the broad geological relations which I have pictured for those of Jerome. L. F. Noble describes these deposits as fissure veins which cut across both the Unkar Group (Algonkian or Belt) and the underlying Vishnu schists (Archaean). To be specific, the facts are as follows; 1. The Unkar group contains great intrusions of diabase, similar, no doubt, to some of the rocks at Jerome. The copper-bearing veins are fault fissures cutting the Unkar rocks but terminating at the overlying basal sandstone of the Cambrian. Speaking of these deposits, and of the conditions of formation, Noble says; All the other deposits in the Archaean and Algonkian rock occur either in similar fissure veins, which represent the mineralized fault planes of normal Al- gonkian faults or in the zone of shattering along the line of the Al- gonkian displacement of the West Kaibab fault. All the faults belong to the same period of displacement, the one in which the great mountain-making move- ment came at the end of Algonkian time. Formation of Jerome Deposits Contemporary to Those of Lake Supe- rior and Canada. 2. If it be logical to regard these conjectures as measurably correct, there is reason to argue that the ore deposits of Jerome may belong to the same cycle of continental history as the copper mines of Lake Superior, the copper-nickel deposits of Sudbury, the silver deposits of Cobalt, and perhaps the gold mines of Porcupine, Ontario and the zinc deposits of New Jersey. These deposits are all connected with batholithic, or at least volcanic, masses along a tolerably well-defined axis. They may all belong, as has been suggested to me by Prof. C. K. Leith, to the same period of mountain building. The broad fact, on which conjec- ture may be based, are as follows: The Upper Huronian, or Animikie, series of Lake Superior, as well as certain earlier rocks separated from the Animikie by an erosion interval or moderate unconformity, is an example of normal sedimentation on an extensive scale. Following a long period of continental quiescence, during which erosion forms had reached mature stages, there ensued a slow subsidence and sea invasion. The first deposits were sandstones or conglomerates, merely the washed debris of land weathering; following these were chemical deposits or precipitations such as usually take place in deepening waters, limestone and the peculiar iron formations; finally, deposits made after the subsidence had come to an end, and erosion products from the land rapidly filled the shallowing basin shales and sandstones. 208 THE COST OF MINING Then followed an outburst of mountain building or continental read- justment, during which certain areas of the rocks described were dis- located and contorted,, just as rocks have been dislocated and contorted along many mountain-building axes in other places in later times. This disturbance was accompanied by igneous activity on a tremendous scale, producing innumerable batholiths or intrusions, as well as great piles of surface volcanics or extrusions. The Keweenawan series, the copper- bearing rocks of Lake Superior, was such a pile. It consists of a succes- sion of thick lava flows separated by beds of coarse erosion products or talus, such as invariably accumulate on mountain slopes. As the process went on, the volcanic activity lost its vigor, the intervals between eruptions became longer, the accumulations of debris greater, until finally the eruptions ceased altogether and the lowlands around or the depressions between the volcanic piles were swamped in a huge mass of talus which differs in no essential respect from the wash that fills the depressions between the fault blocks of Arizona. It seems to me that this Keweenawan series, then, is distinctly a record of continental disturbance, the reverse of the period of quiescence and marginal deposition of which the Huronian is the record. With the closing of the Keweenawan disturbance, the Lake Superior region settled into a state of crustal quiescence which has lasted to the present day. During Palaeozoic and again in Cretaceous times it was quietly depressed, so that it received a partial invasion by the sea, the record of which is sediment still undisturbed and almost unconsolidated. In all its major aspects, this succession of events is on all fours with that recorded for the Belt series, the mountain-building interval, and the Palaeo- zoic of central Arizona; and it is a fair inference that the copper deposits of Jerome belong to the same line in the geological column and to the same set of general causes as those of Michigan. Structural Features of Jerome Ore Deposits. A great deal remains to be learned about the structural features that govern the occurrence of the deposits in the Jerome district, but one salient fact appears to be established the ores are distributed along the contacts of intrusive masses of an augite diorite. All the masses of this diorite now known may easily have been originally one, which has been divided by faulting, but this is not yet a definitely proved fact. This diorite is next to the young- est of the pre-Cambrian rocks of the district, but it is cut by a set of dikes which are also a kind of diorite, but are narrow. The orebodies are younger than the great diorite intrusions but older than the narrow dikes. The massive diorite, which may be designated the United Verde diorite; the orebodies and the narrow dikes, which are known by the rather extraordinary name of '' water courses" are all undisturbed except by recent faulting, and plainly did not participate in the mountain-building stresses which affected the other pre-Cambrian rocks. They are, however, JEROME AND THE PRE-CAMBRIAN 209 definitely pre-Cambrian in age. The whole process of formation was completed, the ores were exposed by erosion, oxidized to a depth of 500 ft., the copper had migrated to the zone of secondary enrichment, and the orebodies brought completely into their present condition before the invasion of the Palaeozoic sea. The rocks cut by the United Verde diorite are all ancient volcanics, either intrusive or extrusive. Some of them may be of pre-Algonkian age, on the theory that the United Verde diorite is post-Algonkian, be- cause they have been subjected to stresses vigorous enough to give them a widespread schistosity ; and I suppose this must indicate that these rocks participated in mountain-building movements that occurred before the Belt rocks were deposited. Relation of Greenstones and Quartz Porphyries, The oldest rocks seem to be prevailingly greenstones, many of which are undoubtedly extrusives, often in the form of bedded tuffs, although a good many of these are of medium acidity and have a gray or dark color. These greenstones are often considerably folded, in axes running, generally, north and south. Into these greenstones a mass of quartz porphyry has been intruded, and forms the high ridge called Cleopatra Hill, just south of the United Verde mine. It is with this north border of the quartz porphyry mass that the present article is chiefly concerned, for the zone of mineralization follows it fairly closely. As a whole, the quartz porphyry is a large irregular mass the outlines of which are vaguely known as its west end, but not at all toward the east, where, beyond a great fault, it is generally covered with Palaeozoic lime- stones and recent lavas. It is certainly intrusive into the greenstones and irregular in outline, probably sending off several spurs from the main mass, and extends along an approximately east-and-west course from south-west of the United Verde to and beyond the Texas shaft, a dis- tance of two and one-half miles. The north boundary of this mass cuts across the bedding or schistosity of the greenstones nearly at right angles and forms a rude plane, which dips generally northward at an angle of perhaps 60. It is a notable fact that this prophyry, which in its center approaches a granite in texture, has been strongly sheared, and a pronounced schistosity has been developed in a large part of it. Some portions, however, especially the southwestern part, have been much less affected by the shearing and are still massive. The pronounced schis- osity begins at the United Verde mine and continues eastward as far as the rock is exposed on the surface. This schistosity has a strike of about N 20 W and occurs in bands of greater and lesser intensity. So far as known at present, the intrusions of United Verde diorite do not penetrate into the mass of the quartz porphyry, but seem to follow along its contact. Sometimes the diorite cuts across branching arms of the quartz porphyry and in places comes in contact with the main mass, 14 210 THE COST OF MINING but large wedges of the schist are included between the irregular boun- daries of the two intrustions. It would appear that the greenstones near the contact formed a weak zone, which was followed, at least in a general way, by the dorite intrusions. As intimated previously, the diorite is strikingly fresher than the older rocks, and the contrast between its massive structure and the extremely schistose part of the quartz por- phyry attracts immediate attention. As the diorite is patently a younger rock, one is inclined to wonder why it did not force itself in along the planes of schistosity, instead of going across them; but that it did not do so warrants the conclusion that the greenstones border must have been, on the whole, less resistant than even the most schistose bands of the porphyry. All the known valuable orebodies of the Jerome district occur in these greenstone schists, which form the border of the quartz porphyry, or are within the latter rock near its periphery. At the United Verde mine, the orebodies are in a large slab of green- stone schists, in horizontal cross-sections resembling a rude crescent, which pitches downward between its enclosing intrusives, in a north- westerly direction, at an angle of perhaps 50 to 60. The diorite covers this slab of schist with a concave surface like an inverted Spanish tile, and the quartz porphyry forms a rough pitching floor. If the included schists were removed, there would be an enormous cavern going down steeply to the north. The schists which fill the space that I have thus attempted to descibe have been the channel of an intense mineralization, so that a considerable part of them has been converted into ore. This ore consists essentially of quartz, pyrite and chalcopyrite. The thing that attracts the eye is an enormous mass of iron pyrite, occupying a cross-section of nearly if not fully 10 acres, rudely circular or elliptical in outline, but irregular. The quartz and chalcopyrite are mingled with this mass in varying amounts. Near the center of the pyrite mass there is not, as I understand it, much quartz, although the amount increases toward the periphery; but this arrangement is far from regular. The chalcopyrite is the ore. The mass of the pyrite contains only one-quarter of 1 per cent, copper being practically barren but certain portions of it contain chalcopyrite in varying amounts, so that large lens-like masses attain a copper content ranging from 2 per cent, up to 15 or 20 per cent. These are the orebodies. Chalcopyrite also occurs in the schists around the periphery of the pyrite masses and also makes orebodies. The ores contained in the pyrite mass are called iron ores; those consisting of chalcopyrite disseminated in the schist are called siliceous ores. Narrow Dioritic Dikes Cut Orebodies. These broad features are unmistakable, and may be regarded as thoroughly established; but, as a matter of detail, the occurrence of the commercial ore, as distinguished from the mineralization as a whole, presents many eccentricities that are JEROME AND THE PRE-CAMBRIAN 211 not wholly understood. The orebodies are cut by several narrow dioritic dikes, known as water courses. These are usually considerably bleached, even in the lowest levels, far below the influence of any alteration proceed- ing from the surface. This would seem to indicate that the dikes have been altered by the mineralizing agencies. On the other hand, there is no evidence that they have been replaced by the ore minerals. It seems reasonable to conclude, therefore, that they came in during the latest stages of the mineralizing process. These dikes have a strike which may be generalized as about N 70 W; and many observers have con- cluded that the dikes may have followed a zone of fissuring which might have existed earlier and have been followed by the mineralization. If this was the case, there is little evidence of it in the orebodies themselves, for the minerals now form a solid mass in which preexisting structures have been obliterated as completely as in a stock of granite. But away from the centers of intense mineralization, in the Jerome Verde and United Verde Extension mines, some fissures have been noted that bear in the same general direction as the water-course dikes and are distinctly, though not heavily, mineralized. This lends color to the idea that a zone of fissuring may have had much to do with establishing the mineralizing channels. New Mineralized Area Developed. The United Verde Extension mine has in recent years opened up a mineralized area about two-thirds of a mile east of the United Verde. Ignoring for the present other inter- esting facts about these occurrences, there is reason to believe that they are part of the same zone as the United Verde. But the structural arrangement is still indistinct, because the development is only partial and because all of it thus far is in the zone of oxidation or in that of sec- ondary enrichment, in both of which the rocks are greatly altered by kaolinization. In the immediate neighborhood of the orebodies, there- fore, it is hard to distinguish some of them. It seems, however, that some of the smaller orebodies follow the contact of a great wedge-shaped mass of diorite between the quartz porphyry and the green schists. These ores are between the diorite and the schists. But the great orebody of the Extension mine is not so easily described. It is at the point or edge of the wedge of diorite and is surrounded apparently on all sides by quartz porphyry, but is near the contact of that rock with the green schists. Moreover, it lies apparently at the intersection of two interest- ing mineralized faults, one of which strikes about N 65 E and the other about N 70W. It is evident that in the region of the big orebody the United Verde diorite is invading the contact between the quartz porphyry and the green schists, but whether the diorite follows a pre-existing fault, or whether the faults are later than the diorite, is very obscure. The mineralization is intense over an area of several acres, in the central 212 THE COST OF MINING part of which an area of an acre and a half is a solid body of chalcocite and pyrite averaging 17 per cent, copper. It is rather early to generalize about orebodies that are so meagerly developed, but it looks as though the vast masses of pyrite, which are a sort of matrix for the orebodies of the United Verde, are comparatively small in the Extension mine. Low-grade pyritic masses have been en- countered, it is true, but thus far they are relatively insignificant, and it is not improbable that they will continue so even in the zone of primary ores. If this proves to be the case, it will only mean, in my judgment, that the Extension orebodies are more distinctively copper mineraliza- tions than those of the United Verde. In the latter mine, the copper ores seem to have been introduced after the formation of the main pyrite masses. The later copper-bearing mineralization is probably identical in both mines. There is no reason to believe that the United Verde Extension bonanza was any richer as originally deposited than some of the individual orebodies at the United Verde; but it does seem probable that, in the Extension, the proportion of copper to the total volume of iron is very much higher. So far as can be judged at present, the two deposits are about equal as copper producers. Even making all allowances for the effect of secondary enrichment, it is doubtful if the United Verde orebodies contain more copper, if as much, per vertical foot, as those of the Extension. Another point of great economic importance is the fact that the two parts, or halves, of the district are separated by a great fault. On the hills above the United Verde, the flat-lying sandstones and limestones of Devonian age begin to appear at an elevation of 6050 ft. The fault has an average strike of N 37 W. East of this is a bench, on top of which the same sandstones and limestones lie almost perfectly flat, but their bottom is at an elevation of 4350 ft. The vertical displacement is, there- fore 1700 ft., and in this bench lie the Extension orebodies. Other faults occur further east, dropping the Palaeozoic formation to a still lower level, so that by the Verde River, at Clarkdale, only three miles away, the pre-Cambrian floor is only 2000 ft. above sea level. None of these faults except the big one at Jerome has raised the pre-cambrian rocks to the surface. East of that fault they have remained buried since the invasion of the Palaeozoic sea. It is all but certain that in the succeeding ages, including the present era, they have never emerged above the ground-water level. They are, therefore, preserved intact, having suffered neither oxidation nor erosion since the day they were buried. On the United Verde side, however, the great recent fault exposed the pre-Cambrian rocks in an escarpment 1000 ft. high above the bordering bench. This escarpment has been beveled off by recent erosion. Above the United Verde mine, 600 ft. of the orebodies has been removed by this erosion, including nearly all of the original oxidized zone. The primary sulphides in places come up to the present surface. JEROME AND THE PRE-CAMBRIAN 213 \ Now, the oxidation plainly acted more vigorously in the larger ore- bodies than in the smaller ones, and the copper migrated further. If there had been smaller orebodies in the vicinity of the United Verde, the enriched portions, as well as the oxidized zone, would have been swept away, leaving only the ores of the primary zone at the present eroded surface. A small vein carrying 3 or 4 per cent, copper would not be valuable. On the other side of the fault, such small veins are still intact, oxidized zone, enriched zone, and all. In the enriched zone they carry fair bodies of chalcocite, running 15 to 45 per cent, copper. Such small veins are, therefore, valuable and make a pleasing adjunct to the big ones. Great Amount of Low -Grade Ore in United Verde. As in other districts where rich ores occur in abundance, the operators have naturally preferred to mine those rich ores in preference to poorer ones. It is, therefore, difficult to form an idea of the average grade of all the merchant- able ores. It is certain that large amounts of low-grade ore, say from % to 2J^ per cent, copper, occur in the United Verde mine. Some of this material goes into the shipping product, inevitably, because the miners cannot always keep it out, but no effort has been made to utilize it. How much there is of it, how cheaply it can be mined, the extent to which it could be concentrated by flotation, are all unsolved problems, and any assertion about them would be pure guesswork. However, I regard it as. probable that in the course of time it will be found desirable and practicable to concentrate some of the low-grade ores; and the life of the mines will be greatly prolonged by so doing. Output from United Verde Mine. At present the United Verde mine is able to ship to its smeltery an assemblage of ores, practically all pri- mary, averaging about 5 per cent, copper and yielding about 90 Ib. copper, 1% oz. silver, and 35c. gold per ton. It may be assumed that this grade was much higher in the earlier years of the mine and that it has slowly declined. It is probable, however, that by careful mining the grade may be maintained at its present level for a number of years, although it is planned to increase the output to 1,000,000 tons a year, increasing the present tonnage by about 15 per cent. This will mean that the output of copper will rise to 90,000,000 or perhaps 100,000,000 Ib. a year in the near future. The assurance that this can be done is furnished by the discovery or a large body of high-grade chalcopyrite ore in the lower levels of the mine, from 2100 to 2500 ft. below the original pre-Cambrian surface. This orebody, I understand, runs about 10 per cent, copper, and a large section of it, opened for stoping, has averaged nearly 13 per cent. A cross-section of the orebody near its middle would apparently cover at least an acre. On the United Verde Extension side 202,477 dry tons of ore has been shipped up to the end of 1917, entirely from the richest part of the zone 214 THE COST OF MINING of secondary enrichment, from which the actual yield has been about 104,000,000 Ib. copper, 375,000 oz. silver, and 7000 oz. gold. The grade of ore, as shipped, has averaged about 27 per cent, copper, 1% oz. silver, and 70c. gold per ton. It is not believed that such ores can be shipped much longer, but there is no reason to suppose that the grade will go below 10 per cent, copper for a number of years. In fact, one may be fairly certain that the first 2,000,000 tons mined will average 15 per cent, copper. If this rate is maintained, will, say, 10,000,000 tons of United Verde ore over a 10-year period beginning in 1915, the date of the opening of the Extension mine, the average grade for the district for that length of time will be not less than 6% per cent, copper. This is high-grade ore, considering that it is obtained without sorting of any kind; but it is no richer than the average of the Bisbee district to date. When one considers the fact that this ore is being mined at depths varying from 400 to 2500 ft. below the pre-Cambrian surface; that none of the mines is exhausted at any level; that the Extension mine has no development at all more than 800 ft. below the pre-Cambrian surface, and almost none below 600 ft. that, in fact, the exploration of the zone east of the fault is hardly more than well started it may reasonably be expected that these mines will make a big output and have a long life. In 1917 they produced 135,000,000 Ib. of copper, and are being equipped to produce 150,000,000 to 200,000,000 Ib. a year. There is no reason to suppose that such an output will put an undue strain upon the ore reserves. Thus Jerome, which for 25 years was an isolated and obscure camp, is now becoming an important producer. I shall try to give some idea of the community as an industrial and mining center. Up to the present, from an output of something less than a billion pounds of copper, the two mines of Jerome have paid $50,114,000 in dividends. They have also built, out of earnings, two large smelteries, a considerable length of railroad, extensive tunnels and mining equipment, two or three rather important industrial towns, completed or under way, and have, no doubt, large amounts of cash in the treasury. A rough com- putation of the operating earnings up to the end of 1917 is not less than $80,000,000. Of this, perhaps half has been earned during the exceptional years 1916 and 1917 from and output of 225,000,000 Ib. There is good reason to suppose, however, that the earnings on 700,000,000 Ib. during normal peaceful times were about $42,000,000, or 6c. per Ib. There is also reason to believe that if the output of the last two years had been made in normal times, with a price of 15 c. per Ib. for copper, the operating profits would have been $20,000,000. Thus, I believe the past history of the camp indicates an average operating profit of about 6^c. per Ib. and a cost of about 8 to 9 cents. It appears that up to the end of 1915, the United Verde mine had been able to pay $36,397,000 in dividends in a period of 21 years, during which JEROME AND THE PRE-CAMBRIAN 215 the price of copper had averaged 14. 3c., the production being fairly uniform at about 35,000,000 Ib. a year. Five cents has been available for dividends, leaving a net cost of 9.3c. per Ib. to cover all expenditures for mining, smelting, development, construction of railroad and smeltery, general expenses, and increase of working capital. The net yield per ton has probably averaged about 100 Ib. copper, 1% oz. silver and 40c. gold. The average value of the precious metals figures down to about IJ^c. per Ib. of copper, so that if the average price of that metal is 14. 3c., the total value of the bullion will be 15.55c. On this basis, a liberal allowance for all expenses, both for operating and capital, on a total output of 700,000,000 Ib., has been 10.05c. per Ib. The cost of convert- ing, refining and marketing the bullion may be estimated at 1.85c. per Ib., teaving 8.2c. per Ib. for all other expenses. United Verde Extension Possibilities. Apply these figures to the extraordinary bonanzas opened by the United Verde Extension, in which 2,000,000 tons of ore can be counted on to run 15% copper and to yield 290 Ib. copper, lj^ oz. silver and 60c. gold per ton, with operating methods equally efficient as those of the United Verde. The value of this bullion is 14. 8c. per Ib. Deducting 1.85c. per Ib. for converting, refining, and marketing, there remains 12.95c. per Ib. The mining, smelting, construction, and general expenses will be, as before, $8.20 a ton, to be divided by 290 Ib. copper. This is equal to 2.83c. per Ib. Deducting this, there remains 10.12c. per Ib., which should be applicable to dividends. I can see no flaw in this reasoning, although the result appears extraordinary. It is fair to believe that the total output of copper, 580,000,000 Ib., according to this computation, would be extracted in 10 years, and that dividends of $60,000,000 would be paid in that time, leaving the mine intact for further development and a complete equipment. Under these circumstances, it seems to me that the investor is warranted in figuring that the $60,000,000 profits expected in 10 years is a conservative and guarded basis for valuing the property; that he might assume a 5% net return, plus return of capital, to be sufficient for a property so guarded, and that he would have important speculative probabilities in addition. Under these circumstances, it is computed that the property possesses a valuation of $45,000,000. The " speculative probabilities" refer to the discovery of additional ores. There is likelihood of such discoveries, both laterally and in depth. Exploration in depth has gone down only one-third as far below the original surface as in the United Verde, in which mine bonanza or occurs in the very bottom. Before ending the discussion of the pre r Cambrian deposits which have proved so valuable at Jerome, it will be interesting to note the extension of the same formations to the southwest. At Jerome itself 'there is 216 THE COST OF MINING merely a narrow point of a wedge of pre-Cambrian, raised up through a cover of Palaeozoic sediments by faulting, aggregating in vertical move- ment 400 ft., which has taken place along a zone a mile and a half wide. It is thus upon the escarpment of an important recent mountain uplift. The Palaeozoic formations at Jerome present two peculiarities that are worth noting: 1. The series begins with the Devonian, at least that is my supposi- tion. The lowest limestone is known to be Devonian, and between it and the pre-Cambrian complex there is only about 50 ft. of sandstone. Ran- some assumes that this sandstone corresponds to the Tonto sandstone (Cambrian) of the Grand Canyon, but I take this to be merely a slip of the pen. It is hardly possible for a few feet of sandstone to carry with it any presumption of equivalence in age with some other sandstone that looks like it. Each invasion of the sea produces a basal sandstone by reasserting the weathered debris on the land surface. Such a basal sandstone merely marks the sea transgression, and the same one might, and no doubt does, mark the progress of the sea upon higher and higher levels of a continental area through a series of geologic ages. In the absence of determining fossils, the age of such a sandstone should be assumed to be that of the contiguous rock overlying, if that is de terminable. Now, throughout Arizona there are usually some Cambrian strata in the Palaeozoic column, but the Ordovician and the Silurian are generally wanting. Ordinarily, there is no angular unconformity between the Cambrian and the Devonian, in spite of the huge time gap represented by the absence of the Ordovician and Silurian. To explain this, one has only to remember that in Russia, along the Gulf of Finland, Cambrian and Ordovician strata are still unconsolidated sand and clay. They have lain there through interminable ages without change, distortion, meta- morphism, or even hardening, because the earth's crust in that region has remained still. It is entirely conceivable that, around Petrograd, Quarter- nary strata may be in contact with and in apparent conformity with the Ordovician. Interesting Geologic Facts and Deductions. In Arizona the absence of unconformity between the Cambrian and the Devonian must mean simply a long period of quiet, with gentle oscillations of level, and no deposition; certainly no mountain building, and no deep erosion. In Devonian times there followed a general immersion in the sea of this whole region. By this time the neighboring lands, wherever they were, must have been worn down so flat that they could furnish little or no clastic sediment, for the Devonian rocks are almost pure limestones. From Cananea to Grand Canyon and from Tucson to Clifton, and no one knows how much further in all directions, there was a sea of clear water of moderate depth, and full of corals and coral reefs. JEROME AND THE PRE-CAMBRIAN 217 An interesting question which may be solved some time is whether the highlands southwest of Jerome may not have been an island in this Devonian sea. The absence of strata older than the Devonian and the strong inference that there had intervened no considerable disturbance or erosion, which was likely to have swept away such strata in pre-Devon- ian times, point decidedly to the conclusion that there was comparatively high land at the site of Jerome which the Cambrian sea did not reach. This naturally brings up the question whether the slope may not have continued in some direction toward a massif high enough to remain an island even during a large part, or all, of the succeeding submergence. Assuming that the Devonian strata were originally level, it is possible to calculate that the pre-Cambrian surface at Jerome was originally 1000 ft. higher than the same surface at Grand Canyon, there being that amount of Cambrian strata under the Devonian at Grand Canyon and none at Jerome. The same facts appear in comparing the sections of Bisbee, Ray, Globe, and Roosevelt Dam (Ransome) . As all these places lie toward the southeast, east and north, it is easy to explain the facts by a depression along axis lying northeast of Jerome, and therefore approxi- mately under the edge of the plateau region. If this is true, it is logical to assume that the land surface sloped upward toward the southwest. How far this slope continued, or to what height, one has no means of knowing, except that there is good reason to believe that in Devonian times the slopes were gentle, erosion was slow, and no large rivers were debouching near enough to muddy the waters. 2. The Palaezoic strata are found at the very top of the Black Hills (the mountain block on the edge of which Jerome stands), but they merely lie on the outer rim of the uplift, and do not continue toward the southwest for more than a mile or two. They appear to feather out. There is no indication of their having been broken off by further faulting. I do not refer to this fact as evidence of the thinning out of the Palaeozoic deposition in that direction. That conclusion must be based on broader facts than those I am pointing to. It appears that the edge of the Palaeozoics occurs as fragments of an arc of a curve the radius of which is about 25 miles, and its center some distance southeast of the town of Prescott. The fragments of this arc are found on the crest of the Black Hills west of Camp Verde and east of Prescott, thence northwest along the crest of the Black Hills to near Jerome Junction. At Jerome Junc- tion there is a gap, but just north of that place the edge of the Palaeozoics may be covered up with recent lavas. Six miles west of Jerome Junction the Palaeozoics appear again in a strong ridge running west. All along the rim of this arc the strata dip gently away from the center. PRACTICAL IMPORTANCE OF GEOLOGIC CONSIDERATIONS I think there is warrant for believing this structure is the remnant of a dome or arch that was formed in Tertiary times, if not earlier, and 218 THE COST OF MINING extensively eroded long before the occurrence of the big faulting at Jerome or the late Tertiary volcanic activity of the region. If the Pa- laeozoics be projected along their dip in to thePrescott region, they would be found thousands of feet above the present surface. In the area now under consideration, this means that the original pre-Cambrian land surface does not exist in the sense that it exists at Jerome i.e., intact but buried but that there does exist, instead a new erosion surface scored down more or less during long geologic ages. I believe these observations to have practical importance, for without them it would be difficult to understand the deposits of the Prescott region, or to have any logical conception of the relationship between them and those of Jerome. The present surface of the scored dome just described is strewn with much recent lava, probably of the age of the San Francisco peaks. There are also many remnants of older volcanics, or intrusives, many of which are too fresh and undisturbed to have participated in the intense mountain-building activities of pre-Cambrian and pre-Algonkian time. There may be many igneous rocks of ages anywhere from Permian to Tertiary. Some of the ore deposits which have been worked in this area, off and on, for the last 50 years, may be derived from these comparatively recent intrusions. I suspect this to be the case with the copper mines at Copper Basin, about eight miles southwest of Prescott. The Mayer Copper Mines. The far more important and promising copper mines near Mayer, 20 miles southeast of Prescott, are patently pre-Cambrian and are not to be explained as emanating from later igneous activity. The largest mine in this district, the Blue Bell, is 30 miles south and 10 miles west of the United Verde, and about 20 miles west of the nearest Palaeozoic rim. The original pre-Cambrian surface in this locality has undoubtedly been scored down at least 2000 or 3000 ft., but the exact amount I have no present means of estimating. If, therefore, these deposits may be assumed to have had about the same relation to the pre-Cambrian surface as those of Jerome (a mere assumption certainly, but let it go at that), one must conclude that the Mayer mines represent a deeper-seated stage of mineralization. In the Mayer district the rocks are known as Yavapai schists. They appear to be ancient surface volcanics for the most part, mainly green- stones of about the composition of diorite or diabase. There are no doubt plenty of intrusives mixed in. The copper deposits all occur in some quartz porphyry dikes which cut the greenstones and strike about N 10 to 15 E. Many of these rocks have been subjected to an extra- ordinarily energetic squeezing which has produced in all of them a schistosity that strikes N 28 E. It is so strong in places that the quartz porphyry looks like a light colored and very fissile slate. There is one important difference between these deposits and those of JEROME AND THE PRE-CAMBRIAN 219 Jerome there is no United Verde diorite or anything like it. The ore- bodies are all within or on the contacts of the squeezed dikes of quartz porphyry. In all other respects they are similar, but smaller and not so rich. The Blue Bell mine has produced to date about 600,000 tons of ore, and has 500,000 tons more in sight above the 1200-ft. level. In 1917 this mine shipped about 120,000 tons of ore, averaging a shade over 3 per cent, copper and $1.50 per ton in gold and silver. About half this ore is concentrated; the other half is massive pyrite, much like that of the United Verde. The Blue Bell orebodies are easily mined, the cost of mining under present conditions being a little over S3 a ton, including development. On a return to pre-war conditions this cost would be reduced to about $2.25 per ton, delivered to the railroad. There is no apparent reason why such ores should not be valuable under normal prices. In all this discussion of the Jerome and contiguous district, I have gone only slightly into the details of cost. The fact is, the district displays little of special interest in this respect, and the reports of the mining companies give meager details. The striking features are pre- cisely those already dwelt on; the geology, the big faults, the rich con- centrations of ore, which allow low unit costs for copper without much regard for costs per ton mined: and the corollary that successful mining is largely successful exploration. In the whole area considered there are seven or eight mines that have dealt with deposits such as those described. Of these, two are wonderful bonanzas. The others are either mediocre producers, like the Mayer Mines just mentioned, or immature prospects, Canyon and a few others. One, the Copper Chief, southeast of Jerome, is working, for gold, the oxidized gossan of a large pyrite deposit which has proved unprofitably low in copper. In addition to these there are many prospects, some of which are mere wildcats and others genuine enterprises testing various theories as to the location of possible extensions of mineralized areas. In all this fervor of exploration, a detached and unprejudiced observer may find one lesson worth noting, namely that exploration of new ground for possible ore deposits demands the same attention to adequate equip- ment and adequate finance as the mining of ores actually found. Vast sums of money have been squandered through loss of time and failure to accomplish the work planned by trying to make two horsepower equal four horsepower. Shafts too small and too insecure, hoists that will not raise the load from the required depth, pumps that will not handle the water, result finally in no room for ventilation, injury to health of the men, and meager results: and often the whole job, instead of being a question of drilling holes and breaking rock, becomes a blind and useless struggle with bad air, broken pipes, rotten timber, heat, water and mud. The spectacular development and success of the United Verde Ex- 220 THE COST OF MINING tension are due almost wholly to good prospecting engineering. The project had been going on in some such fashion as that described in the preceding paragraph for I don't know how many years. It had been started with enthusiasm, but with little calculation, by a man named Fisher, on a small fraction called the Little Daisy, right on the great Jerome fault. A shaft had been sunk 800 ft. through this fault into hard quartz porphyry. All lateral workings had to go out through the fault again. A winze had been sunk, again along the fault, to the 1200-ft. level. All this work had dug up some indications of ore, but the practical result was failure and discouragement, and the enterprise was considered to be a mere wildcat. When James S. Douglas and George E. Tener decided to undertake the prospect, they applied common sense to the situation and came to a sound conclusion. It would cost $250,000 to explore the ground, anyway, and this amount of money, spent in a safe shaft with good equipment, would accomplish the work more cheaper and quickly than is would if spent in the old shaft. They accordingly sank a new shaft 1400 ft. in a central location in solid rock. When they struck ore, they were able to ship it immediately in good volume. Their new shaft was sufficient, as things turned out, to make an output of 63,000,000 Ib. of copper a year, and to make profits at times exceedig $1,000,000 a month. That part was luck, of course, under any interpretation of that rather uncertain word, but good management consists of so acting that when luck comes your way you can make the most of it. I suppose that if no ore had been found, the level-headed gentlemen who created the mine would have been pointed to as victims of over confidence a renewed warning against (some phase of) the danger of building a mill before you find a mine. The indictment would have been false. They took a true measure of the job as a piece of pure prospecting. CHAPTER XIV LAKE SUPERIOR COPPER MINES REMARKS ON GEOLOGY RESUME OP COSTS IN 1911 GENERAL WORKING CONDITIONS PLANTS REQUIRED COST OF SMELTING THREE TYPES OF DEPOSITS ORDINARY AMYGDALOIDS WOLVERINE, AHMEEK, ALLOUEZ, ISLE ROYALE, OSCEOLA BALTIC LODE CHAMPION, TRIMOUNTAIN, BALTIC CONGLOMERATE LODE TAMARACK, CALUMET AND HECLA. The Lake Superior district, for a long time almost the sole producer of copper in North America and still a prominent one, has lost some of its comparative importance in the past ten years through the continued growth of production along the Pacific seaboard in North, and also in South America. In 1909 it produced some 21 per cent, of the copper of the United States and 13 per cent, of ^that of the world, but in 1916 its proportions had been reduced to about 13 and 8 per cent, respectively. In the preceding chapter some hint was given of the broad facts of pre-Cambrian geology, linking the Lake deposits to the same chain of events that produced those of Jerome. Presumably the same kind of relationship covers also the copper-nickel ores of Sudbury, Ontario, the unique silver deposits of Cobalt, the gold mines of Porcupine and the unique zinc deposits of Franklin Furnace, New Jersey. In fact nearly all these pre-Cambrian districts present unique and striking features; but they differ from each other as much as they differ from deposits of later age. The copper bearing rocks of Lake Superior cover a wide area but the productive portion is a tract about 50 miles long upon the Keweenaw peninsula and the adjoining mainland, on the central portion of the south shore of the lake. The bulk of the formation perhaps lies under the waters of the lake, being exposed on the principal islands. It was a huge, but local, pile of volcanic rocks which was built up apparently along the flank of the post-Algonkian mountain range which was formed to the southward and after the Huronian rocks had suffered considerable compression and erosion. The Keweenawan rocks do not offer the ap- pearance of having been greatly folded, but rather the tilting, quite steep in places, that might be accomplished along the edges of a great subsiding mass. They are not otherwise disturbed or altered, except by a few moderate faults. In the five years 1906 to 1910 inclusive the twelve principal mines, three of which were unprofitable, had the following record which I be- 221 222 THE COST OF MINING lieve exhibits more correctly than any other table the general aspects of the business under pre-war conditions. Tons rock stamped Total yield, pounds Yield per ton, pounds Receipts from sale of copper Average price per pound 40,000,000 1,000,000,000 25 $149,806,420 14.98 cents. MAP OF LAKE SUPERIOR^ COPPER JIIMNG DISTRICT Redrawn from Map by R. M. Edwards. Hongbtun. Mlchlcan. FIG. 4. COST OF PRODUCTION Mining, transportation and smelting Smelting (partly included in mining) Construction General expenses Miscellaneous . . Per ton $ 79,626,898 $1.98 8,404,386 .21 8,885,002 3,687,476 1,110,844 0.22 0.09 0.03 Total expense Cost per pound copper 10.1 cents. $101,714,067 $2.54 LAKE SUPERIOR COPPER MINES 223 This calculation agrees in all essential respects with the record for twenty years 1890 to 1909 inclusive, during which the average price was 13.7 cents, the profits slightly under 4 cents per pound and the cost something over 9.7 cents per pound, except that in this period there had undoubtedly been a decline in the yield per ton. Under pre-war condi- tions therefore we might conclude that the average profit was not far from 4 cents a pound, this being somewhat under 30 per cent, of the sell- ing price of the metal. This was a margin of profit that few other dis- tricts have been able to equal. It will be seen from more specific data which is inserted with refer- ence to particular mines, that the yield per ton, especially under the stimu- lus of war conditions has continued to decline. Engineering projects have been undertaken by the chief mines to match this decline of yield by a reduction of costs. How far this effort has succeeded is at present obscured by the disturbance of the economic factors which has not subsided far enough to make comparisons reliable. It was the goal of the Calumet and Hecla management, for instance, to secure "dollar rock;" that is to mine and mill the ordinary amygdaloid for $1.00 per ton. They never reached this goal, although it will be seen from the appended statements that some of the mines, the Osceola for instance, came near it in 1912 and again in 1915. In 1911 I estimated that about 3,000,000,000 pounds of copper to be obtained from some 150,000,000 tons of rock could safely be counted on. This was doubtless an underestimate of the ultimate output, but it is certainly true that the exhaustion of the richest mine, the Calumet and Hecla conglomerate, will remove a producer that is not likely to be re- placed. The Champion mine has made some valuable developments and the Quincy has not suffered from the caving which at one time prom- ised to put an end to, or seriously interrupt, the operations, but in general it must be conceded that the district is already on the wane. Up to date it has produced over 7,000,000,000 pounds of copper. Accord- ing to my estimate of 1911 something like 1,600,000,000 pounds remain to be added to this. Whether the district can produce much more than this amount that will be profitable in like proportion and under the same conditions as that already produced still remains to be seen. It is to be remembered that declining districts often make a large yield on which the margin of profit is scanty or wanting. Here follow some remarks retained from the first edition. The Lake Superior copper mines work deposits of native metal occurring either in beds of conglomerate or in amygdaloids, which mark the upward surface of ancient lava flows. The deposits in these beds form immense ore shoots of dimensions in one case as great as three miles in length and over a mile in width in the plane of the vein, covering many hundred acres. Such a lateral extent, combined with a thickness 224 THE COST OF MINING of from 6 to 30 ft., gives a volume of many million tons of workable material. The persistence and extent of the deposits have long established that the controlling factor in the successful exploitation of these mines is the provision of machinery for handling large quantities of material for long periods of time. The practice prior to 1908 fixed a cost of about $1,500,000 as necessary for the preliminary development and equipment of a property on a scale commensurate with economy. The actual working of the deposits is simple. The mines are dry and safe; the ores of each deposit are uniform in character and can be concentrated easily and cheaply; the smelting operations are reduced to a minimum, the concentrates to be smelted ranging from 1 to 4J^ per cent, of the ore milled. Wages are very moderate, being about 25 cents an hour; sup- plies of all kinds are cheap; the country in the neighborhood of the mines is well watered and well timbered; transportation to and from markets is done mainly by water, and is very cheap. The population is vigorous and intelligent, although at least 95 per cent, of the men employed in the mines are of foreign birth, the greater number being Finns, Englishmen, Austrians, and Italians. It may be said, therefore, that not a single factor in the working of the mines is unfavorable. The inclination of the deposits is from 35 to 70, so that in following the ore shoots the shafts become enormously deep, several of them being in the neighborhood of a mile vertically below the surface. This means, of course, an unusual expense for hoisting and increasing difficulty in working as compared with mining at ordinary depths, but it indicates the remarkable persistence of the orebodies. Under present conditions the total cost of mining these ores and market- ing the copper is from $2 to $3 per ton. Plants Required and their Cost. To elaborate a little on the business aspects of the process of obtaining the copper we may group the plants required as follows: 1 . The mining plants for hoisting, pumping, compressing air, crushing etc. These plants are always owned by the mining companies themselves. Unfortunately I am not able to get the cost of these plants, segregated from other plant charges, in a single instance. 2. The transportation of ore to the mills. This is invariably done by railroad. The Copper Range Company had to provide this equipment for three mines which in 1906 had reached an output of 1,828,000 tons and are likely to average 2,000,000 tons a year. The cost of the Copper Range Railroad was, including working capital and equipment, $6,500,000. This road serves a number of other mines and a considerable territory outside the Copper Range group. Nevertheless it seems fair to charge half of it to those mines, so that we may figure $1.60 per annual ton for their transportation capital. LAKE SUPERIOR COPPER MINES 225 3. The concentrating mills. The cost of these is invariably bound up with that of the mine equipment and development. We may as well stop to consider 1 and 3 together: The Copper Range Mines had to raise the following sums for develop- ment and mine and mill equipment before they became self-sustaining. Baltic $ 800,000 Trimountain 1,200,000 Champion 1,475,000 Total $3,475,000 for an annual output of say 2,000,000 tons, equal to a plant charge of $1.75 per ton of ore stamped annually. The Wolverine Mine paid for its mining and milling plants and development, if I understand the report correctly, $780,000; providing capacity for mining and milling 350,000 tons a year, equal to $2.20 per annual ton. The Mohawk Mining Company spent $1,350,000 to provide itself with mining and milling facilities for an output of 675,000 tons, equal to $2.00 per annual ton. Its Traverse Bay Railroad went in with the mine itself, apparently, at a valuation of $450,000, or about 70 cents per annual ton. Returning to the Copper Range and adding together the initial cost of railroad and mining plants we get a total of $6,800,000 or $3.40 per annual ton. 4. The smelting plants for converting the concentrates or mineral into ingot copper. These plants are usually owned by groups of mines in com- mon. The Michigan Smelting Company, with works capable of turning out 90,000,000 Ib. refined copper a year, which represents the yield of about 4,500,000 tons of ore from the mines, is capitalized at $500,000, probably its cost. This is equal to only 11 cents per ton of rock mined. Companies that have complete mining, milling, transportation, and smelting facilities of their own are the Quincy and Calumet & Hecla. The former states that its total cost for plant, including railroads, ware- house, real estate, smelting, mining, and milling plants is $6,300,000. The annual tonnage stamped is not given, but is approximately 1,100,000, giving a total plant cost of nearly $6 per annual ton. The Calumet & Hecla gives the complete cost of all its plants at between fifteen and sixteen million dollars, with an annual output of 2,500,000 tons, equal to $6 + per annual ton. In round numbers, I think we may say that the minimum plant cost per annual ton is $3 for the most favorably situated amygdaloid mine and $6 for a conglomerate mine. In each case the working is conducted on a grand scale. While the Michigan mines are all remarkably long lived it does not seem proper to reckon on anything less than a 7 per cent, annual instal- 226 THE COST OF MINING ment to cover the amortization of capital so invested. The corollary is that the use of capital is worth from 21 to 42 cents per ton of output, or at the very least 1 cent per pound of copper. Cost of Smelting. Professor L. S. Austin reports (Mining and Scientific Press, April 24, 1909) the costs of the Lake Superior Smelting Company for 1906 as follows: 41,177 tons mineral" (concentrates) producing 55,526,088 pounds fine copper. Per ton concentrates Reverberatory operating $195,144 $4 741 Miscellaneous 43 409 1 055 Construction 15.665 380 Blast-furnace operating Miscellaneous . . 32^623 13.461 0.790 0.327 Total $300,302 $7 . 293 Dividing the total cost by the pounds of copper we get 0.541 cents as the cost of smelting per pound. It appears that to this must be added about J cent per pound for freight for market and marketing expense, so that the total cost for smelting, refining, and marketing is a little over 1 cent per pound refined copper. Nature of the Deposits. While in a broad sense the conditions are rather uniform throughout the district, there are three fairly well marked types of deposits whose characteristics impose certain differences of method and cost. One is the conglomerate, of which the only com- mercially valuable deposit is the great ore shoot worked by the Calumet & Hecla and the Tamarack mines. This has already produced in the neighborhood of 1,100,000 tons of fine copper from more than 40,000,000 tons of ore, and there remains in sight probably 20,000,000 tons more. This magnificent orebody is about 14 feet thick; it dips at an angle of 37, and is a hard compact bed of conglomerate overlaid by a trap hanging wall of such a character that it requires timbering. The amygdaloid deposits are rather numerous and have much in common. There is, however, an important distinction between that of the Copper Range Consolidated Company and the other amygdaloid mines. The ordinary amygdaloids (represented by the Wolverine on the Kearsarge lode and by the Quincy mine) either are, or are assumed to be, homogenous, in that all of the vein stuff is sent to the mill with a very moderate amount of sorting at the surface. These deposits have yielded from a minimum of 12 Ib. to a maximum of 50 Ib. of copper to the ton. The rock is softer than the conglomerate, and is more easily milled. The hanging wall is generally firm, so that in most cases mining can be done without any timbering. The amygdaloid of the Copper Range Consolidated Company on the Baltic lode is somewhat different. The rock is harder than the ordinary LAKE SUPERIOR COPPER MINES 227 and the copper is very apt to be attached to numerous small fissures that traverse the bed. The result of this distribution of value has been the development of an entirely distinct type of underground mining, based on a system of sorting waste out of the vein itself and leaving this waste in the stopes for filling. The Wolverine Mine. Of these various types the simplest is the kind of amygdaloid mine represented by the Wolverine. This property in common with all others of the Stanton group is very well managed and issues clear and excellent reports. The entire process of mining and realiz- ing copper at this mine is simple. The vein averages about 15 ft. thick. It dips at an angle of about 37; no timbering whatever is required but a few small pillars are left. The shafts are sunk mainly in the vein itself, but partly in the foot- wall a few feet back from the vein. Levels are run at distances of 100ft. and are opened by what are called "stope drifts," these being a complete section of the vein 25 ft. wide along the plane of the footwall. The cost of running these drifts is $5.68 per foot in excess of the cost of stoping an equivalent amount of ground. In the stopes themselves, nothing is done except to break the ore with machines. Once broken the ore is caught on a low platform built at the bottom of the stope from which the ore is partly rolled and partly shoveled into the cars. This completes the mining process. The cost of the underground work is less than $1 a ton; 7 cents a ton is added for crushing and sorting in the rock house at the surface. Transportation to the mill costs about 16 cents a ton and concentration about 22 cents. General expenses such as superintendence, taxes, and insurance, etc., amount to about 22 cents more; and smelting, refining, and marketing about 29 cents, making a total of operating expenses of $1.84. Construction work for the last four years has averaged 8 cents, and the total expenses with construction for the same period have averaged $1.92. It is to be noticed that in this mine the exploration work is reduced nearly to zero. The whole operation is a straight, uncomplicated matter of handling so much material; and to the handling of it nature has inter- posed as few obstacles as can be found in any underground mine. There is very little water to pump; there are no complex vein systems to work out, no faults to interrupt the vein, and no geological relations to be under- stood. There is always abundant room to work, good ventilation, com- paratively soft ground, and no timbering. While it cannot be denied that the Wolverine is a well-managed property which has kept notably clear from extravagant, impractical projects of all kinds, it seems fair to say that the low costs obtained by it are not in any way extraordinary, but merely the inevitable result of common-sense methods applied to a favorable set of conditions. The accompanying table gives such details as are published of the cost of mining in the Wolverine. It is to be noticed that the Wolverine is at present the richest of all amygdaloid mines and that for this reason 228 THE COST OF MINING the cost for smelting is higher than that of any of the other mines of its class. WOKKING EXPENSES AT THE WOLVERINE MINE, YEAR ENDING JUNE 30, 1907. Per ton UNDERGROUND EXPENSES (Rock Stamped 344,062 Tons) Sinking 450 ft. at $17.88 $8,046 . 00 Drifting 4,993 ft. at $5.68 28,385.80 Stoping 23,175 fathoms at $7.69 178,269.70 Labor 1,546.55 $216,248.05 Timbering 5,286.60 Tramming 71,603.15 Mining captains and labor 29,151 . 80 Mechanics 7,833 . 15 Hoisting and pumping 22,092 . 51 Compressor 29,774. 52 Teaming, etc 1,095.95 Supplies and fuel 19,107.47 Electric light 291 . 88 $402,584.98 Less profit on supplies furnished contractors 65,416.00 $337,168.98 $0.98 ROCK HOUSE Labor $13,371 .85 Machinists 1,166.28 Fuel 2,160.00 Supplies 3,621 . 29 Teaming, etc 808 . 30 Electric light 1,167. 12 22,294.84 0.065 STAMP MILL Transportation $55,053 . 35 Supplies and electric light 9,918. 72 Machinists 4,318.90 Fuel and teaming 26,816 . 00 Labor 27,632.80 Pumping 7,599. 78 131,339.55 0.38 SURFACE AND INCIDENTAL EXPENSES Superintendence and labor $20,309.57 Supplies 9,523 . 51 Telephone, telegrams, and sundries 495 . 28 Taxes and insurance 48,938. 14 Freight on mineral, etc 5,948 . 28 $85,215.18 LAKE SUPERIOR COPPER MINES 229 Less amounts received for rents . . Construction average of four years Amortization of $780,000 at 5 per cent, in- terest and 3 per cent, annual amortization Smelting, refining, and marketing 6,547.90 78,667.28 0.223 $569,470.65 Total. $1.648 0.08 0.20 0.284 $2.212 Average cost of copper in New York, 7.93 cents per pound. The amortization in this case includes the purchase price of the property, tem is not distinguished from the capital invested in equipment. This The fore-going shows the aspect of this industry in 1909. For the later history it seems better to refer to the groups of mines under the management of the Calumet & Hecla for which excellent reports are now to be had. A summary of the results of all the profitable mines in the district for the years 1906 1910 inclusive is given. Ahmeek. The Wolverine mine is now on the decline. The property in which the general conditions most closely resemble it is the Ahmeek. It will be noted that the costs in 1913 were very much higher than the average. COMPAKATIVE RESULTS FOR THE FOUR YEARS 1910 1911 1912 1913 Tons of rock treated . ... 530,365 598,549 652,260 383 749 Cost of mining, transportation, stamping and taxes per ton of rock $1 42 $1 42 $1 39 $1 77 Pounds of mineral obtained Pounds of refined copper pro- duced 16,758,521 11,844,954 21,917,925 15,196,127 23,945,315 16,455,769 13,742,140 9,220 874 Per cent, of refined copper in mineral 70 68 69 33 68 72 67 10 Pounds refined copper per ton of rock treated 22.3 25 4 25 2 24 COST PER POUND: Mining expense 7.93c. 5.61c. 5 51c. 7 38c Construction 1.85c. 32c. 1 20c 4 53 C Smelting, freight, commissions, eastern office etc. 1.16c. 1 . 19c. 1 14c. 1 39c Interest lie. 05c. OOc OOc Total cost per pound refined copper ll.OSc. 7 71c 7 85c 13 30c 230 THE COST OF MINING COMPARATIVE RESULTS FOR THE PAST FOUR YEARS 1915 1916 1917 1918 Tons of rock treated 948,874 1,164,010 1,271,275 1,196,541 Cost of mining, transportation, stamping and taxes per tori of rock Pounds of refined copper pro- duced $1.26 21,800,492 $1.46 24,142,158 $1.74 28,919,812 $2.18 24,851,235 Pounds refined copper per ton of rock treated 23.0 20.7 22.0 20.8 This was due to a labor strike. In this mine it may be computed that the development work required is only 1 ft. to 87 tons. The dividends paid in the period covered by the statements amount to $11,250,000 from about 165,000,000 pounds, nearly 7 cents a pound. UNDERGROUND WORK FOR THE PAST FOUR YEARS 1915 1916 1917 1918 Sinking No. 1 shaft ft 27 186 80 Sinking No. 2 shaft, ft. . 82 196 289 119 Sinking No. Sinking No. 3 shaft, 4 shaft, ft ft. 66 263 161 263 332 202 122 Total 175 806 964 443 1915 1916 1917 1918 Openings No. 1 Drifting, ft. . . shaft, 478 1,605 913 2,943 14 2,641 2,000 2,238 2,262 3,154 231 2,935 28 1,895 4,058 663 3,364 38 6,067 1,869 3,881 468 101 1,788 4,932 22 24 Openings No. 2 Drfting, ft. . . shaft, Crosscutting, Fork ft ft Openings No. Sshaft Drifting ft. Fork, ft Crosscutting, Openings No. 4 Drifting, ft. . Fork, ft ft. shaft, Crosscutting, Total ft 8,594 12,848 16,085 13,085 LAKE SUPERIOR COPPER MINES 231 Allouez Mining Company. Although this is an old mine it never paid any dividends until 1915. Since then it has paid $2,850,000 from an output of 36,000,000 pounds, 8 cents a pound, indicating complete costs of about 15 cents a pound. The production cost per pound in 1918 were mining 15.45 cents., smelting refining and marketing 1.47 cents: total 16.92 cents. COMPARATIVE RESULTS FOR THE PAST FOUR YEARS 1915 1916 1917 1918 Tons of rock treated 534,705 566,960 566,674 514,888 Cost of mining, transportation, stamping and taxes per ton of rock $1 365 $1 589 $1.869 $2.119 Pounds of refined copper pro- duced . . . 10,043,459 10,219,290 8,892,915 7,071,218 Pounds refined copper per ton treated 18.78 180.2 15.69 13.73 UNDERGROUND WORK FOR THE PAST FOUR YEARS 1915 1916 1917 1918 Sinking No. 1 Sinking No 2 shaft, ft shaft ft 45 144 99 191 Total . 45 144 99 191 Openings No. 1 shaft, ft. . . 1,485.5 1,339.0 1,594.5 855.5 Openings No. 2 shaft, ft 3,373.0 2,164.5 1,243.5 1,903.0 Total 4,858 5 3,503.5 2,838.0 2,758.5 Total Depth of Shafts No. 1 shaft 72 feet below 22d level, 3,980 feet from surface. No. 2 shaft 198 feet below 21st level, 3,407.5 feet from surface. SUMMARY OF RESULTS 1915 1916 1917 1918 Rock hoisted, tons 535,718 567,858 567,459 515,150 Rock house discard, tons 1,013 878 785 262 Percentage of discard 0.189 0.158 0.137 0.046 The Centennial similarly has been making a little money. It pro- duced copper in 1918 for 15.7 cents a pound. Isle Royale Copper Company. This is an interesting case of a mine being operated 60 years before it was made to pay. Perhaps I ought to take this fact as a personal rebuke, for I have frequently argued that the 232 THE COST OF MINING value of hopes so long deferred might be put down at zero. I suppose the fact that the mine pays, and shows no apparent signs of failing to do so, is due to the good management of the group of men now in charge. In eight years 132,000 feet of shafts and drifts were opened for about 6,400,000 tons of rock hoist, 1 ft. to 49 tons. Half of this work was done for the first third of the output. I imagine that doing this was what made the mine pay. In 1918 the cost of producing copper was only 13.49 cents for mining and 1.58 cents for smelting, 15.07 cents altogether. That was pretty COMPARATIVE RESULTS FOR THE FOUR YEARS 1910 1911 1912 1913 Tons of rock treated .... 520,860 457,440 531,105 314 679 Cost of mining, transportation, stamping and taxes per ton of rock $1 42 $1.47 $1.54 $2.12 Pounds of mineral obtained Pounds of refined copper pro- duced 10,433,060 7,567.399 10,339,171 7,490,120 11,461,410 8,186,957 5,887,000 4,158,548 Per cent, of refined copper in mineral Pounds refined copper per ton of rock treated 72.53 14 5 72.44 16.4 71.43 15.4 70.64 13.2 Cost per pound: Mining expense. . 9 75c. 8 97c. 10 Olc. 16 07c. Construction No. 7 shaft 0.16c. OOc. 0.25c. OOc. 0.20c. 15c. 0.73 27c. Shaft "A" and explorations. . Unwatering Huron mine Smelting, freight, commissions, eastern office, etc Interest . 0.33c. O.OOc. 1.26c. 34c. 0.07c. 0.06c. 1.21c. 29c. O.OSc. O.OSc. 1.31c. 09c. O.Olc. O.lOc. 1.53c. lOc. Total cost per pound refined copper 11.84c. 10.85c. 11.89c. 18.81c. COMPARATIVE RESULTS FOR THE PAST FOUR YEARS 1915 1916 1917 1918 Tons of rock treated 680,280 925,419 922,160 974,508 Cost of mining, transportation, stamping and taxes per ton of rock $1 45 $1 53 $2 02 $2 14 Pounds of refined copper pro- duced 9 342 106 12412 111 13 480 921 15 442 508 Pounds refined copper per ton of rock treated 13 7 13 4 14 6 15 9 LAKE SUPERIOR COPPER MINES 233 good for 1918. The total cost per ton milled was $2.40. Since 1913, $1,950,000 has been paid from about 58,000,000 pounds of copper, some 3.5 cents per pound. An equal amount was added to quick assets. 1915 1916 1917 1918 Rock hoisted tons 799 890 1 144 310 1 200 975 1 187 486 Rock house discard, tons Percentage of discard 119,620 15 218,891 19 1 278,815 23 2 212,978 17 9 Osceola Consolidated. The Osceola Cons. Mining Company works some large amygdaloid mines near the Calumet & Hecla. ABSTRACT OF THE REPORTS OF THE OSCEOLA MINING Co. The following table gives the comparative results for 1906, 1907 and 1908. 1906 1907 1908 Tons rock stamped Pounds mineral obtained 1,016,240 24,227,281 811,603 18,607,747 1,241,400 26,912,944 Percentage refined copper in mineral 76 725 75 . 962 78.961 Pounds refined copper per ton of rock stamped 18 3 17.4 17.1 Product fine copper 18 588 451 Ib. 14,134,753 Ib. 21,250,794 Ib. Cost per pound at mine, excluding construction 8 73 cents 10 59 cents 8 . 74 cents Cost per pound construction Cost per pound of smelting, freights, eastern expenses, commissions, and all other charges . 84 cents 1 . 32 cents 0.60 cents 1 . 25 cents . 69 cents 1 . 10 cents Total cost per pound of refined copper 10 89 cents 12.44 cents 10.53 cents Cost of mining and stamping per ton of rock stamped Gross cost of stamping per ton Net cost of stamping per ton after deducting profit on custom rock . . $1.60 16.39 cents 13.83 cents $1.84 17 . 47 cents 11.71 cents $1.50 15.78 cents 13 . 34 cents From the above, it appears that the total costs per ton for 1908 were $1.80 as compared with $2.16 in 1907, and $1.99 in 1906. This rise and fall of cost was an experience the company shared with nearly all other mining companies during this period. The reports state that the old Osceola mine shows large reserves of copper towards the south end, the northerly shafts being more nearly worked out. At the North Kearsarge mine No. 1 shaft was damaged by fire in September, 1906, and repaired at a cost of $36,950. This was 234 THE COST OF MINING charged to operating expenses. The report contains little additional information of interest. The total dividends to date are $7,612,550. Dividends since the beginning of 1901 have been $3,942,150 from an output of 136,584,911 lb., equal to a trifle less than 3 cents a pound. Lake copper in the same period averaged 15.57 cents in price. It appears from this that the copper has averaged some 12.5 cents in cost, including everything. The company has been absorbed by the Calumet & Hecla. At this mine the proportion of development work to ore treated is extraordinarily small. For four years it was only 1 ft. to 200 tons. This mine paid $17,371,000 in dividends in forty years 1878-1918 inclusive. COMPARATIVE RESULTS FOR THE FOUR YEARS 1910 1911 1912 1913 Tons of rock treated 1.217,720 1,246,596 1,246,557 735,044 Cost of mining, transportation, stamping and taxes per ton of rock $1.28 *$1.14 t$1.23 t$1.60 Pounds of mineral obtained Pounds of refined copper pro- duced 25,669,913 19,346,566 24,452,912 18,388,193 24,282,312 18,413,387 14,945,645 11,325,010 Per cent of refined copper in mineral 75 367 75 198 75 830 75.775 Pounds refined copper per ton rock treated 15 9 14 8 14 8 15.4 Cost per pound: Expenses at mine 8 04 c. 7 73 c. 8 34 c. 10.39 c. Construction 35 c. 49 c. 0.95c. 0.77 c. Smelting, freight, commissions, eastern office etc 98 c. 1 06 c. 1 . 07 c. 1.14 c. Total cost per pound refined copper 9.37c. 9.28c. 10.36c. 12.30c. COMPARATIVE RESULTS FOR THE PAST FOUR YEARS 1915 1916 1917 1918 Tons of rock treated 1,361,089 1,284,681 1,237,805 1,194,967 Cost of mining, transportation, stamping and taxes per ton of rock Pounds of refined copper pro- duced $1.18 19,731,472 $1.36 19,586,501 $1.63 16,084,958 $1.78 15,919,647 Pounds refined copper per ton rock treated 14.5 15.2 13.0 13.3 LAKE SUPERIOR COPPER MINES 235 Baltic Lode (1908). The second type of amygdaloid deposits, repre- sented by the Baltic, Trimountain, and Champion mines of the Copper Range Consolidated Company, presents a more difficult problem in operat- ing. The Baltic lode has a dip of about 70. Its hanging wall is insecure so that it will not stand for any considerable area without support. Moreover, the vein is wide, sometimes as much as 50 ft., and the vein stuff has more the appearance of trap than the ordinary amygdaloid. The great width of the vein would in many cases make the leaving of pillars to support the hanging wall a very expensive and doubtful expedient. Mining on this lode by the ordinary methods used for amygdaloid de- posits was a failure. The whole vein had to be mined in order to find the copper which was scattered somewhat irregularly through the mass; but the whole vein proved to be too low grade to pay. It would yield only about 14 Ib. copper to the ton. F. W. Denton solved the problem approximately as follows: The vein as a whole yielded in the mill 14 Ib. copper and probably contained six additional pounds of copper that were lost in the milling process. By picking out waste or low-grade ore in the mine it was found that 40 per cent, that would run no better than the mill tailings could be rejected. This selection yielded the following results: 100 tons mined contained 2000 Ib. copper; 40 tons were re- jected containing 240 Ib., this left 60 tons of material containing 1760 Ib. of copper or 29 Ib. to the ton. This when sent to the mill and treated with a loss of 7 Ib. in the tailings yielded 22 Ib. per ton milled as against 14 Ib. obtained before. Logically, this process means additional expense as follows: 100 tons of rock would have to be broken and only 60 tons realized. If to break the whole vein cost 40 cents a ton, the breaking of the 60 tons recovered must cost 67 cents per ton. This represents about the measure of addi- tional expense involved in the selection process. The coarse waste picked out underground can be piled back as easily as it can be shoveled into cars by the ordinary process and taken to the shaft. Indeed, it is possible that an actual saving is effected in tramming by the use of this system because it is easier to get the rock into a chute than it is to shovel it into a car, and the tramming of the rock from the chute to the shaft is practi- cally as cheap as it would be to push the cars to the shaft after they were loaded by hand. Peculiarities of Sorting and Filling Method. This method of filling the stopes by rock sorted from the vein itself is a novelty in Lake Superior though not in the mines of the West. Since it was developed independ- ently by Mr. Denton, it resulted in one or two points of practice different from that employed anywhere else. The rock sorted from the vein is hard and rough, and this fact has been taken advantage of in building up stone walls on the levels instead of using timbered drifts. These stone walls are covered with large timbers and lagging and then the whole thing is covered with the waste 236 THE COST OF MINING filling. It is found that stone walls resist the pressure of the accumulat- ing filling very much better than any timber, and in fact maintain them- selves in perfect condition as long as they are required. The mill holes leading through the waste to the working faces at the top instead of being built of wooden cribbing are circular wells laid in stone. In building the walls on the main levels and in the mill holes, advantage has been taken of the presence of Italian and Austrian miners who usually have had expeience in laying stone walls in their own country. The total result is a very pretty adaptation of methods to the natural conditions. The results in dollars and cents obtained by this method are all, and rather more, than could be expected. As compared with the Wolverine we find that in 1905 the underground costs at the Baltic were $1.04 a ton, and in 1906, $1.06 a ton, against $0.93 and $0.98, respectively, at the Wolverine, a difference of about 10 cents a ton as against the 27 cents increase that we might have expected. The Copper Range mines are, however, less than 1000 ft. deep, while the Wolverine will average more than 2000 ft.; so that the former gets some advantage in costs on this account. There are certain advantages in the sorting and filling system over and above mere availability. These are: (1) The security of the mine; (2) the fact that no pillars need be left for any reason, unless, indeed, the shafts are sunk in the vein in which case it is always necessary to leave some ground on each side of the shaft; (3) the system completely solves the question of exploring the vein for its copper contents enough ground can always be taken to expose stringers and bunches running into the walls. Costs at Copper Range Mines. Outside of the operations in the mine itself, the Copper Range Company does its business much as other amyg- daloid mines do; whatever further economies it achieves are entirely due to mechanical reasons and the volume of material handled and not to difference in the method. The accompanying table gives the results obtained in recent years. LAKE SUPERIOR COPPER MINES 237 COSTS OP MINES OP THE COPPER RANGE CONSOLIDATED COMPANY 1906 Baltic Champion Trimountain Tons stamped 649,932 671,785 506,942 Superintendence and labor Per ton $0.79 Per ton $.086 Per ton $1.05 Rock house Hoisting 0.07 06 0.10 05 0.08 09 Power drills 06 0.07 0.07 Timber and supplies 15 16 0.14 Surface costs 06 08 07 Transportation to mill 17 0.14 0.11 Stamping 0.18 0.22 0.21 Smelting refining and marketing 25 32 0.23 Total operating 1.79 2.00 2.05 Taxes 70 09 0.08 Construction, estimated average 0.10 0.10 0.10 Average current costs 1.96 2.19 2.23 10,000,000 tons to be mined in 26 years from time of investment at 5 per cent, interest and 2 per cent, amortization 15 0.27 0.22 Recent yield copper per ton S2.ll 22 Ib. $2.46 25 Ib. $2.45 19 Ib. Current cost copper per Ib 9 cents 8% cents 11.7 cents Cost of copper per pound, complete 93^ cents 9% cents 12% cents Pounds Cost Per pound cents Baltic 63,211,963 $5,808,000 9.19 Champion 66,938,611 6,512,000 9.74 Trimountain . . 34,210,014 4,172,000 12.2 164,360,588 $16,492,000 10.00 It seems proper to say that 10 cents per pound is the true dividend cost. Figuring on averages these mines would appear to be able to produce 41,000,000 Ib. a year at a profit of 5.5 cents. The Copper Range Company owns one-half the stock of the Champion and practically all the stock of the other mines, together with the Copper Range Railroad. The railroad does not earn much. We may estimate the total average earnings of the company at 15^-cent copper at $1,750,000 per year, equal to some $4.55 per share. Conceding that this average can be maintained for -twenty years we may estimate a value of $57 a share. 238 THE COST OF MINING COPPER RANGE COMPANY COMPARATIVE STATEMENT (Baltic, Trimountain and one-half Champion combined.) 1918 Average for ten years, 1909 to 1918 inclusive Tons of rock stamped 792 151 1 161 775 Pounds of refined copper produced 26,623,940 29 483 340 Pounds of refined copper per ton stamped Cost of copper per pound 33.61 $0 1446 25.38 $0 1033 Price received per pound 2476 1824 Profit per pound 1030 0791 Mining expense, smelting, freight, marketing copper, etc $3,849,216 38 $3 045 764 49 Net earnings Copper Range Company 2,895,615 28 2,333 045 60 Dividends Dividends Dividends Dividends Dividends Dividends Dividends Dividends Dividends Dividends Dividends Dividends Dividends paid in paid in paid in paid in paid in paid in paid in paid in paid in paid in paid in paid in paid in 1905. 1906. 1907. 1908. $1,536,086.00 2,304,810.00 2,304,810.00 1,536,740.00 1909 1,536,930.00 1910 1,537,340.00 1911 ' 1,357,104.00 1912. . 788,428.50 1913 , 1,084,498.00 1915 1,182,003.00 1916 3,941,648.00 1917 3,943,912.50 1918 2,366,394.00 Total dividends paid to December 31, 1918 $25,420,704.00 CHAMPION COPPER COMPANY Statement of Receipts and Expenditures from Date of Organization to December 31, 1918. Receipts Capital stock $ 2,500,000.00 From sale of copper (1902) 4,165,784 Ib. at 11.82 c 492,553.36 From sale of copper (1903) 10,565,147 Ib. at 13.37c 1,412,711 .43 From sale of copper (1904) 12,212,954 Ib. at 13.02 c 1,591,109.71 From sale of copper (1905) 15,707,426 Ib. at 15.56 c 2,444,554.91 From sale of copper (1906) 16,954,986 Ib. at 19.06 c 3,231,328.71 From sale of copper (1907) 16,489,436 Ib. at 17.28 c 2,848,838.41 From sale of copper (1908) 17,786,763 Ib. at 13.39 c 2,381,137.30 From sale of copper (1909) 18,005,071 Ib. at 13,00 c 2,339,361 . 62 From sale of copper (1910) 19,224,174 Ib. at 12.74 c 2,447,844.73 From sale of copper (1911) 15,639,426 Ib. at 12.54 c 1,960,758. 13 From sale of copper (1912) 17,225,508 Ib. at 16.16 c 2,782,457.60 From sale of copper (1913) 12,080,594 Ib. at 14.89 c 1,798,984. 15 From sale of copper (1914) 15,807,206 Ib. at 13.38 c 2,114,468. 18 From sale of copper (1915) 33,407,599 Ib. at 17.40 c 6,814,279.21 LAKE SUPERIOR COPPER MINES 239 From sale of copper (1916) 33,601, 136 Ib. at 25.28 c. . From sale of copper (1917) 27,550,343 Ib. at 28.735 c. . From sale of copper (1918) 21,748,514 Ib. at 24.757 c. . Total copper production, 308,172,067 Ib. To end of 1915 .225,272,074 Average price 15 cents. Expenditures Real estate (Champion location) Real estate (lands since purchased) 8,494,367.18 7,916,569.27 5,384,208.35 $57,955,532.25 $33,660,338 Net expenditures for construction and equipment, mining operations, smelting and marketing copper taxes, and incidentals Net balance of receipts Dividends paid in 1903 Dividends paid in 1904 Dividends paid in 1905 Dividends paid in 1906 $1,025,000.00 14,095.28 $1,039,095.28 30,866,413 . 66 31,905,508 . 94 $26,050,023.31 $300,000.00 200,000.00 1.000,000.00 1,200,000.00 Dividends paid in 1907 1,000,000 . 00 500,000.00 800,000.00 900,000.00 500,000.00 1,100,000.00 900,000.00 Dividends paid in 1915 3,100,000. 00 Dividends paid in 1916 6,014,540.96 Dividends paid in 1917 4,480,000.00 Dividends paid in 1918 1,975,720.00 Dividends paid in 1908. Dividends paid in 1909. Dividends paid in 1910. Dividends paid in 1911. Dividends paid in 1912. Dividends paid in 1913. Excess of receipts over expenditures 23,970,260.96 $2,079,762.35 Dividends to end of 1915, $11,500,000 equal to 5.11 cents per pound TRIMOUNTAIN MINING COMPANY Statement of Receipts and Expenditures from Date of Organization to December, 31, 1918 Receipts Capital stock From sale of copper (1902) From sale of copper (1903) From sale of copper (1904) From sale of copper (1905) From sale of copper (1906) From sale of copper (1907) From sale of copper (1908) From sale of copper (1909) From sale of copper (1910) From sale of copper (1911) From sale of copper (1912) From sale of copper (1913) 5,730,633 Ib. 9,237,051 Ib. 10,21 1,230 Ib. 10,476, 462 Ib. 9,507, 933 Ib. 8,190,711 Ib. 6, 034, 908 Ib. 5,282,404 Ib. 5,694,868 Ib. 6, 120,417 Ib. 6, 980,713 Ib. 4, 990, 938 Ib. $2,000,000.00 712,959.76 1,186,547.57 1,396,188.30 1,620,893.76 1,791,714.68 1,415,088.48 807,901.07 686,331.95 725,138.66 767,332.52 1,127,603.33 743,226.51 240 THE COST OF MINING From sale of copper (1914) 5,048,306 Ib 675,293 . 75 From sale of copper (1915) 8,302,896 Ib 1,445,041 . 27 From sale of copper (1916) 8,720,558 Ib 2,204,557 . 06 From sale of copper (1917) . . 6,278,097 Ib 1,804,006 . 21 From sale of copper (1918) 5,343,586 Ib 1,322,894 . 09 Total copper production, 122,151,711 Ib Balance of interest account '. 216,556 . 33 $22,649,275.30 Last 3 years 20,342,241 5,331,457 101,809,470 17,317,818 Receipts from copper sales to end of 1915, $15,101,000 from 101,809,000 pounds, equal to 14.84 cents per pound. Expenditures Real estate (Trimountain location) $800,000.00 Real estate (land since purchased) 3,000. 00 Net expenditures for construction and equipment, 803,000.00 mining operations, smelting and marketing copper, taxes, and incidentals 16,768,453.88 $17,571,453.88 Net balance of receipts $5,077,821 . 42 Dividends paid in 1903 $300,000 . 00 Dividends paid in 1908 500,000 . 00 Dividends paid in 1910 150,000 . 00 Dividends paid in 1912 300,000.00 Dividends paid in 1913 200,000 . 00 Dividends paid in 1918 500,000.00 1,950,000.00 Excess of receipts over expenditures $3,127,821 .42 Dividends to end of 1915 from 101,809,000 pounds, $1,450,000, equal to 1.42 cents per pound. From these statements, assuming that the period up to the end of 1915 represents normal competitive conditions, we may deduce that the average price of copper for the Champion was 15 cents a pound and the profits for this 5.11 cents, leaving a cost of 9.89 cents. Similarly for the Trimountain we find that the price of copper was 14.84 cents the profits 1.42 cents and the cost 13.42 cents. The results of the succeeding years, as in most other cases, do not correspond with these figures. From 1913 to 1918 the Trimountain paid no dividends, from which we may suppose that it is normally unprofitable. It took three years of war prices to enable it to pay anything. The Baltic, also, is probably a modest earner. No detailed report is issued for it for 1918, but the cost of producing copper is put down at 15.07 cents; that of Trimountain being 18.42 cents, and of Champion 11.92 cents. The average of these costs, considering the general con- ditions, is undoubtedly good. On a return to pre-war prices the Champion would be producing for about 7 cents a pound. LAKE SUPERIOR COPPER MINES 241 Tamarack and Calumet & Hecla (1908). The third type of Lake Superior copper mines is represented by the Tamarack and the Calumet & Hecla. The record of these properties shows very clearly that the conglomerate is a more difficult and expensive problem than the amygda- loid. The deposit has the advantages of remarkable uniformity and con- tinuity; but as compared with the amygdaloid, the conglomerate has three features that substantially increase the cost of working: (1) The richness of the ore has averaged 2^ times as great as that of the character- istic amygdaloid; consequently the cost for smelting has been 2% times as great, and this fact has meant an increased cost of not far from 50 cents a ton. (2) The conglomerate is much harder, tougher, and more difficult to handle. It breaks in rough, ugly chunks which wear out the tram cars, bin linings, and stamp shoes very rapidly. Its greater hard- ness is reflected by the fact that the mills will handle 40 per cent, more amygdaloid than of conglomerate. This characteristic in itself is pro- bably sufficient to add in the neighborhood of 20 cents a ton to the cost of handling, breaking, tramming, crushing, and milling this ore. (3) The hanging wall is loose and the mines need constant and expensive timbering. This item has added from 25 to 75 cents a ton to the cost. The total of these increased costs may be reckoned at, in round numb- ers, $1.20 a ton. The above figures have reference to the average con-, glomerate ore as mined to date which has contained not less than 55 Ib. copper to the ton. At present 1 the Calumet & Hecla is yielding only 42 Ib. a ton while the Tamarack is yielding only 23 Ib. On the present basis, therefore, the smelting costs are somewhat lower than they would be for an average of this class. Results and Costs at the Tamarack. Up to July 1, 1893, the Tama- rack mine had produced 84,000,000 Ib. copper from 1,400,000 tons of rock, an average of 60 Ib. per ton. The cost for operating was $5,816,083, or $4.15 a ton. Construction on the original mine from which this ore came was 69 cents a ton additional. The total cost had, therefore, aver- aged $4.80 per ton or 8 cents per pound copper. In 1892-3, 345,925 tons were stamped, yielding 46.43 Ib. per ton. The costs were: Underground mining $1 . 69 Rock house, surface and stamping . 77 Smelting 0.82 Total operating $3 . 28 Construction on old mine . 04 Construction on new shafts . . 2.14 Total $5.46 1 January, 1908. The yield has since fallen below 35 Ibs. 16 242 THE COST OF MINING By 1899 the costs were: Total operating $3 . 50 Construction . 63 Total $4.13 By 1904 the costs had become Mining and stamping $2 . 42 Smelting and general 0.61 Total $3.03 Of late years a good deal of amygdaloid has been mined. Since 1904 the operations on the Tamarack have been very much interfered with by a serious underground fire and other difficulties and delays. It is probable that the above figures give a fair idea of the results obtained. The item of construction has been very heavy indeed. It is accounted for by the sinking and equipping of five very deep and expen- sive shafts. It appears that up to 1899 the output of the Tamarack had been about 4,400,000 tons, produced at a total cost of $17,600,000 ,or $4 a ton. The resulting product was 195,000,000 Ib. copper, or an aver- age of about 44.3 Ib. to the ton, the cost of fine copper being about 9 cents a pound. Calumet & Hecla. The Calumet & Hecla has been a rich mine and its costs may have been somewhat higher than were strictly neces- sary. For the last ten years it seems that the costs have averaged a little over $4 a ton, but since the company issues no detailed reports, it is possible to make only an approximation. The cost does not appear at a disadvantage compared with the Tamarack, for while the Tamarack ores averaged about 44 Ib. copper per ton, those of the Calumet & Hecla have averaged 50 Ib.; and while it is true that the Tamarack has expended large sums on new construction and development, it must not be forgotten that the Calumet & Hecla has done the same thing during the same periods. At present the Calumet & Hecla is mining an increasing proportion of amygdaloid from the neighboring Osceola and Kearsarge lodes to the eastward of the conglomerate. It appears that the conglomerate workings as compared with a rep- resentative amygdaloid mine like the Wolverine would appear somewhat as follows: Underground factors making for increased cost are: the very great depth, averaging more than 4000 ft. vertically; the considerable heat, averaging about 80; the necessity of timbering, which in itself accounts for at least 30 cents a ton; the hard, angular character of the ore which renders shoveling, tramming and handling more difficult and expensive; and finally, the difficulty of maintaining the deep inclined shafts under a weak hanging wall. It does not seem unreasonable to appraise these factors at 50 cents a ton, at least, excess cost over that of the amygdaloid mine of moderate depth. The cost of milling the ore should be approximately 15 cents a LAKE SUPERIOR COPPER MINES 243 ton greater; while the cost of smelting 42 Ib. fine copper per ton as against 22 Ib. should be 25 cents more. To sum up it appears that mining costs representing the two types should compare about as follows: Amygdaloid Conglomerate Underground expense and rock house $1 10 $1 60 Transportation and milling 40 0.55 General expense . . .... 22 22 Smelting refining and marketing 25 50 Total $1 97 $2 87 The above costs omit the item of construction which has always been a very large item with these mines. It is safe to say that the Calumet & Hecla has spent 40 cents a ton throughout its career on its plant for construction. The costs of Calumet & Hecla on Osceola amygdaloid for 1910 are reported as follows: Mining Hoisting Rock house. $0.99931 . 0.101 0.1336J Transportation 0.0844 ] Milling 0.2631 Other.. 0.018 J Total $1.5694 Assuming that the output is 18 Ib. copper per ton, we must add for smelting, refining, and marketing Add also for general expense, same as for Wolverine Total.. $1.2039 0.3655 $1.5694 0.22 0.22 $2.0094 Calumet & Hecla Records. Until 1908 this great company had been extremely guarded in giving out information about its operating results. In order to form an idea of its costs it was necessary to compile such scraps of information as could be gleaned from a series of reports and make such deductions as seemed warranted. This state of affairs now seems partly to be a thing of the past. A legal controversy over the right of the Calumet & Hecla to control and manage the Osceola Consolidated Mining Company resulted in the disclosure of most of the essential facts regard- ing the former company's business condition. In the report for 1908 President Agassiz frankly gives these facts and it is to be presumed that more will be forthcoming in succeeding reports. The following summary shows the facts that may be had from the reports in the past eleven years : 244 THE COST OF MINING Year Tons fine copper Price cts. per Ib. Dividends Spent in purchase new property Balance of quick assols 1897-8 41,960 43,879 44,548 37,933 42,462 42,216 41,612 43,090 43,652 46,297 43,264 $4,000,000 7,000,000 8,000,000 6,500,000 4,000,000 2,000,000 4,000,000 4,500,000 5,000,000 7,500 ; 000 5,ooo,!ooo $6,558,456 4,398,544 4,260,858 2,168,130 fire 3,592,779 6,557,023 6,583,038 7,144,000 10,629,819 7,028,942 4,700,755 1898-9... 1899-00 1900-01 1901-02 1902-03 1903-04 42,000 acres timber land $184,859 9,223,395 1904-05... 1905-06 1906-07 1907-08 470,913 15.2 Total cash earnings Add investments, partial only . . $57,500,000 1,857,701 $9,408,254 1,857,701 decrease 55,642,299 9,408,252 65,050,551 1888 Milled 814,000 tons for 50,295,721 Ib. copper 61^ Ib. per ton. 1897-8 Cost $4.05 per ton milled. 1899-00 Pounds copper per ton 59.93, 1,464,697 tons milled. 1902 Pounds copper per ton 52.44. 1904-5.. 1906.. Milled 74,235 tons Osceola amygdaloid 22 Ib. per ton. Milled in March 27,018 Osceola amygdaloid. 1905-6 Milled 1,900,000 tons for 87,304,000 Ib. 45.9 Ibs. per ton. 1906-7 Milled 1,900,000 tons Calumet conglomerate. 350,000 tons Osceola amygdaloid for 6,892,548 Ib. 2,250,000 altogether for 92,584,000 Ib. = 41 Ib. per ton. 1907-8 Milled 1,894,176 tons conglomerate averaging 39.68 Ib. per ton. 603,891 tons Osceola amygdaloid yielding 11,145,220 Ib. or 18.4 Ib. per ton. In the year ending April 30, 1908, the " Product" of refined copper is stated at 78,980,466 Ib. There is some reason to believe that this means "Product sold." It is also reported that the company was con- stantly in the market, selling copper during the declining prices of 1907. If this is so, it must have realized practically the quotational average for the period, or 16.6 cents. On this basis the receipts for the year were about $13,000,000. The dividends were $5,000,000, leaving a balance of $8,100,000. There is no mention made of any considerable outside investments made during the year except the purchase of 50,100 shares in the Gratiot Mining Company. What the price was is not stated. Some explorations were also carried on in various places. Under these circumstances an LAKE SUPERIOR COPPER MINES 245 estimate of the cost of mining is nothing but a guess. However, I will venture the guess. In 1907 the dividends were $7,500,000. In addition $9,223,000 were expended in the purchase of property, but in so doing the balance of assets was diminished $3,600,000, leaving a net expenditure of about $5,600,000 from the proceeds of that year's business. The total profits then must have been about $13,100,000. The revenue from cop- per sales for that year was approximately $20,400,000. Deducting the profits we have left the costs, about $7,300,000. In that year 350,000 tons of Osceola amygdaloid was mined at an expense of $700,000. Deduct- ing this we have $6,600,000 as the cost of mining 1,900,000 tons of con- glomerate, $3.47 a ton. In the following year a cut of 10 per cent, was made in wages, but not until the latter part of the fiscal year. The effect of this probably was so diminished costs by 5 per cent, for the whole fiscal year. For 1908, then, I place the cost of mining the conglomerate at $3.30 and for the Osceola amygdaloid at $1.90. The total cost then would be: Conglomerate, 1,894.176 tons at $3.30 $6,230,000 Amygdaloid, 603,891 tons at $1.80 1,150,000 Total $7,380,000 Estimated cost of outside work and investments 720,000 $8,100,000 These figures should be read in the light of the following remarks by President Agassiz in the report for 1908: "In several of the previous annual reports the attention of the stock- holders has been called to the unsatisfactory character of the conglom- erate below the 57th level in the northern part of the mine. In 1900, the year before Mr. McNaughton became General Manager of the Company, the conglomerate yielded about 59.93 Ib. of copper to the ton. I regret to state that since then this percentage has annually been diminishing. In 1902 it has fallen to 52.44 Ib. to the ton. For the past fiscal year its yield was 39.68 Ib. To maintain our product we have stamped an addi- tional amount of conglomerate rock in addition to the amygdaloid rock mined from the Osceola lode, which has been increased from 74,235 tons in 1905 to 603,891 tons in 1907-08. The amount of conglomerate stamped has gradually increased from 1,464,697 tons in 1900 to 1,894,176 tons in 1907-08. Thus in 1907-08 eating into the available conglomerate at a rate far in excess of that we had been accustomed to consider the normal additional source of copper supply to replace that obtained from the waning conglomerate lode. We anticipate a still further reduction in the percentage. During the last five years the cost per ton of rock has been greatly reduced, partially offsetting the decrease in the copper contents of the rock." 246 THE COST OF MINING It will be seen, by a study of the table given above, that the average cost of copper for eleven years must have been 8.16 cents a pound. In 1898 it probably was 7 cents for a safe average and in 1908 was about 9 cents. Calumet and Hecla Conglomerate mine in later years. By comparison with these deductions the actual record as given in the reports for recent years is interesting. The report for 1918 also shows the depths reached by the different shafts. If I understand it correctly, Tamarack shaft No. 3 had reached a vertical depth of about 5800 feet. Up to the end of 1918, the Calumet and Hecla had been able to pay in dividends from the output of its original mines, about $140,000,000. from about 2,700,000,000 pounds of copper, some 5.2 cents a pound. Conglomerate Lode The comparative results of operations for the four years are as follows: ' : -' Year ending December 31 1910 1911 1912 1913 Tons of rock treated 1,950,040 $2.13 58,739,509 30.12 8.55c. 464 feet 9,215 feet 625 feet 1,924,480 $2.07 58,469,399 30.38 8.25c. 546 feet 8,613 feet 201 feet 1,746,960 $2.23 51,935,245 28.73 8.87c. 523 feet 10,048 feet 614 feet 1,175,259 $2.99 32,731,768 27.85 12.67c. 172.5 feet 5,929 feet o feet Mine cost per ton of rock (ex- cluding construction) Pounds of copper produced Pounds of copper per ton of rock . Total cost per pound of copper produced .... Shaft sinking Drifting ... Crosscuts and foot-wall drifts. . . The operating shafts on this lode have attained the following depths : Calumet Nos. 5 and 6 6155.0 feet, to boundary to 60th level. Calumet No. 4. . 7995.0 feet to boundary to 81st level. Calumet No. 2 6186.0 feet sinking permanently discontinued at 63d level. Slope shaft. 1588.0 feet below 57th level or 185 feet under 66th level Hecla No. 6 7857 . 5 feet under 79th level. Hecla No. 7 7876 . 5 feet 39 feet under 80th level. South Hecla No. 8 6102.0 feet sinking permanently discontinued at 63d level. South Hecla Nos. 9 and 19. . . 7823.5 feet 34 feet under 80th level LAKE SUPERIOR COPPER MINES 247 CONGLOMERATE LODE The comparative results of operations for the past four years are as follows: Year ending December 31 1915 1916 1917 1918 Tons of rock treated Mine cost per ton of rock (ex- cluding construction) Pounds of copper produced Pounds of copper per ton of rock . Shaft sinking 1,739,984 $2.13 51,738,588 29.74 201 feet 1,727,794 $2.63 51,785,016 29.97 feet 1,751,621 $3 26 50,415,860 28.78 feet 1,547,603 $4.09 43,329,816 28.00 33 feet Drifting Crosscuts and foot-wall drifts . . . 5,22 feet feet 5, 142 feet Ofeet 2,942 feet feet feet 7, 149 feet 3,659 feet The operating shafts on this lode have attained the following depths: Calumet Nos. 5 and 6. . . 6.155.0 feet, to boundary to 60th level. Calumet No. 4 7,995.0 feet to boundary to 81st level. Calumet No. 2 6,186.0 feet sinking permanently discontinued at 63d level. Slope shaft 1,588.0 feet below 57th level or 185 feet under 66th level. Hecla No. 6 7,874.6 feet, 32.7 feet under 80th level. Hecla No. 7 7,977 feet, 40 feet under 81st level. South Hecla No. 8 6,102.0 feet, sinking permanently discontinued at 6d3 level South Helca Nos. 9 and 108,132.7 feet, 152 feet under 83d level. Red Jacket Shaft 4,900 feet, 100 feet under 81st level. Tamarack No. 3 29.5 feet below the 18th level, 5,253 feet from surface. Tamarack No. 3 (inclined) . 8 feet below the 24th level, 616 feet below the 18th level. Tamarack No. 5 147 feet below the 40th level, 5,308.5 feet from surface. about 70 per cent, metal. This mineral is then smelted at plants situated along the shores of Portage lake, an inlet of Lake Superior. The smelting and refining are done by a single process; and ingot copper is produced that needs no further refining, the copper being exceptionally pure and commanding a higher price than any other in the market. CHAPTER XV BISBEE GEOLOGIC SPECULATIONS THE PERMIAN REVOLUTION GEOGRAPHY OF PENNSYL- VANIAN TIME GEOGRAPHY OF PERMIAN TIME THE PRESERVATION Ol MINERAL IZED BATHOLITHS THE PERMIAN MOUNTAIN RANGE OF CALIFORNIA ECONOMIC CONDITIONS OF BlSBEE EARLY IDEAS OF DR. JAMES DOUGLAS PRESENT STATE OF THE BUSINESS CALUMET AND ARIZONA HlSTORY SMELTERIES AT DOUGLAS ECONOMIC UNITS GROWTH OF PHELPS DODGE AND CALUMET AND ARIZONA COMPARISONS OF TEN YEARS GENERAL TENDENCIES PURSUIT OF ECONOMY ANALYSIS OF MINING COSTS OF THE COPPER QUEEN. Various references have been made in other chapters to the cycles of change that have occurred upon the earth's crust, (see chapters on coal, the Jerome district, the Porphyry coppers). It has been explained that coal is deposited toward the end of long periods of base-leveling; that many or most of the valuable ore deposits are incident to intervening mountain building efforts; that the principal fissure veins and dissemin- ated sulphide deposits have identical origin; that erosion is a necessary factor in exposing them; and an important factor, through the process of secondary enrichment, in determining their economic value. It seems worth while to dwell a little further upon the observations upon which these conclusions rest, and to bring out if possible a few more points about the relation of ore-deposits to broad geologic processes. It is not im- probable that very much more may be learned about the distribution of valuable deposits by analyzing the geography of past epochs of world history. For this line of thought the ore deposits of Bisbee will serve as an illustration. It is a rational inference, or at least an entertaining speculation, that these deposits originated during the Permian " revolution." They occur in Paleozoic rocks, some of which are as late as Pennsylvanian ; but according to the geologists of the Phelps Dodge Corporation, these rocks are not only unconformable with the next sedimentary series of the local- ity, the Comanche or Lower Cretaceous, but had been partially un- covered and extensively oxidized during an intervening period. It is true that there is a possibility that the mineralization took place in Trias- sic or Jurassic times, but on the whole it seems more likely that during those periods this part of the continent was elevated and was undergoing the erosion just referred to; that the mountain building and batholithic action of which these deposits were an incident, had occurred somewhat earlier. Various facts may be patched together to support this conclusion as well as to give some inkling of the geography of the times. 248 BISBEE 249 During the late Carboniferous, or Pennsylvanian, time, an extensive clear water sea covered a very large part of western North America and in it were deposited enormous beds of limestone which may be found in every state west of Louisiana and Minnesota, with the possible exception of Washington. Similar marine limestones are found also to the south in Mexico and to the north in western Canada. Swampy lowlands, occasionally flooded by shallow invasions of the sea, extended in a vast plain from central Oklahoma to the Hudson river, and even, perhaps, through Massachusetts to Nova Scotia and beyond. It appears then that the shore of the Pacific ran prevailingly from the present Gulf of Mexico northwestwardly through the heart of the Great Plains into north- western Canada. One would suppose that in the vast area between this shore line and the present Pacific coast there must have been some islands, Section A-B^ Se^fioa A-B Section C-D- Section K-F loo 200 300 00 Mto F*M FIG. 5. Sketch showing arrangement of ore bodies, in Bisbee, Arizona where 1 foot of development work opens 11 tons of ore. great or small, but so far as I can learn, the position of any such islands has not yet been made out. It thus seems to be a fair statement that the great plains on which the Pennsylvanian coal was formed, now far within the drainage of the Atlantic, at that time debouched upon the Pacific Ocean. The main land mass at that time was undoubtedly the north- eastern half of the present continent to which perhaps there were then attached large areas toward Greenland and Iceland and even Northern Europe, that are now partially flooded by the Atlantic. It is also pro- bable that the land itself was comparatively flat, having been maturely eroded into a very moderate relief. These conditions in the opinion of geologists are sufficient, or nearly sufficient, to explain the climate of Pennsylvanian times, which ap- parently was mild, moist and equable over most of the world. Perhaps 250 THE COST OF MINING the area of sea as compared to land was considerably greater than it is today. This, it is supposed, might be brought about by the long con- tinued erosion, by which a considerable portion of the continents had actually been swept into the sea, and at the same time the sea level had been raised appreciably simply by the displacement of the water of the ocean basins by sediments. Of course if the solid crust of the earth should be reduced to a dead level, that is if the inequalities were to be removed, there would be neither continents nor islands, but a universal ocean about two miles deep. It is thought that the progress of base- leveling might bring about some portion of such a result. However this may be, it is at least significant that changes of climate seem to coincide with changes of geography. Both occurred during the Permian. In the Rocky mountain area the sea not only disappeared throughout, but the thick masses of sediments which had formed on its floor were broken through by the upthrust of fault blocks and the crystal- line rocks (granites, etc.,) of the underlying crusts were exposed along many an excarpment. To mention well known localities, evidences of this may be seen plainly at the Garden of the Gods, near Colorado Springs and at numerous other localities easily visited along the Front Range all the way from Cheyenne to Albuquerque. If one examines the red con- glomerates in the Garden of the Gods, he finds that some of them are almost pure granitic talus, which crumbles in the fingers and is patently derived from the Pike's Peak granite. Two handfuls of such gravel, one from the Permian red beds, the other from a stream that washes it down in 1919, are absolutely indistinguishable. Other evidences of an abrupt change of climate, are far from lacking. In central Kansas great beds of salt are found in a wide area in Permian rocks, representing the drying up of an extensive sea a sure proof of desert climate. Such an occurence may be explained by the emergence of the new mountain barrier just referred to, just as the drying of Great Salt Lake of our day is explained by the presence of the Sierra Nevada. In other parts of the world intense refrigeration took place. Continental glaciers on an immense scale were developed in south central Asia, in South America, South Africa and Australia. The Permian was a ''revolution" indeed. It is in such events that many, if not most, ore-deposits originate. The upthrust of mountain chains and plateaus, the deepening of oceanic troughs must be due to the exhaustion of the ties that had been maintain- ing the stability of the earth's crust; or conversely, during a long period of quiesence strains accumulate in the sub-crust. Such strains are expressed either in heat or movement or in both ; the longer they accumu- late, the more heat and movement there will be to dispose of. Naturally this is a matter of speculation, but a review of geologic history as well as a study of the principal areas of mineralization, tends to urge it upon one's BISBEE 251 imagination. It seems, moreover, worth noting that the escape of molten magmas into the upper crust is especially favorable to the formation of ore deposits when that surface has been covered by a thick accumulation of sediments. It is supposed that the chief mineralizing agent is super- heated water thrown off by the cooling and crystallization of extensive magmas. If such waters escape freely to the surface, the mineralization also will escape in the air. If, however, the magmas force their way only into the lower portions of the comparatively cold crust, say into the lower strata of great sedimentary formations, the waters from them will be cooled by, and their mineral contents precipitated in those rocks. Mineralization takes place in or around the upper portions of the peri- pheral surface of the cooling magmas, or batholiths. Several consequences would follow. The batholithic action is a part of the formation of mountains. Mountains are subject to intensified erosion. If the domes of the batholiths, even when buried under over- lying masses, are raised far above the base level of erosion they will eventually be attacked and swept away. The larger batholiths so far as they may be seen to-day are those to which this has happened. Their upper surfaces are no longer there. They contain quite generally only feeble and ill-concentrated mineralizations, although such mineralization may be widespread. A very brief review of base-leveled mountain systems containing extensive igneous intrusions ; such as might have produced ore deposits, confirms this observation. The old mountain ranges of New England and Canada, as well as more modern but extensively eroded batholiths like the Sierra Nevada and the Central Idaho, carry only scattered and generally worthless minerals. Good ore deposits are not wanting in ancient mountain systems, but they are found in positions where they have been protected from excessive erosion. In another expression, they have remained wholly or in part, below the base level. Bisbee is an excellent case in point. It has twice been exposed by erosion, first in pre-Cretaceous times and again in the Quaternary. But in both cases, apparently, the erosion barely reached down to the main deposits, which have been preserved far more thor- oughly than most others, so that they remain as good an example of their type as can be found anywhere. For all local details one may refer to many interesting publications, particularly Ransome's "Geology and Ore Deposits of the Bisbee Quad- rangle/' U. S. Geological Survey, Professional Paper No. 21 (1904) and the " Geology of the Warren District/' by Bonillas, Tenney and Feuchere, Bulletin No. 117, September, 1916, American Institute of Mining Engineers. It is from these papers that I get most of my facts. One or two observations designed to link these facts with others may be suggestive, or at least worth some attention. 252 THE COST OF MINING The Bisbee batholith so far as exposed (in Sacramento Hill) is a tiny one. How large it may be at some lower horizon is pure guess work; the only certain thing is that it expands going downward in such a way as to suggest that the known portion is only the crest of a roughly conical mass, the base of which may be many times the area of the whole explored district. This little batholith never has been the core of a prominent mountain mass, its scale is merely that of an outlier. That is why it remains so nearly intact. It was formed on the fringe or flank of a Permian mountain chain in which batholithic action, with its accom- panying compression of the upper crust, including the sedimentary strata lying upon it, occurred on a grand scale. But Bisbee is plainly not within this chain. The rocks are not violently contorted, but only gently inclined. They show only the beginnings of contact metamor- phism. Bisbee lay in the foothills of the Permian mountains. Its topography, as shown by the position of the overlying Cretaceous forma- tion, was typical foothill topography i.e. rocky hills and talus slopes. The big mountain chain lay toward the west or southwest, the lowlands toward the northeast. The mountains seem to have risen rapidly to a great height, producing immediately the climatic change referred to. This is indicated by the rocks of the Plateau region, which, though elevated are otherwise nearly undisturbed to the present day and have been, of course, at all preceding times back to pre-Cambrian. On this plateau the Moenocopie formation, of Permian or early Triassic age consists of red shales containing only salt water, a typical desert deposit. It represents with practical certainty either an inclosed basin, like the present Great Basin of Nevada and Utah, or a longitudinal valley made arid, like the present northward extension of the Gulf of California, by a barrier that shut on the moisture from the ocean. In later Triassic times this plain was covered by a coniferous forest of large trees, (the famous petrified forests of Arizona are a remnant of it) similar to those growing on the plateau at present; showing a con- siderable amelioration of the climate. It is probable that this flat country extended much nearer to Bisbee at that time than the present margin of the plateau, but the indications are that it did not reach to it, perhaps not across much of the present intervening mountain belt, because it seems that the Bisbee district was elevated enough to be undergoing mode- rate erosion. At any rate its rocks had been tilted and had been deeply scored before the Lower Cretaceous times. It is also not improbable that the change of climate in Triassic times was due to the wearing down of the highest crests of the Permian mountains. Those mountains might be called the Old Mohave mountains, for the base leveled core of them may be seen in Southern California, largely upon the Mohave Desert. This old range must not be confused with any of the present mountains in that region, which are merely fault BISBEE 253 blocks of recent age. On those blocks may be found much older rock masses all of which show the characteristics of a first class mountain building effort. They are sharply compressed in folds, liberally intruded by granite, and so thoroughly metamorphosed into marble and schists that there is generally no means of identifying them. One mass, how- ever, in the San Bernardino Mountains is so large that its central portion has escaped the pervading metamorphism and in it I have found abun- dant Paleozoic fossils, enough to identify these great marble fragments with the limestone formations of Arizona. There are enough similar patches in the intervening region to make it certain that the whole Paleozoic series of southern Arizona extended through uninterruptedly to the Pacific Ocean. What the limits of the Old Mojave mountains were I have only the dimmest idea. Perhaps in a rude way they are indicated by the Desert Zone described by Ransome. The chain was certainly not less than 100 miles wide, probably 200 miles, and certainly many hundred miles long; undoubtedly a mass greater in every respect than the Sierra Nevada of the present day. Similar patches of crystalline marble are found here and there along the coast as far north as San Francisco, and undoubtedly further, but in the neighborhood of Redding, 180 miles north of San Francisco, the Paleozoic rocks have changed their character. They no longer show intense metamorphism or any evidence of belonging in the core of such a mountain range. If the Old Mohave range went that far north therefore, it was near the coast. Southeastward the range doubt- less extended a long distance, far into Mexico, but to what point we must leave to future investigations. The imposing batholithic action along this great Permian range was accompanied by widespread mineralization, but in the core of the range only the roots of the ore deposits remain. The bulk of them has been removed by erosion. Probably it disappeared largely even in Triassic time. Although the Bisbee deposits are of Permian age, it is far from safe to assume that the other copper deposits in the region are of the same age. Another great geologic " revolution" occurred at the end of Mesozoic time and it is to this one and to the disturbances and upheavals that continued more or less through Tertiary times, becoming especially pronounced toward the end of the Tertiary, that the continent owes its present form. Again batholithic action occurred on a considerable scale and ore-deposits were formed in the region. The Tombstone mines, barely 20 miles from Bisbee, belong to these later times. Some of the great copper mineralizations such as A jo, Ray, Cananea and Globe, may also be later, but so far as I know their age is not so definitely fixed. The exploitation of the Bisbee district will be better understood by retaining the few pages relating to it in the first edition. 254 THE COST OF MINING Bisbee District (in 1909). Dr. James Douglas describes the Copper Queen mine in a paper in Vol. XXIX, 1899, Transactions of the A. I. M. E. The ore yielded, " about 7 per cent, copper after a rough selection in the stopes where about one-half the total material broken is rejected. To supplement the deficiency in filling the stopes, barren ledge matter from exploratory drifts is used. Though the timbering of worked-out por- tions of the mine is thus enforced, so violent is the movement of the ground that the timbers are dislocated or crushed to chips. About 30 ft. board measure of timber (from Puget Sound) is buried in the mine to the ton of ore extracted." This is a terrific cost for timber. At an average price of $24 per M. delivered at the mine, we have on this basis 75 cents a ton for timber alone. From 7 to 10 tons of ore are extracted per foot of opening work. A large part of the exploratory openings have to be closely timbered, and the cost for this work is high. The reason for the conditions described will appear very plainly from a consideration of the structural relations of the orebodies. Dr. Douglas says: "With regard to ledge matter and the oxidized ore, my own opinion is that they are the product of replacement and local concentration; that where there is ledge matter to-day there was, originally, more or less compact iron pyrites carrying a small percentage of copper; and that during the process of alteration not only did the ferruginous solutions of alumina replace the pyrites, but the cop- per, by a process of segregation akin to crystallization, was concentrated and collected into areas of limited size, thus constituting the comparatively small bodies of oxidized ores which are disseminated irreguarly through the very large masses of ledge matter. As the outline of the masses of ledge matter has never been traced, it is impossible to determine their actual size, but approximately there has been exposed above the 400-ft. level not less than 10,000,000 tons of edge matter." Since at the time this was written not much over 1,000,000 tons of ore had been mined above the 400-ft. level, it is probable that Dr. Douglas believes that the ores now occupy approximately one-tenth of their origi- nal volume; the remaining nine-tenths being now " ledge matter," mainly ferruginous clay. Nothing could be clearer than the above description as an explanation of the cost factors. All the altered residual masses must be explored; this means that the mine development, in addition to the shafts and drifts necessary to reach the ore, must search through 10 cu. ft. of difficult mining ground for every cubic foot to be extracted. At various places in the mines large masses, like kernels, of original pyrites, still exist, surrounded on all sides by the " ledge matter." Al- though workable ore is found along the periphery of these masses, the pyrite itself is not payable. No concentrating ore has yet been found in the district. All the ore raised from the mines must be smelted, conse- quently it must be slelected as much as possible. BI$BEE 255 To sum up there are in these mines three powerful factors that make for high costs: (1) A very large proportion of development work; (2) soft ground, requiring slow, cautious working and heavy timbering; (3) careful selection imposed by the necessity of smelting the whole product, thus imposing a high subsequent metallurgical cost. This is the most imperative factor of all, for it can be shown that in this case lower icosts at the expense of having to smelt lower grade ores might result in fr ght- ful losses of profits. To mine 4 per cent, ore for $3 a ton against 7 per cent, ore at $6 a ton, smelting costs remaining the same, would increase the cost of copper about 0.82 cents a pound, or $16.40 a ton. During the ten years since the above was written the Copper Queen has produced 900,000,000 pounds of copper and the Calumet and Arizona 600,000,000. The total output of the district at the end of 1918 was CopperQueen 1,660,000,000 pounds Calumet & Arizona 771,000,000 pounds Shattuck-Arizona 109,000,000 pounds 2,640,000,000 pounds If we add the production of the present year, besides some shipments not included in these figures, we find a total production of not less than 2,800,000,000 pounds of copper alone. Adding the equivalent in copper of other metals we may count on a metallic output equal to 1,500,000 tons of copper. This comes from a total area not exceeding 2400 acres. I suppose the total output of ore has been about 25,000,000 tons. In round figures therefore, the output has been 10,000 tons of ore and the equivalent of 1,250,000 pounds copper for every acre within the extreme points explored in the district. This is not all. It is probable that not less than 5,000,000 tons of good ore is fully opened up in the limestone mines, besides more than 20,000,000 tons of disseminated ore in the porphyry of Sacramento Hill. Discovery of new ore is proceeding at the usual rate. There is fair reason to suppose that the ultimate production of this tract will be at least twice the amounts mentioned. These statements make a curious commentary on the progress of exploration, knowledge, inference and practice in this kind of mining. The late Dr. Douglas, for 35 years the active head of the Phelps-Dodge mining interests, was for many years extremely cautious in his expecta- tions of this district. For a long time he felt that the valuable ore was confined to erratic concentrations which though, rich and profitable while they lasted, might come to an abrupt end. It was for a quarter century the custom of Phelps, Dodge and Co., to retain as surplus in the treasury an amount of cash or securities equal to the total sum invested in their mines. This was a drastic assurance that they would not pay themselves profits that were not really profits. By this plan the business 256 THE COST OF MINING might come to a sudden end, but the stockholders would be assured of the safety of their entire investment. Dividends paid after making this provision could surely be regarded as income even if the mines should be- come worthless holes and their equipment rusty junk. Dr. Douglas' belief that the original sulphide mineralization was not pay ore has been proved not to be true. This fact alone must have altered profoundly his early conception of the district. It is probable that in thirty years years the development of the country, plus the advancement in the art of mining, has reduced the minimum grade of merchantable ore from about 5 per cent, copper to near 1 per cent. PRODUCTION OF COPPER QUEEN FOR THREE YEARS. LIMESTONE MINES ONLY Dry tons Gold, oz. Silver, oz Copper, Ib. Lead, Ib. 1915 1916 1917 775,000 878,000 790,000 18,974 24,030 19,156 943,000 1,096,000 828,000 86,000,000 99,500,000 93,500,000 9,388,000 9,421,000 6,870,000 2,443,000 62,160 2,867,000 279,000,000 25,679,000 From this we see that the present, or recent, average of the ore is about 114 pounds copper, 10 pounds lead 1.1 oz. silver and 50 cents gold per ton. The value of all these, expressed in copper alone is about 125 pounds. Year Number of employees at mine Development, feet Number of employees at reduction works Tons smelted Copper smelted 1915 1916 1917 1883 2530 2264 68,431 80,853 58,518 965 1118 1485 1063,329 1,304,523 1,276,817 125,144,000 171,894,000 191,581,000 6677 207,802 3569 3,644,669 488,619,000 The output of the mines per man per year is 366 tons, the tons per foot of development is nearly 12; but the latter is somewhat above the average. The pounds of copper, including its equivalent in other metals, per man per year, is about 45,700 pounds, and at the smelteries 145,000 pounds; for both mining and smelting about 34,000 pounds, or somewhat less than 100 pounds per day. Calumet-Arizona. The Copper Queen mines begin at the surface or outcrop, the Calumet and Arizona has always been a "deep level" mine. The remarks made upon it in the first edition are here retained BISBEE 257 Year Copper, Price Value copper Gold and silver Total value Tons 1904 31,638,660 12.562 3,974,448 $195,926 $4,170,374 205,807 1905 31,772,896 14.923 4,741,484 178,843 4,920,327 202,952 1906 37,470,284 17.96 6,729,612 238,464 6,968,076 215,671 1907 30,689,448 18.103 5,554,781 210,846 5,765,627 232,460 1908 28,048,329 12.948 3,631,655 234,358 3,866,013 265,344 Total 159,619,517 24,631,978 $1,058,437 $25,590,317 1,122,234 Year Development, feet Dividends Excess of assets No. of men mining Estimated cost of mining per ton 1904 1905 19,955 21,737 $1,300,000 1,700,000 $1,823,992 583 629 $6.15 6 68 1906 14,818 2,600,000 597 6.00 1907 23,016 3,300,000 621 5 70 1908 30,680 800,000 $3,423,269 567 4.60 100,206 $9,700,000 Copper equivalent 166,500,000 Ib. Copper equivalent per ton Approximate earnings Approximate cost Cost per ton Cost per Ib. copper Tons per ft., development work 148 Ib. $10,900,000 $14,790,000 $13.18 8 . 9 cents 11 The first report that gives actual operating figures to any extent is that for the year 1908. The comparison, with the five-year period is interesting. The amount smelted was 265,344 tons containing the equivalent of 113 Ib. per ton, against 148 for the five years. Operating mines and smelters $2,089,158 Current construction 195,408 Salaries and general expense 32,011 Refining and marketing 368.529 Ore purchases 22,964 Per Ton $7.87 0.74 0.12 1.39 0.08 Total The cost per pound copper is 9 cents. $2,708,070 $10.20 There is nothing to indicate the comparative cost of mining and of smelting except the number of men employed in each. The total number at the mines averaged 567, and at the smelter, 484. It seems probable ihat the total cost of mining will equal $6 a day per man employed, this 17 258 THE COST OF MINING being estimated on the theory that the labor cost is 60 per cent, of the total, which would indicate a mining cost, including development and everything, of $4.60 a ton. This cost is good for Bisbee and I believe below the average of this mine. Smelting would cost, on this basis, 13.18 per ton, which seems very good. Superior and Pittsburgh. This property is a consolidation of several others which undertook a bold and expensive exploration of a tract of 1388 acres lying in the trend of the assumed extension of the Copper Queen orebodies. The venture has been successful as far as finding ore is concerned, but has not yet become profitable. It is heavily capitalized, the stock issued being 1,500,000 shares at $10 par value. That the out- come is viewed with confidence by the stockholders, or by the public, is proved by the present market value (April, 1909) for the stock of $13 a share. Operations have been carried on since the consolidation at a loss of $1,031,284 in three years. The output and results have been as follows: Dry tons smelted Feet development Copper siver Total value 1906 1907 1908 95,779 111,710 214,847 40,019 23,332 29,572 9,044,875 9,691,905 21,924,259 $21,941 33,401 121,296 $1,645,339 1,787,544 1,839,000 422.336 92,923 40,660,539 $176,638 $6,271,883 The equivalent of copper per ton is 100 Ib. The cost per ton averages $17.30, and the cost per pound copper 17.3 cents. Tons per foot develop- ment, 4^. A great improvement over these averages is shown by the report for 1908. The copper equivalent in the ore for that year is 108 Ib., nearly equal to Calumet & Arizona for the same year. Here is the record : Per Ton Tons smelted dry 214,847 Mining and smelting $2,490,857 $11 . 60 Current construction 30,938 0. 14 Salaries and general 36,648 0. 17 Refining and marketing 264,869 1 . 23 Interest 84,719 0.40 $2,908,031 $13.54 The cost per pound was 12.54 cents LATER HISTORY OF THE CALUMET AND ARIZONA On the occasion of the visit of the American Institution of Mining Engineers to Arizona in September, 1916, this Company prepared for distribution, a pamphlet describing its history and properties, and I BISBEE 259 can do no better than to quote this concise bit of mining history almost in full. Early History. Until the fall of 1900, the Copper Queen Consolidated Mining Co. was the only company of any importance in the Warren District. While hopeful prospectors had located many claims south of Sacramento Hill, these claims were generally looked upon as worthless. Even when ore had been developed from the Spray Shaft of the Copper Company to within a short distance of the " Irish Mag" sideline, the old belief that ore would end at Sacramento Hill prevented the develop- ment of the " Irish Mag" and of claims further south. In 1898 Capt. James Hoatson of Calumet, Michigan, visited the Warren District. After becoming familiar with the occurrence of ore in the district, and learning the general location of ore bodies near the Spray Shaft, he became convinced that a large orebody would be found in the Irish Mag claim. He interested friends in Calumet in his idea, with the result that the Lake Superior and Western Development Co. with Charles Briggs as President was formed to develop the Irish Mag and other claims. In March, 1901, the company was reorganized as the Calumet and Arizona Mining Co. The Irish Mag Shaft was started in November, 1900, and was sunk to the 750-ft. level before any drifting was done. Mr. I. L. Merrill was the first Superintendent. The first work was disappointing, and it became necessary to raise more money before continuing the development. At this time Mr. Thomas F. Cole, of Duluth, Minnesota, became interested in the prospect. He secured money with which to continue the work from Mr. Henry W. Oliver and others of Pittsburgh and Duluth. A little ore was found on the 850 and 950-ft. levels, and a small smelter was started in Douglas. In the spring of 1902 the Northeast Drift on the 1050 level cut the main Irish Mag orebody. For 325 feet the ore developed by this drift averaged over 9 per cent, copper. From this time the success of the Company was assured. Shipments to the Douglas smelter were commenced in November, 1902, and. the first dividend of $400,000 was paid in December, 1903. Early in 1903 the Oliver Shaft was started to develop the Senator group of claims and the following year large orebodies were found on the 1050 level of this mine. Development Companies. In 1902 and 1903 the success of the Calumet and Arizona Mining Co. led several of the men who had been responsible for this success to explore other ground lying still further south and east of the productive area. The "Junction Development Co." " Pittsburgh and Duluth Development Co." "Lake Superior and Pittsburgh Development Co." and "Calumet and Pittsburg Develop- ment Co." were formed to develop various groups of claims. The officers 260 THE COST OF MINING and management to these companies were the same as of the Calumet and Arizona Mining Co. Exploration was carried on under the most discouraging conditions. Shafts had to be sunk 1000 feet or more before there was any likelihood of finding ore. Usually the surface gave no idea of where orebodies might lie, and thousands of -feet of development work in barren ground had to be done before orebearing horizons were located. In the Junction Shaft and the Briggs Shaft great flows of water were encountered, which at times stopped all progress for many months, until the ground could be drained. Although the volume of water pumped from the Junction has exceeded 4000 gallons per minute and the Briggs has pumped over 2500 gallons per minute, during 13 years of fighting these heavy flows of water, the pumps have never been lost. Many million dollars were spent before any of the shafts became self- supporting. Although in one case eight years elapsed before commercial ore was found, great mines were finally developed on all four properties. In 1906 th3 four smiller companies were combined to form the Supe- rior and Pittsburg Copper Co., which was absorbed by the Calumet and Arizona Mining Co. in 1910. In 1913 the American Saginaw Develop- ment Co. was also absorbed by the Calumet and Arizona Mining Co. Later History. In 1910 and 1911 the development of wonderful sulphide orebodies in the Junction and Briggs Mines made these mines the greatest in the enlarged Calumet and Arizona property. The in- creasing proportion of sulphide to oxide ore caused by these large ore- bodies in the lower mines was the principal reason for building the new and larger smelter in 1912 and 1913. In 1913 the Irish Mag Mine, the beginning and cause of the success of the Calumet and Arizona Mining Co., was practically worked out and closed down. The bottom of the limestone was reached on the 1350-ft. level of this mine. The Oliver, Cole, Hoatson, Briggs and Junction Mines are all producing. The present monthly shipments to the Douglas smelter average about 68,000 dry tons of ore, from which 5,800,000 Ibs. of copper are recovered. In addition about 300 tons per day of low grade pyritic fluxing ore is shipped to other smelters. To prevent depletion of ore reserves by this large production, it is necessary to do an enormous amount of underground prospecting. The extreme irregularity in distribution and shape of orebodies makes the footage of drifting and raising necessary to develop a ton of ore far greater in Bisbee than in any other large copper district. At present the drifting and raising per month carried on by the Calumet and Arizona company alone averages over 9000 feet. In the most productive part of the district, in order to find all the ore it is necessary to do over a mile of development work per acre. This work finds from 60,000 to 80,000 tons of ore per BISBEE 261 acre. The great amount of drifting and raising per ton of ore makes it impossible to develop in advance the ten or twenty years' life which is considered necessary in the case of the great low-grade copper mines. Yet the fact that the ore reserves show a constant, though small increase makes it certain that the life of the property will be long. The Calumet and Arizona Mining Co. now owns about 2005 acres of mining claims in the Warren District. Nearly three quarters of this area is absolutely undeveloped, and only the fifteen acres of the Irish Mag claim are considered to be worked out. Summary of Production. In less than 14 years, from the time ship- ments started from the Irish Mag Shaft to July 1, 1916, the present Calu- ment and Arizona mines produced 5,763,226 dry tons of ore, from which 634,694,594 pounds of copper were recovered. The gold and silver values in this period amounted to $6,913,072. The dividends paid before July 1, 1916, reached a total of $25,726,661.75. The last paragraph is particularly enlightening. It may be noted that the dividends were up to this time almost exactly 4 cents per pound of copper. It will be noted also that the gold and silver recovered were worth about 1.1 cents per pound. At the summer of 1916 copper had averaged nearly 16 cents a pound during the life of this mine; adding the gold and silver it must have been about 17 cents. The operating costs, plant charges, investments and working capital must have absorbed about 13 cents a pound. It will be noted that the ore from this mine is not as high-grade as that of its neighbor. In 1916 it produced 85 pounds copper per ton of smelting ore; in 1918 about 86 pounds. In the latter year the average number of employees was 1636 at the mine alone. Their production was 50,909,000 pounds, 31,000 pounds per man per year. The Calumet and Arizona smeltery at Douglas is said to be one of the best in Arizona, particularly in the way of labor saving devices. In 1918 the yield in copper per man for the year was about 120,000 pounds; in tons about 1200. In mining and smelting combined the output per man per year was some 26,000 to 27,000 pounds. In 1918 the efficiency was low and the costs high; but in the main the lower output per man as compared with the Copper Queen is explained by the lower grade of the ore, the greater depth and wetness of the mines and the larger proportion of development work, both per ton and per pound in other words the mines are not so good. Neither company publishes any cost details, although both give financial statements and many facts of interest. One may state sweep- ingly that during the past ten years no new element of importance has been introduced to alter the operating practices or costs. The latter change from time to time according to the proportion of development work, the state of the labor supply, the price of wages and materials, 262 THE COST OF MINING and, more particularly, to the grade of the ore. We have seen that the yield of metal in mining and smelting per man per year has lately been, for the Copper Queen some 45,000 pounds, for the Calumet and Arizona about 31,000 pounds. In 1915 these outputs would have meant a cost for copper of about 5 and 7 cents respectively; in 1919 they meant about 9 and 12 cents respectively. These costs are not complete. To them must be added freight on ore from mines to smelteries, freight on copper to New York, refining, general administrative and selling expenses, taxes and depreciation. The lowest cost per ton for mining ever attained by the Copper Queen was, I believe about $5.00, by the Calumet and Arizona about $4.50, in both cases in the period between 1912 and 1915. At present it must be 60 to 80 per cent, higher. I have recited at various places in these pages about all the facts in regard to the costs of operating these mines that seem to have any general interest; but some facts on power, smelting, etc., may be added for reference. Most of the power, at least in the southern part of the State, is made from the fuel oil. At the best plants a barrel of California oil 18 Beaume, weighing 328 pounds, makes from 300 to 315 kilowatt hours of power. In such a plant, for instance that of Ajo, the power is made in Curtis steam turbines, driving generators of 7500 K.W.H. The steam pressure used is about 250 pounds with 100 to 110 degrees superheat. I suppose such a plant is about as efficient as can be had at a mining plant. It will be noticed that each pound of oil makes from 0.9 to 0.95 K.W.H. Before the war a pound of such fuel in some places would cost only a little over a half cent (oil at $1.70 a barrel). The fuel cost per K.W.H. was therefore under six mills per K.W.H. and the total cost was said to be as low as 8 mills. Of course the power-cost items belong to the pre-war period and at present are at least 60 or 70 per cent, higher. From these figures the cost rises at various places very considerably. At the Copper Queen Plant at Bisbee, at the end of 1916 the fuel required was about 3 Ibs. of oil per K.W.H. and at various other places more than that. Such a consumption of fuel would indicate a cost of more than 2 cents per K.W.H. The progress of the industry has called attention to the possibility of reducing these costs by means of electrical transmission. Some water power is made by the Government at Roosevelt Dam and delivered at the Inspiration mine at Globe. I suppose that under present con- ditions this power must be the cheapest used in the state. A considerable amount might be obtained from the Colorado River, but the transmis- sion lines of some of the mines would be very long and such a project depends on Government co-operation, which means usually prolonged and dilatory negotations. But there is a standing argument in favor of manufacturing the electrical power at the coal mines, or rather in a coal BISBEE 263 field, in the northeastern part of the state in the Plateau region, from which transmission lines might reach practically all of the mines at distances from 100 to 200 miles. The price of oil seems likely to grow higher as time goes on and coal used at the various districts has to be transported by rail distances of several hundred miles. The cost of such transportation is usually several times the cost of mining the coal on the ground. I suppose that under ordinary conditions a large power plant placed immediately at a coal mine would produce power for 3 to 4 mills per K.W.H., say about $35 per horse power per year. What the transmission lines would cost I do not know, but it seems as if the large amount of power used by the mines, plus a considerable amount used in agriculture and other industries in the state makes some such develop- ment more or less inevitable. SMELTING AT DOUGLAS At the end of 1916 the Copper Queen smeltery, with a capacity of 100,000 tons a month, cost about $4,000,000. The Calumet and Arizona smeltery at the same place with the addition of a sulphuric acid plant, cost nearly the same amount. The average copper content of the ore at the Copper Queen was 7J per cent, and that at the Calumet and Arizona about 4J per cent. In the former case the high grade was explained by the fact that a considerable quantity of high-grade concen- trates and also a good deal of high-grade crude ore was brought from other mines. The converter matte in this smelter ran about 38 per cent. The coke used in the blast furnaces was about 12^ per cent, of the charge. The per cent, of ore in the charge was about 75 per cent. The tons smelted per square foot of hearth per day was about 5.8 per cent.; about 3 per cent, limestone was used for flux; 295 cubic feet of air at an average pressure of 28 ounces was used per square foot of hearth area. The copper in the slag was 0.38 per cent. In the reverberatory in which the fine ore is treated the matte fall was 26 per cent.; the copper in the matte 34 per cent.; the copper in the slag 0.35 per cent.; 0.8 per cent, barrel of oil was used per ton of charge and 4% pounds of steam per pound of oil, obtained from the waste heat. Of recent years, experiments in these reverberatories in the way of increasing the burning capacity by en- larging the drafts for escaping gases has increased the capacity from 400 tons to 800 tons per day. These reverberatories at the Copper Queen mines have an area, I believe, of 19 feet by 91 feet. Those at the Calumet and Arizona are somewhat larger. At the Copper Queen plant the amount of ore treated per man per day was about 3 tons. At the Calumet and Arizona where labor saving devices were more extensively used, but where on the other hand, the amount of sampling required for custom ore was very much less, the tons stated per man was about 264 THE COST OF MINING These are the main elements as far as I know in the cost of operating, and in detail that cost will be determined by the price of labor in the various mines. GROWTH OF PHELPS-DODGE AND CALUMET AND ARIZONA COMPANIES One who studies the economics of mining should not fail to take note of the progress of financial and industrial organization as shown by the chief corporations. It must strike anybody that the problem of re- ducing costs is confined principally to three elements: (1) to secure cheaper power, (2) to substitute power for labor, and (3) to prevent useless duplication of effort. To accomplish these purposes is the chief function of capital. To illustrate this process it seems worth while to retain in somewhat condensed form the following pages from the first edition which were taken largely from the prospectus of Phelps-Dodge and Company, issued in 1909. STATEMENT BY COMPTROLLER COPPER QUEEN CONSOLIDATED MINING COMPANY "This property consists of one hundred and thirty-five (135) mining claims in the Warren mining district, Cochise County, near the town of Bisbee, Arizona, a large smelting plant at Douglas, of a capacity of 3000 tons a day, which treats the product of the mines of the Copper Queen Company, and for the time being the ores of the Moctezuma Copper Company, and does general custom work. The company conducts a mercantile business, and has large stores and ware- houses in Bisbee and Douglas, and a branch store in Naco, Arizona, as well as other pieces of real estate. It also owns mining interests in othe"r localities. "For five years past the production of the mines has been 294,595,687 pounds. "The output of the Douglas Reduction Works, including purchased and cus- tom ores, for five years past has been 363,121,911 Ibs. "The earnings of the company during the five years have been $22,868,778.24. "The difference between earnings and dividends is represented by expendi- ture on increased plant facilities, and undistributed assets, consisting of the larger stock of coke and fuel necessitated by increased operations; and the accu- mulated stock of ores at the works, amounting in value to over $1,000,000, as well as by increased cash and increased reserves. "A large portion of the company's mining property has as yet been undevel- oped, though situated within the recognized mineral zone of the district, and owing to the difficulty of holding up the soft, shifting ground in which the ore occurs, it has always been found impossible to block out ore reserves as large as mines of such capacity elsewhere have usually maintained, as nominally in sight. There is, however, at the present time as much ore in sight as at any other period of the mine's history. "The valuation of the company's property as of November 1, 1908, exclusive of the mines, is as follows: Invested in plant $4,974,866.77 Other assets 10,915,492.97 Liabilities.. 1,275,573.40 BISBEE 265 MOCTEZUMA COPPER COMPANY "This property consists of about 2500 acres of mineral ground in the State of Sonora, Mexico, on which has been opened the Pilares mine. This is on a mineralized body, oval in shape, and which retains approximately its dimensions between surface and the seven hundred foot level. It is about 1700 ft. in diam- eter from north to south, and 1200 ft. in diameter from east to west, and contains a large area of profitable ore. A narrow gage steam railroad five miles in length connects the mine through the Pilares Tunnel with the concentrating mill at the town of Nacozari. The tunnel itself, with its branches, is over a mile in length, and is large enough to allow of the railroad cars reaching through it the different sections of the mines, and receiving their charge from large bins excavat- ed out of the ore. These bins are of a capacity of several thousand tons each, and are fed through chutes extending to the surface levels, the chutes also being excavated from the mineralized ground. "The quantity of what may be considered ore depends entirely upon the grade which it is profitable at a given price for copper to work, but the mine is at present opened up for an extraction of 1500 to 2000 tons a day of ore of an average grade of three per cent. The daily capacity of the concentrating mill just com- pleted at Nacozari is 2000 tons. At Nacozari is a well-designed power plant, equipped with Curtis turbines of over 4000 horse-power, for transmitting high voltage current to both the mill and the mine. For the time being it is found to be more profitable to convey the concentrates and rich ores by the Nacozari Railroad to Douglas, Arizona, seventy miles distant, than to smelt them on the spot, the ores being treated at Douglas at the same profit to the Copper Queen Company as though they were custom ores supplied by an unallied customer. This feature of the company's operations explains the comparatively small quan- tity of supplies carried by the Moctezuma Copper Company as compared with the other companies. "The old concentrating mill, which is still intact, with its very efficient gas engine and gas-generating plant, which up to within a few months treated 600 tons of ore a day, is now out of commission, though it can be started at short notice as a supplemental plant to the new mill, should this course be desirable. "The production for the five years past has been 53,858,751 pounds. "The increased capacity of both the mine and the concentrating mill, owing to recent improvements, is indicated by the fact that in May, 1908, the produc- tion was 784,892 Ib. of metallic copper, whereas by the month of October it had reached 2,300,000 Ib. of copper, contained in 9500 tons of 12> per cent, con- centrates. A production of approximately two million pounds of copper a month can now be maintained; and, if the market demanded it, this production could be increased to three million pounds per month. "The net earnings for the five years while the mine was still in a stage of development and the works were contracted, were $3,617,295. "The company has built and owns the whole town of Nacozari, and has pro- vided it with a well-furnished library and amusement hall, a thoroughly equipped hospital, hotel, boarding houses, and schools. At the Pilares mine the company has provided its workmen with comfortable houses and supports a school. At both Nacozari and Pilares the company has large stores and warehouses, and conducts a profitable mercantile business. 266 THE COST OF MINING Invested in plant $3,046,384. 32 Other assets 944,663. 08 Liabilities 347,221 .22 THE DETROIT COPPER MINING COMPANY OF ARIZONA "The mines of this company are situated in the Clifton district, Arizona, in the same beds of felspathic rock which at the present time are yielding the prod- uct of the Arizona Copper Company, the Shannon Copper Company, and certain less prominent organizations. The property owned by the company consists of one hundred and forty-five (145) mining claims, and the ore now extracted amounts to about 36,000 tons per month, yielding about three per cent, of copper. The bulk of the ore is concentrated mechanically to a grade of about fifteen per cent., and smelted at Morenci in the company's own smelting works. "The company's production for the five years has been 86,247,889 pounds. "The production for the eleven months of the present year has increased to 21,500,000, owing in great measure to improved facilities for treatment. The future production with the present equipment can be maintained at approximately two million pounds of copper per month. "The earnings during the past five years have been $3,467,810.81. "The company runs a large store and hotel, and owns considerable other property in the town of Morenci, besides a powerful pumping plant on the San Francisco River seven miles distant. "The valuation of the company's property as of November 1,1908, exclusive of the mines, is as follows: Other assets . Other assets . Liabilities . . $2,150,101.00 2,934,465.97 149,878.48 "The ores from the Copper Queen mines carry about twice the quantity of copper contained in those of the Nacozari and Morenci districts, but this ad- vantage is offset by the higher cost of mining the Queen ore, owing to the char- acter of the deposits in which they occur. Moreover, as the Queen ores cannot be subjected to preliminary mechanical concentration, which raises the smelting grade of the Nacozari and Morenci ores, they must be subjected to furnace treat- ment as they come from the mines; hence the cost for smelting a ton of Queen ore is higher than the cost calculated on a tonof crude Nacozari or Morenci ore." Year Output, pounds Operating profits, dollars Profits per pound, cents Average price, cents Cost, cents 1903 37,257,470 2,201,640 5.9 12.6 6.7 1904 50,151,552 2,960,659 5.9 12.562 6.962 1905 64.625,955 5,609,486 8.7 14.923 6.223 1906 79.219,655 7,625,854 9.63 17.96 8.33 1907 63,341,055 4,471,137 7.0 18.103 11.103 Five years 294,595,687 22,868,778 7.76 15.7 8 BISBEE 267 The amount invested in plant is given at $4,974,800. Since it is stated above with reference to the Bisbee district, by Dr. Douglas that the ores of the Copper Queen average about 140 Ib. copper per ton, an approximation that is borne out by the record of the neighboring Calu- met & Arizona mine, it does not seem rash to say that the mining plant is equal to a capacity of 000,000 tons a year, and the smelting plant to 900,000 tons a year. Averaging the two we might say the plant is such that an output of at least 750,000 tons a year can be taken care of. The cost of mining and smelting plants may, therefore, be approximated at $7 per ton of annual capacity. Taking into consideration the character of the orebodies exhibited by the remarks in the prospectus, it seems fair to calculate the amortization of plant in a period not exceeding fifteen years from the beginning of the term in question. This requires an an- nual instalment of 10 per cent. To this should be added depreciation at per cent, to cover the current construction. Applying these figures, not the whole period, but to the maximum capacity reached at the end, we get For amortization $0 . 70 per ton For depreciation . 42 per ton Total $1 . 12 per ton Dividing this by 140 Ib., the average amount of copper realized per ton, we get 0.8 cents per pound as the amount that should be added to operating charges for plant account. I am disposed to regard this as a minimum figure and prefer to believe that at least 1 cent, per pound should be added for these charges. This would mean only $2,940,000 in five years for the use of capital already invested and for current con- struction. It is to be presumed that the company made some profit on treating custom ores, but as these ores must have come largely from other mines owned by the same group, it is not likely that such profits would be sufficient to alter the calculation materially. My estimate of costs, then, for the Copper Queen is as follows; Average operating cost 8 cents Average capital cost 1 cent Total 9 cents It will be noted that the average is exceedingly close to that figured for Calumet & Arizona: and, further, that a considerable rise was incident to the boom period of 1900-07. MOCTEZUMA COPPER COMPANY The figures on this property are very interesting in view of the light they throw on the probable results to be obtained from the Miami, Ray, and other new properties of approximately the same grade and type. 268 THE COST OF MINING Year Output, pounds Operating profits Profits per pound Average price Operating cost 1903 10,281,970 456,524 4.44 12.6 8.16 1904 11,061,641 598,992 5.44 12.562 7.178 1905 10,160,016 533,117 5.25 14.923 9.773 1906 12,714,716 1,195,424 9.4 17.96 8.56 1907 9,640,390 833,236 9.64 18.1 9.46 Five years 53,858,751 3,617,295 6.7 15.3 8.6 In this case the plant investment is $3,046,384, and the producing capacity is now easily 24,000,000 Ib. a year. Calculating depreciation at 6 per cent, we get an annual charge of $182,800 a year, equal to 0.76 cents per pound. Add this to 8.6 and we have 9.36 cents as the dividend cost. It is very probable that with the increased tonnage now possible, the cost will average not over 9 cents. On a life of twenty years, the plant may be amortized at 8 per cent., equal to about 1 cent per pound. The selling cost may then be put at between 10 and 10j^ cents, a figure that fully bears out the conclusions arrived at from other sources. 1 DETROIT COPPER COMPANY Neglecting the explanation of details, it appears that this company earned $3,467,810 from 86,247,889 Ib. copper, equal to 4 cents a pound. The cost must have been about 11.3 cents. The capital invested is only $2,158,106, on which depreciation at 6 per cent, gives an additional cost of 0.7 cents per pound. The dividend cost may be calculated at 12 cents. In all of the above calculations I have failed to exhibit the copper equivalent for gold and silver contained, because the amounts are not given. In most of these mines, however, the value of precious metals is only 2 to 3 per cent, of the total, so that the figures given cannot be far astray from this cause. The progress during the last ten years is quickly indicated by the following table, showing the production of the different properties in the year 1916, which is selected because it was a year when the operations were unhampered by external interferences. Copper Queen Mining Co 102,685,722 pounds copper Detroit Copper Co 17,539,858 pounds copper Moctezuma Copper Co 37,789,310 pounds copper Burro Mount Copper Co 8,587,398 pounds copper Bunker Hills Mining Co 59,299 tons of ore Stag Canyon Fuel Co 1,439,904 tons of coal 1 See Chapter XIII, for discussion of the cost of producing copper from ores of approximately this grade and type. BISBEE 269 The output of the Copper Queen smeltery for that year was 171,893,- 880 pounds of copper from 1,304,523 tons of ore and the total amount produced from the various mines owned by the company, 153,263,729 pounds. The Calumet and Arizona shows a similar growth, part of which is already indicated, but that company has also undertaken outside mining enterprises, the principal one of which consists of 75 per cent, of the stock of the New Cornelia Copper Co., which is now capable of producing at least 50,000,00 pounds of copper a year, and has acquired practically all the ore in the Ajo District, the sum total of which must be about 70,000,000 tons. It is very noticeable in studying the details of mine operations that the progress of such consolidations has made those details less available than they were ten years ago. The Phelps-Dodge Corporation gives its financial results as a lump figure covering all these mines, and the same thing is true of the Anaconda Copper Co. Even the Calumet and Arizona reports are becoming less intelligible from the same reason. I cite these facts not as any criticism of the management of any of these companies, but merely as a indication of the trend of affairs in the American mining business. I have long been convinced that organization on such lines will inevitably continue so long as there is any economy in it. Costs and Operating Details of Phelps-Dodge Properties. An ex- amination of the reports of this corporation reveals that many interesting details were published up to the end of 1914 that have not been published since. Although it is my object in this edition to avoid including too many tables of figures it seems desirable to insert some of these statistics for future reference, for the reports containing this information are not now readily to be had. COPPER QUEEN MINE Tons Copper Price copper, cents Dividends Surplus 1909 595,624 84,429,791 *13 $4,025,000 $10,142,620 1910 596,193 76,428,908 12.826 6,300,000 1911 619,132 74,489,728 12.36 5,200,000 1912 786,368 88,280,908 15.51 5,707,351 1913 867,481 97,181,725 15.37 5,700,000 1914 732,829 86,066,143 13.57 4,500,000 9,406,691 6 years 4,197,627 506,877,203 13.77 31,432,351 $735,929 * Approximate. Apparent earnings, after paying for depreciation and all plant ex- tensions $30,696,422, equal to a trifle over 6 cents per pound copper. The average price for the period was approximately 13.8 cents, to which should 270 THE COST OF MINING be added about 1 cent for other metals making the total receipts 14.8 cents. The grand total cost therefore seems to be about 8.75 cents per pound. The total expenditures were about $44,000,000 equal to $10.50 per ton shipped from the mines. Analysing these costs we find that the sum credited to depreciation for the period is $3,911,000 for five years. It was not reported in 1909. Probably the total should be $4,500,000, equal to about $1.07 per ton shipped and 0.9 cents per pound copper. The remaining costs therefore are about $9.43. The cost of freight to New York, refining and marketing must have been about $6,000,000, equal to 1.3 cents per pound, and $1.57 per ton shipped. There remains for mining, transportation to smeltery, reduction and converting $8.86. Converting probably cost about 0.4 cent per pound, or 50 cents a ton, bringing down the total to be accounted for to $8.36 per ton. The cost of reduction is not given but it probably was not far from $2.00 per ton, this being $1.25 for labor, power, supplies, etc., and 75 cents for coke and fuel. The average cost for mining then would be about $6.35 per ton. There is evidence to support the belief that this cost was divided about as follows: Stoping ore $2.30 Exploration, Development, etc 2 . 00 Tramming, Hoisting and Loading . 90 Taxes and General 0. 90 'Freight to Douglas 0.25 Total. $6.35 In 1913 the report of Mr. Gerald Sherman, Superintendent of the mines, contains the following; " Exploration was very active the footage having reached 105,937 feet." "Four methods of stoping are practiced, the choice depending on local conditions." The comparative costs are; Tonnage Labor Timber Explosives Total per ton In square setting 612,299 $1 . 555 $0.473 $0.085 $2.113 In top slicing In cut and fill In shrinkage 20,682 58,239 3,822 1.010 1.170 0.210 0.110 0.080 0.120 1.30 1.40 694,942 $1 . 506 $0.434 $0.088 $2.028 It will be noticed that in this year only about per foot of development work. tons were shipped CHAPTER XVI THE PORPHYRY COPPERS DISSEMINATED SULPHIDE ORES ORIGIN OF THEIR EXPLORATION THESE DEPOSITS ARE PREPONDERANTLY AMERICAN GEOLOGIC ORIGIN SURFACE LEACHING AND SECONDARY ENRICHMENT PRIMARY DEPOSITION NOT SUPERFICIAL CARBON- ATES MIXED CARBONATES AND SULPHIDES ECONOMIC DEVELOPMENTS IN RECENT YEARS POWER CONCENTRATED CRUSHING OlL FLOTATION COPPER IN SIGHT MIAMI CHINO, A STEAM SHOVEL MINE IN NEW MEXICO RAY CON- SOLIDATED MOCTEZUMA CLIFTON MORENCI ARIZONA COPPER Co. DE- TROIT NEVADA CONSOLIDATED UTAH COPPER INSPIRATION. Porphyry Coppers. The general supposition that this form of copper mining is a new one requires some qualification. There is no fundamental difference between the western porphyries that have recently excited general attention and the Lake Superior copper deposits which began to be worked about 1846. I refer to the operating conditions and not to geological appearance of the deposits; this fact was referred to in the first edition of this work. However, it is the development of the disseminated copper deposits of the Cordilleran region on the western border of North and South America that has introduced a controlling element in the copper business of the world. The first beginnings'of these western porphyries is more or less obscure because it is difficult to say just when and where the first distinction was made between the ordinary fissure vein deposits that had been generally sought and these particular disseminated ores. It is probable, however, that the first mining of such ores on any considerable scale, was done in the Clifton-Morenci district in Arizona, and that a considerable amount had there been mined and concentrated before the year 1900. It is also not unlikely that similar deposits were worked in other places by more or less the same methods. But the beginning of extensive developments and of wide-spread interests in these mines occurred about 1903, when Mr. D. C. Jackling succeeded in calling the attention of C. M. McNeil and Spencer Penrose, who were at that time operating chlorination mills at Colorado Springs, to the problem of concentrating and mining the extensive disseminated deposits at Bingham, Utah. Certain experiments indicated the proba- bility that ores running 2 per cent, in copper might be worked at a profit. The result was the formation of the Utah Copper Company and the initia- tion of the project to mill these ores on a scale which took people's breath away, for it was decided to put in a mill to treat 6000 tons a day and 271 272 THE COST OF MINING even 12,000 tons a day was talked of. About the same time Messrs. F. W. Bradley, J. H. McKenzie and Mark Requa had their attention called to similar disseminated deposits at Ely, Nevada and exploration was done in this district in 1904. It is not my purpose to trace in detail the history of these enterprises but merely to point out the principal facts in the development of the copper business and their relation to the question of costs, profits and future production. In this connection it is well to bear in mind that the peculiarity of the disseminated deposits as compared with the older mines of copper in the west, was the immediate requirement of large sums of money for the necessary construction of plants and development of the properties before production could begin. A necessary factor in success was a large scale of operations. Undoubtedly the projectors of the first porphyry mines felt somewhat appalled at the risks they were taking in asking for the amount of capital required to launch these enterprises. At this time a mill that would concentrate 1000 tons a day was con- sidered a pretty large one, but such a mill applied to the low-grade dis- seminated ores that were being figured on would scarcely make any profits at all. There was for a number of years a great deal of more or less theoretical calculation as well as practical experiment carried on regarding the best means of making these mines pay. While these speculations were going on it was found that the deposits could be explored rapidly and cheaply by means of churn drills or diamond drills, and while plans for milling plants were being matured the amounts of ore indicated as available frequently increased so much that a mill of 5,000 or 10,000 tons a day seemed justified, but it cost a good deal of money to build such plants, vastly more money than any of the projectors were able to furnish. The result was that they had to resort to bankers and to large financial inter- ests. The method of securing funds was to sell securities to the public. In order to make these securities go it was necessary to do a good deal of more or less dignified advertising in which calculations of the amount of copper in the ores and in the deposits, the amounts to be recovered and the expected profits were pretty thoroughly explained. The result was that a wide-spread interest was aroused not only among mining people but among investors in general in the new mining projects; but as a mat- ter of fact, for a period of at least 10 years it was found that the amounts of capital required to bring the properties up to a scale of operations which would create the greatest present value were persistently underestimated and the public was appealed to again and again for additional subscrip- tions in stocks and bonds. It is probable that no incident in the develop- ment of the American mineral industry has been so enlightening to the general public in regard to the nature of the mining business. It seems THE PORPHYRY COPPERS 273 worth while to trace the investment of capital and the operating results of this great group of properties through to the present time when it may be said that all of them are thoroughly established. It is a remarkable thing that so far as known these disseminated deposits are not only entirely American but are confined to the Pacific sea board and belong to the Andean or Rocky Mountain uplifts. It is hard to see any geological reason why similar deposits should not be found in other parts of the world and perhaps they will be. If so, the supply of copper for the next few generations will no doubt be easily obtained, but, judging from the fact that this type of copper mine has been well known for at least 10 years, it may be supposed that it has been looked for in other parts of the world. The fact that none has been reported indicates at least that they are not so common in the eastern hemisphere as in the western; still there probably are enormous areas in Asia and Africa that have not been explored. The American deposits are easily described for they were in all cases produced by the same geological agency; namely, the irruption of vol- canic or plutonic masses through the earth's crust. These masses are described by the general term of batholith, or deep-rock, because they have welled up from unknown depths. They also have the peculiarity of occurring in periods of general continental re-adjustment such as occurred at the end of the Algonkian and also at the end of the Paleozoic and Mesozoic times. It is not, I believe, clear in all cases, to which period of time all of the porphyry deposits belong, there being in some cases no near-by rocks of identifying age; but it is probable, from all I can gather, that all of the American deposits are, geologically speaking, comparatively recent, none being known to be older than those of Bisbee, Arizona, which may be referred rather confidently to the Permian or perhaps to the beginning of Triassic times. The great batholith of Butte, Montana, is known to belong to the end of the upper Cretaceous and perhaps might be classed as Eocene. It seems probable that nearly all of the porphyry deposits belong to one or the other of these two epochs of batholithic activity. Some of these batholiths are of enormous size; the one at Butte, Montana, has an area of approximately 2000 square miles but this is only a moderate sized one. Other great ones scattered along the Cordilleran system are the great Coast range batholith of British Columbia which seems to have roughly an area of 45,000 square miles, equal approximately to the area of the State of New York. There is a great one in central Idaho with an area of perhaps 20,000 square miles; still another along the Cascade range in Washington and southern British Columbia; and the great Sierra Nevada batholith, the area of which I have not measured. I give these figures to show the immense power involved in the line of action we are considering. Apparently it amounts to nothing other than 18 274 THE COST OF MINING a fusion of considerable portions of the earth's crust. Whether this fusion actually reached the surface in many cases or whether it only came near the surface and solidified so that the great batholithic masses have been exposed by the erosion of the remaining crust, is apparently not always clear. Undoubtedly these fused masses, whether they appeared at the surface in bulk or not, were invariably accompanied by volcanic activity of the usual kind. The batholiths to which the principal copper deposits of the Southwest belong are generally small, mere pygmies compared with the huge ones just mentioned. They frequently have a total exposed area of only a few hundred or a few thousand acres. From this it appears that the amount of economic mineralization has little or nothing to do with the size of the intrusions. The accepted theory of the mineralizations is that they were produced by waters or gases driven off from the molten masses in the process of cooling and solidification. These gases under enormous heat and pres- sure are believed, or known, to have the power of carrying metals in solution. With declining heat and pressure these waters or gases are no longer able to carry the metals and the latter are deposited. This usually takes place when the gases escape into the enclosing rocks or into such portions of the batholiths as have been already solidified at the surface or near the surface. This appears to be a simple and compre- hensive statement not only of the porphyry coppers but of practically all sulphide mineralizations regardless of their form. In fact the form in which the ore bodies occur apparently has little to do with their origin, but is determined probably by mechanical factors. Thus if the batholith during its process of cooling has been affected by faulting or fissuring, the escaping solutions will probably follow the partial openings thus made and minerals will be deposited in the form of fissure veins. It may be said in passing that such mineralization never occurs in a single isolated fissure. This might be expected from the nature of a fracture in a huge mass of more or less homogeneous rock. The fracturing invariably affects a considerable area in which there are innumerable interconnected and radiating fissures. In fact, if we look at it broadly the earth's crust cannot be accurately described as solid rock. It is more like a rubble in which the fragments may be very large but nevertheless they are mere fragments held together by their own great weight and the pressure of surrounding rocks. When a spring of magmatic waters is in operation, penetrating the earth's crust thus fissured from below, it naturally finds some channels more readily accessible than others. Then of course the mineralization is irregularly distributed. A mineral district is usually an area that has been affected in this manner, usually from a single ultimate source of mineralization, although at the surface and from a miner's standpoint there may be a number of isolated areas; but in THE PORPHYRY COPPERS 275 strongly mineralized districts such as Butte, Montana, it is no exaggera- tion to say that every ore deposit in the district is connected with every other ore deposit in the district along channels or along fissures that are more or less mineralized, although not always mineralized enough to make an ore. In such cases it appears to be a geological impossibility to make a clear distinction between one vein and another vein. It also happens that, apparently, the process of mineralization may be intermittent; depending perhaps on the forces that produce the fis- suring. We may imagine that one set of fissures tap the escaping waters from a portion of the magma and these waters flow for a considerable length of time and produce mineral deposits but that the process becomes quiescent until another rupture in the rocks re-opens the source of a renewed flow. To refer to Butte again, this action appears to have been repeated 3 times at least. The porphyry coppers are so patently a phase of the same action that I suppose we may say that in every case the disseminated ore bodies have with them some development of fissure veins more or less pronounced. In many districts the mineralizing batholiths penetrate up to sedimentary rocks such as limestones which are frequently extraordinarily favorable receptacles for the minerals carried from the magma by the escaping water. In such cases the ore deposits formed are not disseminated but are frequently masses of almost pure sulphides in which the predominant metal is usually iron, but in which there are frequently commercial quan- tities of copper as well as almost every other kind of useful metal in varying amounts, but in amounts almost always very subsidiary to the iron. Manganese also occurs in large quantities, sometimes comparable to the iron and sulphur. The true porphyry deposits are ores which have been produced by solutions permeating great volumes of rock rather uniformly. I suppose there is almost invariably, perhaps quite invariably, a deposition among the more or less minute fractures that occur in all rocks, but in many cases the ore is disseminated in minute particles which seem to have been substituted for some of the minerals in the original rock by being brought there by magmatic waters as they flowed through the fissures or soaked through the rock masses under pressure. The disseminated deposits thus formed occur usually at the periphery of the intruding batholith; sometimes in the enclosing rocks as in the case at Miami, Arizona, sometimes in the outer crust of the batholith as at Ajo, and sometimes in both. I think it is rare that the disseminated mineralization is found in the solid core of the batholith, in fact I have never heard of a case. Just what the chemical causes for the dissemination of the minerals in this manner were is probably obscure, but at any rate it has happened on an enormous scale; in many districts areas of several hundred acres many hundred feet thick have been thus affected and copper has been 276 THE COST OF MINING introduced in amounts varying from 0.2 or 0.3 per cent, up to 2 or 3 per cent, of the rock masses. When the amount of copper is substantially above 1 per cent, such a mass becomes a commercial ore body, providing it contains a minimum, say, of 5,000,000 tons, and thus becomes what is popularly known as a " porphyry" mine or deposit. During the past 10 years a good deal has been found out about these deposits that was not fully realized during the earlier stages of this in- dustry. At one time it was generally supposed that this kind of mineral- zation was superficial. It now appears that there is no good reason for so regarding it. In the first place it is exceedingly probable that all such mineralizations took place at a considerable depth below the surface and that they are now exposed merely by the erosion of the rocks which were once overlying. The depth at which the deposition took place is not known so far as I can make out and it probably varied greatly in different places but the general supposition among geologists is that it occurred at a considerable depth, say 2,000 or 3,000 feet. Now such depth from a miner's standpoint is not superficial; thus we may almost conclude that none of the porphyry deposits are superficial. At any rate some of them have been traced down to depths as deep as 2,000 feet below the present surface. At such depths the difficulty of exploring is of course enor- mously increased and since the amount of ores known near the surface is at present large enough to cover all immediate mining requirements no particular effort has been made to trace them deeper, but it is probably a fair statement that at present no limit is known to the depth at which disseminated ores of this type may be expected. To make a reference to the Lake Superior deposits which are from a prctical standpoint disseminated ores, there remains a question whether their origin is the same as the ores under discussion. My own conjecture is that the ultimate origin is the same but that they have been affected by some geological factor, the nature of which is not understood. If they are produced by some variation of the same causes they are an example of such deposits reaching the greatest depths known in the mining industry, for some of the Lake Superior mines are approaching 6,000 feet in vertical depth; and that is not all, because the present surface has been exposed to immense erosion since the deposition of the ores and I would take it to be a conservative estimate that these present commercial ore- bodies were deposited at, at least, twice the depths mentioned. To return to the western porphyries we may make a sweeping asser- tion that all the copper was deposited originally in the form of sul- phides accompanying a large but varying amount of silica; but upon this original deposition two other actions have been superimposed. Copper sulphides are soluble and as a deposit emerged into the atmosphere by the slow process of erosion the atmospheric waters penetrating into these masses dissolved the first copper reached and carried some of it, or all THE PORPHYRY COPPERS 277 of it, to a lower level where it was re-deposited in the form of the rich sulphide, chalcocite. This action would take place, and has taken place, in a vertical zone of 200 or 300 feet in depth in which, by the cumulative action of such a process maintained for an immense period of time the amount of copper might have been increased to 5 or 6 times the original amount. This seems to have been the case in the great deposits of Miami, Arizona where the original sulphides apparently carried about 0.5 per cent, copper but the portion thus enriched which constitute practically the sum total of the commercial ore bodies, have been enriched to as much as 3 or 4 per cent, in copper, the grand average being perhaps 1.5 to 2 per cent. This is the well known zone of secondary enrichment, a conspicuous feature of practically all the sulphide mines, either of copper or anything else, but particularly of copper. It has always been the object of a vast amount of discussion and investigation. What its chemical causes are, the exact processes by which it has been effected and even is precise limits are all, I believe, matters of considerable uncertainty. At the time the first edition of this book appeared it was generally accepted that the valuable porphyry deposits were produced entirely by this action by the enrichment of an original mineralization too meager to pay. This idea of course put a limitation upon the expectations both of the amount of ore to be looked for and its occurrence at any considerable depth. There was naturally a justifiable hesitation in basing important investments of money on anything less than proved occurrences of ore, but explora- tions made during recent years have completely demolished the idea that secondary enrichment is necessary for a commercial occurrence of porphyry ore. Many of the most important deposits have not been enriched at all, for instance the great ones at Ajo, Arizona, those at Nacozari, Mexico, at the Braden mines in Chile and also at Chuquicamata in Chile. It is indeed common that ores or ore bodies that are payable in their primary stage have also been affected by secondary enrichment. This is conspicuously the case at Chuquicamata and also at the Nevada Consolidated at Ely, Nevada. In the latter case the paying ores were originally thought to belong entirely to the zone of secondary enrichment. The second alteration referred to is the conversion of a consider- able amount of the original sulphide ores into oxides, carbonates or native copper. The extent to which this conversion has taken place var- ies greatly in different cases and seems to be some function of the presence of lime in the original rocks. Thus in the presence of the true limestone the original copper does not appear to migrate but is converted into a new carbonate practically in situ. In cases where the granite rocks in which the dissemination has taken place contain a good deal of lime-bearing feldspar, the copper has migrated and secondary enrichment has taken 278 THE COST OF MINING place, but at the same time large amounts of copper have been fixed in the form of carbonates. These carbonates generally overlie the sulphides of the zone of secondary enrichment making a kind of shell, not usually very rich in copper but containing on the aggregate enormous amounts of it. In the case of the Ajo deposit a formation of carbonates was produced affecting about 15 per cent, of the original mass of ore, this being the superficial portion of it, without any leaching or secondary enrichment whatever. Thus the oxidized portion lies immediately upon the mass of primary ore and there is no difference in the content of copper between one and the other. The importance in a commercial sense of the formation of these oxides lies in the fact that they do not concentrate in the same manner or on the same terms as the sulphides. A certain amount of them can be recovered by the ordinary process of water concentration but the recovery is not good for the reason that the carbonates and oxides are usually fragile and easily pulverized and the specific gravity is rather low so that the finer particles are usually carried off. In addition to all this the masses of disseminated carbonates are usually pretty low grade, not often being above 1.25 per cent, copper so that a low recovery by concentration does not leave enough copper to make it pay. However, the enormous quantities of such materials so easily accessible, being frequently right on the surface without any barren covering at all, has made it a great object to find a process by which such copper could be secured. This problem has been solved in two cases; namely, those of Ajo and Chuqui- camata, by using a leaching process by which the copper in the oxidized ores is taken up by a solution of sulphuric acid and re-deposited either on iron or by electrolysis. This is thoroughly workable but it has the same disadvantage as the process of water concentration, in the fact that it is available only on the oxidized ores and does not deal with the sulphides. It happens that a good part of the ore bodies are mixed oxides or carbonates and sulphides. Up to date no process has been discovered that handles these adequately, but I believe that various experiments, some of which are being conducted by the Bureau of Mines, are promising enough to lead to expectations that this problem also will be solved in commercial terms. This, I think, is a fairly comprehensive description of the broad features of these deposits, both as to their geological origin and their commercial occurrence. It remains to mention the quantities of such ores that have been developed and to discuss the financial results of their exploitation. It should already be clear that such ore bodies vary within considerable limits both as to their original content of copper and in the content as determined by secondary enrichment and oxidation. Thus in almost every case certain portions of the ore will be found to run as much as 3 per cent, but the other portions grade down to only 0.5 THE PORPHYRY COPPERS 279 per cent. The amount of ore available is an irregular function of the grade that is required. In the earlier stages of the development it was not believed that ore much under 2 per cent, would pay, therefore atten- tion was directed specifically to such portions as would run more than that, but after large plants had been established running from 5,000 tons a day upward, mining being done by steam shovels or some other wholesale method, two things were found out; first, that money could be made from ores running a good deal less than 2 per cent, and, second, that it was a practical impossibility to keep ores that would run 2 per cent, or over, separate from certain enclosing or intervening masses that would not run so much. Thus as a practical matter it was found that the mass of material to be worked was inevitably much in excess of the amounts estimated at the initiation of the enterprises and it was the equally uni- versal experience that the grade of ore sent to the mill was markedly lower than the grade originally estimated. The emergence of the latter fact was noted by some of the operators at first with dismay and in some cases they even hesitated to disclose their figures regarding tonnage treated, hoping, no doubt, to overcome the difficulty before the knowledge that there was a difficulty would alarm the public, which was the general backer of all these enterprises. Part of the rather disconcerting low grade of the ore milled was due also, no doubt, to the fact that the concentrating process failed to give as good a recovery as was expected. But after all, the outcome proved that the disappointment in yield per ton was a negli- gible difficulty, in fact no difficulty at all : first because the operating costs were low enough to make a good profit on the ore as it was; second, because it was possible to increase the tonnage treated far beyond the amounts originally intended, and third, because the lowering of the grade was compensated several times over by the increased volume both of ore and copper made recoverable by added explorations and by taking lower- grade ores into the definition of availability. It may be said that the commercial success of the porphyry mines is almost invariably greater than the original expectations, but this fact is derived from compensating factors that have been superior to the disap- pointments. The value of a mine, of course, is very largely a matter of income, and this income is dependent on the output of copper. If twice as much copper is produced as w as originally intended at the expense of handling three times as much ore in order to get it, the income of the property is still nearly or quite twice as much as was originally contem- plated. This will depend, of course, on the cost of operating, but with increased tonnage the costs usually go down in some proportion. In a general way this is exactly what has happened with most of the mines. In 1906 the Utah Copper Company expected to produce 50,000,000 pounds a year and get a yield of say 26 pounds of copper per ton. In 1909 it expected about 75,000,000 pounds and got about 18 pounds per 280 THE COST OF MINING ton. In 1916 and 1917 it has actually been producing more than 200,000- 000 pounds from ores yielding some 17 pounds of copper to the ton. The costs have never been quite so low as were hoped for but the difference has never been very great and the income has been several times greater; and not only that, the expected life of the property by the constant addition of further ore supplies has remained as long as ever. To take another example, the Miami Copper Company in its prospectus issued in 1908 planned for a mill of 1000 tons a day, expecting a yield of 40 pounds of copper per ton and an annual production of 14,000,000 pounds. As a matter of fact its yield per ton, in spite of all e-orts to keep it up, has not been over 30 pounds, but the milling has lately been done on a scale of more than 6000 tons a day and the output has been over 60,000,000 pounds a year, the costs being not much, if any, above those originally calculated upon. This we may say is the general experience of this type of property. At present it is very hard to say whether the maximum output has been reached or not. The high prices and forced production during the war period may have brought many of them up to the maximum output which sound economic policy would justify, but undoubtedly many of them have not yet reached that point. Thus, it will appear that from the standpoint of making money the controlling factor has really been the development of plants and equip- ment which, of course, means the investment of capital enough to make a very large output. During the ten years which have elapsed since the information was gathered for the first edition, several developments in industrial methods have taken place which have been exceedingly valuable to the operation of the porphyry mines, more particularly perhaps in their case than that in any other kind of property. Without laying stress on the number of small things that might be mentioned, such as improvement in rock drills and similar mechanical devices which have contributed something, the main factors have been first, a development of the oil flotation process; second, the development of crushing machinery, particularly ball mills; these have not added much of an improvement in the matter of operating costs over devices formerly employed but have facilitated the fine crushing of enormous quantities of material by machines occupy- ing very small spaces. As an example of this it may be cited that the Miami mill as originally built was intended for a capacity of 2000 tons a day; it has since been modified so that 6000 tons a day are being put through it, but the neighboring Inspiration mill, originally designed to take advantage of the possibilities of economizing space through the use of ball mills, with a floor space no greater than that of the Miami mill which be it remembered was designed for 2000 tons in 1909, puts through regularly 18,000 tons of ore per day. How much economy of operating expense there may be in this economy of space is perhaps THE PORPHYRY COPPERS 281 difficult to figure out, but is is probably considerable. What is perfectly patent is that there is an enormous saving in plant construction. Third, a continued development in the general practice of substituting mechanical power for labor. This is done not so much by special devices for econo- mizing labor as by utilizing power on a large scale and producing power cheaply. This might be illustrated from several other forms of mines fully as well, perhaps better, than in the porphyries. The utilization of power results in great savings through securing a large output from single units. Thus at present the usual practice is to get out several times as much ore from a single shaft as was done ten years ago. A conspicuous example is the Inspiration mine where a single shaft equipment employing no more men to run it than the ordinary shaft provides for the hoisting of 20,000 tons a day. The same thing has been done in southeast Missouri where ten years ago 300 tons a day was considered a respectable output per shaft; now 1000 tons per day is only a fair output and a new equipment would probably provide for from 2000 to 4000 tons. The power required to hoist a ton at increased output remains as great or almost as great as ever, but the equipment of one shaft both in material and personnel is hardly more than one-fourth of the equipment of four shafts. The result is a greatly increased output per man per day. Another example of the same process is the development of a large type of steam shovel which is being used in the Lake Superior district and perhaps among the porphyry mines. This new type of shovel weighs about 350 tons. Before its introduction about the largest machine in use was the 90-ton Bucyrus shovel. I understand there is little or no economy in operating the shovel itself; but here is the economy: The big shovel removes a cross-section 11 times greater than that of the 90-ton shovel. Since every time the machine is moved a railroad track has to be moved, it is evident that the big machine can be operated at one- eleventh the former amount of track construction; and that is a very considerable item in the whole process. These are illustrations of the general principle which I think has had the greatest effect in the organization of industrial enterprises in the past 10 years. Its effect in the way of reducing costs, or of increasing the output per man, which is the same thing, has in many cases been very great indeed. For instance, at some mines in southeast Missouri, which are not porphyry mines but are a convenient illustration, the cost of power in 1912 was about 35 cents a ton of ore milled. In 1916 this had been reduced to about 10 cents. Concurrently the output per man per day in these properties, perhaps not within the period of time just mentioned but approximately so, was doubled. I have not dwelt upon the flotation process as much as it deserves. Its introduction into this kind of mines dates later than the first edition of this book. I can do little more than point out the general effect of 282 THE COST OF MINING it for one very good reason: that I know very little about it as a technical matter. The process has been in a state of perpetual evolution or development. Even in cases where the theoretical possibilities are pretty well worked out their practical application has not been always perfected. In almost every case there still remains a field for the in- troduction of supplemental processes which will take care of carbonate ores not adequately dealt with by the flotation method, and also of the mixed carbonates and sulphides referred to above. But in many cases the use of flotation has been a tremendous improvement over anything that was possible before, both in the recovery of metals and in the economy of space and reduction of costs. Thus it may be said generally that a sulphide ore can be made to yield easily 90 per cent, of its value by flotation. Most ores would not yield as much as 70 per cent, by the water concentration processes of ten years ago. The substitution of a process that will save 90 per cent, as against one that will yield only 70 per cent, means an increase of 30 per cent, in the out- put of metal. This is a matter of overwhelming importance. It is pre- cisely in the matter of practical adjustments required to make an actuality of this improved recovery that much remains to be done. In a great many mines the improvements made possible by flotation are only about one-half realized on account of certain mechanical and constructive difficulties. Thus in some mills it has not been very easy to substitute finer grinding, which is required for flotation, for the crushing machinery already installed. The result is a sort of compromise which admitted of a large increase of production at very little expense. To obtain the remaining increase which is patently possible there is some- times the necessity of going to great expense, perhaps the construction of an entirely new plant. In many cases this would pay but there are often good reasons for not introducing such a project at once. For instance in times of acute demand for the product it is not always easy to get the machinery or labor to make the installation. To introduce such a project might hamper the present working of the mine. Then again in some cases the material rejected is not finally lost but remains available for future working in the form of tailings or slimes, which are generally impounded. Still further there is often a complication involved in the fact that the technical details of finished operation are just being found out and it may often seem desirable to postpone the construction of a thorough plant until further progress has been made in the art. Almost every mine of any importance in the world is an example of one or all of these considerations. It is fair to say that a great many changes in milling practice, recognized as feasible and desirable, have not yet been executed. Unquestionably the results that would be obtained from this field are more important than the pecuniary returns of any particular property, for they will open up .or make available a considerable addition THE PORPHYRY COPPERS 283 to the visible reserves of copper and other metals. To put the thing concretely, the Utah Copper Company is making an output of 200,000,000 pounds a year, and in order to do so it is milling 13,000,000 tons of ore a year containing about 325,000,000 pounds of copper. Thus 125,000,000 pounds are permanently, or temporarily, lost through milling and smelt- ing losses, the net recovery being about 62 per cent. A substitution of the recovery of say 85 per cent, would mean an additional output of about 75,000,000 pounds of copper a year. If we apply the same figures to the whole amount of ore as it originally stood, say 400,000,000 tons, the improvement in recovery would put an addition of more than a million tons of metallic copper in sight. Be it remembered that this amount is 4 times the amount of copper estimated to be commercially available on this property in 1906. And this is only an example of the state of affairs in the whole field of disseminated copper mines. I would not refer to this matter with any emphasis were it not for the fact that the recoveries thus indicated are known to be thoroughly possible and are not visionary calculations by any means. Some failure to secure all the metal that there is in an ore is generally taken for granted in mining practice. It is not a matter of practical importance whether the recovery is only 60 percent, or not so long as there are no known means of improving it, but the flotation process with the subsidiary processes that are being developed to supplement it does permit a vast improve- ment in mining practice and of course it is a new element introduced in the mining industry. The resources of the " Porphyries" constitute a large part of the visible source of this metal. A list of 17 of these mines, not a complete list but nearly so, compiled by L. H. Taylor, Jr. is given below. I have not examined critically the facts which support these figures. Certain allowances must be made in some cases that I happen to know of for the inclusion of ores that are certainly copper bearing but not certainly profitable; but whatever its shortcomings it is fair to believe that the table give a pretty good idea of what to expect of these mines. I imagine that before they shall have been entirely abandoned they will have produced approximately the amounts set down. The estimates are confessedly too general to make it worth while to add up a total for the amounts, but roughly we come to an estimate of some 1,950,000,000 tons of ore which is expected to produce 56,000,- 000,000 pounds of copper. If the estimates are at all reliable such a yield is not incredible in view of the high recoveries made possible by the flotation process. But by past experience we should not expect so much, say rather about 20 pounds per ton, or a total of about 40,000,000,000 pounds. It is well to notice also that more than half of all this ore is in Chile. If this estimate is worth anything we are assured of the world's supply of copper for 20 years from this one group of mines. 284 THE COST OF MINING ORE RESERVES PORPHYRY COPPERS Company Ore reserve, tons Average grade, per cent. Recoverable copper in ore reserve, pounds Capacity, daily tonnage Life of mine, years Andes Copper Mining Co. Arizona Bagdad Copper Co. Braden Cop. Mines Co .... Burro Mount. Cop. Co .... Canada Cop. Corp., Ltd... Chile Cop. Co 110,000,000* 20,547,500 263,506,356 3,835,000 12,000,000 697,510,349 1.40* 1.44 2.255 2.20? 1.74 2 12 2,400,000,000 503,002,800 9,954,000,000 121,492,000 328,657,200 24 300 000,000 15,000z 3,000z 6,000 2,000 3,000 11 500 21 19 75J 5K 11 ^ 74 1 Chino Copper Co 96,552,026 1 63 1,992,000,000 12,500 22 Con. Coppermines Co 19,653,034 1.33 430,240,000 1,000 11 MX Howe Sd. Co. (Brit. Mine) . Inspiration Con. Cop. Co . . Miami Copper Co 9,787,396 82,754,277 54,570 000 2.16 1.63 1 467 295,970,000 1,970,000,000 1,139 000 000 2,500 20,000 6000 11 UK 26 Nev. Con. Cop. Co New Cornelia Cop. Co Ohio Copper Co. of Utah . . Ray Con. Cop. Co Ray Hercules Cop. Co Utah Copper Co 1 68,549,644 51,320,421 15,000,000 86,383,642 9,500,000 374 040 000 1.57 1.58 0.80 2.061 1.77 1 37 1,448,000,000 1,317,800,000 177,600,000 2,667,000,000 269,000,000 6 672 900 000 13,000 5,000 3,000 10,000 1,500 40000 15 29 14 24 17^ 27 x At enlarged capacity of 5,000 tons daily. J At enlarged capacity of 10,000 tons daily, t At enlarged capacity of 27,000 tons daily. z Proposed. * Estimated. I include the following sketches with no pretension of describing this business in detail, but merely with the hope of illustrating the growth and broad economic features. Miami Copper Company. The following prospectus was issued in March, 1908: "The property of the Miami Copper Company consists of about 300 acres, 200 of which is mineral land, located six miles west of the city of Globe, Arizona, at which city are the mines and works of the well-known Old Dominion Company. "Development which is still being carried on shows to date 2,000,000 tons of concentrating ore containing 3 per cent, of copper. Ore was struck at a depth of 220 ft., and the bottom of the shaft, at a depth of 500 ft., is still in ore, and the area shown of the ore body is 300 ft. by 350 ft., without having as yet reached the limits, so that the prospects are that an enormous body of concentrating ore will be developed as indicated by surface conditions. "The Gila Valley Globe & Northern Railway ends at Globe, six miles distant, and surveys past the Miami have been made and right of way secured; this extension will pass within a quarter of a mile of the mine. There is abundant water available for concentration purposes. "It is proposed to erect the first unit of a reduction works, which unit will have a daily capacity of 1,000 tons. This will give an annual production of 14,000- 000 Ib. of copper, based on 350 days running time an a yield from the 3 per cent, ore of 2 per cent., or 40 Ib. of copper to the ton. THE PORPHYRY COPPERS 285 Concentrating tests have shown that the ore can be readily concentrated 10 into 1 and the resulting concentrate smelted with the above yield in fine copper. It is estimated that the cost of electrolytic copper sold in New York will be 9 cents per pound. On this basis the profits at 12 cents copper will be $420,000 per annum, and at 15 cents copper $840,000 per annum. As developments advance a second unit of 1,000 tons daily capacity will be built which will double the above figures of profit. "It is estimated that it will require $750,000 to erect the necessary first unit of the reduction works and that $250,000 additional will be required for mine plant, shops, buildings, etc. "The ore deposit of the Miami Copper Company is in nature similar to those of the Arizona Copper Company, the Nevada Consolidated Copper Company, the Utah Copper Company, and the Boston Consolidated Mining Company; that is, large masses of ore in which the copper as a sulphide mineral is dissemi- nated through the rock and which readily yields a high-grade concentrate by water treatment, which can be easily smelted. "The mining is simple and cheap and when found these deposits are the most valuable as copper producers. The Miami ore, running 3 per cent, in copper as it does, is higher in grade than any of the above-mentioned properties and it will without doubt prove a large producer and dividend payer." During the year which elapsed after this was issxied all hopes have been far exceeded. There are now 13,300,000 tons of ore in sight and the company is erecting a plant of 2,000 tons daily capacity which is twice the original plan. It is hoped that this plant will begin operations in the summer of 1910. The first six years of operation showed the following results; PRODUCTION Year Tons milled Pounds copper Pounds per ton Price per cents pound Receipts in dollars 1911 445 036 14 970 557 33 6 13 00 1 950 669 45 1912 1,040 744 32 477 923 31 2 16 60 5,385,501.53 1913 1914 1915... 1,058,784 1,096,633 1 348 122 33,134,334 32,879,447 41 907 754 31.3 30.0 31 1 15.25 13.40 17 30 5,049,807.04 4,389,026 30 7,262,884 02 1916 1,842,017 54,433,863 29.5 24.00 13,072,440.06 6 years 6,831,336 209,803,878 30.7 17.67 37,710,328.40 For the five years preceding 1916, the average price of copper was 15.5 cents; and during this period there had been no unprecedented prices. The dividends paid during the six year period amounted to $9,695,783.75. In addition to this the quick assets had increased over the beginning of 1911 as follows: 286 THE COST OF MINING 1911 1916 Increase Ore Metals $232,410. 11 \ 395,772 52 / 5,419,055.75 $4,790,873.12 Supplies Stock 182,389.78 21,661 88 346,439.22 101,762 28 160,049.44 80 100.40 Cash 85,670.68 1,525,109.03 1,439,438.35 Total $917,904.97 $7,392,366.28 $6,474,461.31 Combining dividends with the increase in quick assets we have a total profit of $16,170,245.06, equal to 7.7 cents per pound. The apparent cost remaining is $20,940,083, equal to 9.97 cents per pound copper and $3.05 per ton milled. Chino Copper Co. An Open Pit Mine. "The original issue of first mortgage bonds amounted to $2,500,000. During the year 1912, $185,500 par value were converted into stock; during the year 1913, $2,078,000 par value were converted; during the past year all of the remaining outstanding issue amounting to $236,500 par value, $235,000 were converted into stock and the remaining $1,500 par value were paid for in cash: thus retiring the entire issue." (Report of the President, C. M. McNeill, 1914). Year Deferred charges Construction and development Working capital Mining T property Pounds copper 1911 $541,417 3,760,015 $640,000 $1,802,795 40,000 986,375 1912 867,382 4,646,920 2,359,492 1.913,719 1,120,375 27,776,088 1913 1,315,454 j 5,580,216 298,521 1,916,456 1,942,700 50,511,661 1914 | 1,799,632 6,095,395 2,427,710 1,918,101 1,907,300 53,999,928 1915 2,160,158 6,634,690 5,747,130 1,924,084 2,379,800 64,887,788 Year Dividends Receipts from metals Miscellaneous income Interest 1911 $131,232 $85,223 1912 $1,919,070 4,344,261 125,133 $160,397 1913 $1,919,070 7,621,419 137,533 69,862 1914 2,169,065 7,247,197 179,588 31,832 1915 2,609,860 11,383,777 229,074 3,819 In all 99,940 shares of stock were issued to convert the bond issue, leaving the outstanding capital stock at 869,940 shares. In 1910, the amount raised in cash for stock seems to have been $1,860,000 1911, First mortgage bonds and notes payable 2,700,000 1912, Stock issue of 70,000 shares at $25 1,750,000 Total cash for plant and working capital $6,310,000 THE PORPHYRY COPPERS 287 At this date total investment was about $7,900,000 so that about $1,600,000 had been added from the production of the mine. By the end of 1915, the total capital accumulation was as follows: Deferred charges to operating (stripping) $2,160,000 Construction of plant, and development 6,634,690 Balance of quick assets 5,747,130 Total.. 14,541,820 If from this total we deduct the $6,310,000 raised by stock subscriptions and conversions, we have left $8,311,000 raised by operating, of which $5,747,000 was liquidatable. There remained nearly $2,500,000 that had been put into plants, some of which ought, probably, to be charged off to depreciation. To make a rough guess let us suppose that one half, say $1,300,000 should be so charged off. We should still have remaining a surplus for the period of about $7,000,000. Add to this the dividends and we have total actual profits about $13,700,000 from a net output of 198,160,000 pounds copper, equal to about 6.9 cents per pound. There was paid in addition $265,910 for interest on bonds, etc., which would not have been necessary had the enterprise been completely financed, so that this amount also was paid from earnings, bringing the total earnings up to full 7 cents per pound. The total receipts from metals were $30,727,- 886 equal to 15.5 cents per pound, making miscellaneous receipts $756,- 551 or 0.38 cents per pound, making total receipts 15.88 cents per pound. Deducting net profits of 7 cents we have a total cost of 8.88 cents. Ray Consolidated Copper Co. An Underground Mine in Arizona. This concern became a copper producer in April, 1911 and since then has had the following record. End of Net copper Tons milled Construction equipment after depreciation Mine development Net working capital 1911 14,935,047 681,519 $5,743,929 2,120,491 842,000 1912 34,674,275 1,565,875 6,514,675 3,024,613 1,364,004 1913 52,341,029 3,365,296 6,537,514 3,737,342 1,505,871 1914 57,004,281 2,427,700 6,347,846 4,024,120 1,970,236 1915 60,338,936 2,848,969 6,495,274 4,076,250 4,055,093 217,293,568 9,889,359 1916 74,983,840 3,332,340 8,001,332 4,655,381 9,694,492 1917 88,582,649 3,560,900 7,927,277 6,044,968 11,167,217 380,859,757 16,782,599 288 THE COST OF MINING Several points in this record are worth noting with reference to general principles; first the steady growth of tonnage treated and copper prod- uced for six years after the plant Was started : second the equally steady growth of the capital invested in construction equipment and develop- ment: third that the increase of such capital did not keep pace with the output, but decreased from $6 per ton milled and 28 cents per pound of net copper produced in 1912, to less than $4 per ton milled and 16 cents per pound of copper in 1917. Another point worth attention is the growth of working capital and surplus. Up to 1915 this growth barely kept pace with the output of copper and there is reason to suppose that the company was during this time straightened for funds, for at the first good opportunity, 1915, when the price of copper averaged 17.5 cents a pound without any increase of working costs, the amount set aside for working capital or held in quick assets was immediately doubled. I think we are justified in believing that under the pre-war conditions 4 cents a pound of annual production was the lowest permissible working capital. It is probable that 6 cents a pound was comfortable. But when the price of copper mounted to over 26 cents in 1916 the company held 13 cents pound on its annual output for this purpose and continued to hold it through 1917. Just what reasons actuate a concern in holding a large surplus of quick assets are not always clear from its reports. The inescapable reason for a certain amount is of course, the actual necessity of having enough money to meet current operating expenses and to carry the prod- uct through the process of mining, milling, smelting, shipping and refin- ing until it is sold; but other reasons supervene. It is not uncommon for a mining company to acquire a surplus of funds for purposes not always definite in the minds of the directors, as for instance a general intention of buying further mining property, of rebuilding plants, of providing new ones or of exploiting new processes. Still another reason comes to the front during periods of economic or political disturbance the desire to hold funds as a protection against unforeseeable demands. During the past two years for instance, the nature, amount and settlement of war taxes has given rise to much painful uncertainty and withholding of dividends. In the case of Ray Consolidated the amounts I have set down for working capital are the net current assets. The experience of Ray Consolidated, illustrates the fact that the completion of a plant, according to its initial design, does not put an end to plant expenditure by any means, but that so long as production is increased plant must be increased also. At the end of 1911 this plant was ready to make an output of 35,000,000 pounds, from 1,565, 000 tons of ore in 1912. The capital invested in plant and development was then $7,860,- 000. By the end of 1917 an output of 88,582,000 pounds from 3.560.000 THE PORPHYRY COPPERS 289 tons of ore had been reached, but the plant and development account then stood, including depreciation, at $13,972,000 an expenditure of $6,000,000 during a period of six years in which about 360,000,000 pounds had been produced. The increase of plant cost therefore 1.66 cents a pound of copper produced. If we assume that 6 cents per pound of annual production is a fair allowance for working capital we should have to estimate not less than $3,200,000, or about 0.088 of a cent a pound would have to be held for that purpose, out of earnings. The total amount required for new capi- tal was therefore about 2.56 cents a pound over the whole period. With these data in mind we may make a fair estimate of the normal operating costs and profits of the enterprise. For this purpose it seems best to take the record only to the end of 1915, a period during which prices had not reached any abnormal heights. For that period we find that 217,293,568 pounds of copper, with a small amount of gold and silver had been marketed for $33,426,525.48 equal to 15.38 cents a pound. About $3,200,000 was added to working capital, $3,600,000 added to plant, and $4,593,000 paid in dividends, making a total of nearly $11,400,- 000, or 5.25 cents a pound, leaving a gross operating cost of 10.13 cents a pound. It seems, however, fair to question the accuracy with which various capital accounts are transferred to operating. In 1911 the indebtedness in bonds and notes payable was $3,950,000 and the capital stock $11,991,750. In 1915 the indebtedness had been reduced to nothing, but the capital stock had been increased to $15,- 712,790, an increase of $3,721,040; and a surplus accumulated from sale of securities of $1,451,835, making a total increase of $5,173,375. If from this we deduct $887,691.19 paid as interest on bonds, notes and ad- vances during this period, we have a remainder of $4,305,683.81 net from these sources. A part of the increase of capital was due to the purchase of the Ray Central Copper Co. in 1912, but the reports leave us in the dark both as to the number of shares issued for that property and the amount of cash it had in its treasury. We find further that an item of $1,606,971.36 came in as "miscellane- ous income" which must be accounted for, no doubt, before the total expenditures can be ascertained. In all it seems that the company had receipts from outside sources of nearly $2,000,000 beyond the amount required to call in the bonds and pay interest on them. It is next to certain that this amount was more than sufficient to cover the purchase of Ray Central. The reserves for depreciation seem low, amounting at the end of 1915 to only $878,500 for five operating years and at the end of 1917 to $1,635,784 for seven years, an average of only $231,000 a year. It is true that for five years the capital charged to plant and equipment was 19 290 THE COST OF MINING held nearly at level by means of the depeciation charges, that during this period the tonnage treated increased materially, and that the rail- road, power-plant and shops had probably not depreciated at all, perhaps even enhanced in value; but it is more than probable that the milling plant had suffered a very great depreciation and that a fund should have been started for rebuilding it. It is not, indeed, certain that the plant was not capable of maintaining the performance upon which this financial record is based. The need for reconstruction arose through the de- velopment of a new and superior mill design and practice through the exploitation of the flotation process. The need for a new mill was based therefore on the expectation that it would more than pay for itself by better recovery and cheaper operation. So long as we are discussing the cost of actual operations in themselves, it is unreasonable to add to them the cost of a different scheme of operating. There remains, however, the probability that with increasing age the expense of maintaining the plant at its original level of efficiency would increase and I am inclined to doubt whether it would be safe to count on anything short of replacing a milling plant entirely in ten years. I should be inclined to argue that a deprecia- tion charge of six per cent, on the entire cost of construction railroad, power-plant and all would not be excessive; would not in fact be anything more than anticipating expenditures sure to be made if the plants were to be kept indefinitely in operation. If this is true the total amount charge- able up to the end of 1915, should have been double what was actually charged and we should be justified in adding nearly $900,000, or say 0.4 cent per pound for additional depreciation. In the matter of mine development also the figures argue apparently for higher charges than have been estimated Without going into an analysis of figures, it appears that for the history of the mine to date one foot of development was required for 50 tons extracted, but that on account of the reserve of broken ore created by caving the pillars, the amount of development work destroyed is greater in the earlier stages of operating the mine than in later stages. The smallest amount of develop- ment openings destroyed has been in 1916 and 1917 one foot to sixty tons. It remains, therefore, a question whether to charge development work at the rate of sixty, or only fifty, tons per foot. Under pre-war conditions the development work averaged $10.50 per foot, so that we are brought to an estimate of from 17.5 to 21 cents per ton. Up to the end of 1915 this estimate would amount to $1,750,000 to $2,100,000 against $1,113,273 actually charged. Thus we should charge $600,000 to $1,000,- 000 additional: striking an average, say 0.4 cent per pound copper. If we are to consider this plant as having reached a level at which its output will remain stationary at about 80,000,000 pounds a year, we might expect the performance under pre-war conditions to be about as follows : THE PORPHYRY COPPERS 291 Pi i Jr ton Per pound Operating cost Mining Additional depreciation Addition i,l allowance for milling, smelting, etc $ of plants 2.22 10.13 [).09 0.40 3.09 0.40 development Less miscellaneous income i ! i 2.40 10.93 ).09 0.43 Net cost application to dividends, say 2.31 10.50 According to the costs prevailing in 1915, a division of the net costs would seem to be about as follows Mining 80 cents, milling 60 cents; smelting, refining and marketing 90 cents. It is to be noticed that the last item averages 4.1 cents per pound of copper, this from concentrates running 18 to 20 per cent copper. This is much higher than the direct cost of smelting, etc., to other companies that produce concentrates of similar grade, but it must be remembered that the cost of building and maintaining a smeltery has been saved, and there is no reason to suppose that the result is unfavorable to the mining company. Moctezuma Old Mexico. This mine has far outstripped the expectations held out for it in the Phelps-Dodge prospectus of 1909. Tons Copper Development, feet Grade per cent, ore Earnings Dividends 1909 510,094 26,119,000 19,550 3.22 $1,104,454 $ 988,000 1910 447,555 22,602,000 21,596 2.99 480,690 1,143,009 1911 517,352 25,511,582 13,668 3.17 1,206,182 754,000 1912 596,600 34,194,000 31,431 3.49 2,735,060 2,118,569 1913 603,654 37,180,000 31,292 3.56 2,402,447 1,950,000 1914 500,000? 29,591,658 1,189,100 1,170,000 1915 424,027 22,889,885 7,572 3.41 1916 715,070 36,062,201 23,252 3.27 1917 750,897 38,186,451 33,823 3.18 5,065,241 268,336,777 182,189 The number of employes is not given. The value of gold and silver per ton under pre-war conditions was about 45 cents. The earnings in 1912 and 1913 were about 7 cents a pound, leaving a cost of about 8.4 cents per pound. Since the yield was very close to 60 pounds, the cost must have been about $5.50 per ton milled. The development work done is one foot for 25 tons. The costs 292 THE COST OF MINING per ton seem fairly low. The freight and treatment per ton of concen- trate could hardly be less than $10.00. The proportion of concentrate to ore is about 22 per cent. The cost of freight and treatment must be about $2.25 per ton of crude. This leaves about $3.25 per ton for mining, milling, depreciation and general expenses. How much these costs have been increased by the war is not indicated. The mining industry of Clifton-Morenci has been much disordered of late years by prolonged and repeated labor strikes. The district has been producing less copper than formerly, or barely holding its own. THE PORPHYRY COPPERS 293 The ore has become lower and lower in grade until now it yields barely 40 pounds to the ton; all, or practically all, is disseminated in porphyry which, by the way, is, like the Butte batholith, or post-Cretaceous, or Eocene, age. For the successful conduct of this kind of an operation the early history of the camp is no doubt a handicap; for the mines were started and equipped on the smaller scale required to work mines of higher grade and it has been difficult to substitute the larger and simpler units of the modern " porphyries." The mining is all done underground. I am informed however, that the outlook of the distrct is not discouraging for large bodies of ore running between 1 and 2 per cent copper have been discovered in both of the principal mines. The following is retained from the first edition: The Clif ton-Morenci district produces prophyry ore in which chalco- cite is disseminated. In this respect the orebodies resemble the deposits of Bingham, Utah, and of Ely, Nev. The ores form large irregular bodies at depths of from 100 to 300 ft. below the surface. In this respect the ore is easy to mine. But there is a certain irregularity, not only in the orebodies as a whole, but also in their internal make-up. A certain amount of sorting may be done to advantage in the mines. The ore is fairly hard and firm and is taken out by square-setting. Mexican miners with white bosses are employed. THE COST OF MINING Costs are not generally stated in detail, but the reports of the Shannon and Arizona copper companies make plain the following facts: About 1 ft. of opening work is necessary to find and develop 15 tons of ore. The cost of this work is stated to be 21 to 33 cents a ton (Shan- non). Stoping costs are about $2- to $2.80 a cents a ton (Shannon). Stoping costs are about $2 to $2.80 a ton. Details for one year are shown in an accompanying table (p. 295). The Arizona Copper Company gives its costs for mining, including deadwork, ores purchased, and leaching as follows: 1904, $2.81; 1905, $2.46; 1906, $2.50. It seems fair to assume from this that the under- ground costs are substantially the same as the Shannon. The same may be said of the Detroit Copper Company. Assuming that the cost of mining, including development, is $2.25 to $2.50 a ton, and that out of this cost about 50 cents is due to timbering, it seems fair to say that the excess over Lake Superior costs is due to the external factors. The internal factors that govern the cost of treatment are the losses due to concentrating, the proportion of concentrates to the crude ore and the smelting qualities of the ore. (1) The Shannon Copper Company reports for 1904 a saving of 75 294 THE COST OF MINING per cent, on ore averaging 4.16 per cent.; in 1905, 73 per cent, on ore run- ning 3.77 per cent., and in 1906, 69 per cent, on ore averaging 3.36 per cent. This saving is for both smelting and concentrating. (2) The Shannon Copper Company smelted in 1905, 44 per cent, of its total output; in 1906, 44 % per cent.; in 1907, 56 per cent. The Arizona Copper Company smelted in 1904, 22 per cent, of its total output; in 1905, 20 per cent.; in 1906, 20 per cent. The costs for concentrating, smelting, refining, and marketing are not given in detail, but in the case of the Arizona Copper Company these costs lumped together where, in 1904, $1.90; in 1905, $1.93; in 1906, $2.06, the costs being based on the entire tonnage sent from the mine. If the cost of concentrating is 75 cents a ton, including transportation from the mines, the cost for smelting, refining, and marketing would appear to be about $6 per ton smelted. On this basis the cost to the Shannon company, on account of the larger proportion smelted, should be $1.80 higher than to the Arizona company. This seems to be approxi- mately the case. (3) Certain difficulties have been experienced in smelting on account of a deficiency of sulphur for matting purposes. This is particularly the case with the first-class ores. In the earlier days this difficulty added more to the cost than it does at present. SUMMARY OF OPERATIONS, ARIZONA COPPER COMPANY 1904 1905 1906 Total ore (tons) . ... 491,600 547,000 610,000 Total copper (Ib.) First-class ore (tons) 28,732,800 31 695 30,080,000 26,000 29,756,000 31,378 Concentrating ore (tons) . . Copper per ton (Ib.) 460,000 57.5 521,000 56.3 578,517 48.8 Tons smelted 102,893 108,000 121,507 Tons leached Copper from leaching (Ib.) . Copper per ton from leach- ing (Ib.) 80,100 2,824,000 35.3 90,000 2,470,000 26.3 80,000 2,126,000 26.7 Cost working mines (dead- work, ores purchased, leaching etc ). Per Ton 285 056 $2 81 Per Ton 276 326 $2 46 Per Ton 373,560 $2.50 Smelting, refining, and marketing General Interest and amortization . . 194,077 1.90 14,286 0.14 49,162 0.49 215,846 1.93 14,430 0.13 58,965 0.52 258,506 2.06 15,579 0.14 88,765 0.70 Cost per Ib. at New York. . $5.34 9.3 cents $5.04 8.93 cents $5.40 11.07 cents THE PORPHYRY COPPERS SUMMARY OF OPERATIONS, SHANNON COPPER Co. 295 1903-4 1904-5 1905-6 1906-7 Smelting ore (tons) 66005 53 340 69,342 Mill ore (tons) 91,311 135,503 140,683 Total 157 316 188 843 210 025 209 654 Per cent, copper, smelted ore Per cent, copper, mill 5.28 3 34 4.70 3 41 4.37 2 86 Per cent, copper, average Copper, Ib. saved per ton 4.16 62 34 3.77 55 03 3.36 46 41 47 6 Per cent, saving Feet development 75.0 73.0 11,931 69.0 14,740 14,610 With these facts the experience of recent years is interesting by comparison. DETROIT COPPER Co. Year Tons Copper Assay crude, per cent. No. employees Output per man per year, in pounds 1909 468,882 23,991,595 3.385 1910 494,286 23,056,292 3.32 1911 517,087 22,704,398 3.4 1912 520,272 24,802,789 3.33 1414 17,540 1913 537,324 22,255,130 2.89 1510 14,835 1914 477,365 18,060,707 2.79 1438 12,560 ', 1915 376,604 15,333,976 2.83 1307 11,800 1916 474,808 17,539,858 2.60 1241 14,000 1917 333,263 13,202,201 2.73 1192 11,000 The earnings reported were as follows: Year Earnings Per pound, cents Price, cents Cost, cents Dividend, dollars Dividends per pound, cents 1909 $1,153,269 5.0 13.00 8.0 $760,000 3.25 1910 1,079,405 4.6 12.82 8.2 1,960,000 8.35 1911 930,495 4.1 12.36 8.25 800,000 3.6 1912 1,406,170 5.6 15.51 9.9 1,464,610 6.0 1913 1,112,870 5.0 15.37 10.4 780,000 3.45 1914 602,318 3.3 13.57 10.3 280,000 1.6 $6,284,527 $6,044,610 The statements of earnings have not been published since 1914. the years 1912, 1913 and 1914 we may deduce the following: For 296 THE COST OF MINING Since the cost of freight refining and marketing was about 1.3 cents per pound (there being no gold or silver to speak of in the ore) the cost of producing, at the smeltery, would be about 8.6 cents per pound in 1912, 9.1 cents in 1913 and 9 cents in 1914. Multiplying the copper produced per man by the cost per pound we get the cost per man per year as follows: 1912 17,540 Ib. at 8.3 cents $1,455 1913 14,835 Ib. at 9.1 cents 1,350 1914 12,560 Ib. at 9.0 cents 1.130 If the labor cost was 60 per cent, of the total, we would conclude that the average earnings per man in 1912 were about $870, in 1913, $810, in 1914, $700. In all probability the earnings did not vary as indicated but were more likely at an average of the different figures, say about $800 per year. The output per man is very low, being only 35 to 50 pounds per day against 100 pounds at Bisbee and nearly 200 pounds at the Inspiration for the same kind of operations. Whether the low wages are the cause or the effect of the low output I do not know. One thing is very certain so long as the production per man is on the present scale, the wages in this district must remain lower than in the other districts of Arizona. If the wages are to be the same as in other camps, the business will have to be reorganized radically and the output per man doubled. Probably this situation is at the bottom of the strikes. The miners can hardly be expected to understand these things; they merely rebel against the disparity of wages which appears to them as an injustice. The same general facts hold true with the Arizona Copper Co. where in 1916 the output of copper per man was only 50 pounds per day. Nevada Consolidated Copper Co. This is an example of a steam shovel mine of fair grade. From 1909 to 1915 inclusive 18,473,000 tons yielded 415,848,000 pounds of copper, the average value of which with included silver and gold was 15.34 cents a pound, giving a total value of about $63,660,000, of which however, only $58,456, 000 had been realized. Profits may be expressed as follows : Dividends paid $19,975,000 Increase of quick assets 4,000,000 Increase of deferred assets 4,000,000 Total 27,975,000 This is equal to 6.72 cents a pound, leaving an apparent cost of 8.62 cents. The yield was about 22.5 pounds per ton, giving a total cost of about $1.96. THE PORPHYRY COPPERS 297 In 1915 the costs were: Mining 3,081,520 tons Freight $ 825,072 Milling 1,641,517 Smelting (about 520,000 tons) 1,237,255 Depreciation 493,043 Per Ton $1,308,211 $0.425 4,196,887 Less profit .' 764,918 3,431,969 1.114 3,431,969 Freight and Refining $926,634 Commission 112,858 1,039,492 0.337 $1.876 SUMMARY OF STATEMENTS Nevada Consolidated Copper Co. Deferred charges Property and development Working capital Tons Pounds copper 1909 $ 140,784 $9,476,309.53 $2,510,000 1,065,387 34,527.823 1910 1,179,111 17,134,222.42 2,633,617 2,237,028 62,772,342 1911 2,117,361 17,077,330.34 2,241,872 3,338,242 78,541,270 1912 2,738,075 16,748,381.60 3,324,236 2,852,515 63,063,261 1913 3,276,397 14,256,068.76 3,249,897 3,139,137 64,972,829 1912 3,739,987 13,361,672.36 3,191,444 2,640,294 49,244,056 1915 4,136,970 13,027,218.83 5,732,521 3,081,520 62,726,651 18,473,011 415,848,232 By the end of 1918 dividends had increased to $42.275,000, being $23,300,000 in the three years of high prices, from an output of about 249,000,000 pounds from 10,800,000 tons equal to more than 23 pounds per ton. The profits applicable to dividends were therefore about 9.5 cents per pound. The costs, figured on the basis given above, were about 10 cents a pound in 1916, 13 cents in 1917 and over 15 cents in 1918. Up to the end of 1917 the total receipts had been $113,171,000, from which $37,000,000 were available for dividends. This was from 491,323,000 pounds sold at an average price of 18.3 cents. The net profit therefore was 7.5 cents and the gross cost 10.8 cents. It will be noted that the gross receipts exceed the value of the copper by a large margin. Utah Copper Company. This has been for some years the greatest individual copper mine, and it has always been the greatest of the " por- phyries," although it appears that the Chile Copper Co. has, at Chuqui- camata in Chile, a still larger one. But with a tonnage in sight reported at 375,000,000 and a plant capable of treating more than 12,000,000 tons a year, it has a long life and a high earning power. The yield per ton seems to average about 17 pounds. The average operating profits seem 298 THE COST OF MINING to have been up to the end of 1915, about 5.0 cents per pound, half of which was absorbed in capital, fixed or working. From 1908 to 1915 inclusive about 760,000,000 pounds had been sold for $115,420,000, equal to 15.3 cents per pound. This leaves an actual cost of about 10.3 cents a pound. What the capital requirements for the future will be it is very hard to determine but it would seem as if this great enterprise should be nearly complete and that from now on a greater proportion of the profits should go to the shareholders. It requires considerable analyzing to dissociate the affairs of the differ- ent parts of this corporation. It appears that the company owns a THE PORPHYRY COPPERS 299 trifle over half the shares of Nevada Consolidated Copper Co. From its own mine at Bingham it has produced up to the end of 1918 about 1,350,000,000 pounds of copper. Its total dividends were $92,000,000 of which presumably about $21,000,000 came from Nevada, leaving $71,000,000 from its own mine. Of this output 580,000,000 pounds were produced in the three years of high prices, and during those years the dividends were, from its own ores, about $51,000,000, or 8.8 cents per pound. For those three years the average price received for copper and associated metals was over 25 cents a pound. The li practical" costs therefore which include reserves for taxes and other emergencies must have been about 16 cents. Utah Copper (in 1908). The actual production for eighteen months ending December 31, 1908, was as follows, the figures being the net return free from all smelter deductions: Pounds copper Copper metal 54,051,212 Gold, 20,072 oz. equal to 3,000,000 Silver, 163,953 oz. equal to 665,000 Total metallic output expressed in copper 57,716,212 Using the round number of 57,700,000 Ib. as a divisor, we may calculate the cost as follows: Dollars Approximate per ton milled Per Ib. copper, cents Operation (mine and mill) $2 666 284 $1 20 4 448 Mine development Prepaid stripping . . 20,028 121,103 0.01 06 0.035 210 Freight on ore 658,754 0.32 1.142 Treatment and refining 1,806,659 85 3.131 Taxes, etc 7588 012 Total operating Add depreciation, 6 per cent, of plant cost . . . $5,280,416 387,000 2.47 0.12 9.134 0.670 Total cost $5,667,416 2.59 9.804 The cost does not correspond to that reported by the company because, instead of deducting the gold and silver from the cost of copper, as the company does, I adopt the more logical method of calculating an equivalent for the gold and silver in copper metal and charging against the sum thus obtained the total costs. The addition of depreciation is absolutely essential. It is a matter of experience in such plants that about 6 per cent, must be allowed for renewals and changes that usually have the appearance of new construction. Furthermore, in a theoretical calculation of complete costs we must 300 THE COST OF MINING add the amortization of the plant. In this case there is a guaranteed life of twenty-five years. This means that the capital will be retired with 5 per cent, interest by an annual installment of 7 per cent. Now the total capital required for this business, outside of the cost of the land (which was probably nominal), averaged almost exactly $5,741,000 on which the installments for eighteen months would equal $592,805, equal to a trifle over 1 cent a pound. Add this to the 9.8 cents obtained above and we get 10.8 cents as the actual cost of copper to date. Looking to the future it is not necessary to include the amortization in the calculation of dividends. It is, however, a vital necessity in cal- culating the cost at which the mine can sell copper, for if the owners were to sell copper, to take this example, at say 10j^ cents, because they calcu- late an operating cost of 9.8 cents, they would be in a fool's paradise. They would be losing part of their capital; burdening themselves with the conduct of a vast business for less real return than they could get for their money by buying gilt-edged bonds and doing nothing. But we must remember that the period we have reviewed is the first eighteen months of the mine's history. It is entirely likely that the mine will be worked out with an annual production averaging 75,000,000 Ib. The managers believe that operating costs will be under 8 cents, which will change to 8.5 on the basis I have used. Let us agree to that and add an annual depreciation charge of $300,000. Let us say further that the capital employed will rise to a net total of $8,000,000. We shall have then the following costs: Operating 8.5 cents Depreciation 0.4 cents Amortization . . 0.8 cents Total cost 9.7 cents This means that 8.9 cents is the dividend cost and 9.7 cents is the metal selling cost. Owing to the great prospective importance of the type of mine that it represents, and also because it is an example of a good report to stock- holders, I have thought best to reproduce here almost the whole report of the Utah Copper Company for the period of eighteen months ending with the year 1908. This report shows better than any other statement I have seen, matters that occupy the attention of the management, the equipment, and plants required, and the conduct, in general, of such an enterprise. The problem involved is to take a disseminated ore containing 2 per cent, copper in the form of chalcocite from a very large deposit, con- centrate it with a saving of 70 1 per cent, into one ton for every twenty-two 1 These figures are not being realized. The actual yield of refined copper does not seem to be over 20 Ib. per ton. This fact may invalidate my conclusions as to the cost of copper from this type of deposit. See Chapter X11I. THE PORPHYRY COPPERS 301 tons mined, the concentrate running over 30 per cent, in copper. The company does not smelt its own ores, but has it done by contract by the Garfield plant of the American Smelter Securities Company. The following report is by the general manager, Mr. D. C. Jackling: UTAH COPPER COMPANY December 31, 1908 Income Account 54,051,212 Ib. copper at 13.36 cents $7,222,406.85 Debit difference in copper settlement for the period, 0.16 cents 87,639.06 Net price applying for the year's sales, 13.20 cents . $7, 134,767 . 79 20,072. 18 oz. gold at $20.00 per oz 401,443 . 60 163,952.87 oz. silver at 54.76 cents 89,780.33 Shipments of ore other than concentrating 37,877 . 38 Rents received 9,300 . 90 Interest, freight, refunds, sale of power, etc 9,399.36 $7,682,569.36 Operation $2,666,284.44 Mine development 20,027 . 80 Prepaid expense ore stripping 121,103.20 Freight on ore 658,754 . 14 Treatment and refining 1,806,658. 52 State of New Jersey, Annual License Tax 4,005.90 Extraordinary tailings expense, Bingham Canyon. 3,581.98 $5,280,415.98 Net profits for period $2,402,153.38 Interest on bonds $40,755 . 00 Dividends paid 696,387 . 50 737,142.50 Net surplus for 18 months ended December 31, 1908 $1,665,010.88 UTAH COPPER COMPANY RECEIPTS AND DISBURSEMENTS July 1, 1907, to December 31, 1908 Receipts Balance on hand July 1, 1907 $35,802 . 68 J Issuance of 214,150 shares at $10.00 per share 2,141,500.00 \ Premium on sale of 214,150 shares at $10.00 per share 2,141,500.00 Received from sale of bonds 1,500,000 . 00 Accounts payable 308,452 . 40 United Metals Selling Co 991,899.06 Net surplus for period 1,665,010 . 88 $8,784,165.02 A portion of Mr. Jackling's remarks are now omitted and for them are substituted some extracts from the statements of Mr. R. C. Gemmel in the company's report for 1918. 1 These items cover conversion of $4,283,000.00 par value bonds converted into stock at $20 . 00 per share. 302 THE COST OF MINING References to the map of the company's mining property appended to this report will show the additional area of fully and partially developed ore resulting from the underground work during the period. In the report for the year ending June 30, 1907, the statement was made that the developed and partially devel- oped area amounting to seventy-two acres. Developments since then have resulted in extending this area about eight acres, so that now the known ore area, fully and partially developed, is approximately eight acres. The ore- thicknesses and values of this additional territory are, generally speaking, similar to those described in the former report, so that the new developments have resulted in additional ore reserves to the extent of about 8,000,000 tons, or at a rate during the period of over three times the rate at which ores were extracted for reduction. The net result of the developments we have made during the period has been that fully developed ore remains approximately as stated in our last annual report, viz., 20,000,000 tons, as the area of this class of ore has been increased to an extent that will more than offset the quantity of ore mined. The two classes of partially developed ore, described in the former report, have been increased in the aggregate to the extent of approximately 8,000,000 tons, as above stated, so that we now estimate 60,000,000 tons in these two classes of reserves. In other words, of fully developed, partially developed and reason- ably assured ore, the total amounts to about 80,000,000 tons. Of this total tonnage, 65,000,000 tons can be classed as of the better or normal grade, aver- aging about 2 per cent, copper, and 15,000,000 tons as of the lower grade, approxi- mating \ l /i per cent, copper. In addition to this, we have the lower zone, as described in the previous annual report, the average value of which has been indicated to only a limited extent by diamond drilling, but which is estimated contain a minimum of 40,000,000 tons that will probably average \y% per cent. In discussing the above quantities throughout, consideration should be given to the fact that the stated figure include the quantities of ore mined during the fiscal period. This would amount, in percentage, to approximately 3 per cent, of the above described three classes of ore aggregating 80,000,000 tons reserves. All the development done during the period has been on the easterly end of the property and on both sides of the canyon, but the larger part of it has been on the south side of the canyon, in the southeasterly portion of the company's territory. The ore-bearing area is still being extended in that direction. Stripping. Stripping operations since their commencement, in August, 1906, have resulted in the removal of 1,705,322 cu. yd. of capping. Of this amount, 1,335,233 yd. have been removed during the fiscal period under discus- sion. During the first six months of the fiscal period, 367,950 cu. yd. were re- moved; during the second six months, 446,460 cu. yd. were removed, and during the last six months of 1908, 520,823 cu. yd. were removed. The total area over which stripping operations have been conducted to date is 19.7 acres. The average thickness of capping, as disclosed by these operations remains the same as that stated in our last annual report approximately 70 ft., corresponding to 113,000 cu. yd. per acre. The total amount removed is, there fore, equivalent to stripping of approximately 15 acres, and, at the present time, the actual area completely stripped is slightly in excess of 7 acres. The average cost of stripping, throughout the entire operations from their beginning in 1906, has been approximately 32 cents, per cubic yard; this cost covering only the removal of capping and its conveyance to available dumping THE PORPHYRY COPPERS 303 ground. Applying this cost to the average thickness of stripping removed and ore uncovered, the cost per ton of ore uncovered is somewhat less than 4 cents. Stripping operations have been more expensive and difficult in the past than they will be in the future, on account of the very limited area upon which the shovels could work and the expensive tracks it was necessary to build in starting these operations in the narrow canyon. As we develop more room, the rate at which shovels can operate will be increased, and the cost of shoveling correspond- ingly reduced; but the expected decrease in the actual cost of loading the material will probably be offset by the increased cost of outing the waste material for greater distance, so that it may be expected that our stripping costs will remain about the same as in the past." REPORT OF 1918 Ore Reserves. At the end of the year 1918, an ore area of 226.3 acres had been outlined by underground workings and churn drilling. No attempt was made to add to this area, but some drilling was done in order to obtain data for future steam shovel operations. The churn drilling, however, increased the calculated average thickness of developed and partially developed ore from 508 feet to 556 feet. Revised calculations show that at the end of the year there was developed in the property 453,421,400 tons of ore, averaging 1,375 per cent, copper, of which quantity 270,000,000 tons are classed as fully developed and 183,421,400 tons as partially developed. There was mined from the entire property prior to January 1,1919, a total of 79,308,140 tons of ore, averaging 1.397 per cent, copper, and the reserves, therefore, amount to 374,040,000 tons averaging 1.370 per cent, copper. The year's addition to reserves was 2,288,000 tons in excess of the tonnage mined during that period. The net value of the gold and silver recovered was 0.795 cent per pound, and the miscellaneous income in Utah, including that from the Bingham & Garfield Railway, amounted to 1.003 cents per pound. The operating costs on concentrating ore, including all fixed, general and maintenance charges for the years 1910 to 1918, inclusive, are shown in table below: Year Tonnages Mining Transportation Milling . Total 1910 4,340,245 $0.4097 $0.2978 $0.4663 $1 . 1738 1911 4,680,801 0.4479 0.3078 0.4168 1 . 1725 1912 5,315,321 0.4233 0.2848 0.4158 1 . 1239 1913 7,519,392 0.3288 0.2797 0.3676 0.9761 1914 6,470,366 0.3232 0.2782 0.3536 0.9550 1915 8,494,300 0.2441 0.2781 0.3402 0.8624 1916 10,994,000 0.2781 0.2792 . 3782 0.9355 1917 12,542,000 0.4446 0.2794 0.6930 1.4170 1918 12,160,700 0.5370 0.2983 0.9277 1.7630 304 THE COST OF MINING STATEMENT OF OPERATIONS For the Year Ended December 31, 1918 Operating Revenue: Copper Produced 188,092,405 Ib. @ 22.876c .... $43,029,021 . 49 Gold Produced 50,928,217 oz. @ $20 1,018,564.34 Silver Produced 489,483.74 oz. @ 97.561c 477,543.66 $44,525,129.49 Operating Expenses: Mining and Milling (including Taxes) $17,076,992 . 59 Treatment, Refining and Freight 12,066,465 . 78 Selling Commission 303,918 . 71 Stripping Ore 1,235,057 . 50 Mine Development 35,392.26 $30,717,826.84 Net Income from Operations plus Depletion $13.807,302 . 65 Miscellaneous Income and Receipts: Dividends on Investment $ 1,600,300.00 Capital Distribution Nevada Consolidated 2,651,325 . 00 Other Income from Interest, Rentals, etc 886,852. 31 $5,138,477.31 Total from all Sources $18,945,779. 96 Other Charges: For Contributions to Red Cross and United War Work Funds 500,000.00 Balance to Surplus Account $18,445,779.96 SURPLUS FROM OPERATIONS Balance December 3i, 1917 $48.293,528.23 Net Income and Proceeds of Depletion 18,445,779.96 $66,739,308.19 Less: Dividends $12,589,797.50 Capital Distribution 3,655,102.50 $16,244,900.00 Balance December 31, 1918 $50,494,408.19 CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES ASSETS December 31, 1918 December 31, 1917 Increase Mining and Milling Properties and Equip- ment $27,835,991.61 $24,172,445.85 Railway Properties and Equipment 8,323,984 . 33 7,849,012 . 35 $36,159,975.94 $32,021,458.20 Less Reserve for De- preciation 4,542,125.08 3,385,758.53 $31,617,850.86 $28,635,699.67 $2,982,151.19 Investments 5,609,425.22 5,604,002,23 5,422.99 Patents and Process 312,694.00 300,000.00 12,694.00 Rights Deferred Charges to Operations 8,943,523 . 85 8,300,040 . 34 643,483 . 51 THE PORPHYRY COPPERS 305 Current Assets: Increase Cash $8,771,328.78 $11,533,737,92 Cash due in January for December Copper Deliveries 3,695,141.86 3,962,156.56 Marketable Securities 12,458,312.82 4,869,283.00 Accounts Receivable, Prepaid Insurance, etc 833,715.68 395,825.55 Notes Receivable 10,800.00 Metals on Hand and in Transit 8,709,791.16 13,166,994.92 Materials and Sup- plies 4,549,755.44 5,084,139.12 39,018,045.75 39,022,937.07 4,891.32" $85,501,539.68 $81,862,679.31 $3,638,860.37 LIABILITIES Capital Stock Out- standing (Utah Cop- per Company) $16,244,900.00 $16,244,900.00 Current Liabilities: Accounts Payable $ 1,105,077.03 $ 1,523,244.84 Accrued Treatment, Refining and Delivery Charges 2,390,112.53 1,930,009.77 Reserve for Taxes, Ac- cident Insurance, etc 6,620,785.46 5,327,475.06 10,115,975.02 8,780,729.67 $1,335,245.35 Surplus from Sale of Se- curities $8,290,620.00 $8,290,620.00 Surplus from Opera- tions 50,840,044.66 48,546,429.64 59,140,664.66 56,837,049.64 2,303,615.02 $85,501,539.68 $81,862,679.31 $3,638,860.37 *Decrease. BINGHAM & GARFIELDS RAILWAY COMPANY Construction and Improvements. The total increase in length of all tracks was 14.18 miles. A large part of the additional mileage was for the track layout in connection with the new car dumper at Arthur. The mileage at the end of the year 1918 is shown in table below: Main Line and branches between and in the vicinity of Garfield and Bingham 37. 136 miles Yard and Siding Tracks, including all the terminals 52 .769 miles Additional tracks leased to Utah Copper Company 43.458 miles Total length of tracks 133.363 miles Other improvements include a new scale house, new office building for superintendent at Magna, extensions to the engine house and back shop, and some additional necessary tools and machines for the shops. One Mallet articulated compound locomotive and four outfit cars were added to the equipment. 20 306 THE COST OF MINING Operations. A total of 12,439,394 tons of freight was transported, being an average of 34,081 tons daily, compared with 12,648,225 tons and 34,653 tons, respectively, for the year 1917. A total of 10,949,278 tons of ore was shipped by the Utah Copper Company; 368,473 tons by other mining companies in Bingham, and 26,484 tons by mining companies in Nevada through the Western Pacific connection, making a total of 11,344,235 tons of ore. The remaining 1,095,159 tons was commercial freight, as compared with 1,069,894 tons of such freight transported during the previous year. A twice-daily passenger train was operated between Salt Lake City and Bingham in connection at Garfield with the Los Angeles & Salt Lake Railroad. The total number of passengers carried was 617,749, as against 671,004 for 1917. Inspiration Consolidated Copper Company. If the Utah Copper is the most conspicuous open pit mine of the porphyry group, Inspiration is certainly the most interesting underground mine. To illustrate this I find it difficult to choose between the singularly terse and energetic reports of Mr. C. E. Mills who was general manager during the formative period. I select that for 1916 with one or two remarks in that of 1915 I quote the latter first. Three years prior to the starting of production at Inspiration roughly 100,000,000 tons of ore, seventy-five million of which was sulphide, had been developed by churn drilling. A comparatively negligible amount of underground work was done. To prepare and equip the property for the mining and concentration of 5,000,000 tons of sulphide ore per annum roughly 14,400 tons daily capacity an expenditure as follows may be set down: Cost per ton of daily capacity Equipment of mine and mill, including water supply, power, mill sites, tailings lands, railroads, etc $625 Advanced mining expenditures to prepare for an output of 14,400 tons per day 208 $833 The advanced payments for mining will appear at the proper time in the mining costs. A considerable part of the plant equipment expenditures will last the life of the mine. Improved metallurgy will doubtless justify re- placements of other parts. The oxide ores will probably call for a treat- ment method of their own. The operating costs at Inspiration for mining and milling will probably be from $1.00 to $1.15 per ton of ore, possibly nearer the former figure. While a yield of more than 20 Ibs. per ton of ore can be obtained from much of the ore, a better mining practice can be followed and more ulti- mate profits obtained by mining ore producing 20 lb. on the average. THE PORPHYRY COPPERS 307 I herewith submit a report of operations at the Company's mines for the year 1916 the fifth annual report since the organization of your company and its acquisition of the Live Oak and Inspiration Mines in March, 1912, and the first report covering a full year's activities in the production of copper. A very brief review of the time intervening between March, 1912, and the close of the past year may be of interest. The character of the work under way suggests three divisions of the total interval. First Period. March, 1912, to June 29, 1915 (when the first unit of the mill started). This was a period of plant construction and underground development. At the beginning of this period the mines had already been developed by churn drills but only very slightly by underground work. The second quarter of 1912 was occupied in the selection of a mill site, its purchase together with suitable lands for tailings storage and with negotiations for hydroelectric power. In July, 1912, active underground work was started. On August 2, 1912, the first grading contract (for the railroad) was let. On November 3, 1912, the first grading actually began on the mill site. On January 1, 1913, Flotation tests began in ten ton plant and continued for six months. In following six months a 700 ton (daily capacity) flotation test mill was built. On January 1, 1914 700 ton flotation test plant started ran until June 29, 1915, treating 257,000 tons ore. On July 30, 1913, the first concrete was poured for surface structures. Twenty-three months later the first unit of the mill was started. Seven and two-thirds months following this, the last or eighteenth unit of the mill was started. Meanwhile, the main shafts were sunk and equipped, the power house, rail- road, etc., built, and the water supply developed and equipped. 53.7 miles of underground openings were driven to operate the mine. 6,858,000 tons of ore were developed by churn drilling in the Live Oak. 7,500,000 tons of ore were acquired by purchase of Keystone group of claims. Second Period July 1, 1915, to December 31, 1915 Covering construction work on unfinished units of the mill and operation of mine in connection with the finished units of the mill. Production of copper during this period 20,445,670 pounds. Third Period. The full operating year of 1916. In 1916, mining operations of the Company were substantially confined to the Inspiration Division. The Keystone property was not worked at all and the Live Oak and Cordova group only to a very limited extent in supplying with silicious oxidized ore the small market furnished by the International Smelter for this class of material. The concentrator was fully supplied from the stopes of the Inspiration Division. In all 5,353,880 tons of ore were mined during the year, 21,289 tons being the maximum for any single day. The average output of ore per shift's work chargeable to the Mining Depart- ment was 17.46 tons. The area covered by the undercutting of ore was 18.4 acres. 28 miles of underground openings were driven and 31 miles of such work were destroyed in the caving operations. Details are as follows: 308 THE COST OF MINING TONS ORE MINED *Milling ore 5,332,058 From Inspiration Division * Includes 200,859 tons reclaimed from dumps by driving branch raises from the mine below, and drawing ore down to the mine haulage ways. Silicious ore sent to Smelter 1,969 From Inspiration Division Smelting ore direct to Smelter 18 From Black Copper Claim Oxide ore direct to Smelter 9,473 From Live Oak Division Oxide ore direct to Smelter 10,362 From Cordova Group Total 5,353,880 DEVELOPMENT WORK UNDERGROUND Openings driven to beginning of 1916, miles Driven during 1916, miles Total driven to end 1916, miles Destroyed by stoping operations to end 1916, miles Mine openings end 1916, milrs Haulage Ways 7 61 0.98 8.59 0.26 8.33 Ordinary sized drifts Main Raises ... 22.69 23 20 7.09 7.45 29.78 30.65 11.79 5.69 17.99 24 . 96 Finger Raises 8 93 12 55 21 48 13 25 8.23 Shafts . . 1 21 1.12 0.17 1.04 Misc 0.21 0.21 0.21 63.85 28.07 91.92 31.16 60.76 The refined copper returnable by the Smelter as the result of all ore treated in 1916 was: Pounds copper From concentrating ores 119,431,389 From oxide ores sent direct to Smelter 1,341,248 120,772,637 The cost of copper derived from concentrating ores was : Cost per pound Cost per ton ore Mining. . . . . 2 . 702c $0.60708 Coarse crushing 0.125 0.02798 Ore hauling . 0.069 0.01540 Concentrating and royalty 2.243 0.50385 Concentrate hauling . 0.006 0.00145 Smelting, freight, refining, marketing, etc., etc. . . . 5.145 3.528 1.15576 0.79269 8.673 119,431,389 Ibs. 1.94845 5,316,350 tons THE PORPHYRY COPPERS 309 It is estimated that for each 1000 tons of ore mined there will have to be driven (including the original preparatory work) 13 feet of ordinary sized drifts, 20 feet of main raises and 1.4 feet of haulage ways, making a charge for this ac- count of approximately 20 cents per ton of ore mined. In the 1916 cost of mining as it appears in the above cost tabulation: Per ton ore For driving of drifts, main raises and haulage ways, there is charged $0 . 20 For undercutting and caving, drawing, loading, hauling, hoisting, etc., to- gether with a proper proportion of all general charges, the cost was . 406 However, the actual cost during the period for driving drifts, main raises and $0. 606 ways, amounted to 10 cents per ton. That is to say, the actual cash ex- penditure per ton for mining in 1916 was $0.506. The copper in the ore occurs mainly in combination with sulphur, but par- tially in oxide combinations. The first is readily separated from the waste rock in which it occurs by either flotation or gravity concentration. The oxides, however, give but poor recoveries by either means. The ore milled in 1916 ran 1.548 per cent. Cu and the recoveries were as follows: Assay of ore Percentage saved in milling Copper in sulphide form 1 213 90 95 Copper in oxide combinations 335 16.60 Total copper in ore 1.548 74.86 As against the mill record for the latter half of 1915, the above record shows some improvement in the recovery of sulphide copper, but a lower total recovery due to an increased proportion of oxide copper in the ore. The last six sections of the present mill were not quite completed at the be- ginning of 1916, but went into commission as follows: Section No. 13 on January 6th, 1916 Section No. 14 on January 9th Section No. 15 on January 21st Section No. 16 on January 24th Section No. 17 on February 1st Section No. 18 on February 21st Due to this and the further fact that the grinding capacity of the mills gradu- ally increased throughout the year, the two half year's work compare as follows : The average daily tonnage milled during the first half year was 13,466 tons The average daily tonnage milled during the second half year was 16,203 tons The average daily tonnage milled during the past month, February, 1917, was 17,013 tons The production of copper for the first half year of 1916 was 53,962,136 Ibs. The production of copper for the second half year of 1916 was 66,810,501 Ibs. 120,772,637 Ibs. 310 THE COST OF MINING During the year two additional sections of the mill have been under construc- tion and should start within the next two months, adding about 11 per cent, to the present capacity. Attached here to, you will find details of the concentrating operations for the year. Respectfully, C. E. MILLS, General Manager. INSPIRATION CONSOLIDATED COPPER COMPANY Mill Statistics Year 1916 Dry tons milled 5,316,350. 1 Tons per day 14,850 . 1 Average number of sections running 16. 54 Average tonnage rate per section 897 . 8 Assay mill feed per cent, copper 1 . 548 Screen analysis of feed (on 48 mesh) 3.3 Per cent, copper in feed oxidized 0. 335 Assay of general tailings per cent, copper 0. 397 Per cent, copper in general tailings oxidized . 283 Per cent, copper in general concentrates smelter assay 30. 688 Per cent, copper in flotation concentrates 37 . 50 Per cent, copper in table concentrates 11 . 23 Per cent, moisture in general concentrates 17. 27 Tons concentrates produced per ton of ore . 377 Recovery of copper calculated from: (Smelter Assays) Assays only 75.33 Assays and weights of concentrates and feed 74 . 86 Assays and weights of concentrates and tails 75. 18 Assays and weights of feed and tails 75 . 29 Recovery of copper sulphides 90 . 95 Water used per ton ore total gallon (February, 1917, figures) '. 1108.0 Water used per ton ore Reclaimed in tanks at foot of Mill 354 Reclaimed from ponds 528 New water from Kiser Pump Station 226 Steel ball consumption per ton of ore milled 1 . 76 Flotation oil consumption per ton of ore milled (pounds) 1 . 287 Coal tar 1.20 Other oils.. . 0.087 CHAPTER XVII THE NORTHWESTERN COPPER FIELD CLIMATE AND GEOGRAPHY OF THE NORTH WESTERN COAST INLETS AND GLACIATION ECONOMIC ADVANTAGES PROBABILITY OF FURTHER MINING DEVELOPMENTS BUTTE ITS COMPARISON WITH THE PORPHYRY MINES ANACONDA COSTS IN 1915 BUTTE IN 1908 GRANBY CONSOLIDATED IN 1908 HIDDEN CREEK. In the region along the northwestern border of North America, ex- tending from Butte, Montana to south-central Alaska, there is made at present an annual output of copper of about 500,000,000 pounds, or more than twice that of the Lake Superior region. In this territory by far the most productive district is that of Butte, which is now fully developed and is not likely to add further to its production. At the other extremity of the field the Kennecott Copper mine, which has been an extraordinary bonanza, seems also to have reached or passed its zenith. But in so large a tract it is reasonable to expect that the output mentioned will be maintained or increased. In climate and appearance this region is in marked contrast to the southwestern copper fields. The one marked feature is the presence of a coast range or ranges along the border of the Pacific. The central portion of these ranges has within recent geological times been depressed so that the mountains, valleys and canyons are now partially flooded by the sea. This is the case all the way from Puget Sound as far north as Skagway, Alaska, a distance of nearly 1000 miles. Thus the whole coast has been made exceedingly picturesque. While the scenery of this region, of course, is generally known, the actual facts concerning it are not perhaps fully realized. For instance at the Portland canal, which forms for some distance the boundary between southeast Alaska and British Columbia, the canyon, which is flooded by the ocean, has the scale of the Grand Canyon of Arizona. Within three miles of the shores of this narrow inlet glacier-covered mountains rise to heights of over 5000 feet. The water, which is not more than two or three miles wide, is over 1000 feet deep, so that the scenery while very different from that of the Grand Canyon is at least as imposing. In many other places equally striking scenes may be found. But while the coast ranges are partially flooded they are everywhere high enough to catch a great deal of the moisture of the Pacific, so that inland at distances not more than 50 to 100 miles from the coast there is a semi-arid belt which extends continuously down- ward through the plateau regions well into Mexico. Butte is in this semi-arid belt. There are places in British Columbia where the rainfall 311 312 THE COST OF MINING is only 8 to 10 inches a year. But the effect of this slight precipitation is very different from that found farther south. In the winter the propor- tion of cloudy weather is very much greater and all the hillsides are covered with growths of pine and other evergreens. It is only the level plains that remain unforested. While the winters cannot be said to be very severe as compared with those of the northeast part of the country there is still a good deal of snow and many weeks of sharp frost. To return to the coast ranges, we may say that they are the most conspicuous feature of the geography of the region, for their presence gives rise to the semi-ardidity of the continental belt just east of them, and they also present in themselves interesting climatic, geographical and geological features. The mountain summits of the coast ranges are frequently islands or peninsulas. The Olympic mountains west of Puget Sound are about 9000 feet high and covered with glaciers. The northern extremity of the Cascade mountains just east of Puget sound is a ridge about 6,000 feet above the sea, but on its summit are a number of lofty volcanoes, such as Mt. Helens, Mt. Adams, Mt. Rainier and Mt. Baker, rising to heights of from 10,500 to 14,500 ft., all covered with snow and ice. This range seems to come to an end just north of the inter- national boundary line, south of the Frazier River; but only a few miles toward the northwest the coast range of British Columbia begins and even within a few miles of Vancouver it shows an altitude of 4000 feet or more and still farther northwest reaches heights of 11,000 to 12,000 feet. At such heights, of course, it is universally covered with snow and has been glaciated for long periods so that in some places the range con- sists of a series of spiral shaped peaks like the Matterhorn, rising through the snow fields. At one place I have counted over thirty of such peaks. Vancouver Island is separated from the Olympic peninsula by a narrow strait. It consists of a mountain ridge some 350 miles long with more or less gentle slopes toward the north east. The continuation of this chain toward the northwest, or at least similar groups of mountains, form the numerous large islands of the coast of British Columbia and southeast Alaska. There are abrupt changes in the rainfall on the different sides of these islands or mountains. The westward or windward side is exceedingly rainy, in some places rising to 140 inches. On the eastward side it may be only 20 or 30 inches. Thus on Vancouver Island the City of Victoria at the southeast extremity has an average rainfall of only 31 inches, and Seattle on Puget Sound only 37 inches, but during the winter there is a great deal of cloudy weather in both places. Instead of heavy rains there are long continued drizzles which give the visitor the impression of much rain, although as a matter of fact the precipitation of either of these places mentioned is a good deal less than that of New York or Boston. THE NORTHWESTERN COPPER FIELD 313 But the rainfall for a considerable distance from the coast is heavy enough to produce a heavy forest growth. The Douglas Fir, otherwise known as the Oregon Pine, forms an immense forest on Vancouver Island but farther northward this tree no longer appears, its place being taken by heavy growths of cedar and spruce. The long periods of damp cloudy weather seem to be favorable to numerous fernlike plants such as one finds in the rainy regions of the tropics. The coast ranges seem to have been uplifted slowly across the courses of rivers which take their rise in the interior. These streams were able during the uplift of the mountains to continue to cut their way through, thus producing the canyons referred to, which have become inlets that extend back in many cases more than 100 miles. During the glacial period the whole country was covered with ice and each of the inlets was occupied by such portions of the general glacier that flowed faster than the rest so that at present their walls are thoroughly smoothed and polished. The visitor from other regions is astonished to see the swamp growth climbing up the sides of some of these steep mountains. In some places formations of peat are found actually on crags difficult to climb. Of course in most regions a peat swamp is only found in a dead level. It is hardly necessary to say that the invasion of the sea among the coast ranges is an important economic feature. The coast is a succession of deep harbors some of which actually traverse the mountains to the comparative level country further inland. The abundance of timber and the cheap water transportation are important to the mining business, or any other business for that matter. A number of considerable cities have already grown up on these inlets, supported by trade that extends to all parts of the world. Of these the most southerly is Portland on the Columbia river, the most southerly of many rivers that cut through ranges. On Puget sound and its northerly continuation the strait of Georgia, are the large towns of Tacoma, Seattle Victoria and Vancouver. Still farther north is Prince Rupert where the Canadian Grand Trunk Pacific has built its terminal after passing through the mountains along the Skeena river. In various portions of this territory or contiguous to it there are numerous coal fields, the largest of which is in southeast British Columbia facing the great plains. In this region is the Crow's Nest Pass coal district, which produces an excellent coking coal; but coke is also made in a rather small field of Cretaceous age on Vancouver Island. A great deal of coal, mostly of rather inferior quality also occurs in Montana. An extensive coal field of Tertiary age occurs in the basin of Puget Sound. In Alaska there are also coal fields which have been much advertised in the newspapers chiefly as subjects of controversy, but which are not at present of great commercial importance. I recite these facts as a basis 314 THE COST OF MINING for the expectation that the industries of this region will be found capable of great development. Along a great part of the coast region it is no exaggeration to say that the factors making for cheap mining are alto- gether exceptional. This is an argument for supposing that it will be found possible to work ore deposits that might, in less favored places, prove unpayable. The geological features of the coast ranges are such as to give rise to the expectation of finding considerable and persistent mineralization. An immense granite batholith of moderate geological age forms the core of the mountains and around the edges of this many deposits of sulphide ore have been found. In the coast range proper only two of these have been developed as yet into important copper mines, namely the Hidden Creek property at Anyox, British Columbia, and the Britannia mine near Vancouver, but many others are known, such as the gold of Douglas Island, Alaska, a copper district on the White Horse river and many similar mines and prospects. Two features which should be specified that bear on the possibility of other mines being opened up : first the heavy forest growths and the boggy nature of the soil effectively conceal the rocks over large tracts, and second, the heavy glaciation has swept off such portions of the orebodies as may previously have been oxidized with the accompanying secondary enrichment, so that the miner is compelled to face at once the problem of working the unaltered sulphides. To start successfully under these conditions is usually a matter requiring consider- able capital. It is, therefore, no poor man's mining country. But I have a strong impression that the development of the flotation process and the use of considerable capital will make commercially available ore that will average only 1 or 2 per cent, copper and of such a considerable amount apparently may be found. To one accustomed to living in Butte, Montana, these general des- criptions of the coast ranges and the geography of the northwest may seem rather a far cry, for that locality shows only a meager resemblance to the coast country itself. However, quite close to Butte, in the Coeur d'Alene mountains, the features of the country are not far from those I have just described. Butte itself is in most respects more similar to the general plateau regions of the Rocky mountain system. It is surrounded by grassy plains broken by numerous hills and mountain ridges forested with pines. It is, however, separated from other copper producing dis- tricts to the southward by a gap of many hundred miles and its ore deposits belong to the mountain-building period which occurred at the close of Mesozoic times. The Butte batholith is merely a portion of a series of great intrusions that are found here and there over a large area of Montana and Idaho cutting through sediments of upper Cretaceous age. I have no reason to assert that the coast ranges of British Columbia are of the same age, but it is not improbable. I am sure they cut through THE NORTHWESTERN COPPER FIELD 315 rocks at least as young as the lower Cretaceous. Thus in a general way it seems as if the principal deposits of Montana, Idaho and British Col- umbia do belong to the same geological province. The Butte, or Boulder batholith is exposed over an area of over 2000 square miles. Around its border are minor mineral districts, but the principal one, Butte itself, is in the south central portion of it. This great intrusion has been abundantly described not only by the United States Geological Survey, but by many private writers, particularly H. V. Winchell, Reno H. Sales and other geologists employed by the Anaconda Copper Company. It appears that the mineralization took place in the hardened crust of the batholith, probably before the deeper seated portion had become thoroughly solidified. Some quartz porphyry dikes within the district are thought to be the upward prongs of a re- newed intrusion within the body of the main one. However this may be, it is certain that the orebodies were formed before the mass had reached the stage of quiescence because the mineralized waters followed at different periods fissures that were formed after a portion of the minerali- zation had been accomplished. Thus the veins cross and fault each other in a most intricate way, the details of which have never been fully published. The area of the Butte district is small, covering perhaps 1500 acres. From it have been obtained some 3,500,000 tons of metallic copper and the end is not by any means in sight. It is interesting to compare for a moment the volume of such copper with that obtained from that of some of the disseminated deposits further south. The area covered by the Utah Copper Mine is only a little over 200 hundred acres, yet it is known to contain as much as has been produced by the entire Butte district. A similar comparison might be made with almost any other of the other large porphyry deposits. Thus it appears that even with respect to superficial area the mineralization of Butte is not so concentrated as that of the porphyry districts; but when we consider in addition that the ores are spread over a vertical range of more than 3000 feet as compared with only a few hundred feet in the case of the porphyries the comparative sparseness of the minerals becomes much more evident still. If we may suppose that Butte is worked out to an average depth of 2000 feet over an area of 1500 acres we find that its product of copper is only about 6 tenths of a pound of copper per ton of rock in the inclosed volume, as against a yield of 15 to 30 pounds per ton in the case of the porphyry mines. It seems as if nothing could show more clearly the difference in the problem of mining. A territory so poor by comparison en masse is made commercially valuable only by the concentration of the copper in veins or limited areas. Since not all of the rock can be taken out, it follows that the richer portions, which after all are only a minute portion of the whole, say 1 per cent., must be searched for by means of expensive underground de- 316 THE COST OF MINING velopment work. A person does not have to be an expert in mining to recognize such a difference. In dollars and cents it is represented by the cost for mining which is $1 per ton, and in some places a good deal less, among the porphyry mines of the south, as against about $3. 50 in the Butte district under pre-war conditions, and something like $6 per ton in 1918. It has been thought that there must be something wrong with the mining practice of the Butte district to make the cost of mining so high. The answer to this is that many able engineers and managers have tried to reduce it but have universally failed. Some twenty years ago, in the late 90's, when the wages were lower and general operative conditions much better than they have been since, a portion of the mines of Butte, namely those of the Boston and Montana Company were able to mine their ores for about $2.65 a ton, but this was not maintained, and I suppose no mine in the district has, of late years, even before the war, been able to cover all its expenses at less than $3 per ton. The expectation that cheaper work could be done arose in all proba- bility from a misconception of the facts. There is always in such a district as Butte some large deposits that are described first, conveying an impression that they represent the ore bodies as a whole. I remember nearly thirty years ago of reading in newspapers a description of the Anaconda vein at Butte, which said that the ore was more than 20 square sets wide, more than 120 feet, and very rich, etc, etc. Now unquestion- ably such stopes existed, very likely they are to be found today, but so far from representing the whole bodies of the district they do not even represent a single vein. Such places are merely swells or local enrich- ments. The fact is that most of the ore comes from rather narrow streaks frequently occurring between walls of soft, partially decomposed granite. The enrichments or ore-shoots frequently come to an abrupt end, either upward on account of the leaching from the surface, or in any direction from original limitations of the mineralizations, very frequently by fault- ing. Not only the orebodies but actually the largest veins progressively change their appearance and even their structure from level to level. These changes are not revolutionary or very great in a distance of a hundred feet, but in a vertical range of one or two thousand feet the changes are so great that one acquainted with the orebodies at the top if shown those at the bottom without tracing them through would find nothing to induce him to believe that they were related in any way. In short, the cost of mining in Butte is necessarily so high it must be looked at as the principal factor which will limit the production of that district. THE ANACONDA COPPER MINING Co. This introduction will serve to explain many features in the history of the Anaconda Co. which has now become, not only a mining concern, THE NORTHWESTERN COPPER FIELD 317 but an important financial organization doing a general business in mining smelting, refining, marketing and manufacturing; its products include not only copper, but also lead, zinc, silver, gold and other metals. In the ten years since the first edition of this book was published, changes in this direction, by consolidation, purchase and expansion have been going on practically all the time, until it is scarcely an exaggeration to say this concern does practically all of the copper mining at Butte. It is scarcely worth while to specify the dates at which all the changes have taken place, but roughly, the Anaconda which was long the principal copper mine of the district but which had at later times many important rivals, has been made to absorb nearly all the others and finally the holding company to which it itself belonged the Amalgamated Copper Co. During the past ten years the Butte Coalition Mining Company, the copper mines formerly owned by Senator W. A. Clark, the Parrott Mine, the Boston and Montana and the Butte and Boston have all been consolidated, principally, by interchange of stock. The International Smelting Company and The United Metals Selling Company, which owned a lively refining business on the Atlantic Coast have also been merged. A considerable interest has been obtained in the Inspiration Copper Company of Arizona. Many isolated claims have been purchased and large properties bought for development in South America. Great investments have been made in improving smelting plants in Montana and development of a process and plant for the production of electrolytic zinc. A careful study of the annual reports makes it plain that these changes were more or less necessary to prolong the life and maintain the earning power of the Company. In other pages it is shown that for many years it has been a struggle to maintain an output of ores of high enough grade to permit the extraction of copper at a reasonable cost. It was stated in the first edition that if the increase of costs, which had been showing itself for a number of years in the mines of the old Anaconda Company, were to continue for another ten years that those properties would no longer be profitable. The ten years have passed, but the prediction has not come true, the reason being that the efforts of the management have prevented it. One may discern these efforts in every direction; in the improvements in the mines by way of better ventilation, the concentra- tion of pumping and hoisting operations to as few points as possible, and the reduction of power costs. In the smelting works there have been similar changes, designed principally to increase the extraction of copper from the ores and also to reduce the cost of transportation, and, very likely, of operating also. For many years the Company operated two large plants, one at Anaconda, at a distance of only 26 miles and con- nected with the mines by a railroad owned by the Company, and the other at Great Falls, at a distance of 160 miles to which the ore had to be 318 THE COST OF MINING transported over the Great Northern Railroad at a cost of $1.00 per ton. By the enlargement of the Anaconda plant it has been made possible to treat all the copper ores there and thus save the excessive transportation from Butte to Great Falls. Probably the principal agency for increasing the yield of copper has been the introduction of the flotation process of concentration. By these efforts the yield of copper per ton has been maintained fairly well against the undoubted decline in the average value of the ores. Indeed, in the year 1917 and 1918 there was an increase in the yield of copper compared with 1915, of about 10 per cent., but is a reasonable supposition that a portion of this increase was due to war conditions. The company no doubt tried to keep up its output by mining its best ores. There was, as in other places, a considerable shortage and deterioration of labor. It is plain that the sole result of these efforts has been to arrest the decline in yield and the increase of cost. During the past few years the multiplicity of the activities of this concern have made it almost impossible to figure out the cost of individual operations. Mining and developments at Butte are confused with developments in South America; the smelting operations at Anaconda and Great Falls are confused in the statements with similar operations on zinc ores at Great Falls and with the various smelting operations of the International Smelting Company in Utah and Arizona. About the last year for which I can obtain a reasonably correct statement of the cost of operations at Butte was 1915. In that year the costs were as follows: Mining 4,383,340 tons $17,254,622 - $3.93 Transportation 4,383,340 tons 1,029,670 - .24 Reduction 4,805,694 tons 10,694,032= 2.44 Freight, refining and selling 4,492,171 = .94 Administration, taxes, etc 573,545 = .12 Total cost per ton $7. 67 Yield Copper 55.2 j Equal to about 66 Ibs. Cu. Cost Silver 1 . 9 oz. J 11 . 8 cents per pound. Gold 50 cents If these costs were representative one is justified in stating that copper produced at Butte is hardly as cheap as the average. If under pre-war conditions it cost so close to 12 cents a pound under the present it can hardly fall under 18 cents. Butte (in 1908). The labor employed in the Butte mines is vigorous, intelligent, and, under normal conditions, abundant; but on the other hand, the wages are the highest paid in the United States, if not in the world, for any considerable volume of labor. Up to 1901 the average wages paid were 37 cents an hour. Since 1901 they have averaged 47 cents an hour, these figures being compared with 25 cents an hour for Lake Superior It is indeed probable that the Butte miners are better THE NORTHWESTERN COPPER FIELD 319 and more effective than those of Lake Superior, but hardly to the extent required to make up this great difference. Under present conditions, wages in Butte are nearly 100 per cent, higher than in Lake Superior. It seems unreasonable to estimate that more than half of this difference can be made up by superior efficiency in Butte, so that in round numbers we shall have to estimate labor costs in Butte as at least 50 per cent, higher than in Lake Superior. One unfavorable factor which may be classed as external is the loca- tion of claims under the apex law. This has meant the parceling out of the surface in small, irregular, and conflicting fragments, and this fact has interposed a serious obstacle to the comprehensive development and working of the mines. In this respect Butte does not perhaps suffer by comparison with other mining districts in the Rocky Mountain region; but as compared with Lake Superior this feature must be classed as a pronounced disadvantage. Internal Factors. The internal factors of the Butte mines are not unfavorable for fissure vein deposits, but they present certain character- istics which make for increased costs as compared with Lake Superior. The ores all come from an area of about two square miles, and from this area the output of copper and silver has been simply prodigious. This is a favorable feature. The veins, according to H. V. Winchell, belong to three different systems. Of these the first and oldest, called the Anaconda system, strikes east and west and dips to the south. The filling of these veins is quartz and pyrites in which the original proportion of copper was probably small. These veins are intersected by mineralized fault fissures striking northeast and southwest, and both these systems are intersected and faulted by a third system of mineralized fissures running northwest and southeast. In addition to these veins, still later barren faults of considerable displacement intersect all the orebodies. The result is a great complexity of vein structure which has proved a serious problem to unravel. As might be expected the various faults are accompanied by considerable zones of crushing and alteration which add materially to the difficulty of mining. An additional complexity is brought in by the influence of a pronounced reconcentration of values due to surface oxidation and leaching and subsequent deposition at greater depths. While it is true that in a great measure the orebodies owe their commercial value to this reconcentration, it is also true that it has resulted in an uneven distribution of the ore which imposes a necessity for sorting and is a factor of additional cost. The upper 200 or 300 ft. of the veins is absolutely barren. The oxidation of the large bodies of pyrites and the decomposition of vast quantities of timber in these mines has resulted in the generation of an unpleasant degree of heat. The temperature must be kept down 320 THE COST OF MINING by very thorough ventilation. Here we have a factor that makes for additional cost. Method of Treatment. The process of reduction in Butte is conducted about as follows: The ore is hoisted from the mine and dumped directly into large bins from which it is drawn into railroad cars and transported to combined concentrating and smelting plants. A small proportion goes to plants in the vicinity of Butte itself, and not more than two or three miles from the mines, but by far the greater portion is taken to Anaconda 26 miles away, or to Great Falls 100 miles away. At the smelter all ores containing less than 6 per cent, copper are concentrated. The higher-grade ores are smelted in blast furnaces and the concentrates in reverberatory furnaces collecting the metals into a matte which is bessemerized on the ground into blister copper. A portion of this blister copper is refined at the Great Falls plant, but by far the greater portion is shipped to the Atlantic seaboard in the neighborhood of New York and there refined. Nearly all the copper output of Butte is sold through the agency of the United Metals Selling Company. The most pronounced factor making for high costs in the Butte ores is the large percentage that must be smelted. This can be estimated roughly at 40 per cent, as against 4 per cent, for the richest copper ores in Lake Superior. The concentrating and smelting are largely done in two immense plants owned by the Amalgamated Copper Company, one at Anaconda, and the other at Great Falls. It is believed that these plants are equipped and operated as well as any in the world, no pains having been spared in capital expenditure to secure the greatest economy. But it is mani- festly a physical impossibility to smelt 15 to 30 tons of ore at Butte for anything like the cost required to smelt one ton of concentrates in Lake Superior. Furthermore, the Butte copper must stand not only a very heavy transportation expense to the seaboard, but must further undergo the expensive process of electrolytic refining. The logical result of these conditions is that in Butte $4 a ton for concentrating, smelting, and refining may be considered as an absolute minimum as against a cost of from 60 cents to $1 in Lake Superior. Mining in the Butte District. It is not my intention to go into the details of mining practice further than to point out the general char- acteristics that determine the costs, but it may be pertinent to mention in a general way the methods in use underground. The Butte ore is all opened by vertical shafts which at present have attained depths of from 1800 to 2800 ft. Levels are run out at intervals of 100 to 200 ft. A large amount of work is necessary to discover and develop the ores and many thousand feet of exploring drifts and crosscuts must be run through country rock in pursuit of the various ore shoots. Here is an item estimated at 30 cents a ton for exploration work that is quite absent from the prominent Lake Superior copper mines. THE NORTHWESTERN COPPER FIELD 321 In sloping, the walls are found to be soft enough to require constant timbering, usually by square sets. In many places the effect of the faults above mentioned has been to produce rock so soft as to make the timbering especially difficult and expensive. As a rule the stopes require, in addition to the timbering, a rock filling for safety. This filling is obtained mainly out of exploring drifts and to some extent from the sur- face, but also in some cases it has been found necessary to make rooms in the country rock for the mere purpose of securing waste filling. It does not appear that a great deal of waste is sorted for filling out of the vein itself, although it suggests itself to the casual visitor that this is a point that might be gone into rather seriously. Since the cost of trans- portation, concentrating, smelting, refining, and marketing amounts to at least $4 a ton, it would seem as if the point at which ore already broken would better be left in the mine than treated is about \Y to J per cent, copper. All the mines of Butte are run on the same principle; when you describe one you describe them all. I select the Anaconda mine as a basis for comparison with the Calumet & Hecla in Lake Superior, not for the purpose of drawing any invidious comparisons of management, but for the purpose of calling attention to the factors which I believe establish the costs per ton. In such a comparison it is, of course, absurd APPRAISEMENT OF COST FACTORS AT ANACONDA AND AT CALUMET & HECLA Calumet & Hecla Anaconda Difference against Anaconda Cost at Mine Sloping labor $1 10 $1.65 $0.56 Exploration . . . 30 30 Supplies including timber 0.50 0.90 0.40 General expense 22 0.50 0.28 Total $1 82 $3 35 Construction and amortization 40 0.40 Outside Costs- Freight to mill $2.22 $0 15 $3.75 $0 15 $1.53 Cost of concentrating 0.55 Cost of smelting. ... 2.90 2.35 Cost of refining and marketing 50 1 21 71 Total cost $3 27 $7.86 $4.59 Percentage milled, Calumet & Hecla mine, 100; Anaconda 90. Percentage smelted, Calumet & Hecla mine 3; Anaconda mine, 45. Pounds copper to ton, Calumet & Hecla mine, 42; Anaconda mine, 63. . 21 322 THE COST OF MINING to lay claim to accuracy, but since the object of this discussion is to find out why costs are different in different places, it seems proper to enumerate what reasons one may see. The accompanying table shows the reported costs for the various mines at Butte from 1903 to 1907. Two facts are worth noting; First, that the cost for mining proper tended to rise, probably on account of an increased proportion of development work undertaken in the later years; second, that the cost of reduction and also of refining and market- ing came down notably. This reduction is probably due to the great metallurgical improvements that have been effected by reason of the liberal policy of the Amalgamated Copper Company in its expenditures to provide better smelting facilities and also its good management. A further reason for diminishing costs in smelting, refining, and marketing is a diminution in the metallic contents of the ore, a greater amount being concentrated and a less amount being smelted and refined per ton. In the case of the Boston & Montana a considerable saving has also been effected in transportation costs. COSTS AT MONTANA COPPER MINES ANACONDA COPPER COMPANY (Transportation to Anaconda 26 miles) Tons Mining per ton Freight to smelter per ton Reduction per ton Refining marketing per ton Total cost per ton 1903 1,392,835 $3.49 $0.15 $2.39 $2.30 $9.23 1904 983,001 3.73 0.15 3.82 1.96 9.66 1905 1,473,644 3.56 0.15 3.00 1.11 7.82 1906 1,521,310 3.63 0.15 2.27 1.08 7.13 1907 1,401,948 4.47 0.16 2.52 0.93 8.08 BOSTON & MONTANA (Transportation to Great Falls) 1903 907,227 $2.61 $1.00 $3.05 $2.90 $9.54 1904 988,866 2.89 1.00 2.53 1.81 8.23 1905 1,138,307 2.91 1.00 2.21 1.69 7.81 1906 1,209,805 3.45 0.93 2.45 0.90 7.73 1907 1,156,785 3.93 0.76 2.67 0.92 8.28 BUTTE & BOSTON (Transportation to Anaconda) 1903 245,333 $3.27 $0.16 $2.44 $1.12 $6.99 1904 202,286 3.42 0.17 2.67 1.05 7.31 1905 260,433 3.31 0.19 2.45 0.79 6.74 1906 246,593 3.51 0.20 2.06 1.25 7.02 1907 331,629 3.79 0.21 2.27 0.85 7.22 THE NORTHWESTERN COPPER FIELD BUTTE COALITION 323 1 1906 149,101 $3.94 $0.60 $3.94 $2.50 $9.98 1907 412,169 5.49 0.29 2.29 NORTH BUTTE 1906 1907 259,650 374,632 $4.47 4.53 $0.20 $4.84 0.20 4.04 $9.51 8.77 It is to be noted that the Butte & Boston ores have cost less than the others. This is undoubtedly due to their lower grade, the proportionate cost for smelting, refining, and marketing being less. On the other hand, the North Butte has cost more on account of its higher grade, and Butte Coalition has cost more than the average on account of the large expendi- tures for improvements. The following discussion refers to a mine at Phoenix in southeastern British Columbia, where the external conditions are not unlike those of Butte, but the underground conditions very different. The inference which might be taken from the remarks in the first edition that the Granby property was over-valued was soon proved to be justified. The mine is now nearly exhausted. Granby Consolidated (iplS). The Granby Consolidated Mining, Smelting and Power Company, Limited, British Columbia, has mined in three years 1,995,948 tons and treated 2,088,381 tons. The ore yielded by actual extraction 24.2 Ib. copper, 0.38 oz. silver, and 0.06 oz. gold per ton. The silver and gold are worth $1.42 per ton, equal to about 10 Ib. copper. The total value, therefore, is equivalent to a little more than 34 Ib. copper, and this may be taken as a safe basis for figuring the econo- mic performance of the mine. The ore is chalcopyrite disseminated through limestone altered by magmatic waters so as to form an approxi- mately self-fluxing gangue. The ore will not concentrate, but is smelted in bulk. A large part of the mining has been done in open pits with steam shovels. This company does not issue a good report to its stockholders. The statement is too brief; it contains no estimate of ore developed, nor does COSTS PER TON AT GRANBY Per Ton Current operating cost; mining, smelting, refining, and marketing for 2,088,- 381 tons treated $3 . 39 Current construction 2,088,381 tons treated JL?? Brought forward $3 . 75 Return of $14,000,000 invested in lands and equipment at 5 per cent, interest and 5 per cent, annual amortization; this being sufficient to extinguish the investment in 15 years with an output of 11,200,000 tons 2.00 Total $5.75 324 THE COST OF MINING it give any intimation of the probable life of the mine. The reports give no figures about the capital invested in lands as distinguished from capital in equipment. On these accounts it is possible that the costs indicated may not do the property justice. On this basis the selling cost of copper or its equivalent in New York is about 17 cents a pound. It is stated in the reports that a maximum capacity of 3500 tons a day, say 1,200,000 tons a year has been provided. If this volume of operations can be maintained for fifteen years the amortization charges on the invested capital may be computed at about $1.16 per ton on 18,- 000,000 tons. This will equal 3^ cents per pound copper and the total cost required to neutralize the investment is 14 J^ cents per pound. The idea can be expressed somewhat differently, as follows: Cost of copper for current operation and construction per Ib 11 cents Profit per ton required to return capital in 15 years with 5 per cent. interest 3.5 cents Total cost required at maximum output for 15 years to make the investment justifiable 14.5 cents It is pertinent to remark that this is what I mean in all cases by amortization; but in other illustrations I have attempted to amortize only the capital invested in actual plant, while in the case of the Granby the amortization covers the entire investment in lands and property besides plant. THE GRANBY CONSOLIDATED IN LATEK YEARS During the past ten years this concern has re-established itself by opening up a new mine in North British Columbia, known as the Hidden Creek property at Anyox. The situation is rather interesting, an arm of the sea at about 55 north latitude. The average rainfall is about 90 inches in a year. Most of it occurs from October to March. The summer months, from April to September inclusive, are comparatively dry, the rainfall being only about 21 inches or 3j^ inches per month. The mean temperature for the year is about 47, which, by the way, is three degrees higher than that of Flagstaff, Arizona. The dampness of the climate makes the woods exceedingly thick and the surface of the ground is almost universally covered with peat. In this damp climate the destruction of vegetation by the sulphur fumes is infinitely greater than in the dry regions of the south; for miles around the smeltery the forest has been killed, giving the landscape, which is naturally very attractive, a sad and desolate appearance. The Granby Company has had the peculiar experience of operating only on a smelting basis. Its first considerable mine, situated in South- THE NORTHWESTERN COPPER FIELD 325 east British Columbia at Phoenix, gave a low-grade smelting ore, on which no milling has ever been done. The Hidden Creek mine is also operated entirely by smelting, although its ores scarcely average 2J4 per cent. At both plants these operations have been carried on with great efficiency, but it is a very open question whether it is, after all, the proper method. About 40 per cent, of the ore is almost pure sulphide, carrying about 3 per cent, copper, and 60 per cent, of sulphide mixed with green- stone and carrying 2 per cent, copper or less. The ore reserves as of June 30th., 1918 were estimated at 10,481,000 tons averaging 2.29 per cent. In 1916, 722,620 tons was treated yielding 33.30 pounds copper per ton and about 30c in gold and silver. The cost of smelting and con- verting is given at $1.80 per ton, but to this, I suppose, should be added for depreciation about 50 cents more, making a total of $2.30 per ton or something like 7 cents per pound of copper. The cost of mining, includ- ing development and transportation to the smelter was probably about $1.30 a ton or 4 cents per pound of copper. The sum of these costs was about 11 cents which carries the metal up to the stage of blister copper and to it must be added freight and refining and general expenses, making the total cost in 1916 about 13 cents. There is reason to doubt that these results may be obtained indefi- nitely; one reason being that up to the present all the ore has been ob- tained through tunnels. There will presently be an additional cost of mining for hoisting. The ore, of course, is obtained in a wholesale man- ner and whether this can be continued down to great depths is more or less open to question. The orebodies are similar in size to those mined for many years by the Alaska Tread well group, the description of whose operations is given in another place; but where finally the whole enter- prise came to a sudden end by the caving of the mine which let in the sea water. This latter danger is not present at Anyox. But, as matters stand, an extraordinary amount of ore is taken out per man per day; something like 6 tons. At the smeltery about 4 tons is treated per man. In November, 1917, about 1200 men were employed in all at Anyox and produced about 30,000,000 pounds copper per year. If this is a representative output we might count on about 25,000 pounds of copper per man per year, which is nearly as good as that of the Calumet and Arizona mines of Bisbee. The full development of a property like this requires a great deal of capital. The country abounds in water power which is only partially developed. The present development is satisfactory only for a portion of the year. During the winter when the streams are partially dried up by frost it is necessary to use some steam. The water power costs about 4 mills per K. W. H., and the steam power about 5 times that much. In treating low grade ore this difference is important. The total amount of power required for mining, smelting and town lighting is about 28 K.W.H. 326 THE COST OF MINING per ton. Since the yield is only about 35 pounds copper per ton the water power would only cost about one-third of a cent per pound but the steam power would cost 1H cents per pound. To obtain a sufficient supply of water power for the whole year would justify a considerable outlay of capital. The amount of coke required to smelt the ore is about 9 per cent. Of late I am informed that this coke has been costing $14 a ton, twice as much as before the war. This is almost prohibitive for it means about 4 cents per pound of copper for fuel alone. It would seem as if the most likely way to reduce such costs would be to concentrate the ores, or at least such portion of them as can be con- centrated. But this also requires a large investment. It is said that the major portion of them may be successfully treated by flotation at a recovery of about 80 per cent. With cheap power it would seem as if this might be done at a reasonable cost and the saving in smelting would be very great indeed. All these operations present a curious contrast with those of most of the copper mines of the western United States or of any part of cordil- leran region for that matter. Anyox is situated on an admirable harbor, open all the year round; the mines are within two miles of the smelter; transportation to the United States and to all portions of British Colum- bia and southeast Alaska, is conducted through protected deep water channels, a little dangerous it is true on account of strong currents and rocky shores, but on the whole exceedingly cheap. Ores, coal, coke and supplies might be carried by specialized ships such as those used for iron ore on the Great Lakes when the volume of traffic becomes great enough to justify it. There is no geographical reason why Anyox should not be made an important smelting center for various ores or concentrates that might be obtained along the coast. The development of transporta- tion in the manner just mentioned would seem to add greatly to its present advantages. From all these conditions it seems to me that the outlook for the Granby company is encouraging. The principal requirement is the gradual and wise investment of sufficient capital. As matters stand the capital invested in real estate, timber land, machinery, buildings, dwellings and equipment as stated in the report for 1918 is about $9,000,000. It is probable that most of this should be charged to the Hidden Creek operations, although it was probably not all spent there. The old plants in Phoenix are of doubtful value. The mines, smelters and other equipment at Anyox cost a total of $6,000,000. That is only $6 per annual ton. The probability of the extension of these operations is largely deter- mined by the geology of the region. The orebodies at Hidden Creek seem to be in most respects similar to the large sulphide copper deposits THE NORTHWESTERN COPPER FIELD 327 in the southwest. They are on the periphery of a green-stone intrusion through states, probably of Jurassic age and are on a scale quite compar- able to those of Jerome, Arizona, though not so rich in copper. The country has been extensively eroded but apparently not deep enough to carry away the cream of the mineralization. The great coast range, particularly of British Columbia is, indeed, very extensively eroded along its main axis where great intrusions of granite have cut through forma- tions of moderate geological age, but on both sides there are many smaller ones which have scarcely penetrated through the sedimentary rocks. The geology has been only roughly mapped, but it appears that the area of this great batholith is almost equal to that of the State of New York. According to the maps it is 800 miles long. The sum total of minerals around such a mass as this must be great, but how much of it is com- mercially available may only be guessd at. CHAPTER XVIII COPPER MINES IN VARIOUS DISTRICTS TENNESSEE COPPER Co. UTAH CONSOLIDATED MOUNT LYELL IN TASMANIA NORTHERN CALIFORNIA FIRST NATIONAL IN 1908 GREENE CANANEA IN 1908 AND LATER WALLAROO AND MOONTA FlSSURE VEINS AT GLOBE, ARIZONA OLD DOMINION ARIZONA COMMERCIAL. In the following chapter, as well as in others, there are retained from the first edition some remarks about mines based upon records which are now antiquated. I have not been able to revise them. In some cases the mines themselves have nearly, or quite, gone out of existence. Never- theless, I have been surprised on several occasions to find that some of these references still have a practical value and I retain some of them in the belief that other engineers may have the same experience. TENNESSEE COPPER COMPANY 1908 Only one mine of importance is found in the United States east of Lake Superior. It is owned by the Tennessee Copper Company, which works several large lenses of cupriferous pyrite. All the ore must be smelted in the blast furnace. For ores of this character I believe this company does the cheapest work in the world. Its reports are excellent and reveal not only the operating costs in detail, but also the plant expenditure and the ore in sight. The external factors are favorable. Fuel is cheap and transportation to markets much less than for western mines. Wages are about 20 cents an hour, but I do not believe this means cheap labor. The internal factors are favorable, with the exception of the necessity of smelting all the ore. This is a most powerful element of high cost. The ore yields only 32% Ib. copper to the ton. The current operating costs for 1907 were as follows: Mining $1.22 Smelting 2. 14 Administration, etc . 49 Total $3.85 To this I think should be added 21 cents a ton for the use of the mining plant and 47 cents a ton for the use of the railroad and the smelting plant, making a total of $4.53. In detail these costs are as follows: 328 COPPER MINES IN VARIOUS DISTRICTS 329 Development $0. 1318 Mining, hoisting, etc . 9389 Crushing and sorting . 0804 General.. 0.0851 Total current cost $1 .2162 Add cost of preliminary development amortized in 15 years at 5 per cent, interest and 5 per cent, annual amortization. ... 0.06 Mining plant similarly amortized 0. 15 Transportation to smelter $0. 1329 Blast furnace 1 . 6279 Engineering and laboratory . 0628 General 0.0852 Converting . 2402 Total current smelting cost $2 . 1430 Add amortization of smelting plant and railway as above 0. 47 Add administration, shipping, refining and selling expenses. . . 0.49 Grand total $4. 5292 On the basis thus figured, anything received above 12 cents a pound for copper in New York is applicable to dividends, and anything above 14 cents is net profit after allowing for the return with interest of money invested in the plant. These costs are higher than the average by from 5 to 10 per cent. The costs for 1907 were high on account of unfavorable economic conditions throughout the country. It should be explained further that in addition to the copper the sulphur is being utilized so that in future the property will not be wholly a copper mine. Its opera- tions will be nearly equivalent to those of the Rio Tinto Company in Spain. The subsequent history of this concern has been unfortunate. Copper is no longer the chief product. Sulphuric acid is being made at the rate of 300,000 tons a year and sold under a long term contract at pre-war prices. The result has been disastrous. The ore bodies are holding out well however at the 1200 ft. level, and the development of the fertilizer business gives an assurance of future earning power. Acid is being made under the high prices of 1919 for about $5.00 a ton and copper for about 20 cents a pound. UTAH CONSOLIDATED 1908 This company has mined since 1899 large deposits of cupriferous pyrite at Bingham, Utah, averaging by actual recovery for five years 60 Ib. copper, 1.33 oz. silver, and 0.104 oz. gold per ton. The silver and gold are worth about $2.88 per ton, so that with copper at 14 cents per pound there is a total metallic extraction equivalent to 80 Ib. copper. The ore occurs in large lenses or shoots in limestone. It is approxi- mately self-fluxing, there being a moderate excess of iron over silica. 330 THE COST OF MINING Most of the mining has been done through adit levels. The mining plant is not extensive. The ore is delivered to the railroad over an aerial tram- way about 12,000 ft. long. It is transported by rail about 25 miles to the smelter. The external conditions are, for the Rocky Mountain region, good, and the internal factors, with the single exception of the requirement of smelting all the ore, very favorable for cheap work. The ore is soft, uniform, and occurs in good-sized bodies. The stoping is done in square- set rooms. The item of timbering must be one of the chief mining expenses. There is nothing in the reports to show the mining or smelting losses; but with this exception the reports are excellent. They give the stock- holders in brief but sufficient outline the costs and financial results of the business. In the five years ending December 31, 1907, the costs were as follows: COSTS PER TON FOR FIVE YEARS, UTAH CONSOLIDATED Mining, 1,260,453 tons $1 . 73 Development, 1,400,000 tons 0. 30 Transportation, smelting, and refining, 1,276,393 tons 2.80 General expense, 1,276,393 tons 0. 23 Current construction, 1,276,393 tons 0. 34 Amortization at 5 per cent, interest and 5 per cent, annual amortization of $1,232,274 invested in plant at beginning of period; this being sufficient to retire the investment in 15 years proportion for five years 0. 48 Total cost $5. 88 Recollecting that the ore contains in copper, gold, and silver the equivalent of 80 Ib. copper to the ton, we get an average complete cost of producing copper of 7.35 cents per pound. This may be divided as follows: actual operating cost, 6.75 cents; allowance for return of work- ing plant, 0.60 cents. Of course, everything received above 6.75 cents for copper or its equivalent in New York goes to the stockholders as dividends. The report of the Utah Consolidated for the year 1908 exhibits con- ditions that are not comparable with certainty to those of former years. The smelter, which was the principal plant asset of the company, had to be permanently shut down on account of a decision of the court to the effect that its operation was inimical to the agricultural interests of the Salt Lake valley. In 1908 the ore was treated at the Garfield smelter of the American Smelters Securities Company, under terms that the Utah Consolidated believes to be unfavorable. Certain deductions were made from the metal contents of the ores under this contract. The exact amounts deducted are not stated. On the face of the returns the record for the year was disappointing. The costs were as follows: COPPER MINES TN VARIOUS DISTRICTS 331 Mining 248,215 tons Ex. and development Mine plant Smelting and transportation Depreciation and general Current construction Add refining and marketing, bullion actually produced. . $461,711 $1.86 73,441 .30 3,869 .01 921,239 3.71 127,569 .52 129,621 .52 120,400 .48 Total operating Copper metal, Ib . . Silver, oz Gold, oz $1,837,850 $7.40 10,648,243 265,284 23,441 At the prices current during the year this equals 15,225,000 Ib. refined copper. This is 61.4 Ib. per ton. Dividing the operating cost of $7.40 per ton by this amount we get 12 cents as the cost of copper per pound. The ore reserves have been increased so that there is no reason to change the amortization charge of 48 cents a ton given above. This, on account of the diminished yield of the ore is now equal to about 0.8 cents per pound. Adding this we get 12.8 cents as the selling cost of copper for the year. Needless to remark that this showing is disastrous and undoubtedly the stockholders will await with impatience the inauguration of new smelter arrangements, which, it is announced, will be provided by the new International Smelting Company. SUBSEQUENT HISTORY OF UTAH CONSOLIDATED Following the inference made in the last paragraph the operating results in the next few years were not very encouraging, but later, through the discovery of bodies of lead ore, the securing of satisfactory smelting rates, and the pursuit of a liberal plan of development the property re- gained its earning power and has been profitable ever since. Copper Ore Pounds Copper Lead Ore Pounds Lead Profit 1909 280,637 10,043,900 $ 154,267 1910 182,204 7,489,471 65 348 1911 162,522 9,162,023 8,305 3,311,000 438,430 1912 159,143 6,506,814 24,243 8,732,000 603,923 1913 181,077 7,710,668 70,889 19,208,000 630,828 1914 153,345 7,584,391 48,492 14,588,000 565,665 1915 207,119 8,836,091 65,129 17,777,000 1,128,122 1916 36,0,034 12,211,118 74,542 18,175,000 1,924,176 1917 226,536 7,968,165 58,247 13,014,000 723,323 1918 221,651 8,476,197 31,725 812,000 252,763 2,134,068 85,988,838 381,372 102,419.000 5,486,845 332 THE COST OF MINING It appears that approximately 2,500,000 tons of ore, of which the copper ore as above ran only 2 per cent, and the lead ores 13 per cent., in each case carrying say 1.5 ounces silver and SI. 50 in gold, have been made to yield profits of $2.20 per ton. In 1915 the costs were about as follows ; Per Ton Mining $565,000 $2. 10 Development, 20,000 ft. at $8.30 166,000 0. 60 Smelting 706,000 2 . 60 Administration, etc 42,000 0.15 Refining, etc 131,000 . 48 Total cost about $1,610,000 $5 . 93 In 1911 the ore reserves were estimated at only 300,000 tons, but it will be noted that 1,800,000 has been mined since a good example of the fallacy of valuing mines on ore reserves. MOUNT LYELL The Mount Lyell Company operates a cupriferous pyrite mine and a smelter in western Tasmania. The original Mount Lyell deposit was a great mass of nearly pure iron pyrite containing only 0.6 per cent, copper, but a portion of it had been enriched near the surface. This deposit has been mined almost wholly from an open pit. Another mine, however, called the North Mount Lyell produces a much more siliceous ore averaging 6 per cent, copper. This ore has to be mined underground. During the four years, 1905-1908, which will presently be reviewed, about 60 per cent, of the ore has come from the Mount Lyell proper and 40 per cent, from the North Mount Lyell. The external factors are probably nearly average for English-speaking countries. The climate is rainy, but nor more so than Cornwall or Scotland. The mine is situated near the coast, so that supplies must be reasonable in cost, and transportation of copper, even to England, must cost less than transportation of western American copper to New York. The internal factors are, for a smelting enterprise, very favorable. The ores are mined, thanks to the large proportion obtained from the open pit, for less than $2 a ton. The smelting is largely pyritic and the proportion of coke used in the charge is said to be only one per cent. In four years 1,690,531 tons were mined. In the same period the ore reserves diminished from 4,666,000 to 4,107,000 tons, a loss of 559,000 tons. At this rate of loss the property would last thirty years, but s'nce (1) a large part of the low-grade pyrite which hitherto has been mined from open pits must be taken at greater cost from underground and, (2) there does not seem to be a first-class reason to believe that the rich ores of North Mount Lyell can be found in the same abundance for a long COPPER MINES IN VARIOUS DISTRICTS 333 period, it seems safer to estimate a life of twenty years as the amortizing period of the investment. On this basis we may compute the costs as follows; COSTS PER TON AT MOUNT LYELL Mining 1,690,531 tons $1.05 Stripping 1,690,531 tons : . 0. 26 Developing 1,131,258 tons 0.50 Total mining $1.81 Smelting 1,698,793 tons $1 . 78 Converting 1,698,793 tons 0. 34 Railway expenses 0.27 Freight and marketing . 72 Total for smelting, refining, and marketing $3. 11 General expense, 1,698,795 tons $0. 25 Use of plant; being 5 per cent, interest and 3 per cent, amortization for four years on average invested (376,000) . 35 . 60 Total cost $5.52 The actual returns of metal from the Mount Lyell ores have been 34,210 long tons copper, 3,056,231 oz. silver, and 91,815 oz. gold. The extraction has been 86 per cent, copper, 99 per cent, silver, and 105 per cent, of the gold estimated by assay to be contained in the ore. There is no statement as to whether the ore treated is given in long tons or short tons, but it is probably safe to assume that the copper output is given in long tons. We have on this basis a recovery of 45.5 Ib. copper, 1.8 oz. silver, and 0.054 oz. gold per ton of ore treated. The gold and silver are worth $2.18 per ton, at average prices. This is the equivalent of 15H Ib. copper, and we may figure the metallic contents altogether as equal to 61 Ib. copper. On this basis the cost per pound of copper is 9 cents. NORTHERN CALIFORNIA COPPER MINES 1908 During the last twelve years a considerable output of copper has been obtained in Shasta County from a number of pyrite deposits that are described as occurring in zones of intensely crushed granitic porphyries. The pyrite masses have been considerably enriched by the leaching of copper from the upper portions and the deposition of it in a lower part of the same deposit. It is to be inferred that the original pyrites, below the zone of enrichment, are pretty low grade, probably too low in many cases to be payable. The following description of the industry is copied from the report on the " Production of Copper in 1907," by L. C. Graton of the U. S. Geological Survey. The output of copper for that year is stated at 28,000,000 Ib. " The ores smelted in 1907 yielded approximately 3 per cent, of copper. 334 THE COST OF MINING The yield per ton in gold was about $1.30 and in silver 2.1 oz., or $1.40, which combined are equivalent to 4.5 cents per pound of copper. In the aggregate several million tons of ore are blocked out in the mines of the Balaklala, the Bully Hill, the Mammoth, the Mountain, and the Trinity companies. The limits of these orebodies are now pretty well defined, and it is doubtful if new bodies can be discovered as rapidly as the present ones are exhausted. The first large body to be worked in the district, that at Iron Mountain, is now nearly worked out, and in spite of the fire which has been burning for several years practically all the ore will be extracted. "Most of the orebodies thus far discovered are developed by workings not more than 500 ft. deep, but the Great Western workings, in the Afterthought district, exceed this depth, and in the Bully Hill district the lowest level is about 900 ft. below the outcrop. Owing to the rugged topography, tunnels afford easy access to the orebodies, but in a few- places winzes from these tunnels are required. Open cutting is employed in part at the Balaklala and the Afterthought mines. Water is not troublesome. Up to the present time square setting has been chiefly employed. At the Mammoth mine the horizontal slicing system, with subsequent caving, is employed, and the quantity of timber required, which was large at the start, is gradually being lessened. Methods requiring less timber may be employed in the mines that are now in the development stage. Native timber is used. Electric power is employed almost exclusively and is derived from the lines of the Northern California Power Company. Much of the coke comes from Australia. The Southern Pacific Railroad crosses the district. The Iron Mountain and Hornet mines are connected with it by a private railway, and the Mam- moth by an aerial tramway, which has been replaced by a combination steam and electric road. An aerial tram connects the Balaklala and Trinity mines with the Balaklala smelter at Coram. The Sacramento Valley and Northeastern Railway was completed to the Bully Hill district early in 1908. Work has been begun on a line to the Afterthought district. European labor is employed chiefly. u Pyrite smelting is now applied almost exclusively to the ores and is very successful. Even the zincky ores of the Afterthought region are handled by the aid of a hot blast. Some experiments are under way to save the zinc now lost at this plant, and some steps in this direction may be undertaken at Bully Hill also. The Mammoth Company was the largest producer of the year, but turned out only matte, which was con- verted at the United States smelter in the Salt Lake Valley. The con- struction of converters, as well as of two additional blast furnaces, however, was practically completed in 1907. During that year the fine ore was shipped mostly to sulphuric-acid works near San Francisco, where the resulting cinders were smelted for their copper. The Mountain COPPER MINES IN VARIOUS DISTRICTS 335 Copper Company, owing to the raising of the injunction against its Keswick plant, treated part of its output at that smelter and part at its works at Martinez, on San Francisco Bay, where it has, in addition to a small electrolytic refinery, a sulphuric acid and fertilizer plant that utilizes phosphate from Utah and Idaho. The Afterthought smelter shipped its matte to Utah for conversion. Some Shasta County copper ore was treated at the Garfield smelter. The Bully Hill smelter, which has been idle since early in 1906, was enlarged and equipped for pyritic smelting. A reverberatory was also added for the treatment of fines. Work was actively carried on by the Balaklala Company in the construc- tion of its new 1500-ton smelter until October, when construction was stopped, not to be resumed until 1908. This plant, which will treat the Balaklala and Trinity ores, will make matte, which may be converted at the Mammoth works pending a decision regarding the resumption of construction of the San Bruno smelter." The United States Smelting, Refining & Mining Company gives no information worth speaking of about its operating results. This is un- fortunate, for their Mammoth mine is now the largest producer in Northern California. The only report I have seen upon the mining operations of this district is that of the First National Copper Company. This concern took over in 1908 the stock of the Balaklala Consolidated Copper Comp- any, which had evidently been organized on an inflated basis. The new company with a paid-up capital of $1,500,000, bought all the stock of the old one, which was capitalized at $10,000,000. The comparison of the balance sheets of the two companies is rather amusing. The First National Company has no liabilities to speak of except its own capital stock, and no assets except the capital stock of the Balaklala, each amounting to $1,500,000. Turning to* the Balaklala balance sheet we discover " Mines and Mining Property" put down at $8,688,777.05. This item was evidently a fancy price put upon the undeveloped and unequipped mining claims a good example of mining finance in boom times. It is also a good example of the wisdom of keeping the item of real estate, the opportunity to mine, out of one's computations of mining cost. Other assets on the Balaklala balance sheet undoubtedly represent investments, as follows: Cost of outside properties MINE CONSTRUCTION: Air drill equipment Locomotives and cars Aerial tramway and connections Buildings Teams and equipment $37,015.77 $ 24,759.23 18,956.23 202,499.21 49,985.49 1,699.43 292,899.59 336 THE COST OF MINING SMELTER CONSTRUCTION: Smelter $873,682.30 Converter 102,512.60 Steam railroad 83,279.41 Teams and equipment 3,931 . 28 1,063,405.59 Property in dwellings, etc 88,346 . 55 Total plant $1,481,667.50 There is in addition working capital in inventories, supplies and cash, approximately $600,000 .00 We might fairly add to this about $400,000 for the cost of developing the mine and then the total cost of starting the enterprise will amount to approximately $2,500,000. The president of the company has the following to say in the first annual report: " During the year we operated the mine for sixty days and the smelter for fifty-two days. In the commencement of operations we expected to find a num- ber of things that would require alterations and would more or less delay us in getting down to a working basis. I am glad to say that we are gradually over- coming all difficulties and are now producing blister copper. " Attention is called to the fact that we only operated part of two months and one full month, and our expenses are for three full months. "Commencing operations we had considerable waste in opening our drifts, which has reduced the value of our ores, but all indications are that the ore de- veloped will average about 2.7 per cent, copper, 0.025 oz. gold, 0.75 oz. silver. "Our costs, based on present operations, will be materially reduced when we are mining and smelting to our capacity of 1250 tons of ore per day." At average prices the ore above mentioned would contain the equiva- lent of 60 Ib. copper per ton. It is not stated whether this is the actual yield, or only the assay value from which losses will have to be deducted. While it is manifestly unfair to calculate costs on the interrupted operation of only three months, I give the following costs for what they are worth : BALAKLALA CONSOLIDATED COPPER COMPANY SUMMARY OF MINE OPERATIONS OCTOBER, NOVEMBER, AND DECEMBER, 1908 Cost per ton Development $1,452.47 $0.077 Mining 29,866. 14 1 . 593 Compressor 787 . 93 0. 042 Air drills 1,199.62 0.064 Mine tramway 1,807.31 0.096 Timbering 1,620.97 0.089 Power 1,560.36 0.083 Shop's expense .- 245.64 0.013 General expenses, including taxes and insurance 4,250.02 0.227 Carried forward > $42,790.46 $2.284 COPPER MINES IN VARIOUS DISTRICTS 337 Brought forward $42,790.46 $2.284 Surface and road repairs 118 . 03 . 006 Repairs to buildings 197.31 0.010 Stable expense 438 .10 . 023 Steel sharpening 666 .36 . 035 Special construction 1,244 .00 . 066 Total cost $45,454.26 $2 . 424 Ore mined, 18,751 tons. SUMMARY OP SMELTER OPERATIONS OCTOBER, 11 DAYS NOVEMBER, 11 DAYS DECEMBER, 31 DAYS Cost per ton Amount of ore Converters $1,750.77 0.070 Blast furnaces 51,095 .00 2 . 035 Matte and slag casting 4,454. 52 1 . 77 Repairs to plant buildings 1,444 .51 . 057 Repairs to ore bins 2,110.78 0.084 Railroad operation and maintenance 2,697. 14 0. 108 Unloading custom ore 1,190 . 72 . 047 Sampling mill for custom ore 887 .75 . 035 Sampling mill for sulphides 2,253.35 0.089 Lighting, electric 1,148.75 0.045 Water supply and pumping plant 424 .78 . 017 Assay office 800.44 0.032 General expenses, including insurance and taxes 3,199.48 0. 128 Total expense $73,457.99 $2.924 Ore smelted, 25,121 tons 66,961.50 2.665 Furnace products on had Total cost (see Balance Sheet) $140,419 .49 $5 . 589 Operating tramway . 304 Total cost per ton $5 . 893 Assuming that the 60 Ib. mentioned above represents recovered metals, these costs indicate operating costs of about 10 cents per pound. To this will have to be added an annual charge of 6 per cent, on $1,500,000 for depreciation of plant expressed in construction, equal to $90,000 a year. General expense, including taxes, insurance, and administra- tion, will be $35,000 more. On an output of 250,000 tons these items will be 50 cents per ton and the total operating cost of copper will ap- proach 11 cents. The amortization of $2,500,000 invested in the property with 4 per cent, interest at 15 cents copper and 11 cents cost, equaling 4 cents a pound profit, with an output of 15,000,000 Ib. a year, will require five years operation, 1,250,000 tons of ore, and 75,000,000 Ib. of copper. Whether the company has this amount in sight or not is not stated. GREENE CONSOLIDATED, CANANEA, MEXICO 1908 This company has a very large property near the Arizona border in the state of Sonora, Mexico. In 1906 the Greene-Cananea Company 338 THE COST OF MINING was formed to consolidate the old Greene Consolidated Copper Company, and the Cananea Central Copper Company. The management has been completely reorganized. The record of the old Greene Consolidated Company was as follows: Greene Consolidated Output and dividends Lb. copper Dividends 1901 28,826,854 $400,000 1902 38,268,407 1903 42,310,544 600,000 1904 55,014,339 1,200,000 1905 63,005,848 2,800,000 1906 55,943,739 1,200,000 283,369,731 $6,200,000 The dividends are up till March, 1907. It appears that up to that date the dividends, which must represent approximately the earnings, were equal to 2.19 cents per pound copper produced. If we count as copper the value of silver and gold produced, the earnings per pound would be about 2 cents. Since in those particular years the average price of copper was about 14.9 cents, we may conclude the average cost to have been about 12.7 cents; and since at the end of the period it was found necessary to undertake large improvements, it is altogether probable that something should be added for depreciation. No estimate of the amount of ore in sight is given in the report for 1908. The report goes into the question of mining costs so thoroughly and with so much good sense and poise that I quote largely from the state- ments of the general manager, Mr. L. D. Ricketts. It will be seen that the reduction of costs in all departments has been enormous. But it occurs to me to point out one or two reasons for accepting with a little caution the conclusion that the process of reduction is so firmly intrenched that further reductions are inevitable. First, let me note that during 1908 the monthly tonnage treated was about 60,000 against nearly 100,000 in former periods. It is just possible that the reduced tonnage may have great advantages over the full tonnage in that it is secured with selected labor and from selected places. Either of these advantages may be of great consequence in the matter of costs, as has been pionted out in the chapter on the Value of Mining Property. It comes as an example of how costs go down in periods of depression. Second, it is worth considering whether the period under review does not get great advantages from the reconstruction that preceded it. All COPPER MINES IN VARIOUS DISTRICTS 339 plants were overhauled and renovated. It is natural to suppose that in consequence everything was in excellent repair better than average. As to charging up current construction to operating, that is something that always must be done sometime whether the cost sheets show it or not. There is no great virtue in doing it in this particular case because in this very year, outside of what was charged to operating, there was spent on plant no less than $820,000 or 5^ cents per pound of copper produced from the company's own mines. Furthermore, let us consider the following. At average prices for the last ten years (15.4 cents copper, 57 cents silver, and $20 gold) the ore for 1908 shows the following values. Copper 53.4 Ib. = $8.22 Silver 0.923 oz. = 0.54 Gold.. 0. 00575 oz. = 0.115 Total 8.87 = 57.6 Ib. copper The costs for 1908, the lowest on record, are $5.976 per ton. This gives 10.37 cents per pound for the copper, or its equivalent, extracted. With these costs, the profit per pound is 5 cents and we might expect a profit, under average conditions, of some $2.80 per ton mined and treated. With these comments the following is quoted directly from the report. THE CANANEA CONSOLIDATED COPPER COMPANY, S. A. AUDITOR'S REPORT December 31, 1908 Earnings Total earnings on copper, gold and silver, and net earnings from mis- cellaneous revenues. $2,427,335 . 79 Expenditures Total expenditures account copper, gold, and silver 1,821,029.85 Net profit for year $606,305 . 94 Sundry expenditures including shut-down costs, etc 820,446.56 Deficit for the year 1908 214,140.62 REPORT OF GENERAL MANAGER The figures of production are for the period beginning July 11, 1908, when operations were resumed, to the close of the calendar year. In reading this report I would respectfully refer you to my report of Febru- ary 15, 1908. Tonnages Wet tons domestic ore treated 295,554 Wet tons custom ore treated. . 72,088 Total 367,642 340 THE COST OF MINING Ratio of concentration, domestic ore milled 3. 12 tons into 1 Ratio of concentration, custom ore milled 4 . 02 tons into 1 Production Returnable fine copper in domestic bullion 15,679,685 Ib. Returnablr fine copper in bullion from custom ore 2,939,924 Ib. Total '. 18,619,609 Ib. Silver in domestic bullion 272,651.24 oz. Silver in bullion from custom ore 175,011.99 oz. Total silver 447,663.23 oz. Gold in domestic bullion 1,700.683 oz. Gold in bullion from custom ore 1,178.150 oz. Total gold 2,878.833 oz. Recovery from Ores. Recovery from domestic ore and other material treated was as follows; Copper 2.652 per cent. Silver 0.923 oz. Gold 0.00575 oz. The value of the precious metals per ton of domestic copper produced amounted to $21.09. Development during period: January 1 to December 31, 1908: Shafts Winzes and raises Tunnels, drifts, and crosscuts. Total.. 412.5ft. 3,550.5ft. 9,388.0ft. 13,351.0ft. The Mines. The following statement covers the tonnages and costs of mining at the various mines ; Wet tons Total cost Cost per wet ton Puertocitos 18465 4 $41,549 68 $2 250 Elisa 40,481 4 71,580 00 1.764 Capote .... 15 923 1 82 088 64 5 155 Oversight 142,824 8 272,766.63 1.910 Veta Grande . . 91 901 3 191,992 54 2 089 Total 309,696 659,997.49 2.131 The Cost of Mining. The cost of mining for the total tonnage mined was $2.13 per wet ton. For the fifteen months ending October 31, 1907, it was $3.28, and for the year 1905-1906 it was $3.85. COPPER MINES IN VARIOUS DISTRICTS 341 Great credit belongs to the Mining Department for this showing under most difficult conditions. The reasons for the decreased costs are twofold. First, the slicing and carving system has been thoroughly learned and applied to the various mines in the modified forms which the conditions demand. This has resulted in a decreased amount of timber and supplies and an increased efficiency of the men. The second reason is ' that the Mining Department has been entirely reorganized and the average pay per employee has been decreased by this readjustment very nearly 20 per cent. We have, therefore, a de- creased cost per man and an increased output per man. For the period in question the output per man has been increased from 1.2 to 1.6 tons, and this covers not only the miners but the muckers, trammers, black- smiths, and in fact every employee of the mines up to and including the foremen. It is hard to realize the difficulties that have been encountered in accomplishing this, but it had to be done and was done. Departing from facts and predicting for the future, I have little doubt that we will be able to maintain and improve upon these costs in spite of the tre- mendously increased amount of development work we propose to do, and we can look to continued decreases in mining costs rather than increases for sometime to come; but in saying this I am keeping in mind certain capital expenditures which are exceedingly urgent. This construction provides cheaper compressed air and more electrical power at the mines. You have authorized and we are now installing an air compressor of 6000 cu. ft. of free air per minute capacity at the power house and will lay a pipe line to four of the mines and replace with this one machine eight uneconomical small machines. Since the reverbertory furnace is generating an average of over 600 boiler horse-power we have a surplus of boilers at the power house and no new boilers are needed, and our power house condenser is abundantly large to take care of this compressor. In addition to this we are now up to the limit of our electrical generating capacity and it is essential that we should put in more power for the use of the mines. Mr. John Langton, consulting engineer, is now making a study and report on our power equipment, and is preparing specifications to be submitted to you. It would appear that with an expenditure of $57,000 we can increase our capacity 1000 kilowatts and reduce the cost of generating power per kilowatt year about 15 per cent. If this unit is put in there is no question but that other capital expen- ditures will be required, because if we can change over our steam hoists of four of our shafts to electrically driven hoists by the addition of the proper motors we can abandon entirely four very expensive steam plants. If the program is ap- proved and carried out it will require a total expenditure of about $120,000. In making this recommendation I have carefully considered the tremendous expendi- tures that we have had to make and am still keeping in mind the rule of recom- mending only expenditures that will pay for themselves in one year's operations. In the first edition further quotations were made from Dr. Ricketts' re- port for 1908 but for present purposes it seems desirable to substitute 342 THE COST OF MINING PRODUCTION AND PROFITS OP MINES OWNED AND CONTROLLED BY GREENE-CANANEA COPPER Co., INCLUDING CUSTOM ORES. Copper, Ibs. Silver, oz. I Gold, oz. Price copper, cts. Profit 1911 44,897,466 1,295,297 5,892 12.886 $1,318,472 1912 48,157,847 1,457,308 7,197 16.019 2,580,750 1913 44,480,514 1,497,938 8,021 15 1 2,344,592 1914 21,858,920 907,310 6,054 13.838 638,955 1915 16,335,081 635,997 3,773 19.566 1,410,543 1916 62,250,067 1,975,734 11,692 25.541 7,673,184 1917 30,496,487 891,226 5,754 27.038 2,497,888 268,476,382 8,660,810 48,383 18,464,384 I an outline of the subsequent history of the concern. Several points in this experience are worth attention; for instance, the correctness of Dr. Ricketts' anticipation of being able to maintain the improved operat- ing results, the difficulty of keeping up satisfactory industrial enterprises in a county of unstable politics, and the comparison of Mexican labor with American labor. Up to the end of 1915, that is before the war introduced any change beyond peace time precedent, the profits aggregated about $8,300,000 from a total of about 175,700,000 pounds copper, about 4% cents a pound. But it appears that some of the metals reported was from custom ores, from which the profit was presumably small. The exact amount of such metals is not entirely clear but it appears to be about 28,000,000 pounds copper, for the five years 1911-15 inclusive. The total amount of copper therefore, from which the overwhelming preponderance of the profits must have come was only about 148,000,000 pounds, with 5,000,000 ounces silver and about 27,000 ounces gold. Under the prices then prevailing the gold and silver averaged about 2 cts. per pound of copper, making the total value expressed in that metal about 18 cents. The average profits were about 5j^ cents, equal to about a third of the recovered value, leaving say 12^ cents per pound for cost. The dividends paid in the period 1911-15 from the above stated earnings, of $8,300,000 were about $5,885,000, about 70 per cent, of the earnings, but the difference is quite accounted for by the growth of $2,124,000 in current assets in four out of the five years. We may therefore conclude that the profits reported are a real excess of receipts over expenditures. The unstable political condition of Mexico is pictured in every report; not so much by description as by the bald references to repeated shut- downs, resulting in fluctuations of output between 16 and 62 million pounds. That the costs under such conditions should remain so con- stant as is shown by the following record is not a little remarkable. COPPER MINES IN VARIOUS DISTRICTS 343 COSTS OF GREENE-CANANEA OPERATIONS FOR A PERIOD OF YEARS Tons Mining Reduction Total 1905-6 947,977 $10.21 1906-7 1,305,291 7.625 1908-6 mos. 295,554 5.976 1909 835,929 5.459 1910 792,856 5.765 1911 741,873 $2.52 5.257 1912 895,406 2.927 $2.848 5.925 1913 757,460 2.890 2.546 6.73 1914 439,587 3.09 2.678 7.02 1915 312,196 2.46 2.715 7.82 1916 1,238,151 2.61 2.395 7.95 There is reason to suppose that the totals reported for 1912 and before cover not quite the same items as those reported later; perhaps they cover only operating costs while the later ones cover also general ex- penses of all kinds. The reduction of the ores is interesting. The grand average yields about 45 pounds copper, 1.4 oz. silver and 16 cents gold, per ton. In 1916 about 70 per cent, was smelted direct, the remainder concentrated, chiefly by flotation. Concentration cost, in 1916, 84 cents a ton. The cost of operating the reverberatory furnaces, per ton of charge, was $1.67. We may suppose that the total expense of treatment per ton of new ore before the war was divided somewhat as follows : Concentrating 30% at 84 cts $0. 25 Converting 45 Ibs. at Y 2 ct . 23 Refining and marketing about . 70 Roasting and smelting 2 . 30 Total about $3.48, equal to about 7^ cents per pound of copper alone, and to about 6 cents per pound if we convert the precious metals into their equivalent in copper. The cost of mining is exhibited in the table and averaged perhaps $2.80 per ton. A little over 15 tons is mined per foot of development. The cost of development is not always reported but for 1913 it figures out about $8.00 per foot. The number of men employed in 1916, which was a full year of operat- ing, was 3643 Mexicans and 188 foreigners, a total of 3831. The output per man per year was about 15,000 pounds of copper alone and about 17,000 pounds if we convert the precious metals into their equivalent in copper. This output per man is less than that at any of the neighboring districts in the United States, as will be seen for the figures given for those districts. About one ton was mined, concentrated and smelted per man per day; and the total cost per man was about $5.00 a day. 344 THE COST OF MINING WALLAROO AND MOONTA An example of conditions and costs similar to those of Butte is furnished on the other side of the world by the Wallaroo and Moonta mines of South Australia. These mines have not been described with the definiteness one would like; but in a general way the first is a group of fissure veins in metamorphic schist and the second a similar group of fissures in porphyry. The production of the district has not been so large as that of Butte, and the mineralization is less intense. The mining costs are somewhat higher because exploration is more expensive, but in other respects the parallel with the great Montana camp is close and interesting. These mines are described by the general manager, H. Lipson Han- cock (son of the inventor of the Hancock jig) in a pamphlet issued at Wallaroo, in November, 1907. The mines were discovered in 1860. In forth-seven years these mines have raised and extracted as follows: Dressed ore and concentrates 1,670,360 tons. Copper, averaging 15 per cent, in ore 248,993 tons. Total value 13,944,445 Total cost 11,285,809 Total dividends 2,018,254 Average cost per ton of concentrates 6 15s. 2d. "The dressed ore of Wallaroo," says Mr. Hancock, " has through- out recent times averaged about 11 per cent.; that of the Moonta about 20 per cent, of copper, excepting that in later years it has been 2 or 3 per cent, lower. For a long time the vein stuff as raised to surface at both properties has contained on the average from 3 to 4 per cent, copper." Port Wallaroo, the smelting point, is situated on the west side of the York peninsula. The Moonta mines are twelve miles south and the Wallaroo mines six miles east of the port. The ore comes from about ten diferent veins in all. At the Wallaroo mines there are three large veins and several smaller ones in metamorphic mica schist supposed to be of Cambrian age. Most of the work has been confined to one lode along which were oc- currences of copper near the surface for a length of 10,000 ft., but at the the depth of 2000 ft. the length of workable ground has contracted to 2500 ft. On the other veins the ores did not prove remunerative below the 1000-ft. level. At Moonta there are five veins of which only one is holding out below the 2000-ft. level. In both groups the copper is largely in the form of chalcopyrite mixed with iron pyrite. The ore occurs in rather short shoots, often where the vein is intersected by cross- courses. The high cost for mining is easily explained. There are more than eighty miles of development openings, including shafts, drifts, etc. This COPPER MINES IN VARIOUS DISTRICTS 345 work would probably cost at least $12 a foot, or $5,000,000. This accounts for $3 per ton of dressed ore, or approximately 75 cents per ton of vein stuff hoisted. The actual stoping, including hoisting, pumping, etc., costs about $3.50 per ton. The ground is soft like that of Butte, probably softer, requiring close timbering as well as close filling. The granulated slag from the smelter is used for filling. Sorting and milling in 1903 cost 75 cents at the Wallaroo and $1.25 at the Moonta. These costs seem high, but the work is done with extreme care. In terms of short tons and American money I find that the average cost of mining, concentrating, and smelting a ton of concentrates for the whole life of the mine has been $32.90. In recent years the cost has exceeded this by about $2 per ton. The increased cost is to be explained by the increased depth and a certain deterioration of the mines. The accompanying table gives the cost of the complete operations for six out of the last ten years. The reports are excellent. COSTS OF OPERATION AT WALLAROO AND MOONTA FOR Six YEARS 1,176,000 tons 292,889 tons crude concentrates General expense. Mining and milling. Smelting Interest and discount $0 . 07 Adelaide office 0.07 Special funds for employees . 04 Depreciation and redemption . 40 Wages and contracts 4 . 20 Machinery and materials . 55 Fuel 0.44 Buildings 0.04 Water supply . 04 General and miscellaneous 0.41 Freight on concentrates Wages Machinery and supplies Fuel and flux Buildings and improvements General and miscellaneous Shipping copper Total $0.58 $2.33 $5.68 $22.81 $0.52 3.73 2.33 $2 . 37 \ 3 . 02 0.15 0.28 0.49 $8.63 '$34.66 MINES ON THE OLD DOMINION LODE, AT GLOBE, ARIZONA The following remarks from the first edition are retained, with a few modifications to remove some misconception. OLD DOMINION COPPER MINING AND SMELTING COMPANY This famous property has been working for many years on a fault fissure of rather complex geological relations in the Globe copper district of Arizona. It has not published any detailed reports that have come to 346 THE COST OF MINING my attention prior to the one for the year 1908, which gives some in- formation about the two preceding years. The information is exceedingly interesting for the additional light it throws on the problem of copper mining on fissure veins. It belongs to the same class of mines as those of Butte and the Wallaroo and Moonta. In PRODUCTION o* COPPER INCLUDING CUSTOM ORE 1905 . 15.103,955 1906 16,653,225 1907 23,377,841 1908 30,308,223 Four years 85,443,244 The silver and gold with the ore are so small in amount as to equal in value less than 2 per cent, of the copper. The yield of copper was 2.83 per cent, in 1906, 3.88 per cent, in 1907, and 5.15 per cent, in 1908. Development Work. For three years 1734 ft. of shaft sinking and 55,261 ft. of drifts, winzes, and raises, a total of 56,995 ft., were done on the property. It is not stated that the ore reserves were greatly increased by this work, so that we are led to calculate that each foot of develop- ment opens up a little over 14 tons of ore and about 1230 Ib. copper. The cost of development per foot can be inferred. It is $15.70 per foot. The cost of shaft sinking must be high, owing to the considerable amount of water. If the drifts, raises, and winzes average $12 a foot, the shaft would cost about $125 a foot The development costs $1.90 per ton mined and 2.14 cents per pound copper. MINING COSTS . 1905 1906 1907 1908 Development . . . $0 8792 $1 1436 $0 9853 $1 1571 Pumping. . 5354 5470 4331 6356 Mining (from stopes to surface) 4.2514 4.4929 4.9152 4 . 5449 Total $5 666 $6 1335 $6 3336 $6 3336 Concentrating. In 1908 about half the ore was concentrated. This ore ran 3.036 per cent, copper and 3.019 tons were put into 1 with as extraction of 82.5 per cent. Hence we may conclude that the concentrate ran 7.5 per cent, copper. Total Operating Results. It appears that in 1908 the total cost at Globe for mining, concentrating, and smelting, deducting profit from custom ores, was $3,108,351. The tonnage mined is given at 225,227 COPPER MINES IN VARIOUS DISTRICTS 347 tons dry, with a yield of 105 Ib. per ton. This ore would only yield 23,- 600,000 Ib. The total amount of copper produced was 30,300,000 pounds, the remainder custom ores. On this basis we get the following: 225,227 tons mined at $6 . 3336 = $1,427,383 . 83 7 | Concentrated and smelted at 5.703 = 1,680,968. Z94, /5l | Refined and marketed at 1 . 590 = 471,597 . $13.6266 = $3,579,948.83 These are the best costs I can make out of this report. If the ore contains 105 Ib. copper equivalent per ton, then the cost per pound is 13 cents. These conclusions are borne out by the more extended history of the company which is now available. It is probable that in its whole history of nearly 40 years this company has produced about 500,000,000 pounds of copper. From 1905 to 1915 inclusive, the yield was probably about 220,000,000 pounds and the dividends about $7,400,000, equal to 3.4 cents a pound. The costs must have been about 12 cents, about $10.80 cents a ton. The ore has seldom risen much above 5 per cent, in grade and often falls below it. In 1917 it averaged 4.97 per cent, in 1918, 4.52 per cent. Since 1908 the proportion of development work has been increased to 1 foot for every 10 tons extracted. Heavy pumping and close timbering are required. Under these circumstances it is doutful if mining costs ever got much below $5.50 a ton. MINES EAST OF THE OLD DOMINION So far as I can gather the Old Dominion vein is not a simple or un- mistakable fissure, but is an assemblage of branching fissures, each of which is a fault of rupture of the rocks, along which the opposite rock masses have moved more or less. Each intersecting fissure therefore is in itself a plane of adjustment and carries with it some more or less important change in the characteristics of any other vein that it meets. Thus for instance, the walls of the main fissure at the Old Dominion mine have moved past each other about 1100 feet, but going eastward this movement has been so distributed among branch fissures that by the time the Iron Cap is reached the movement between the walls is only 300 to 350 feet. It seems probable that other branches may have taken up a larger part of the movement and might be argued to be "the" Old Dominion vein. The principal claim for the Iron Cap to that dis- tinction is that it contains large bodies of good ore and lies in the same general course as the more pronounced and more valuable parts of the Old Dominion. 348 THE COST OF MINING ARIZONA COMMERCIAL The total productive length along the Old Dominion lode or zone, is about 2^2 miles. The Arizona Commercial lies immediately east of the Old Dominion. It has shipped in the four years 1915-1918 inclusive, 195,743 dry tons of copper ore and report that they have developed "probably upward of 600,000 tons, averaging more than five per cent, copper." This would give that company a total production, mined and unmined, of something over 600,000 tons, which would yield a total of about 68,000,000 pounds copper. Since this property is only 1740 feet long, these figures indicate a production of more than 450 tons of ore and nearly 40,000 pounds of copper per running foot. ARIZONA COMMERCIAL MINING Co. Year Dry tons Per cent, copper Development, feet Cost including Boston office Cost pumping Cost without pumping Cost per ton without pumping 1915 44,333 4.872 4,326 $227,638 $35,609 $192,029 $ 4.33 1916 48,890 5.028 4,442 339,578 49,689 289,889 5.93 1917 39,703 6.15 3,545 353,771 69,519 284,252 7.16 1918 62,797 5.87 5,729 est. 712,000 70,000 642,000 10. 20 est. 195,943 19,042 The cost for mining in 1918 is not reported as in the preceding years and I have been compelled to estimate it by trying to dissociate it from the smelting costs with which it is lumped. I cannot vouch for the ac- curacy of the figures thus obtained, but they fit in pretty well with general experience. They indicate a rise of cost of 40 per cent, in 1918 over 1917. CHAPTER XIX LEAD LEAD MINING IN GENERAL DIVISION INTO THREE ECONOMIC TYPES DISSEMINATED ORES FISSURE VEINS ORES RESULTING FROM CONCENTRATION OP MIXED SULPHIDES PRODUCTION OP LEAD BY STATES WORLD'S PRODUCTION SMELT- ING PLANTS. Lead Mining. While a geological description of lead deposits would be rather tedious and difficult to make, a classification of lead ores from an economic standpoint is easy. As in the case of copper they fall naturally into three groups. 1. Disseminated sulphide ores that can be concentrated in a high ratio, i.e., where far the greater part of the material mined can be dis- carded mechanically as waste, leaving only 3 to 10 per cent, to be smelted 2. Fissure vein deposits, almost always carrying an important amount of silver, and often gold and copper. Such ores concentrate in a moderate ratio. From 10 to 35 per cent, must be smelted. 3. High-grade bunches of carbonates or sulphides already concentrated by nature so that the ore must be smelted as mined, the only rejection of waste being by hand sorting. Without going much into detail it will be interesting to pursue the characteristics of these ores a little further. 1. In the United States practically the only disseminated ores are those of the Mississippi Valley region, principally in Missouri. They have been deposited by waters circulated from the surface downward, and de- positing lead ores in the beds of limestone most favorable, through their chemical or mechanical structure, for the reception of such ingredients. These deposits are invariably sharply limited in their extension downward. They are confined to certain beds that the geologist can soon recognize. The horizontal extent may be very great, sufficient to give these deposits, great importance and a long prospective life. The southeast Missouri district is by a good margin the most productive in the world. Here the mining conditions are closely parallel to the copper districts of Lake Superior and to the newly developed disseminated copper ores of the West. This holds good as to costs. As in the case of copper ores of this class, the total cost of production per ton of ore was before the war between $2 and $3. The lead ores of this class are about three times as rich as the copper ores, hence the cost of lead is only one-third the cost of the copper; a fact that, as a corollary, holds good with regard to the selling price of the metal. 349 350 THE COST OF MINING 2. The fissure vein deposits are for the most part original deposits caused by hot waters ascending along fissures from great depths. The fissures of the Coeur d'Alenes were not simply open cracks in the rock, they were more apt to be crushed zones where the circulation of water was often brought to a stop by the infiltration of minerals and again started by renewed fissuring. There were thus several distinct periods of mineralization. Sometimes the successive mineralizations were of the same character, sometimes of quite diverse characters. In the case of the principal deposits of the Cceur d'Alenes the lead ores were deposited at the expense of, and replacing, certain iron carbonate that had been deposited earlier. The iron carbonates had often replaced large quantities of the original quart zite rock in the fissure zone. After the lead had been deposited there was a recurrence of deposition of the iron carbonates which attacked some of the lead sulphides. All these complicated processes were of deep-seated origin. After the real minerali- zation had all ceased the orebodies were exposed to the effects of the circulation of surface waters. As the surface was slowly eroded away the air-carrying waters from the surface reached gradually deeper and deeper into the original deposits, attacking and rearranging the minerals enrich- ing some parts of the orebodies and impoverishing other parts. In the Cceur d'Alene mines, the effect of the last process upon the value of the ores was not very great. The oxidation did not affect the veins more than a few hundred feet down from the outcrops. The far greater portion of these deposits is original, the surface action has nothing to do with the depth limit of profitable mining. That limit is quite unknown. Wherever the end of an orebody has been found the geological reason for it has either been that the fissure entered a different and less favorable rock formation, or else the reason for termination is obscure. Certain formations of quartzite are now recognized as being far more favorable for the deposition of lead ores than others. With this sole limitation the Cceur d'Alene veins promise to be productive to very great depths. 1 Other great lead-bearing fissures have a somewhat different character. The great Broken Hill lode in Australia, which has produced more than $325,000,000 in gross value of lead and silver, from which over $60,000,000 has been paid in dividends, is mineralogically as much of a zinc deposit as a lead deposit, though the proportion of silver is nearly the same as in the Cceur d'Alenes. At Broken Hill the effect of surface waters in re- arranging the minerals was of capital importance. Although the original ores have been proved to be payable, the metallurgical difficulties en- countered upon passing from the oxidized zone into the unaltered sulphides were so serious as to bring the development of the mines for a time almost to a standstill. A brief further description may be interesting. The Broken Hill lode is one of the greatest mineral deposits of any 1 This was written in 1909 and is retained for its historical interest. See chapter on Silver-Lead Mining. LEAD 351 kind in the world. It is certainly the greatest of its class. It is some 2J^ miles in length and contains ore shoots as much as 300 ft. thick of massive ore averaging some 35 per cent, in lead and zinc sulphides. The geological relations of the mass are somewhat obscure. At one time it was thought to be conclusively proved that it was a "saddle reef/ 7 i.e., a bed folded back upon itself so as to form a deep trough, approximately lenticular in cross-section and plunging to the south. I believe doubt has been thrown on this explanation, which seems a little improbable. At any rate it is a huge, highly mineralized mass, acting in all essential respects like a fissure vein, in a region where the rocks are highly meta- morphosed and compressed. The original minerals seem to be in the proportion of lead sulphides, about 15 per cent., zinc sulphides about 20 per cent., with a gangue of quartz, calcite, garnet, and rhodonite. The metallic assays are lead and zinc, each about 13 per cent., and silver 5 to 10 oz. per ton. In the lower parts of the mine the ore forms a hard compact mass, containing no waste, in which the valuable minerals are closely knit together with the gangue, making the concentration and separation of the metals difficult, expensive, and unsatisfactory. But the surface waters, to a depth of from 250 to 400 ft., had removed the zinc and left a bonanza orebody containing 33 per cent, lead and 20 to 30 oz. silver; an ore of easy metal- lurgical treatment accessible to mining in an open pit. At the surface, therefore, the realization of the values presented no difficulties even in the Australian desert; but when it suddenly became necessary to separate a lessened percentage of lead from an obstinate accompaniment of zinc (for the two metals cannot be smelted together), facing at the same time a loss of half the silver, in a region where water was scarce and everything expensive it required a good part of the money earned from the surface bonanza to solve the problem. It required nothing short of discarding the old smelting plants altogether and beginning anew; worse than that, experimenting with new processes. The outcome has been that the orig- inal ores have proved to be payable, but to a diminished degree. Lead can no longer be produced so cheaply, while the great masses of zinc ore, formerly discarded, have become valuable and a formidable factor in the zinc market. Under no circumstances, however, can the original ores become anything like so valuable as the altered surface ores (except, indeed, through their much greater volume). Lead ores from such fissure veins as the above bear a close economic as well as natural resemblance to the copper ores from fissure veins. It will be noted that the costs in the Coeur d'Alenes and at Broken Hill, per ton, are not far from those of the copper mines of Butte, of Wallaroo, and Moonta, and of the Old Dominion at Globe, Arizona. The total cost for the whole process is from $6 to $10 per ton. As noted in the case of disseminated ores, the lead is about three times as abundant as copper, justifying prices inversely proportional. 352 THE COST OF MINING 3. The third class of lead ores, simply smelting ores, are nearly always of an origin similiar to the surface ores, just described, of Broken Hill. They are usually the result of the reconcentration of mixed sulphides of iron, zinc, lead, and copper. It very often happens that the original ores are quite unpayable, owing either to their low grade, or to the fact that their volume is insufficient to warrant the expensive installations of plant necessary to work them. Lead ores of this kind usually form an insignifi- cant fraction of the ore deposits from which they are derived, but often they are of high grade both in lead and silver, are near the surface, and can be mined profitably even in small quantities. For this reason a considerable amount of lead and silver is derived from a multitude of small shipments of this kind of ore, from hundreds of different places. In some few cases, such as Leadville, Colorado; Tintic, Utah, and Park City, Utah, such ores have been important sources of lead. In those camps the rich lead ores have been the principal resource of some of the mines. A certain amount of concentrating ore is obtained with the high- grade ore, but in each case, if the high-grade ore were absent, the lower grade ore would not be payable. Other districts producing this type of ore are Eureka and Pioche, Nevada; Aspen and Creede, Colorado, and Santa Eulalia in Mexico. I shall give no very clean-cut examples of the cost of mining these ores. Those of Park City will give a general idea. The cost per ton in general for this class is high, certainly not less than $20 per ton for mining and smelting. In Park City the cost is between $10 and $15 for mining alone, to which must be added for freight, smelting, refining, and losses from $20 to $25 a ton more, making a total of $30 to $40 a ton. Ores of this class bear a close parallel in manner of occurrence, methods of exploration, and high costs to the similarly derived copper ores of Bisbee, Arizona. The above table will show at a glance the sources of lead supply in the United States and their comparative importance. I propose in the following pages to give an idea of the state of the business in Missouri, Idaho, and Utah. These three states produce more than 80 per cent, of the total for this country. A chapter is added by Mr. W. R. Ingalls (The Mineral Industry, 1908) on Silver Lead Smelting in the United States, to show not only the relations of the Western mines to the custom smelters of the country, but also the business results of the American Smelting and Refining Company, by far the largest factor in the smelting, refining, and marketing of lead and precious metals in North America. The above table and paragraph are retained to show by comparison what changes in the business and in the production have taken place since. The following later statistics from the reports of C. E. Siebenthal for the United States Geological Survey entitled "Lead in 1916 " bring out some additional facts. It will be noted particularly that the relative LEAD 353 production by various states has not changed materially. It is estimated that up to the end of 1916 some 12,558,000 tons of lead had been produced in this country, with a value at New York of $1,138,000,000, equal to a ton or 4.5 cents per pound. That for 10 years 1905-1915 inclusive, PRODUCTION, PRICE PER POUND, AND VALUE OF REPINED LEAD IN THE UNITED STATES, 1720-1916. Year Desilver- ized lead a, b, Short tons Soft lead c, Short tons Total pro- duction b, Short tons From do- mestic ores and base bullion 6, Short tons From foreign ores, Short tons From foreign base bullion, Short tons Price per pound at New York Value 1720-1905 .... 1906 5,251,079 313,886 313,588 295,552 329,751 328,954 331,032 339,646 330,593 383,903 388,594 403,619 2,081,836 90,860 99,801 101,012 117,158 141,318 155,947 141,248 131,867 158,219 161,461 167,515 7,332,915 404,746 413,389 396,564 446,909 470,272 486,979 480,894 462,460 542,122 550,055 571,134 6,032,383 336,200 352,381 311,666 352,839 375,402 391,995 392,517 411,878 512,794 507,026 552,228 1,3 28,803 24,041 11,509 21,754 18,065 10,764 11,572 13,223 7,639 9,581 6,085 00,532 39,743 36,967 73,389 72,316 76,805 84,220 76,805 37,359 21,689 33,448 12,821 $0.057 0.053 0.042 0.043 0.044 0.045 0.045 0.044 0.039 0.047 0.069 $634,403,000 46,141,000 43,819,000 33,311,000 38,434,000 41,384,000 43,828,000 43,280,000 40,696,000 42,286,000 51,705,000 78,817,000 1907 . 1908. . . 1909 1910 1911 1912 1913 1914 1915 1916 9,010,197 3,548,242 12,558,439 10,529,309 2,029,130 1,138,104,000 o Desilverized soft lead is included; for quantity see page 841. b Antimonial lead is excluded; for quantity see page 842. c Desilverized soft lead is excluded. WORLD'S PRODUCTION OP LEAD, 1910-1916, IN SHORT TONS Country 1910 1911 1912 1913 1914 1915 1916 Australia 108 907 109 789 118 387 127 867 107 520 113 733 152 762 Austria-Hungary 19,290 21,605 23,589 26,565 Belgium 44 864 48 832 56 438 55 997 51 220 18 485 17 150 Canada 16 535 11 795 17 968 18 849 18 465 22 700 21 000 France 22,266 26,014 34,282 30,864 Germany . . . 174 604 181 218 194 666 199 627 Great Britain . . . 32 628 28 660 32 187 33 620 22 248 17 659 14 000 Greece 18 519 15,763 15 983 20 282 23 166 12 986 10 555 Italy 15,983 18,408 23,699 23 920 22 920 24 429 27 200 Japan Mexico Russia 3,858 133,048 1,323 4,630 137,347 1,102 4,960 132,276 1,102 3,968 68,343 1,102 5,111 31,000 5,336 62,000 12,500 30,000 Spain 211 531 193 013 205 79Q 223 767 158 207 192 049 165 095 Sweden 441 1 213 1 433 1 653 1 564 2 148 2 324 Turkey in Asia 13,999 13,668 13,779 15,322 Other countries a 17,306 22,597 13,448 6,834 11,814 7,750 12,410 United States (domestic re- fined) 375,402 391,995 392,517 411 878 512 794 507 026 552 228 1,210,504 1,227,649 1,282,513 1 270 458 United States percentage of world production 31 32 30 6 32 4 a Includes Burma only, 1914-1916. 354 THE COST OF MINING 00 C2 1C CO 'Q CO iO rH -OS O -COCO 558,880 rHiC -O2OGO OOCO rHl>* i^jTrn" 00* CO* 100,008 o r. "* CO O rH t-. IO h COrHt>-CO'^ CO 'CO ' ^ 00 rH I s - OS O -'COS 00 "O O l>- CM rf< CO -CO CM O2COCO^ ** -CO iC OO ** CM CO *f 00 00 TjH CO ^ CO O GO 'CO rHC5CO-f . .53 . . O '"I O2 O5 r-H Tt< 'C 00 CO oo o r- co -* o w GJ ^ O O CO O2 'C O OO t^ rH . CO 1C 00 t- 1C rH r. T-T o 2 b- rH05%t< ! COCOrHCDOOCO -b. CM02GC CM .05 . t^tXNrH .rH** CM CM 00 rH t>- t^ CO CD (N GO rH CM CO rH CD CO t> 05 i-C CO CM O2 00 CM O 'C rH 1 B 1C CO COO" . rH 00* -^"rH CO ' o" rH CO ' O CD O5 iQ " "" " 00 10 50 2 00 CO rH 5O C 1C O 1C 00 rH CM O5 00 1C CO . -0005000505 'COiC O -O5Tj- CO CD 02 -CN GO GO CO -1C rf(MrH -^ CM rH O_00 CO 1> -HHCO . 1C . . 436,430 CO CO CM t~- CM C5 t^rH -rHrHO 'C O5 1C CO rH -CO ic ; "* CM" : i>r 1 CM o GO ICrH -rHOSOCO -|>rHOt>O5 -rH^OrH C\J -O^lCCOrH -OrH "*O5 -rHCOCOrH 'COO5rHrHO5 i-H CO O CM 'rH OOCOGO'CO CM CO GO'GOOt^-iC'02 COiCCO'lC 1C * CO CO'' 11 ' 1C OS co t- CM ' O CO CO O DO CM rH co" , tCi>I .rH CM" CM ic :c co * co b- -ic CO rn'cM* !co" i So -* OS 484,081 O5 "" OCO CM* '.rn'rH"^" irn" ifM" ' '. '. O '. 00 rH* COO . rt* . . . CO 363,319 O CO O -^i CD 00 OCO rH O2 1C 1C GO CO C0"r-" rn'o" .' 94,070 co >o 00 CO- -iCOSTffNOcO -rHQCO -CO -05t> -CO -CMiCCOrHCO COO CO -rHCMCDCDrHO5 -lC rH . 1 05 (Mos N i^^^ : i"" 1 : ; ^ *** CO : o co : -*' 00 1C 02 CO OOiCGOCS(NOOiCGO>CCDiCO 't^ "tiC -CONOCOrHCO -CDO 02 GO l>- CO ^ O2 CD rH 00 N- 1 ICM" CM" co r-* CM" CM" co" .'CM : : '. >o* oo" : r-T 5 1C r>. CO CMCO_ CM_O5 t-_CM^ s co" co ; ; : ; c ; ; : s o> 1 |1llll|l | IlJ 1 i ill III I lifll 11 i Q t cgT3 g S -^"^TJ S- , o =3 ^3 '73 S C ^'G+J <1OO^aQO ^U^te 1 LEAD 355 4,665,000 tons were valued at $425,000,000, equal to $91.20 per ton or $4.56 per pound. I assume that we may argue that the normal value of lead mines should be based on the profits realized under this average price. The lead smelters of the United States are distributed as follows: California 1, Colorado 4, Idaho 1, Illinois 4, Indiana 2, Kansas 1, Mis- souri 5, Montana 1, Nebraska 1, New Jersey 2, Pennsylvania 1, Texas 11, Utah 3, Washington 1, Total 28. Canada 2. Mexico 14. Total for North America 44 plants. Of the lead produced in 1916 only 72 per cent, came from straight lead ores, the remainder came from zinc-lead and copper-lead ores. The average output of lead per smelter in the U. S. seems to be about 20,000 tons per year. Most of them smelt other ores with the lead but in what proportion it is hard to find out. Perhaps the average tonnage of ore treated per smelter is 100,000 tons per year. The average content of crude lead ores mined in the U. S. in 1916 was only 5.7 per cent. Of this at least 90 per cent, is concentrated before smelting. The Coeur d'Alene concentrates run about 45 per cent, and the Missouri concentrates 68 per cent. Probably all the lead con- centrates of the country average over 55 per cent. Most of the straight smelting ore is produced in Utah and by the numerous small producers outside of Idaho and Missouri where with insignificant excep- tions all the ore is milled. CHAPTER XX SOUTHEAST MISSOURI GEOGRAPHY OP THE DISTRICT POPULATION GEOLOGIC HISTORY EARLY PALEOZOIF GEOGRAPHY THE SlLURIAN MOUNTAIN RANGE OF NEW YORK. MYSTERY ON THE ORIGIN OF MlSSISSIPI VALLEY LEAD AND ZINC DEPOSITS ECONOMIC SITUATIOC EXPLORATION MINING MILLING SMELTING PROFITS COSTS. There is such a thing as vogue or fashion even in the most serious affairs of life. Thus for instance it may be taken for granted that the history of Rome is interesting, but that of England dull; that it is "the thing" to know French, but not to known German, or that some dignity accrues to a family that moves from Brooklyn to Manhattan, and is lost by a family that moves from Manhattan to Brooklyn. This is true of mining districts in the same way and to the same extent and it is worth while calling attention to the fact too, because we miners have spent so much effort trying to describe our business in terms of engineering, that we may have forgotten that human nature is just the same in mining camps as it was in Imperial Rome itself. Thus certain mining districts are in a way famous and fashionable. The glamour of romance has long ago fallen over the golden streams of California and a certain glory has attached to Butte, Leadville, Cripple Creek and many other such places. Novelists have gone to them for scenery and characters; magazines, newspapers and even the stock ticker have made them everyday words to the great public. A miner boasts of having worked in the "Corns to ck" the foreman's wife feels prestige when she tells her guests at the table that "we come from Butte." No such mantle of fame has ever been enjoyed by the greatest of lead mining district, Southeast Missouri. I have known ladies who had gone there from theWest because their husbands had found employment, to suffer agonies from the depression of the imagination due to the general acceptance of its commonplaceness. Arithmetic is not a secure defense against public opinion and the statistics of Flat River are not much comfort to souls that pine for the glories of Canyon Creek. I remember being amazed to find that children could be homesick for Flat River. But positive observation convinced me that they not only could be but were, and it was only by calling to mind the ancient proverb "de gustibus non disputandum est" and Polonius' sage remark that "there's nothing either good or bad but thinking makes it so," that I was able to find precedents for such a state of affairs. But an unprejudiced observer need have no such difficulties. The 356 SOUTHEAST MISSOURI 357 region has beauty and a strong local color; and even the romancer would have to dig no deeper there than in Butte itself to find the inter-play of hopes, ambitions, attachments and anxieties that give zest to the story of life. A very modern and very obscure poet has even called upon rhyme to picture the landscape of early spring between Bonne Terre and Simms' Mountain through the heart of Flat River. "A patch of yellow field and now a cedar glade Amidst the oak woods dressed in last year's dingy red, 358 THE COST OF MINING And by the lazy sun are frequently displayed Green shoots which spring is rousing from their winter bed. And from this ridge where now I drive my car Broad river vales are pictured through the oak, And yonder, bluish highlands rise up dim and far Through drawing haze and level streams of smoke. And here's a dusty village where stray pigs squeal, And chicks and children scatter as we pass; Where bony curs rush out as if to snap the wheel, And sad faced hound dogs sniff the strips of grass." This region is near the eastern end of the great low plateau of the Ozarks, which, although made known to every school boy as a name in the geography, is not generally understood. Some geologists have given excellent descriptions of it but their books are technical and are read mainly by a few students, anxious to learn how to earn a living. To the farmers of the great rich surrounding plains of northern Missouri, Kansas and southern Arkansas, this region is dimly known as a poor country with flinty hills peopled by exceedingly queer "natives" who do not know that the civil war is over yet and who make a living by some mysterious colla- boration with " razor backs" (half wild hogs), where the hills on the roads are so steep that "you must lie on your back to see up them," where the thin tires of the baling-wire-bound-together wagons have a way of coming off and wheeling themselves uncertainly away into the brush, where wood ticks and "chiggers" afford one constant company, and where fever and ague hold control of the scanty river bottoms. While a part at least of this description is intended to be facetious, it is true in substance. But it is hardly fair to allow the Ozarks to suffer too much from the jests of their neighbors. In many respects derision is just the pot calling the kettle black. It is true that the country is rather sterile, the ridges being strewn with rough fragments of flint; in consequence many of the farms and the farmers are poor; but those rocky hills are a welcome relief to the eye wearied by the monotony of the plains where the rich farms are, and those poor farmers are of the very stock that produced Abraham Lincoln. The rocky roads are no worse than the bottomless mud ruts of Illinois; the water in the streams is often clear and much fresher than that of the neighboring plains. You will find wood ticks and "chiggers" just as abundantly near the golf courses of fashionable Long Island, where by the way, the scrubby flint hills are replaced by scrubby and monoton- ous sand barrens. Malaria still lingers in the swamps inside the world's greatest city and mosquitoes drift through the windows of its sky- scraping hotels. And in the Jersey highlands within fifty miles of that same metropolis I have heard of " natives" of pure and old white Ameri- can stock who not only could not read and write but who could not tell the numbers on the brass checks by which they register their work days. Some of these products of a proud and free democracy have even condes- SOUTHEAST MISSOURI 359 cended to ask the oppressed Slavs of Austria and Hungary to tell them the numbers on their pay checks. All this, be it remembered, within walking distance of Princeton, Columbia and Vassar. The poor soil of the Ozarks has retarded their development but whenever one is able to disregard or overcome that handicap, he will be disposed to think well of this region as a place of residence; far from being envious of his neighbor in Illinois he will plume himself on enjoying better water, better drainage, better climate and infinitely better scenery. And we take the point of view of the mining population of course we are not concerned primarily with the fertility of the soil. The miner of Flat River is in attractive natural surroundings. He does not enjoy the sight of snow clad mountains or the impressive fault escarpments of the Cordilleras but he has green hills and a pleasing landscape: his imagination may console itself for want of the Continental Divide by contemplating the obverse of that divide for he is only twenty-five miles from the Mississippi River. Moreover he is in the very heart of the riches of the great central valley, only sixty miles south of its metropolis. He does not have to go far to find other miners and mineral products. Barely fifty miles to the east are the coal fields of Illinois, three hundred miles west are the zinc and lead fields of Southwest Missouri, three hundred miles north are the zinc fields of Wisconsin, six hundred miles north the copper and iron fields of Lake Superior, six hundred miles east the wonderful coal fields and smelting plants of Pennsylvania and West Viriginia and the zinc mines of Tennessee; six hundred miles southeast are the coal and iron fields of Birmingham ; and at lesser distances on all sides are the oil and gas wells of Illinois, Kansas, Oklahoma and Arkansas. It is true that no direct roads or common interests have seemed to lead him to exchange frequent visits with these neighbors, but that is a privilege that is wide open to him, which with his expanding opportunities and vision he may yet take advantage of. It is a fact that many a common miner of Flat River is able to take his family to visit the circus in St. Louis and return the same day in his own automobile. Before going into the human history of this region let us see if we cannot get some picture of its natural history. Most people would have no difficulty in understanding the salient features of geological history if they had an opportunity to observe the facts over a wide enough area. This opportunity however, is denied practically to all who do not make geology a profession. But the miner is pre-eminently a geological animal who is altering the arrangements of nature: or, to put it another way, and perhaps more correctly, he is rapidly becoming an important factor in the development of the earth's crust. To such an animal gifted with intelligence and desire to know the effect of what he is doing some training in geology ought to be a com- monplace of education, just as geography is. In fact geology is a mere 360 THE COST OF MINING amplification of geography. I do not mean the stereotyped political geography which deals with the names of countries, of cities, of counties and county seats, but with the fundamental and interesting natural geography which deals with the distribution of sea and land, of mountain systems, drainage systems, the movements of the atmosphere and of ocean waters, the distribution of heat and cold, of rainfall, of deserts, of volcanoes and glaciers, of vegetation and animal life on land and in the sea. The normal child is intensely interested in some or all of these things. With this as a foundation it would be very easy to understand and to recognize the effects which would be produced by the long con- tinuance of the activities of winds, rivers, seas, volcanoes, glaciers, changes of level, etc. and to realize the legible evidence of these effects in the rocks, soil and landscape that one sees every day. The Ozark region is a part of the earth's surface where the geological record is one of extreme simplicity and stability. A few miles south of the principal lead mines is a group of granite and porphyry hills known as the St. Francois mountains. Among them are some famous old iron mines the exploitation of which was the foundation of some of the solid fortunes of St. Louis, and whose existence prompted the construction of the St. Louis, Iron Montain and Southern Railroad, now one of the trunk lines to the southwest. A casual observa- tion shows that the St. Francois mountains are a series of rounded knobs of harder and older rock which rise up through the layers of sandstone and limestone just as islands rise out of the waters of the sea. A very little observation, properly directed, will make it plain that those sand- stones and limestones do actually represent the work of the sea. This simple observation is an easy starting point from which the interested student may explore the geology of North America. Curiously enough, no! not so curiously either, for this is the usual experience in such things, this observation also leads to an understanding of many important facts about the lead mines, the iron mines, the drainage, the soil, the climate and the whole basis of life in this region. In the rocks of the St. Francois mountains and of the lead mines one may see perfect evidence of the four following facts: (1) the St. Francois mountains are part of an old land surface no doubt an earlier development of our present continent, (2) that in some manner the level of this part of the continent was lowered and the ocean which is now no nearer than the gulf of Mexi flowed in until it submerged the whole country and left the St. Fran Mountains sticking up as small islands, hundreds of miles from he nearest mainland, (3) that the sandstones are the washed and assorted debris which the advancing ocean found on the old land surface, and that the limestones are sediments deposited in the sea water probably with the help of organic life, that these materials gradually filled up this mediter- ranean sea, and that the process of subsidence went on slowly enough SOUTHEAST MISSOURI 361 and the agencies of deposition kept at work fast enough to keep the sea shallow most of the time or all of the time, and (4) that the period of subsidence came to an end altogether and was followed by a period of slow and vacillating elevation, which has continued for an enormous length of time but which represents on the whole an extraordinary stability of level compared with other parts of the continent, and that while the Ozark plateau has been a land surface for interminable ages the greater part of its present elevation took place in relatively recent times. One does not have to be much of a geologist to discern that all of these statements are facts, as well and plainly recorded as any facts in human history, but when we come to another observation relating to the lead mines the evidence is not so definite or conclusive; but is a more or less well founded inference which we will call (5) that the lead ores were introduced not when the rocks were originally deposited but later by the circulation of underground waters in the long period of emergence and erosion mentioned as period (4) . It is a matter not entirely academic but of present economic interest to picture to one's self the extraordinary difference of scene one might have found if he had been able to visit the St. Francois mountains during late Cambrian times when the great Appalachian, or American Mediter- ranean Sea was lapping around their sides. They then looked somewhat as they do now. They have been protected through all these ages by a partial covering of other rocks which formed around them. Part of this casing has been removed, the old form returning to vision again at least as much like what it was in Cambrian times as the mummy from an Egyptian tomb is like the form of an Egyptian king. They were a group of rather abrupt rocky islands surrounded, as all such islands are, by numerous rocky islets and reefs. The main islands were rather small, not large enough for streams which would carry much gravel or sand into the sea so that the sand had only a moderate source of supply and practi- cally all of it lay in the bottom and was now being covered up by a calcare- ous sand from lime which was slowly being precipitated out of the sea water. In the bays and shallow reaches of sea on the north and northeastern coast of these islands from Big River past Flat River toward Doe Run there were extensive belts of sea weed perhaps something like the kelp belts along the Santa Barbara channel in California. Just west of Bonne Terre was a little round island of porphyry around which the waves lapped harmlessly. Off the east side of this little island there was a belt of sea weed which stretched liko a fish hook three-quarters of the way around it. Only on the northwestern side there was no sea weed. These belts of seaweed acted very much like belts of vegetation do on the surface; as the plants lived and died portions of them settled to the 362 THE COST OF MINING bottom and formed a sort of soil in the limy bottom of the ocean. The thicket of kelp kept the currents from washing these fragments away just as a thicket of trees keeps the wind from blowing the falling leaves away. Thus in the course of time these sea weed belts became the sites of deposits of a vegetable ooze which gradually in long geologic ages became buried in the increasing deposit of limestone and other sediment. As the rocks hardened under the increasing weight and by the slow chemi- cal interaction these patches of vegetable ooze became patches of carbon- aceous shale. I have said that a picture of the conditions under which those lime- stones were deposited, if corrrect, would not be wholly academic. I explain this now by adding that the belts of carbonaceous shale in the limestone are now the loci of the great lead deposits of this district. It is not impossible that if we can get a correct idea of how these shale patches originated we may get a better idea of where to look for them and a clearer perception of how much to expect from them. The nearest mainland was probably due north in Wisconsin about 400 miles away. Over the site of St. Louis the water may have been fairly deep but this is not determinable with certainty. There are 3600 ft. of limestones and sandstones under St. Louis and under that the old granite surface of the pre-Cambrian continent has been found in a drill hole, but, as remarked sometime ago, it is more probable that the sea was never very deep, a respectable portion of its apparent depth having been filled with sediments during the process .of deepening. Indeed, it is certain that this was the case. The foregoing was written in 1917 and was interrupted by my desire to have something a little more definite to say regarding the geography of Cambrian times. But a little excursion into geological literature soon convinced me that that was no subject that the text books had a matured answer for. The more I read the less I knew, and at last I am convinced that the only answer is a mere tabulation of facts from which some obvi- ous inferences may be drawn. TABULATION OF PROMINENT OCCURRENCES OF CAMBRIAN AND ORDOVICIAN STRATA Thickness feet Bisbee, Arizona Sandstones and Limestones 1,500 El Paso, Texas Sandstones and Limestones 1,800 Central Texas Sandstones and Limestones 800 + Grand Canyon, Arizona Sandstones and Limestones 1,200 Southern New Mexico Sandstones and Limestones 1,200 Central Oklahoma Sandstones and Limestones 5,000 + Northeastern Alabama and \ T . Northwestern Georgia ) Sandstone > Lunestone and fehale 13,000 + Eastern Tennessee and } ~ . , T . TO- .1 ' AT /-< T > Sandstone, Limestone and Shale 11,000 + Western N. Carolina .' Western Nevada Sandstone and Limestone 5,000 SOUTHEAST MISSOURI 363 Inyo Range, Nevada-California Sandstone, Limestone and Shale 16,300 Missouri Sandstone, Limestone and Shale 2,000 + Eastern Pennsylvania Sandstone and Limestone 10,000 + NCJW Jersey Sandstone, Limestone and Shale Not given New York City Sandstone and Shale 5,000 + Boston Shale Not given Wyoming Sandstone, Limestone and Shale 1,000 S. Dakota Sandstone, Limestone and Shale 400 St. Paul, Minnesota 1,000 Adirondacks Sandstone, Limestone and Shale 12,000 Southwestern Montana Sandstone, Limestone and Shale 1,250 Quebec Sandstone, Limestone and Shale 5,000 St. Johns, New Brunswick Sandstone, Limestone and Shale 2,800 Northern Newfoundland Sandstone, Limestone and Shale 6,000 Canadian Rockies Sandstone, Limestone and Shale 4 9,000 Arkansas Sandstone, Limestone and Shale 4,000 Throughout the vast area in which these observations have been made, the Cambrian and Ordovician sediments are generally covered with later ones; they are exposed for the most part only in places where the rock formations have been bulged up above the general level so that they have been worn through by erosion. Areas in which these rocks do not occur may frequently be proved to have been merely denuded of them. By combining these facts with the long list of localities, dotted all over the country, in which these formations may be seen, and with the surprising uniformity in the character and the succession of the materials which compose them we arrive without difficulty at the con- clusion that in early Paleozoic time practically the whole of the United States with large adjacent tracts in Canada was flooded by the sea; that these were none of the mountains with which we are familiar ; no Atlantic and no Pacific coast. The highlands of the continent must have had an alignment nearly at right angles to that of the present time, i.e., nearly east and west. It seems to be a fair guess that the principal divide was along the line of the pre-Cambrian mountain chain which may be traced from Labrador to eastern Minnesota south of Lake Superior. This chain is buried in Minnesota and westward under later sediments but it is pointing in such a way that it would, if continued, reappear in the plateau region of Wyoming or Colorado, and from thence might easily swing southwestward to north central Arizona where there is plenty of evidence of post Algonkian and pre-Cambrian mountains. A dim support to this theory is afforded by the fact that in Colorado, northern New Mexico and portions of Arizona the Cambrian and Ordovician sediments are either absent or extremely scanty. What is certain is, that the region south of this line was invaded in the course of time by the sea. It was probably a plain sloping gently toward the south or southeastward and this plain gradually and progressively became a sea floor over which the water was never profound and on which were accumulated the Cam- 364 THE COST OF MINING brian and Ordovician sediments, the measure of which we have roughly taken. To return to Southeast Missouri then we may be sure that when the Bonneterre limestone was forming the St. Francois mountains were at first islands which gradually became islets and finally sank completely beneath the waves; that an extensive ocean swept through without a break. I am certain that at that time a mariner might have embarked at some point between Jerome and Grand Canyon, Arizona on the north shore of either an island or a peninsula, and from thence he might have sailed freely on a clear sea over Reno, over the site of the Sierra Nevada, over San Francisco and Los Angeles, thence eastward over Tucson, Bisbee, El Paso, over the great plains of Texas and Oklahoma, over the Ozarks, over St. Louis and Chicago, Cincinnati, Buffalo, Phila- delphia, New York, Boston, Montreal and Quebec.. REMARKS ON PALEOZOIC GEOGRAPHY While it is probably true that the broad groupings of Algonkian, Paleozoic and Mesozoic have the meaning indicated in the chapter on coal it would be a mistake to interpret it too narrowly. Terrestrial conditions were not uniform throughout any of those times. Thus the Algonkian in Lake Superior was separated into three general periods of sedimenta- tion, by two intervening periods of general erosion, brought about by the elevation of the region and by considerable mountain building. Similarly the Paleozoic series exhibits changes certainly on a continental, and pos- sibly on a world wide, scale. It seems that there is a pretty sharp dis- tinction between the Lower and Upper Paleozoic in North America. The important break, or change, occurred at the beginning of Silurian time, the disturbance being a very widespread elevation of the continent, which in the preceding Cambrian and Ordovician periods had been very generally invaded by the sea. Desert conditions supervened. A large tract of water, covering the western parts of New York and Pennsylvania, the whole of West Virginia, Ohio, and Indiana, portions of Kentucky, Illinois, southern Michigan and southern Ontario, must have been shut off from the ocean and exposed to so dry a climate that it evaporated, leaving immense salt deposits covered tightly by shales that probably represent the dust of the desert. The immediate cause of such a revolutionary change of climate was, not improbably, the formation of an important range of mountains on the general line from the Gaspe Peninsula through Vermont, western Massachusetts and Connecticut to New York City and south west ward. It might be called the Manhattan Range, for it is as well developed on Manhattan Island as anywhere else. At present of course nothing re- mains of these mountains but their base-leveled core. But all the evi- dences of mountain building are there sharp folding, igneous intrusions SOUTHEAST MISSOURI , 365 and extensive metamorphism. The highly crystalline schists in Central Park are of upper Ordovician age; the same age to which some of the oil bearing strata of Ohio belong and younger by far than the undisturbed rocks of Flat River. The axis of the mountains is clearly shown by the metamorphism. Westward from this axis the same rocks are found in various folds, but the metamorphism disappears rapidly until at Fishkill and Poughkeepsie it has disappeared altogether; the rocks are twisted but not recrystallized. The southward continuation of this ancient range is obscure and perhaps will remain so. At New York City it disappears under the waters and under the later sediments of the coast line, but it reappears in the vicinity of Philadelphia where it points toward the low foothill region eastward of the Blue Ridge of Virginia, and, I imagine, may have extended all the way to Georgia and Alabama, perhaps much further still. But geologists do not seem to have recognized it. They have generally supposed that the crystalline area of the foothill or Piedmont region of the Appalachians was a pre-Cambrian island or continent that remained exposed during Paleozoic time. They call this supposed island Appalachia. Some study of the literature on the subject does not convince me that there was any Appalachia in pre-Silurian times. It appears rather that it is merely a zone of mountain building and erosion. Immense masses of Cambrian and Ordovician limestones and shales are crowded into folds along its northwestern flanks. "Metamorphism increases toward the southeastward," is a common phrase in describing them. The character and thickness of these sediments, that is, their uniformity over large areas and the fact that they are generally of marine origin, are pretty strong evidence that they could not originally have terminated so abruptly along such a line. If they had these would have been evidence of shore line conditions; but the contrary seems to be the case. Moreover what does the metamorphism mean? Why should there have been metamorphism only along a supposed shore line? I prefer to believe that the evidence points to something like the following: 1. In Cambrian and Ordovician times the sea, or at least low plains partially or occasionally flooded by ocean water, spread continuously from the Atlantic over the present Appalachian highlands and far to the northward invading in fact a large part of the present continent, rather uniformly. In other words the continent became pretty well baseleveled. 2. The beginning of Appalachia was the emergence of a great mountain range in early Silurian or late Ordovician time, along the line described. This event was coincident with the general emergence of the continent, which was the cause perhaps of a general change of climate throughout the world, certainly in North America, and very likely this change had much to do with the evolution of living creatures. This 366 THE COST OF MINING mountain range of Appalachia was a long and high one and its erosion produced much of the sediments which filled the interior valley during later Paleozoic time. But in the lower Paleozoic time in which the rocks of southeast Missouri were accumulated it seems fair to conclude that nearly the whole of the United States was an open sea. The region later, through the emergence of distant barriers, became the central portion of a continental valley. Minor oscillations of level have at various times caused this great valley to be alternately a spreading shallow sea and a great interior plain. The climate has varied from desert to sub-arctic, probably from the effect of the barriers that have arisen and disappeared at various times. No true mountain building stresses and no volcanic activity has affected this great area in all this stretch of many million years. The rocks have been disturbed slightly but to the eye they are as horizontal as when first laid down. In the preceding chapter it was pointed out that silver-lead deposits in the west are consequent upon igneous activity. The strange thing about the lead and zinc deposits of the Mississippi valley is that there has been no such activity within many hundred miles. But the deposits occur over a very wide area, almost wherever these lower Paleozoic rocks are found, and often in the upper Paleozoic rocks as late as the Pennsylvanian in Oklahoma, Kansas, Arkansas, Missouri, Iowa, Wis- consin, Illinois, Kentucky and Tennessee. In the Ozark region one or two paltry dykes, quite unmineralized, have been found; barely enough igneous action to emphasize its general absence. Nevertheless there is in all these places an assemblage of sulphide minerals almost exactly like those of the magmatic deposits of the west, but in different proportions. The single exception is vein quartz. There are in places enormous quantities of chert or flint, but there seems to be little if any association of this mineral with the metallic sulphides. In many places it is completely absent. But sulphides of iron, copper, lead and zinc, with silver, nickel, cobalt, manganese and barium are widely distributed. In the Flat River region the principal locus of the mineralization is the Bonne Terre or basal Cambrian limestone. This stratum is about 400 ft. thick. It is so generally mineralized with disseminated iron pyrites that it weathers to a bright red residual soil. This redness is decidedly more pronounced in the neighborhood of the principal lead deposits. A tract of about 15,000 acres of this limestone produces regularly a third of the lead of the United States and 12 to 15 per cent, of that of the world. In this field the external conditions are favorable. Mining is con- ducted in the midst of the great agricultural regions of the Mississippi Valley, where the cost of living is low, labor abundant, fuel and trans- portation cheap, and markets close at hand. The internal factors also also are favorable to low costs. The depths reached are not great, the SOUTHEAST MISSOURI 367 orebodies are fairly large and persistent, though somewhat irregular. Drilling provides against underground perplexities. In the southeast district there is, unfortunately, little to be found in the way of reports of mining companies. The following notes are from my own observation, and while I cannot vouch for the accuracy of the figures as representing any particular property, I believe that they may be taken as fairly representing the district as a whole. SOUTHEAST MISSOURI LEAD Mining in southeast Missouri is based on orebodies that carry an average of about 5 per cent. 1 in metallic lead, or a little more. The ore is called disseminated from the fact that the galena is often sprinkled through the limestone, although usually most of the lead is confined to rich streaks. It concentrates well and can be turned into a 65 or 70 per cent, product, with a saving of 80 per cent. Commercially speaking, therefore, the ore yields about 4 per cent, net lead. The formation lies approximately flat, though grades of from 3 to 10 per cent, are not uncommon. It has, throughout the district, a gentle dip toward the southwest. The ore now being mined occurs mostly in the lower 100 ft. of the Bonne Terre limestone, and often at the very bottom of this formation in contact with an underlying sandstone. Occasionally it happens that in the 100 ft. just mentioned there are successive enrichments, making workable orebodies one above the other. In this case more than one level may be necessary. But it is more common to find only one large irregular sheet of ore immediately above the sandstone, so that it can all be worked from one level ; although some- times the ore may shoot up some distance above the general level. The upper orebodies are relatively unimportant. The ore zone may carry some lead scattered through the rock on both sides of the workable channels, which may be only 5 ft. wide. The fissures are sometimes the source of the ore from which it has fed out into the surrounding rocks. The richest ore, in such cases, is right at the fissure, and it fades out on either side, so that midway between fissures the ore may be too poor to work. The ore is workable to a thickness varying from 6 ft. to as much as 100 ft. EXPLORATIONS IN THE SOUTHEAST DISTRICT It will be evident from the above that the exploration of these ore- bodies by the sinking and drifting methods used in Western mines would be difficult and unsatisfactory. To follow the ore underground, it is almost necessary to stope the ore as you go. There is enough vertical 1 The average is, in 1919, about 4 per cent. 368 THE COST OF MINING irregularity to prevent following the ore successfully by horizontal drifts; and there is enough horizontal irregularity to make it impossible to keep in the channel, unless you are prepared to follow up each turn. If the ore rises you must be prepared to go up after it ; if it sinks you must go down after it. The problem of blocking ore out ahead has resolved itself entirely into diamond drilling from the surface. This varies in difficulty accord- ing to the depth. The formation dips slightly toward the southwest, while the surface rises a little in that direction. The southwestern part of the field is, therefore, the deepest part. In the older mines at Flat River, the depth to the sandstone is only 300 to 400 ft. In the newer mines like the Derby (Federal) and the Hoffman (St. Joe) the depth is 500 to 600 ft. In the deepest part, between Leadwood and Irondale, the depth is from 500 to 800 ft. When the depth is not over 550 ft., the drilling is all through very favorable rock; but where it is deeper, the cherty Potosi limestone comes in. This cherty formation is very hard to drill through, and it is best, whenever it is found, to use a churn drill through that formation, and then put in a diamond drill. The drill is used first to find out in a general way the position of the ore channel by running a line of holes at intervals of about 200 ft. When lead ore is found that looks worth following up, holes are put in closer in the attempt to follow it in its usual course. If ore is found in consider- able amount in 15 or 20 holes, enough is blocked out to justify sinking a shaft. As a general rule it is not found desirable to try to map out the orebody accurately by drilling until some progress has been made in stoping it, and more knowledge gained about its peculiarities. Owing to the soft nature of the richer ore streaks, the drill cores in- variably give an underestimate of the value of the ore. Even where ground is most carefully drilled, the actual mining shows from 20 to 100 per cent, more lead ore than the drilling would indicate. It is very common to have blank holes in the middle of a good orebody through grinding up of the ore streaks. Owing to the irregular shape of the deposit, some poor ground is apt to run into the middle of the space occupied by the ore. For these reasons it often happens that one-half the holes, even in good stoping ground, do not indicate pay ore. The cost of drilling for many years went constantly upward, owing to the increased price of diamonds and of labor. Where drilling could be done about 1900 for 40 to 50 cents a ft., in 1907 it cost from $1 to $1.25 per ft. In the deeper holes, where the Potosi limestone must be penetrated, the cost probably averages $1.50 per ft. Subsequently events have reduced these costs again. The above description refers especially to the mines in the vicinity of Flat River only. At Bonne Terre the orebodies are a little different, in that the longer axis there seems to extend N.E.-S.W., instead of N.W.- SOUTHEAST MISSOURI 369 S.E. These orebodies are northeast from the ore zones of Flat River. It now seems very probable that a connection will be established between Bonne Terre and the Flat River orebodies. Extent of the District. As remarked above, a line taken around the productive mines incloses an area of only about 15,000 acres and from this a production rising from 50,000 tons in 1900, to 100,000 in 1907 and to 200,000 in 1916 has been taken but outside of this area are a number of other places where ores of the same kind have been mined. At Doe Run, Fredericktown, and Mine La Motte are important occurrences which diTer from the above-described field only in that they are in shal- lower basins of limestone, which are interrupted by knobs of pre-existing granite. At Fredericktown the ores carry, besides lead, copper, nickel, and cobalt. At the North American mine at that place considerable ore has been found that carries 5 per cent, copper and 2.5 per cent, nickel and cobalt. Everything indicates that there are possibilities of extension in copper mining in that neighborhood. The copper ores have exactly the same structural characteristics as the orebodies above described, except that, instead of pure galena, the ore is mainly sulphides of copper, nickel, and cobalt. Following is the discussion that appeared in the first edition. It was probably nearly correct at that time and is retained in order to indicate later the directions in which changes have been made. Problem of Mining in the Southeast District. The most difficult part of actual mining operations is the preliminary exploration by drilling. This de- termines the depth to which the shafts must be sunk, and their location. Usually only one level is necessary, but the fact that the ore does not lie exactly flat makes some provision for hauling cars up and down hill necessary. This can best be done, I believe, by electric haulage. This has been installed at one of the Fed- eral plants and is very effective. Provision must also be made sometimes for secondary pumping to raise water from depressions that may reach lower than the shaft-pumping station. 1 The stoping is very simple. No timbers are used. Round pillars of ore are left, containing 10 to 15 per cent, of the ore. It is often possible to leave pillars in the poorer parts of the deposit by laying out the main entries so as to follow the rich ore along the fissures. Underground diamond drilling is necessary in some mines to prospect ahead for water channels. These are open fissures that carry so much water that, if broken into carelessly, they make disastrous gushes. Some shafts are pretty wet, making 1300 to 1500 gal. of water a minute. The usual output from each shaft is about 300 tons a day. This output may be greatly exceeded, however, by the use of electric haulage so as to cover a large area from one opening. Ventilation may be secured by drilling large churn-drill holes from the surface. 1 In some of the mines compressed air locomotives are used, apparently to advantage. 24 370 THE COST OF MINING The most economical power equipment used in the district is at the plant of the St. Louis Smelting and Refining Company. Here a central steam plant oper- ates a compressor and an electric generating plant. The mill, hoists, and pumps are operated by electricity. Electric trams are also used to haul the ore from various shafts to the mill. The cost of mining, hoisting, and pumping is from $1 to $1.50 per ton. To this may be added 10 cents a ton for drill prospecting, and about 10 cents a ton for hauling the ore to the mill. The total cost of ore is therefore, from $1.20 to $1.70 at the mill. The Problem of Milling the Ores. The milling 1 practice is now pretty well established. The ore is ground to 9 mm. Everything smaller than 9 mm. is screened out as soon as the ore passes the crusher. When crushed, the ore is screened to various sizes, from 9 to 2 mm., and this product jigged. The tailings from the coarser jigs are all re-ground. The material below 2 mm. is classified and treated on Wilfley tables, as are also the re-ground tailings. Middlings from the tables are also re- ground in Huntington mills and treated on Frue vanners. The cost of milling in a 1000-ton plant is from 30 to 75 cents per ton. The cost of a concentrating mill, together with a power plant for the mines, may be estimated at $500,000 for 1000 tons capacity. The new plant built by the Federal Lead Company handles about 2400 tons a day. It is built of steel and concrete, has a large air-compressing and electric plant, and elaborate crushing and sampling arrangements. It cost $900,000; The Problem of Smelting the Ores. Smelting may be considered either on a custom or an operating basis. The ore leaves the mill in the shape of a concentrate carrying 70 per cent, lead and 5 per cent, mois- ture. Freight to East St. Louis is about $1.50 per dry ton. This ore may be sold to custom smelters, who will pay for 90 per cent, of the lead at current quotations, and charge from $6 to $8 per ton smelting charges. On this basis, the cost of freight and treatment figures as follows: i ! Lead, 4 cents i Lead, 5 cents | Lead, 6 cents Freight I 1 $1 50 $1 50 $1 50 Treatment say 7 00 7 00 7 00 Deduction 10 per cent., 140 Ib 5 60 7 00 8 40 Total $14.10 $15.50 $16.90 On an operating basis the cost is about $6 per ton, and the loss, with the best practice, 3 per cent. : 1 Since this was written a considerable change has occurred through the extensive use of Hancock jigs. SOUTHEAST MISSOURI 371 Lead, 4 cents I Lead, 5 cents i Lead, 6 cents Freight and treatment ' $7 50 $7 50 $7 50 Deductions, 42 Ib. lead 1 . 68 2.10 2.52 Total $9.18 $9.60 $10.02 On average prices there would be a saving of about $5.50 per ton of concentrates in operating a smelter. But it must be remembered that the above costs could only be secured by a plant handling a considerable tonnage, say 3000 to 4000 tons a month. Let us now consider the cost of the entire operation with due regard to both capital and operating charges. In the utter lack of any official statements of the companies operating in the Flat River district I shall have to make an estimate of my own, with due apologies to the secretive persons who control the mines for rashly guessing at their secrets, and to the public for any inaccuracies. The companies operating in the district are the following: - Mill capacity Shafts operated 1908 Dividends Deslodge Lead Co .... 800 tons per day 3 Not stated St. Joe Lead Co 2,700 tons per day 8 $6,308,357 Doe Run Lead Co 800 tons per day 4 1,859,893 St. Louis Smelting & Refining Co Federal Lead Co 1,500 tons per day 3,000 tons per day 4 6 Not stated Not stated Five companies 8,800 tons per dav ' 25 Total output 1908 estimated at 100,000 tons pig lead. If we call this an average output and figure that the mills ran 300 days a year, we get a total of 2,640,000 tons and an average yield of less than 4 per cent. I believe that this is an overestimate for tonnage and an underestimate for yield for this particular year, but not for the long run. I shall base my calculations on the performance of this district on a yield of 4 per cent, refined lead, at a price of 4^ cents per pound. I shall exclude from my calculations, as usual, the money paid for mining land on the theory that that is a part of the profit won from the industry. I shall proceed to compute the capital invested in the industry and figure the use of it as an integral part of the operating cost. Capital in Exploration of Lands. This must amount to about $2,500- 000. The greater part of this has been spent by the St. Joe and Doe Run lead companies, with the Federal Lead Company (including the Central) 372 THE COST OF MINING a close third. It is probable that the ore in sight is sufficient for about seven years. Capital in Shafts and Mining Plants. This I estimate at $2,100,000, being $60,000 each for the twenty-five shafts in operation and for ten other shafts discarded or not operating. Capital in Milling Plants and Power. I estimate this at $4,400,000, being $3,400,000 for plants in use, and $1,000,000 for discarded plants, experiments, and failures. Capital in transportation equipment from mines to mills, but not including railroads leading out of the district, may be estimated very roughly at $1,500,000. Capital in Smelting Plants. Including some capacity for smelting outside ores, this amounts to some $2,500,000, including workmen's houses, lands at plant, etc. Working capital, $2,800,000, being equal to the value of the lead output for three months. We have then: Capital in explorations $2,500,000 Capital in mining plants 2,100,000 Capital in milling plants 4,400,000 Capital in transportation plants 1,500,000 Capital in smelting plants 2,500,000 Working capital 2,800,000 Total $15,800,000 This is equal to $6 per ton of annual output. The use of this capital can hardly be calculated at less than 10 per cent, which is sufficient to return the investment in fifteen years with 5 per cent, interest. This calculation does not apply to working capital, however, for that is a quick asset that can always be liquidated. As long as it is in the business, however, it must be considered with 5 per cent. We have then for amortization: 10 per cent, on $13,000,000 risked in business $1,300,000 5 per cent, on 2,800,000 working capital 140,000 Total annual charge $1,440,000 This is equal to $14.40 per ton lead and 57.6 cents per ton of ore mined. The depreciation, or current construction of plants, to take care of changes in method, improvements, removals, etc., should be calculated at 6 per cent, on capital invested. This will equal $780,000, accounting for $7.30 per ton of lead and 31.2 cents per ton crude ore. We have now covered all the charges incident to the business except the current operating charges. These may be estimated as follows, giving due consideration to varying conditions: SOUTHEAST MISSOURI 373 Per ton, crude Per ton concentrate yield 65 per cent. Per ton, pig lead Mining and hoisting Transfer to mills Milling $1.00 to $1.50 0.05 to 0.10 30 to 50 $25.00 to $37.50 1.25 to 2.50 ' 7 50 to 12 50 General expense Freight to St. Louis Smelting 0.10 to 0.20 . 097 to . 097 0.378 to 0.378 $1.60 6.00 2. 50 to 5.00 2 . 44 to 2 . 44 9 . 23 to 9 . 23 Total operating Add depreciation $1.925 to $2.775 0.312 to 0.312 $47.88 to $69.17 7. 80 to 7.80 Dividend cost Add amortization $2. 237 to $3. 087 0.576 to 0.576 $55. 68 to $76. 97 14. 40 to 14.40 $2 813 to $3 663 $70.08 to $91.37 We find that the mines can pay dividends on what remains above from 2 8 to 3.85 cts. per pound, say for an average 3.3 cents. They can justify their investment at a price of from 3.5 to 4.5 cents, or in round numbers, 4 cents per pound. This I believe is a fair exhibit of the entire business. I do not pretend that the mines will not show great differences from these figures. The differences I have placed in the operating cost columns are intended to cover, for mining: the difference between a thick and a thin orebody, between dry and wet mines; in milling, the dPerence in the milling quality of the ores, between simple and elaborate processes, and between small mills and big ones; in general expense, the dif erence between simple and, elaborate managements. There have been failures in the district. It am striking an average of the successes. That these figures are not far from the truth may be gathered from the records of the St. Joe Lead Company, which paid more than $5,7005, 000 in dividends and built up its property greatly from an output of about 300,000 tons of lead. This indicates a profit of 0.95 cents per pound. Deducting this from an average price of 4.5 cents we get an average cost of 3.55 cents, less whatever surplus may be credited from surplus in the treasury. The cost, of course, fluctuates with the times. It is always possible during periods of depression to produce more cheaply by cutting wages and curtailing construction and development; -on the other hand, in boom times wages are raised and people embark in unusual expenditures for expansion and development. As a matter of fact, lead was sold in St. Louis from the Flat River district, in the years following the panic of 1893, as low as 2.6 cents per pound without loss; but in the boom period of 1906-7 it is doubtful if any of the mines were producing it for less than 4 cents." 374 THE COST OF MINING In the period since 1908 the changes worth particular note are: 1. A great increase in the production per shaft. It will be noted that in 1908 25 shafts were operating for a total output of 8800 tons a day; now not over 14 shafts are yielding at least 16,000 tons a day. In most cases they are the same shafts. The motive behind this change was the desire more fully to utilize the equipment, which is tantamount to saying in this case that it was not worth while to operate four shafts when one would do just as well. The leader in this improvement was Mr. H. A. Guess, who was for a number of years local manager of the Federal Lead Co. 2. Similarly, to take an example, the mill of the Federal Lead Co. which was designed for an output of 2400 tons a day, was made to treat 5000 tons by virtue of minor changes and adjustments. It was found that it took no more men to work the machinery twice as hard so that it worked out that the output per man for mining and milling was doubled. This was a signal achievement which is touched on to some extent in other chapters. 3. The introduction of oil flotation has made and is still making important changes in the scheme of milling. It is now possible to recover 90 per cent, of the lead, while with water alone the recovery scarcely reached 80 per cent, on the best ores and probably in some cases fell below 70 per cent. Perhaps the jigs will finally be discarded altogether. At the Bonne Terre mill the ore is now ground at once to 2 millimeters and washed on tables which take out a large part of the clean galena and also reject the coarser and nearly barren sand; the remaining tailings and slimes are then treated by flotation. It is found, by the way, that the limestone of this district cannot be ground as readily in ball or rod mills as many of the silicious ores of the west. . 4. The St. Joseph and Doe Run Lead Companies have been consoli- dated and reorganized. Great economies have been made in the produc- tion and use of power, in the distribution of supplies, in the operation of the transportation system and in the process of smelting. This one concern has made an output of as much as 110,000 tons of pig lead a year, and might be called the " Calumet and Hecla" of lead mines. The total production of lead from this district to the end of 1919 has been approximately 2,650,000 tons, presumably from about 65 to 70 million tons of crude ore. Of this the St. Joseph Lead Co. has con- tributed 1,460,000 tons and paid about $26,700,000 in dividends. It will be noted that the dividends have averaged almost exactly the same amount as was stated in the first edition, i.e., $19.00 per ton. SOUTHEAST MISSOURI ST. JOSEPH LEAD COMPANY AND SUBSIDIANIES COST OF OPERATING DECEMBER, 1914 375 Production and value Total Pounds recovered Tons ore mined 137 469 Tons ore milled 133 599 Lb. wet concentrates 16 568 360 Lb. pig lead equivalent 10,318,622 Lb. wet flotation product. . . 995 340 Lb. pig lead equivalent 407,398 Lb. wet slime 97,800 Lb. pig lead equivalent 42,653 Total pig lead equivalent 10,768,673 78 34 Estimated value at $389 039 85 Cost of production Cost ton Prospecting .... $10,494 45 076 Mining 87,843 31 639 Ore freights '. Suspension 11,934.56 5,388 75 0.087 039 Milling General and indirect operating 45,945.56 38,927 92 0.334 284 Depreciation 26,296 55 191 Interest . . . 25,868.39 188 Discount 13,406 73 098 Total cost ore to concentrates $266,106 22 $1 936 Other costs and incomes Cost cwt. Freights (concentrates and pig lead) $11,237.03 0.1043 Smelting costs 69,662 55 6469 Selling costs 1,756.30 0.0163 Total cost of product $348,762 10 3 2387 Cost per ton smelted about $7 50 Total Shifts Worked 64.724. Output per Shift in all Departments, Mining, Rail- road and Smelter 2.15 Tons. CHAPTER XXI SILVER-LEAD MINING GENERAL REMARKS ON THE SILVER-LEAD MINES OF THE CORDILLERAS THEIR IDENT- ICAL ORIGIN CGEUR D'ALENE MINES ECONOMIC FEATURES WAR^NER VEIN BUNKER HILL AND SULLIVAN CANYON CREEK 1908 LATER HISTORY HECLA HERCULES SMELTING DECLINE OF FEDERAL MINING AND SMELTING BROKEN HILL PROPRIETARY PARK CITY IN 1908 General Remarks on the Silver-lead Mines of the Cordilleras. Idaho and Utah have for two decades yielded about half the lead of the United States. Twenty years ago a mining engineer would have described the respective occurrences as very di Jerent; now, by virtue of the generalizations of such geologists as Lindgren, Kemp, and Ransome he is bound to recognize that they originated in a common process. In every case some connection, direct or inferred, may be traced to igneous, generally granitic intrusions. Solutions flowing from enclosed magmas have deposited metallic compounds in the covering rocks into which they escaped and through which they traveled along any available channel. In Utah the rocks which received the deposits thus formed were moderately tilted limestones and quartzites of Paleozoic age, and the outer periphery of certain of the granite masses; in the Coeur d'Alenes the rocks were Algonkian sediments of great thickness thrown into rather sharp folds. In Utah the solutions rising perhaps from the magma through a fissure frequently were able to find pervious beds along which they proceeded great distances, irregularly but persistently depositing ores in long ribbons. Such bodies are almost invariably in limestone beds, but in no case is any bed the invariable or sole locus of deposition. The association of the ores with the limestones is not inherent but accidental. There will be various beds in which ores will be deposited merely in proportion to the extent to which those beds were accessible to the solu- tions. The only invariable fact is the emergence of the ores from the magmas. Every district shows a group of phenomena essentially equivalent to that of every other district. Practically every metal is found in some proportion. Frequently the same district (Bingham for instance), contains deposits valuable here for copper, there for zinc, elsewhere for lead; somewhere else for silver, gold or manganese; some- times for several metals at onc3. Some such deposits are disseminated in large volumes of rock, sometimes chiefly in fault fissures, sometimes in beds, sometimes in or along the walls of dykes, sometimes at the con- tacts of batholithic masses with various rocks; sometimes within the body 376 SILVER LEAD MINING 377 of the batholith, sometimes in the zone of contact metamorphism that surrounds it; sometimes in fresh unaltered rocks far beyond such a zone. The nature of such a deposit is not governed by the rock or the fissure in which it occurs, but by the volume and energy of the mineralizing flow and the distance from the source of that flow. Apparently the deposi- tion of certain minerals was de- ermined by the progressive loss of temperature by the emerg- ing solutions. A little reflection on this point will enable one to see that during the process of mineralization the factors governing such changes might vary greatly: fresh fissures might be opened, and old ones closed, by earth movements such as must invariably take place around either an emerging or a cooling magma; the batho- lithic action itself might be re- newed, or be intermittent, and new supplies of magmatic waters might be given off with varying energy and tempera- ture from time to time. Thus we may see that almost at the same place deposits with con- siderably different characters may be formed in different phases of the same mineraliza- tion. One deposit sometimes carries a good deal of copper as well as lead and silver, while another a few hundred yards away will carry the lead and silver but no copper. One may imagine that the first might have been formed by a hot gush of solution emerging from the magma at an earlier or later stage than the second, or the latter might be fed from a fissure which tapped the magma at a greater distance. 378 THE COST OF MINING In general silver-lead deposits are not found within, or in immediate contact with, the batholithic masses, but copper deposits frequently, indeed generally, are. In a silver-lead mine zinc frequently increases markedly in proportion to lead at greater depths. From such facts the inference is made that copper is probably deposited at higher temperatures than zinc; zinc than lead, lead than silver, etc., but while this general succession is t recognizable the detail will be frequently confused in a manner explicable by the preceding paragraph. In various parts of the Coeur d'Alene district there are mines of cop- per, zinc and silver, lead and silver, silver only, and gold only. The zonal occurrence seems to hold good pretty accurately except for the copper which is confined to the eastern part of the district several miles from the exposed granitic stock. But who knows that there are not unexposed granitic masses beneath these copper veins? The simplest relationship of the silver lead veins to the batholith may be seen, or figured out, in the Canyon Creek part of the district. The granite appears on the ridge between Canyon Creek and Nine Mile Creek. The granite stock seems to have nearly a perpendicular contact with the sedimentaries on its east side, and cuts across some folds in- discriminately. Beginning at the north there are the following principal lodes; Hercules, Tiger-Poorman, Hecla, Standard-Mammoth, Frisco, Morning and Gold Hunter. All these lodes show the following peculiarities. 1. They lie in unmetamorphosed sedimentaries of great thickness. 2. They occur in a zone which fringes the granitic stock. 3. Their general course is nearly at right angles to the major axis of the stock. 4. The deposition is entirely in fissures and does not spread out along beds. 5. The ores are found in greatest abundance where the veins traverse quartzites (Burke and Revett) rather than in the dense clay slates (Pritchard). 6. There is a decided tendency for zinc to increase in depth. 7. There is reason to believe that the top of the ore shoots, as originally deposited, corresponds to the present altitude of about 6000 ft. above sea level. The Tiger-Poorman and Helena-Frisco veins showed strong out- crops of ore near the bottom of the Canyon Creek valley at elevations between 3000 and 4000 feet. The Hercules, Mammoth and Morning showed extremely meager outcrops of ore at elevations between 5000 and 6000 ft. It is doubtful if the Hecla lode had any outcrop of ore. The crest or summit of the ore-shoot seems to lie below the surface at an elevation of about 4500 ft. It may be noted that this ore shoot is further from the granite stock than any of the others. An apparent exception to this is the case of the Morning and Gold Hunter lodes; but acid dykes SILVER LEAD MINING 379 are found near those mines, a fact that leads to the suspicion that the granite mass, or an off-shoot from it, is not far below. In confirmation of this suspicion is the fact that the Morning and Gold Hunter carry a great deal of zinc. However, a branch vein on the Hecla property known as the Ore-or-no-go, which may be older than the real Hecla lode, carries a good deal of zinc quite near the surface. 8. There is reason to believe that the vertical range of commercial silver-lead deposition in any one lode is limited to about 4,000 ft. More- over it is entirely conceivable that all the principal veins have had ore over about that range. The Helena Frisco and Tiger-Poorman lodes which became unprofitable at depths of less than 2, 000 feet below their present outcrop may have, indeed probably, once extended 2,000 ft. above that outcrop. The Wardner part of the district is 20 miles away. How far all these generalizations may apply to it is hard to say. No granitic mass is exposed. But the mineralization is identical and the habrtTof the veins identical. The great practical question is the vertical range of the ores, which we may suppose will be different, certainly as to present altitude. If the expectation of life of- the Bunker Hill lode is limited to a vertical range of 4000 feet it is still uncertain what the life will be because how far it once extended above the outcrop cannot be known. In a general way the expectation of future output from veins now being worked in the Cceur d'Alene field thus seems to be limited by facts proven by experience, but to draw the conclusion that profitable operations will have ceased at any date that can now be fixed is not warranted. One may say this confidently on the basis of experience. Such an extensive field may be counted on for fresh discoveries, if not in the way of new veins at least in the way of branches, or extensions, or overlooked por- tions, of old ones. But that is hardly all. It seems legitimate to draw, from the generalizations of ore occurrence given above, the inference of two possibilities in which might lie the discovery of brand new silver- lead mines. 1. Explorations within the zone of known productive lodes at ap- proximately the level of greatest productivity. About the only space I know of in the Canyon Creek field where this exploration is not covered by tunnels already driven is that between the Morning and Hecla mines, where the surface is higher than the level reached by known ore-shoots. A tunnel driven across this space at an elevation of about 3000 feet might cut veins which do not reach the surface. Some mineralization in subsidiary cracks parallel to the principal veins has been found as far as openings have been made. 2. In the region between Nine Mile and Wardner some of the veins which contain only silver where exposed might carry silver-lead at a 380 THE COST OF MINING lower horizon. This is a bald speculation based on the zonal theory of ore deposition. The external factors which affect mining in the Cceur d'Alene are the most favorable of the whole Rocky Mountain region. The altitude is moderate, the climate mild; timber and water power are abundant and cheap. Transportation to consuming centers is, however, expensive, and wages are high. Labor is efficient and abundant. The mines are generally deep, measured from the surface, but the configuration of the country has permitted their attack by adit levels; so that most of the ore has not needed hoisting from great depths, and pumping operations have generally been inexpensive. The internal factors are favorable. The veins are typical fissures. The ore is galena, which seems to be a metasomatic replacement of pre- existing veins of iron carbonate. Ransome believes that the Burke and Revett quartzites, flaggy, evenly bedded, light-colored rock about 3,000 ft. thick, contain nearly all the payable ore, although veins are found traversing an immense mass of slates and quartzites of presumable Algonkian age, some over and some under the productive formations. The whole sedimentary series is estimated to have a thickness of 13,000 ft. 1 The ore shoots are persistent and profound, with a thickness varying from 8 to 100 ft., and a length varying from 100 to 1000 ft. normal to the plunging axis. Single bodies have produced 5,000,000 tons or more. The ore in the main has to be concentrated. The proportion shipped to the smelters varies from a quarter to a tenth of the amount mined. Of the proportion shipped a considerable amount is picked out by hand either underground or at the mill, the lower grades being concentrated. In addition to the sorting of first-class ore, there is a still larger sorting of waste in the stopes. In many cases it is necessary for safety to fill the stopes, and in all cases it is economical to reject waste. The various mines differ greatly in the amount of sorting and filling done. Several have run for years without shipping any first-class ore and wihout sort- ing any waste in the stopes, everything mined being sent to the con- centrator. On the other hand, one prominent mine, the Hercules, ran several years without a mill, shipping only fir^t-class ore. 1 Perhaps all the statements in these two paragraphs need some modification through the developments of the past ten years. It is probable that neither the wages nor the average capability of the miners is any longer comparatively high. Nor are many of the mines accessible wholly by tunnels. The veins are the same as ever but they are being worked at levels 1000 or 1500 feet deeper than ten years ago. It is now quite clear that while the rocks in which the ore is found is of Algonkian age, the veins are post-Cretaceous. The granite batholith from which the veins spring and which they surround is no doubt part of the same movement that produced the great batholiths of Butte and of Central Idaho as well as many smaller ones in this region. The ore deposits therefore belong to the Eocene "revolution" like those of Butte, Cripple Creek, Clifton, Ariz , and many others. SILVER LEAD MINING 381 Producing Mines. The mines may conveniently be divided into two groups: the Wardner and the Canyon Creek. In Wardner there is only one important mine: the Bunker Hill & Sullivan. The Wardner district used to be described as one vein, but that idea has been proved long ago to be a mistaken one. There are not only a number of different veins but two or three systems of veins of different ages. It can hardly be said that the mineralization is greatly diferent in the various systems but I suppose one familiar with the ores might tell them apart. The largest ore bodies are along the Bunker Hill lode, which is a mineralized fault of considerable displacement. One group of such ore bodies, perhaps better described as one large shoot, occurs on the foot- wall side of the main fissure, a second large group, not quite so persistent as the first, on the hanging wall side. It used to be supposed, by the way, that there was one universal "footwall" fissure for the whole dis- trict; but it appears that the eastern part of this supposed "footwall" is merely an older vein which is cut and displaced a considerable distance by the Bunker Hill fault. Another set of veins called the Jersey system is also cut by this fault, almost at right angles. Some of these veins are highly productive and valuable. It is perhaps safe to conclude that all the mineralization came from the same source but that the location of deposition was changed two or three times by the opening of fresh fissures. In this respect it is very much like ths Butte district. The mining is done almost wholly by the filling method. Whether square sets are put in first and then filled, or whether the stopes are filled without timbering, depends on the firmness of the ground. This varies in different parts of the mines. In nearly all cases enough waste for the filling can be sorted out of the vein-stuff itself. The Bunker Hill mine in twenty-two years up to June 1, 1908, had produced as shown in the following table : 1908 22 years Average yield per ton crude ore, lead per cent. 9.8 9.68 Ounces silver 3.84 3.82 Average contents of shipping product, lead per cent 43. 17 51 .45 Silver, ounces 16.58 20.31 It will be observed that while the yield of the crude ore per ton is almost exactly the same as for the entire period the grade of the shipping product has dropped about 15 per cent. No significance attaches to this except that in recent years a considerable tonnage of low-grade concen- trates containing less than 10 per cent, lead and a high percentage of iron has been shipped on account of its favorable fluxing qualities. In earlier periods no such ore was shipped. Of course with the present grade of shipping ore the cost per ton will be considerably different for smelting charges than with the higher grade of past shipments. 382 THE COST OF MINING OJ * 111 Pn$T (NO?DOOOOO>OI> OOOOOrHOC 00 l> C O CO 1-1 O O O o o o IN CO iC (NO CO S co co d s CO CO s g 2 2-g * S 5 f|8 s 3* ^ O0 TjJ CO CO Tf' 0 06 '*O5'oa5'Oooo5 Tji Tt< to co cc ft! oo *' d >-i T-I b- 1C O i-( (M .-H O CO t^ (N IN CO O i> co ^ (N * O5 (NO CO >O 00 -^ CO (N O CO IN O 00 l> IN l> CO CO IN IN 01 ~<- o 6 03 * iO --i OCOO^> i>O'OCDiCCO 00 -# CO IN t>- O 00 IN 5 r^ co IN CO >0 2 co GO lO r-l "c < PH H fe H .5 -3 S 2 jd-So 4 !- s ~ ojTti-i (N'CD O C r-l CO CM 00 CO O5 2S t^ t>. ~ g pf? I rr >- s I-H OS C <> i-i (N r-l *""* w o 8g 00 05 -* "" o^g fCOtO>OTfi(NOt-CO CO TH O rH t>- O 1C O rH (N rH CO CO i-l 05 8rH O5 O O5 * i-i -s r? O 1C CO CO CC '-O 00 id i-H (N (M t> CD 1-1 OS IN O O O CO r-l CO 00 rH O r-l O O g co e 05 Tt< CO I> CO r-l s CO * IN If <=& g 13^1^ ^> ^>"o ^ 1 3-2^ iCOi^OO500COCOO5COO5 OlOTfHlO'**t>TtllOGOO O5 l> O3 OS i-l 01 OOOOTtiQOTtl OO GOeO OC.OOCOO(M OO >Ot^ O COO _ **_ 3 o^^-oo^ogi^^ooao^^gcogo^gco^g Q gCU OeOOOi-icOOOWl>ioScDiOCOCOOOr-(C o eo eo t* r^ e* eo g .... cooasi>Tt--ir-i|>iOt^OOiOOOOOO5Oi^t^ i O O O 02 CO IS Oi-HrH -COOTXOC^C^Co5ScOCO^GO(NCDSoo5ot^OOtNCOOOOOCOCO II e itlCOOr rt t^'OOiOOOi-(Tf->*lU3'*OOOlOOO-l^rHrHO5 ** " ' " -pOOCDCDOOiMC003(NCOiOCO^CO'* ir-iOit^l^COO(Nt^COr}H 1 c; . _-., s 8 "8 so H- ^^ 5^ ll aJ ^ 5 SQ oooooooowoooooooow^ooo505a>o5oioio5aj05diososbs' t^td oococoGoooooooooGooooooooooooc35O5O5ajO5O5O5O5OiajO5ajO5O5O5a5 j^.ioJcycrcirGrQrarQrQj'cu'co'cu'aJaJo'arajQrcirQrQrcJcrcr^ *-< ** ^ ^ S^H 5 H S I^^H s ^I^H,H s h,H,^H5H,^h,H5H s l^h,^h,l-5t--5><>H>H>Hj>i SILVER LEAD MINING 387 It appears further that the costs incurred on the ground, i.e., omitting smelting costs and losses were $3.13 per ton crude ore mined and $19.58 per ton of concentrates. These costs were not increased in the following year which is surprising. In 1917 the cost on the ground was per ton crude $3.16 and per ton concentrates 14.96. The decline in the cost of concentrates was due no doubt to the increased yield. This summary shows that on the average the net smelting costs and deductions have been about 43 per cent, of the total value recovered at the mine : that the operating profit is about 55 per cent, of the net smelter returns and 32 per cent, of the gross value; that out of 30,000,000 ob- tained from operating and other profits only $20,500,000 was paid in dividend 68 per cent. The remaining profits have been absorbed of course in purchase of property, construction of plants and in working capital. We may summarize the whole history as follows: 7,886,886 tons cost for operating $20,700,000 = $2 . 62 per ton for capital 9,500,000 = 1 . 20 per ton Total for 31 years $3 . 82 per ton The capital requirements have been increased considerably since 1915 by the construction of a smeltery at Kellogg. This means a good deal additional for working capital, the total of which stood at the end of 1917 at about $3,000,000 net. The mine is thought to be good for a long life, although only 3,457,000 tons or about 7 years life is reported in sight. The mine is 2600 feet deep vertically and perhaps 4000 feet on the slope; but the ore has not changed its character appreciably from top to bottom. Canyon Creek. The Canyon Creek mines differ from the Wardner mines only in the shape of the orebodies. The dip is not far from ver- tical; the ore shoots are much longer, thinner, and more regular. Wages OPERATIONS OF THE FEDERAL MINING AND SMELTING COMPANY FOR THREE YEARS ENDING 1908 Total tons mined and milled 2,428,112 Tons lead in shipping product 166,912 Ounces silver in shipping product 10,300,049 Percentage lead : 6 . 87 Ounces silver per ton 4 . 24 Value of product ! $24,310,441 Smelting, refining, and deductions 10,514,773 Net value to mining company 13,795 . 668 Profits reported 6,160,247 Total cost 7,635,421 Cost per ton, mining and milling crude ores. 3 . 14 Cost per ton, concentrates shipped 22 . 03 Smelting, refining, and marketing concentrates 30.35 388 THE COST OF MINING average 46 cents an hour (in 1908), 4 cents higher than in Wardner. Details of cost are not given. It will be seen that these figures indicate conditions similar to those of Wardner. Further elaboration of detail seems unnecessary. The costs are higher than at the Bunker Hill, but the difference at the mine is to be explained by the factors, (1) higher wages, (2) a greater amount of hoisting and pumping, (3) a charge for railroad transportation from mines to mills, (4) a greater number of power and mining plants to maintain, and a higher power cost. In each case these factors are in- herent to the problem and cannot be removed. The cost of mining and milling, of construction, of freight and treat- ment; and the value of the ore to the mines, free from smelter deductions for a period of five years during which the average price of lead in New York was 4.6 cents and of silver 59.2 cents, are given for a number of properties in accompanying tables: COST AND VALUE OF ORE PER TON AT Six MINES FOR FIVE YEARS (New York prices; lead, 4.6c; silver, 59.2c.) 1908. Tons Cost mining and milling Construction 3 "o EH 3 C3 j o u o c 's 2 .Mas 53 % ** c3 fl g' S 3 ~5 > V3 i_, PH Hecla Standard 402,000 1,244,571 488,675 924,416 670,164 $3.43 2.91 2.94 1.96 2.66 $0.47 0.15 0.10 0.15 0.08 $3.90 3.06 3.04 1.22 2.74 $2.56 2.37 1.71 2.51 2.99 $6.46 5.43 4.75: 4.62 5.73 $9.57 7.29' 4.99 5.42 8.19 $3.11 1.86 0.24 0.80 2.46 Tiger- Poorman Morning Last chance Total and averages 3,729,826 $2.90 $2.43 $5.33 $6.93! $1.60 ESTIMATED AVERAGE VALUE OF CHIEF ITEMS Smelter deductions $1 . 50 Loss in milling, 20 per cent. (In some of these mines where no first- class ore is shipped, the loss is probably greater; where a good deal is picked out the loss is probably less) 2.11 Gross value of ore before milling, at N. Y. quotations 10.54 Per cent, lead, before milling '. 8 . 66 Ounces silver per ton, before milling 4.33 Cost to mine per pound lead at New York 3 . 54 cents Cost to mine per ounce silver at New York 46 cents Cost of lead in New York (actual cost) 3 . 36 cents Cost of silver in New York (actual cost) 43 . 5 cents If these mines were all owned by the American Smelting and Refining SILVER LEAD MINING 389 Company, and the cost of the whole process from mine to market were to be given, it would probably be something as follows: Total value recovered per ton $8 . 00 Cost of mining, milling, and construction 2 . 90 Cost of smelting, refining, and marketing 3 . 20 Profit per ton 1 . 90 These were the facts in 1909. Since that time the Standard-Mam- moth, Tiger-Poorman, and Last Chance (Wardener) mines have been worked out and abandoned; as well as the Success mine which was not mentioned in the first edition but which was a resuscitated old mine that ran successfully for a number of years. Other mines like the Hecla and Hercules have increased their output enough to make up for the decline of others, and one new vein, the Interstate-Callahan, which produced heavily for a while, was discovered. The last was principally a zinc mine but it produced some lead and a good deal of silver. The Hecla mine has improved steadily at least to the depth of 1600 feet below the level of Canyon Creek. In all probability the deposits will not weaken suddenly with increasing depth, but very likely are approximately lens shaped so that if the 1600-ft. level is that at which the volume of ore is greatest it seems reasonable to suppose that as much ore might be obtained from below it as above it. Whether the 1600- foot level is actually the best in the mine or not is beyond my knowledge; but, assuming it and applying the above theory, we get the following: Amount of ore mined to end of 1918 2,400,000 tons Ore in sight above 1600 ft. level end of 1918 1,500,000 Total accounted for to 1600 ft. level 3,900,000 Add for presumed lower half 3,900,000 Total ultimate production . . , 7,800,000 Deduct production to date 2,400,000 Future expectation 5,400,000 Rate of mining, 1917 and 1918 per year 375,000 tons Length of line at that rate, less than 15 years It is generally believed that the portion of the Algonkian series of rocks known as the "Burke" and a Revett"quartzites is that in which the silver-lead veins are particularly productive. Some mines in the district are thought to have played out when the workings reached the underlying "Pritchard" slate. If this theory is correct the Hecla mine may be expected to go to a great depth, for the Burke quartzite is dip- ping nearly vertically into what is probably a very deep fold across which the vein cuts nearly at right angles. Following is a table showing the progress of this concern in the past few years; 390 THE COST OF MINING g 00 6 PH fc O S 9 . H o ^ il CO CO CO lO lO O CO 8 Ci ^^ ^^ (N CO O GO O ^ O Ci O e^ o ig o o t> 10 ^ i-t d (N lO O GO CO : oi (M CO CO ' O CO I>- ' O OS cO O -H 1C "* ^ "^ CO C^ PH Q_| Q P^ <* c $12.5374; 197.3 Ib. lead at 4.147 cents, $8.1820; 19.17 Ib. copper at 12.45 cents, $2.3867. Total, $31.5357. Having already shown that the average profit per ton of ore smelted in that period was probably about $2, the actual net profit to the smelter was a little more than 6J^ per cent, of the ore value. Subsequent Increase in Profits. It is impossible to follow analytic- ally the subsequent history of the company in any way that has a very sound foundation. The reports show a marvelous increase in the profits, which were $5,421,103 in 1902-03 and $9,914,253 in 1906-07. During this period of four years the amount of ore smelted by the company in- creased greatly, but there is no reason to surmise that it increased in the same ratio as the profits: indeed, there is sufficient evidence to warrant me in saying positively that it did not, and that if the tonnage of ore smelted in each year were made the divisor of the net profits reported the quotients would be steadily increasing up to the last year or two. However, any such figuring would be misleading, because the company has undergone great expansion and derived greatly increased profits from sources that are not properly referable to the direct smelting opera- tions. The company avers that it has not increased treatment charges, and there is much evidence in support of that assertion. Explanation of Increasing Profits. In directing attention to the subject of the increasing profit shown by the reports of the smelting company, it is important to consider a variety of conditions. It is well known that it is much more economical to smelt on a copper basis than on a lead basis. The difference in favor of the former is fully $1 per ton of ore. Consequently, the more copper ore to be smelted, the more the profit, and the increasing net earnings of the smelting company are doubtless due to some extent to the increased amount of ore smelted on the copper basis. It is also well known that the margin on ore purchased THE COST OF SILVER-LEAD SMELTING 409 in Mexico is much greater than on American ores, and a large part of the profit of the smelting company is derived from its Mexican business, which has been rapidly increasing. The lowest margin, probably, is realized by the smelteries in Colorado, which until lately have treated in the neighborhood of 1,000,000 tons per annum and operate rather uni- formly at that rate. A few years ago the profit in smelting in Colorado was only about $1 per ton, and probably it is no larger at the present time. It is claimed also that the profit in smelting in Utah has been only about $1 per ton since competition has been active at that point. On the other hand the profit at non-competitive points and in Mexico must be large. The increase in the earnings of the smelting company has also been promoted without doubt by its profit-sharing system, which was designed to increase efficiency and has had that e^Iect. The company has bene- fited from economies in administration, as is clearly shown by the decreas- ing amount to the account of general expense. Furthermore, it has derived great advantage from the introduction of metallurgical improve- ments, such as the Huntington-Heberlein process, and the concentration of operations at the most economical plants. Finally, we come to the question of metal stock account, wherein the purchaser of ores may lose or make a great deal through fluctuation in the value of the metals. In the long run such fluctuations are expected to balance, and temporary gains or losses are commonly charged to an account representing quota- tional profit or loss. In a long upward trend of prices, a buyer of ores may realize a great profit; and similarly in a sharp decline, he may suffer an immense loss. From 1901 to the end of 1907 the general trend of the metal markets was upward, and undoubtedly the greatest factor in the increase in net income up to April 30, 1907, was the appreciation in the value of metals on its hands, just as since June, 1907, its net income suffered severely from the decline. The company carries in its statement of assets an item of " metal stock" ranging from 116,418,543 to $19,415,- 200, which represents its valuation of ores and metals on hand. The nature of its business requires that large quantities of ore and crude metal be in stock at all times. It appears from the data deduced in this article that the stock necessarily carried is from 20 to 25 per cent, of the annual turnover; in other words, the ore and its products are in process of treat- ment and in transportation for 2J to 3 months. Division of Ore Value. Now let us see what division is made of the value of an ore assaying 0.41 oz. gold, 24.95 oz. silver, 179.3 Ib. lead, and 19.17 Ib. copper, which was the composite of all the ore bought by the American Smelting and Refining Company in 1902-03. The smelter and refiner probably realized, from this ore approximately as follows: gold, 0.41 oz. at $20.56, $8.43; silver, 24.95 oz. X 0.97 at 50J cents, $12.16; lead, 197.3 Ib. X 0.94 at 4.147 cents, $7.69; copper, 19,17 Ib. X 0.7 at 12.45 cents, $1.67. Total, $29.95. 410 THE COST OF MINING The expenses from the time of receipt of the ore at the smelting works to the sale of the refined metals are approximately as follows: 1. Smelting, 1 ton at $4.50 $4 . 50 2. Converting 40 Ib. copper matte at 0.7 cents 0.28 3. Freight on 190 Ib. lead bullion at 0.43 cents 0. 82 4. Freight on 13>^ Ib. copper bullion at 0.5 cents -...." 0.07 5. Refining 190 Ib. lead bullion at 0.38 cents 0. 72 6. Refining 13> Ib. copper bullion at 0.7 cents 0.09 7. General expense . 40 8. Amortization . 25 9. Tie-up of metals . 30 10. Metal account.. 0.30 Total $7.73 1. As previously computed. 3. The rate of 0.43 cents is the mean of the rates from Salt Lake and Pueblo; this assumption is necessarily arbitrary. 4. In this case also the assumption of freight rate is neces- sarily arbitrary. It is intended to cover all freight charges on copper from the time of leaving the first smelter. Copper matte goes to Omaha from East Helena, Salt Lake, Denver, Pueblo, and elsewhere even from Perth Amboy and the copper bullion thence goes to Perth Amboy. Probably the assumption of 0.5 cents per pound to cover all of this move- ment is too low. 7, 8. These figures are deduced from the reports of the American Smelting and Refining Company; the allowance for amorti- zation appears to be too low. 9. As previously computed. 10. This appears to be the average allowance that has been made by the American Smelting and Refining Company, as insurance against depreciation of metals on its hands. Inasmuch as the smelter is supposed to realize a profit of $2 per ton of ore, the total deduction for its account must be $7.73 + $2 = $9.73, and from the value of the ore, $29.95, there is left $29.95 -- $9.73 = $20.22 to pay for the ore and the freight upon it to the smelting works. Now let us see how that would figure out to the producer. We may assume a settlement on the lines of the following: gold, 0.41 oz. at $19.50, $8; silver, 24.95 oz. X 0.95 X 50>i cents, $11.91; lead, 197.3 Ib. at 2 cents, $3.95; copper, 19.17 Ib. at 5.45 cents, $1.04; total, $24.90; deducting a treatment charge of $4.68 leaves $20.22 as the net value to producer. This corresponds to an ore contract reading, "Gold to be paid for at $19.50 per oz.; silver at 95 per cent, of the New York quotation; lead at 40 cents per unit; copper at the New York quotation, less 7 cents per pound; treatment charge, $4.68 per ton; neutral basis; delivery at smel- ter's works." This has a familiar sound, except that so small a percent- age of copper is not always paid for, but it must be remembered that I am here figuring on a composite ore, the copper of which is obtained chiefly in special classes of a higher average of all ores smelted. THE COST OF SILVER-LEAD SMELTING 411 Conclusions. -After a consideration of the data, it is impossible to escape the conclusion that the great increase in the net earnings of the American Smelting and Refining Company from year to year is to be attributed to: 1. Enlargement in the volume of business. 2. Institu- tion of economies (a) in administration; (6) through centralization of operations; (c) through metallurgical improvements; (d) through increase in operative efficiency. 3. Appreciation in the value of metals, due partly to natural causes, and partly to manipulations by the company. The profits on exempt lead, and on contracts with the producers of lead ore, whereby the value in excess of a certain price per pound is divided between the producer and the smelting company, must contribute largely to the treasury of the company. Since the middle of 1907 the depreciation in the value of metals has offset some of the gain previously realized. 4. Increase in the amount of ore smelted on the copper basis, which is more profitable than the lead basis. 5. Increase in earnings of subsidiary companies, such as the steamship company. 6. Earnings from investments of surplus, e.g., the preferred stock of the American Smelters Securities Company. 7. Profits from investments, e.g., the sale of a portion of its holding of the stock of the United Lead Company, carried into earnings for the year ending April 30, 1907. The position of the smelting company being so strong in many respects, and the surplus which it carries being so large, the company may be forgiven for not writing off anything for amortization of its plants. As I have previously pointed out, the outlay made on account of extra- ordinary improvements is of the nature of an amortization account, but the amount expended so far in this way is of doubtful sufficiency. The smelteries and refineries now owned by the company must be worth in the neighborhood of $15,000,000, i.e., it would cost that amount to replace them. The average amount expended for extraordinary improvements during the five years ending with Apjil 30, 1907, was a little less than $750,000 per annum, which is only 5 per cent, of the physical value of the plants. This, it seems to me, is an insufficient allowance for amortization. According to the statement filed by the company in the New York Stock Exchange, in January, 1909, its smelteries and refineries were the following : 412 THE COST OF MINING SMELTERIES Place Plant Furnaces Annual capacity Denver, Colo Pueblo Colo Globe Pueblo 7 t 322,000 328,000 Pueblo Colo Eilers. 6 295,000 Durango, Colo Leadville, Colo Salt Lake, Utah East Helena, Mont Omaha, Neb Chicago 111 Durango Arkansas Valley Murray East Helena Omaha National . 4 10 8 4 2 2 146,000 509,000 523,000 235,000 82,000 60 000 Maurer N J Perth Amboy. 3 140,000 El Paso, Tex Monterey Mex El Paso Monterev 10 10 492,000 460,000 Aguascalientes, Mex Chihuahua, Mex Aguascalientes Chihuahua 10 3 720,000 153,000 86 4,465,000 REFINERIES Place Plant Lead, tons Copper, tons Gold and silver, oz. Omaha Chicago Maurer Omaha National Perth Amboy 156,000 84,000 66,000 66,000 36,000 16,400,000 36,000,000 The annual product of the refineries is about as follows : gold, 1,250,000 oz.; silver, 66,000,000 oz.; lead, 225,000 tons; copper, 66,000 tons. CHAPTER XXIII ZINC STATISTICS Zinc. A resume* of the progress of the zinc business of the United States in recent years, covering the war period, is obtained from the following statistics by W. R. Ingalls, Engineering and Mining Journal, May 31, 1919: PRODUCTION OP SPELTER (In Tons of 2000 Ib.) By Ore Smelters Only 1914 1915 1916 1917 1918 Arkansas 7637 25 701 26 750 Colorado 8,152 8,984 8,908 7,735 3,897 Illinois 130 587 161 665 181 495 176 071 141 808 Missouri- Kansas Oklahoma 53,424 92 467 111,052 111 405 154,396 169 064 86,505 204 587 31,834 143 371 Electrolytic 10963 27245 38885 East and others (a) 85,682 114,036 147,555 154,567 138,805 Totals 370,312 507,142 680,018 682,411 525,350 (a) Includes Anaconda and other electrolytic production in 1915. STATISTICS OF SPELTER-SULPHURIC ACID WORKS (In tons of 2000 Ib.) 1914 1915 1916 1917 1918 Ore received Spelter produced Sulphuric acid, basis 60 deg. 434,666 196,529 355,424 614,565 244,252 475,740 752,021 293,525 683,514 779,941 313,433 817,573 485,276 217,134 636,149 From these totals it appears that the recovery of spelter from the ores smelted averaged about 43 per cent, in 1914, 40 per cent, in 1915, 38 per cent, in 1916, 43 per cent, in 1917 and 46 per cent, in 1918. This indi- cates that in years of slacker demand higher grades are smelted, lower grades being used only during periods of sharper demand. We may conclude that the grade of ore smelted under average conditions yields from 850 to 900 Ib. spelter and if the recovery averages 85 per cent., the gross content is from 50 to 55 per cent. Such grades of course can only be obtained by concentrating; some selected, hand picked ores no doubt are shipped in small lots, especially carbonates and silicates, but the 413 414 THE COST OF MINING RECEIPTS OF ZINC ORE (In tons of 2000 lb. This table includes the receipts of ore by the smelters only and does not include the production of ore exported or what was taken by the electrolytic producers or by the manufacturers of zinc oxide.) State 1913 1914 1915 1916 .1917 1918 9,347 6,357 14,718 17,243 14,837 1,962 1,500 1,737 . 7,017 12,854 20,225 (c) 6,796 8,827 27,445 41,291 12,444 5,351 Colorado Idaho 220,166 31,835 164,739 57,001 148,359 78,767 194,418 104,575 184,304 86,172 82,995 62,109 Kentucky Missouri-Kansas Missouri-Kansas-Oklahoma- Arkansas Montana . . . 441 280,000 (d) 91,257 434 247,723 (d) 125,663 1,863 278,099 (d) 200,528 2,460 369,397 (d) 233,645 2,019 301,809 (d} 171,904 799 (c) 476,954 152,905 Nevada 22,313 20,447 24,949 51,670 35,045 19,733 New Mexico 14,593 15,369 37,042 35,734 16,353 13,206 Oklahoma 23,500 26,247 25,231 42,799 153,035 (c) Tennessee 8,297 18,708 38,527 43,309 38,488 45,924 Utah 27,073 20,322 21,535 43,240 21,381 14,758 Wisconsin (c) Others and undistributed 89,662 57,241 74,311 57,936 90,128 122,490 91,561 111,273 137,248 192,393 123,506 98,870 Totals Mexico Canada 884,012 19,965 6,012 845,821 16,414 10,532 1,116,698 49,171 14,000 1,395,4569 142,687 31,877 1,387,657 135,368 21.502 1,099,072 49,532 14,502 Australia . .... 68,448 134,464 37,031 618 Other foreign . . 9,211 73,394 31,714 2,373 Grand totals (6) 909,998(6) 872,767 1,257,528 1,777,891 1,613,272 1,166,097 (a) Including Illinois and Iowa. (6) In addition to the ore reported from Canada and Mexico, zinc smelters received a few thousand tons from Europe and Eastern Siberia in 1913. (c) See "Missouri- Kansas-Oklahoma-Arklnsas." (d) See under separate states. grand total of such shipments must be small and their effect is to reduce the average grade used at the smelteries. It also appears that nearly, or quite, a ton of sulphuric acid may be obtained from a ton of such ore, although presumably the purer sulphides are selected for this purpose. Zinc Smelting. It will be seen from the tables that between a third and a half of the spelter of the United States is smelted in Oklahoma and Kansas. Natural gas is the fuel and the occurrence of it is the sole reason of existence for the smelting industry in that region. There are three types of zinc smelting, or producing, plants : 1. The gas fired retort plants of Oklahoma which live on the advan- tages of cheap construction and cheap fuel, and produce sp'elter only. 2. The coal fired retort plants in the central industrial field of Illinois and Pennsylvania. These establishments are much more costly for construction, less economical for zinc smelting alone, but have the advantages of a more pemanent fuel supply and better facilities for distribution. The last factor enables them to engage in the production of sulphuric acid which is used largely in galvanizing iron at the neigh- boring steel plants, but is also the chief base of the chemical industry. ZINC STATISTICS 415 3. Electrolytic zinc plants, the chief of which is that of the Anaconda Copper Co. at Great Falls, Montana. The sine qua non of this opera- tion is cheap power. A significant hint of the competitive strength of this process is contained in the fact that the great Anaconda plant was shut down in 1919. 1. OKLAHOMA PLANTS PRE-WAR CONDITIONS It takes about 65,000 cubic feet of natural gas to treat a ton of sul- phide ore. When this gas can be obtained for 7 cents a thousand cubic feet, or less, it becomes a desirable basis for zinc smelting. When gas can be obtained for 4 cents a thousand the advantage is very marked, not so much in the cost of operating as in that of constructing this kind of a plant. Thus a given margin of profit on the ore'makes a much more handsome return on the capital invested than is the case with plants based on coal, which cost three or four times as much. It is confessedly a temporary and migratory business which becomes unprofitable when the available supply of gas runs short, or goes up in price, but if the operation will last five years with gas costing say 5 cents a thousand, the smelter will pay for itself; and so long as these opportunities recur it will continue to be a good business to build cheap plants at points where sufficient gas may happen to be found. How long such points may continue to be discovered is uncertain but the area in which they may f occur is very considerable and I do not imagine that the end is yet very near. The following illustration of the capital required to install and conduct such operations throws light on the subject. Four plants in Oklahoma had up to the end of 1918 a fixed capital expen- diture of about $3,000,000 The working capital at that date was about 3,000,000 6,000,000 The maximum capacity was 380,000 tons of ore per year, so that the fixed capital per ton was about $8. In 1918 the actual tonnage was less than half of the maximum, but the working capital was the amount stated, say $17 per ton; from which we may conclude that the minimum capital required, fixed and current, is about $25 per annual ton; but when the output is curtailed it rises as high as $33 a ton. Perhaps it will average about $30. The operating cost was about $9.35 per ton of ore in 1912 and about $22 a ton in 1919. If we neglect the latter figure as one belonging to a period of economic uncertainty and return to the more secure proportion of things that existed before the war, we shall have to reduce to some extent the estimate of capital required, especially the working capital, nearly in proportion to the operating cost. It must 416 THE COST OF MINING be remembered that although the ground-work of fixed investment of all these enterprises existed before the war the working capital is pro- portional both to the cost of operating and to the price of the product, which determines the amount of money required to buy ore and hold it until the contents are disposed of. Thus in 1912 (a year selected because the price of spelter was very close to the average), the figures were about as follows : tons treated 100,000 Fixed capital $900,000 Working capital $600,000 Number of retorts 12,000 Cost fixed capital per retort $75 . 00 Cost total capital per ton ore treated 15 . 00 Operating cost 9.35 Interest on capital . 90 Amortization of fixed capital in 10 years . 60 Total estimated cost $10. 85 Operating profit 4 . 99 Actual profit as per estimated costs 3 . 50 Operating return on total capital about 33 per cent. Assuming that these were the average financial and operating condi- tions on the ground and that the average smelting margin was deter- mined by competition, we arrive at certain conclusions as to the value of zinc-ore. Average price for year 5 . 66 cents Smelters margin $ 14 . 35 Loss in smelting 130 pounds at 5.66 ' . . . 7 . 36 Total margin and losses on the ground 21.71 Other deductions would be for freight and these would be determined partly by the grade of the ore and partly by the distance between the mine and the smelter. Assuming a standard Joplin ore running 60 per cent, zinc, the freight items would be about as follows : Freight on 1070 pounds to St. Louis $1 . 61 Freight on ore to smelter and loading 2 . 50 Grand total of deductions about $25 . 80 Value of zinc in ore, 1200 Ib. at 5.66 68 . 00 Margin to miner $42 . 20 As a matter of fact the margin to the miner thus calculated is very close to the price paid for ore in Joplin for the period in question. STATISTICS 417 CO oa CM -^ ^ CO -^ CO oo fl M CO 10 o* o >o 00 O o o 3 1 os s S 10 CO 2? o "o > of CN 00 04" g co" ^ 3 00 r-l * 03 g co OJ CM 03 * co CD Tj< 10 CO g CD co <*< CO o H 3 Js, t^. ^ co ^ co os O OS s ' g ^ '~ - 1 10 CO 03 CM OS o O i-l CD fs ci CO Ol CC r> 10 co t>- 05 O to GO O (N OS 2 5 M 03 ^ co _ CM CO CO -. 00 CM. 3 3 O "u t~ 00 CO O4 1 i CO CO rH S 00 CM Sj s i CO ^ oq 01 5C 01 oo ^ OS ^ ^ ^ CO co '<3 08 M CD co t- a o O O 03 03_ CK 05 05 CD* rH Cv CM il of oo OJ 03 (& OJ iO -* o> CO CD | a ^ TJ '3 -J 1-1 co ^ re CO CD co ^* CD T}H s ^ CO S g (M 00 01 OS CO Tfi ^ Is : a J2 ^ : ll "o 2 : 1 X> QO '. 'S Jl II : a $ : 11 : a a ' 03 1 i : S3 ; oo ! 06 o 2 : : t a : 2 ; os o : a : : | 1 II '. ^ ' rH 'o "o 3 . *> ^ t~* ; 03 O5 : Ti . G _a : s : a ft ^~* cu > ' ' ! QJ o3 ~ ft ! o . O -^> a ; c ' i> 73 ' ^ ; T) ; os c3 : Q O o '. a -2 * 06 c . 3 ** os "^ ' +3 ; ^> 85 00 C rH -3 ' 3 >1 ^^ 03 o3 ?^ 03 *J I-l OS "w s .a s : | : | 1 ^3 % S.-2 2 "V 3 a 'g ^ Year erected. . . . Capital expendit OS 1918 Capital expendit capacity (as bi Working capital Current assets Deferred asset Total worki Working capital Tonnage treated Furnace-days op Tons per furnac< Maximum avails Maximum ore a -g oo "d o 27 418 THE COST OF MINING The following tables show the production of the United States and of the world. w ^ (^ i i 00 Ci CO i i !> 10 CO O b- oo-tfcococo-^ior^ioco^o-^ co i> i- i> OfHr-( CO^i-HT*HTHTjHOSTt.THO5O COTtHCOOOr-tJOCOCOQOOOOO rH_ (N^ O_ i-J CO^ CO^ iO^ ^ 00^ i-H^ O^ O_ so ccT ^ CD" to" o" o~ 10" io~ ccT ccT o" co o>' c o" oo" i>." cT co" N." co" OOCOCO CO(N>Ol> r-T co" co" oT co o c^ o i> rj T- i> co co -CMWCO- -t-IOOO- CNTj i OO 1C OOOO CDCOcO CO CO 09 B T3 g c"'rHrHCO CNTcOCO " 1 ' ' iH C> t ' JO O ^ ^ '.'.'.'. '.^ :::;:: ^ : 5 1 * 1 00 t- ^ CO ^ ^ 00 ^ CO M . US CO ^ c 1 'ro' a I1IS8|||||| |il|l^oS8 g E 1 o Z- cfosOi-HCOOOriTlH'i-rcOOOrH (M"t> /Alaska's rapid increa ze A& tra il:U f lines A I 1 1 [/ RandS / / 1 / \Uo r *_ r / / \ I 1 55 he \ / / \ 1 / \ / / / / / / / n ' ! 'J".! he / T'.V .4 ' ( " Sjg ' / ^ X^ - - V, ft ... i 1 1 ad ou tpist o We Id >r ' rrc seel. Gold being 10% by-product: - > \ B' \ \ FIG. 10. Gold production of world for 30 years. (According to M. W. von Bernewitz.) of the Europeans, though the collisions between great nations were avoided until the Russo-Japanese War of 1904-1905. But war in Europe was constantly brewing, and was with difficulty avoided on many occa- sions. Finally, a furious war, all the more violent because so long repressed, involved all the principal nations of the world. The events of the Great War have accentuated rather than mitigated, in Europe at least, the force of the economic conditions outlined. Those who take pains to look the situation in the face must be impressed with the following facts : The total white population of the world is about 600,000,000. Of these, three quarters live in Europe. The total area occupied by white populations is about 20,000,000 square miles, a good part of which is in the circum-polar regions of America and Asia and an- 444 THE COST OF MINING other portion in the deserts of Australia. Of this population, half at least, both in number and in area occupied, have been thrown into a state of political revolution and social and economic chaos, and are today suffering in varying degree from all the distress incident to such terrors, from starvation, exposure and danger. Out of the ruins of the empires of Russia, Germany, Austria, and Turkey a number of small nations have been created, or resurrected, without fixed organization, all jealous of their neighbors; some already at war with each other, and each nation far less self-sustaining than the larger units from which it was broken. When it is considered that revolutions, once started, are hard to stop and frequently go on from one stage to another for generations, it is hard to look upon the general situation of the white race with much assurance of a complete return to tranquility and prosperity. These conditions do not affect the Anglo-Saxon world within its own territories as they affect every other white nation. The Anglo- Saxons are, as I have pointed out elsewhere, richer in resources, stronger in industry, and firmer in political organization than any other nation; and these facts have been demonstrated as much by the recent war as by anything that ever happened. But the solidity of the English- speaking countries is not the only factor in their relations with the world, unless they can shut out and ignore the rest of that world and that is precisely what it is proposed not to do. The economic consequences of such a cycle of events have been just such as one might expect from an attentive consideration of historical parallels. But in this case the tendencies that have been visible on former occasions have operated with multiplied intensity. Prices of staples have been forced to heights only the extreme peaks of which have been passed. It is hard to escape the conclusion that the main factor in these high prices is the tremendous national borrowings. The world has financed itself with promises. There has been a steady decline in the purchasing power of these promises. To return to the general figures mentioned, there are 600,000,000 white people divided among various nations. These nations owe about $200,000,000,000. At .a conservative average, each individual owes about $300 and each head of a family $1,500. The theory is that these sums must be paid, principal and interest, not out of product but out of profit out of savings. It is only, of course, when these debts are owed by one nation to another that these sums mean an actual transfer of goods. The debts of a nation to its own citizens can be paid only through taxes from those citizens, so that, although the process may affect individuals variously, in a national sense it is merely a transfer from one pocket to another. The overwhelming preponderance of public debts must be of this nature. But is it not true that the necessity of giving these pocket-to-pocket transfers the semblance of real money is the potent cause of marking up prices? How can it be avoided? GOLD STATISTICS, WARS AND PRICES 445 The actual wealth is not money but goods. A nation can produce only a given amount. To repay itself vast sums of money through taxes for interest and principal can be accomplished only through adding to the value of the goods the amount of the taxes. As this addition to value is not expressed in goods, but in money, it follows that the sum total of goods must be expressed in a larger amount of money, i.e., in inflated or imaginary value, a decreased purchasing power of the dollar, or higher prices all these expressions meaning the same thing. Hennen Jennings has pointed out that the only effective check upon the progressive depreciation of the unit of value through these causes is free payment in gold. An ounce of gold is divided into something over twenty dollars. It costs as much effort and as much goods to produce the gold ounce or the gold dollar as it ever did. Therefore, so long as the dollar actually represents a given amount of gold it will always represent a given amount of effort. If a given amount of effort made highly efficient by improved organization and appliances can be made to produce a greater amount of goods, it is likely, also, to produce in a general way a proportionately greater amount of gold. The only in- fluences that would permanently alter this relationship would be funda- mental causes, such as the discovery or exhaustion of great sources of gold by which the metal might become relatively easier or more difficult to obtain. When it is obtained only at greater effort than is necessary in the acquisition of other commodities, or through consumption in process of its production of greater quantities of other commodities, then, if secured at all, it must be acquired through the use of greater quantities of those commodities, and it will be manifestly equal in value to a greater quantity of them will buy more of them. Prices will then be low. The contrary process is equally imaginable and to specify it would only be repetition. Thus gold, if freely used, is probably as dependable and fair a medium of exchange as could be devised. It may be remarked further that its equilibrium is maintained in the long run through natural causes which, of course, do not operate instantly, but which do tend to confine the os- cillations of value between comparatively narrow limits. If gold is produced in quantity greater than the demand for it, people will not pay so much for it in commodities. This is equivalent to a rise in cost which will force some producers out of business. On the other hand, if the stock of gold runs short, prices will be low, and the inducement to mine more of it will return. It is pertinent to remark that the influence of prices upon gold pro- duction is bound to be felt in the long run, regardless of the cause of the change of prices. It makes no difference in the ultimate effect on the gold industry whether high prices are brought about by the existence of an abnormally large stock of gold, or by the shortage of commodities 446 THE COST OF MINING brought about by decreased production of them for any reason wars, disasters, disorder, or famine; the tendency will always be to curtail the production. Such influences will bring about considerable swings in the popularity of the industry. The reasons which operate to make gold mining unprofitable will discourage or diminish the search for gold. Plants will go out of business, and a considerable period will elapse before the counter-swing will have much effect. The gist of these considerations is that in the cycles of high and low prices it is possible to discern the operation of common economic laws An outburst of national borrowing is in itself either a diversion of labor from its usual channels of production or an evidence of distress brought about by the shortage of production from some other cause. It will either produce high prices or be produced by them. On the other hand, the widespread liquidation of borrowings can be accomplished only during the periods of tranquility when labor is employed in full measure for the production of private wants, when there is freedom from calamity. A war, therefore, unless it is local and insignificant, is sure to raise prices. The more general and violent the war, the wider its effect in raising prices. Moreover, the effect of war is not confined to the period of organized military effort, but will persist as long as the exhaustion of resources, the impeding of traffic, and political and social disorders prevent the resumption of peaceful industry in an efficient manner. The inducement to produce gold will naturally follow upon these influences. Its production will be curtailed during the whole of the period of high prices and 4 high costs, and will not be resumed with full impetus until it has been encouraged for some years by low prices, which means a glut of the chief staples. It certainly is to be expected, and feared, that the present situation of the world indicates a long-continued periof of high prices for reasons which mav easilv be summarized in the order of their importance : 1. Every new- or revolutionary government is necessarily unstable. Every nation between the Rhine and Vladivostok and from the Arctic Ocean to the Mediterranean and the Himalayas is the seat of potential, even prospective, revolution. The population of this tract is as follows : Russian Empire 170,000,000 German Empire (including Poland) 65,000,000 Austrian Empire 53,000,000 Balkan States and Turkey 40,000,000 Total 328,000,000 Every nation in this group is confronted with a long list of burdensome tasks which must be accomplished despite the probability, according to historical precedent, of having its projects deranged by internal disorder. It must establish, or re-establish, public and private credit. It must GOLD STATISTICS, WARS AND PRICES 447 establish new, or re-establish old, lines of trade and traffic. It must restore or replenish its stock of staples and raw materials, and it must make provision for the payment of foreign debts. How easy it is for national and racial jealousies, actual or latent disorders, to prevent all this, not only locally but throughout the whole area! 2. The white populations unaffected by revolution are as follows: British Empire 60,000,000 United States 100,000,000 France 40,000,000 Italy 35,000,000 Spain, Portugal, Netherlands, Scandinavia 45,000,000 South America Brazil, Argentina, Chile 20,000,000 Total 300,000,000 These countries are in control of the resources of the greater part of the world, but by a very unequal division. Of the chief resources, the Anglo-Saxons control the preponderance. On the whole, however, there is nothing to prevent this group from resuming, or even increasing, its former prosperity. By returning to peaceful industry, the major portion may soon replenish its warehouses. The chief difficulties are the curtailment of national expenditure and the liquidation of foreign debts. To whatever extent these operations are dependent upon the prompt payment of obligations and a resumption of good feeling by the great disturbed populations of central and eastern Europe, northern Asia (and it may be added, perhaps, of China and Japan), their success can hardly be regarded as present as other than doubtful. Even if it is reasonable to believe that the recent cycle of political, social and economic disturbance has passed its acute stage, it still remains certain that these distractions have operated upon a scale and with an intensity scarcely ever known before; and the time required for recovery should logically be at least as long as at any former period. On this reasoning one might expect that the present cycle of high prices will not have fully subsided until about 1940, at the best. CHAPTER XXVI OCCURRENCE AND PRODUCTION OF GOLD VALUE OF GOLD AND TRANSPORTATION ECONOMIC PHASES OF GOLD MINING PLACERS AMALGAMATION CYANIDE AND OTHER RECENT PROCESSES ECONOMIC DISTINCTIONS OF GOLD ORES QUARTZ- PYRITE LODES REASONS FOR VARIATIONS IN COSTS TfiLLURIDE ORES AND DISTRICTS TABLES OF GOLD PRODUCTION PRODUCTION OF VARIOUS DISTRICTS COST OF PRODUCING GOLD PER OUNCE PROFITS OF GOLD MINING COMPARED WITH THOSE OF OTHER METAL MINES. Within recent years gold has become more than ever before the precious metal par excellence. Its production has not only increased enormously in amount, but also greatly by comparison with its historic rival, silver. A general description of its qualities has no place here, but it will be interesting to review the more salient features of its occur- rence bearing on its production and cost. A ton of pure gold is worth $602,836. This high value renders the metal, once secured, utterly independent of transportation costs, for it is evident that it can be carried from the remotest corner of the globe for a minute fraction of its worth. Another equally important fact is that gold occurs to an exceedingly large extent in such form that its extraction from ores is one of the simplest of metallurgical problems, so that it can nearly always be ob- tained by plants erected on the spot. The cost of such plants per ton treated is moderate. The avidity with which gold has been sought has resulted in the exhaustion of the mines in the older civilized countries so that at present the output comes from new or barbarous countries where, for the most part, the climate is bad, labor costly, and transporta- tion crudely developed. In the case of gold mines, therefore, the ques- tion of transportation has little or nothing to do with moving products from the mines, but much to do with moving plants and supplies to the mines. The history of gold mining exhibits three economic phases with refer- ence to mechanical developments : These may be divided chronologically into, (1) The placer period. (2) The amalgamation period. (3) The cyanide and smelting period. 1. From the earliest times down to the present gold has been very largely obtained in a metallic state from the debris of erosion, i.e., from stream gravels. Owing to its great weight gold resists transportation by water and lags behind while the lighter minerals are carried off to the sea. In this way each stream in a gold-producing country is a natural 448 OCCURRENCE AND PRODUCTION OF GOLD 449 concentrating mill and often retains the metal, or a portion of it, that was once scattered through enormous masses of rock. How great this concentration may be is perhaps not fully realized even by mining men. A stream bed 100 miles long and a quarter of a mile wide and a few feet deep may have gathered gold derived from thousands of cubic miles of eroded rock. The gravel that now contains the gold may equal only a millionth part of the mass that once contained it. Undoubtedly in every such case a very large portion of the original gold has also been removed, but if even one per cent, has remained, the gravel may be ten thousand times as rich in gold as the rock from which the gravel was derived. It is evident, therefore, that streams may contain highly profitable deposits in regions where the gold was originally scattered through a multitude of insignificant veins, all worthless in themselves. The presence of placer gold in payable amounts does not indicate that payable gold will be found in situ. Many cases might be cited of im- portant placer mines in regions where there has never been a good mine of any other kind. To be sure quartz mines have been found in Alaska, California, Australasia, and many other regions along with placer deposits. On the other hand, in early times placer gold was obtained in Spain, France, the British Isles, Italy, in fact all over Europe where scarcely a payable quartz mine has been known. It is almost certain that the older civilized countries, Northern Africa, Western Asia, China, India, and Japan, also produced a full quota of this metal from sources now long forgotten. It is highly probable that by far the greater part of the gold possessed by mankind, even now, came from placer deposits. Nearly all gold was obtained in this way until well into the nineteenth century by the process of mere washing, unaided by amalgamation or any metallurgical process. 2. The properties of quicksilver have been known from very early times, and undoubtedly since about the time of Columbus this metal has been used to a large extent to collect gold out of its gangue in both placer and quartz-mining operations. But it was not until the almost simultaneous discovery of gold in California and Australia at the middle of the nineteenth century that amalgamation came to be the essential process in the recovery of gold. Before the working of extensive quartz mines in those countries amalgamation was used as a useful adjunct in cleaning up the concentrates from gravel washing, but for that purpose it was not vital. But from 1850 to 1890 this process was the only one successfully used by English-speaking people, who have since 1850 produced most of the world's gold, to extract the metal from rocks in place. The method was found to apply only to ores in which the gold lay in rather loose metallic particles in the rock. It is essential for amal- 29 450 THE COST OF MINING gamation that the gold when it adheres to the quicksilver will be free from adherence to other minerals. In course of time more and more gold ores were found where this was not the case. It was found that most gold veins produced amalgamating ores in the oxidized zones near the surface, but that only selected ones would yield their values in this way after the sulphide zone was reached. Where an extraction of 70 to 90 per cent, was easy in the oxidized zone, the extraction would drop to 60 or 50 per cent, in the sulphides. At the same time the actual assay value of the ore would show some diminution. These two causes were sufficient to render many a mine unpayable. Although some mines continue to be perfectly amenable to amalgamation to great depths, there were found so very many where this was not so that gold mining began to decline, especially during the eighties. This decline was due to the limitations of the amalgamation process. 3. The ingenuity of metallurgists discovered about 1890 remedies in leaching processes that would extract gold independently or could be used as supplements to amalgamation. These were based on the solubility of gold by chlorine gas and by various cyanides. In one form or another these chlorination and cyanide processes were found to apply to most gold ores. This happened at a time when the world was hungry for gold. Great districts were found like the Witwatersrand where by amalgamation the. ores would pay only in selected cases, but with the additional values saved by the new process would pay handsomely. There was a great revival of the gold industry, which has grown rapidly ever since. It would be hardly proper to infer that the whole increase of gold production is due to the cyanide and other leaching processes. The old sources of gold supply have not disappeared. Placer mining in Alaska has developed a respectable output. Placer mining in general has been aided by improvements in mechanical appliances, of which by far the most important is the dredge. An increasing amount of gold is also obtained by the smelters as a by-product of lead and copper ores. But it is entirely proper to state that since 1890 the improvements in gold-mining practice have been such as to warrant calling this period a new era in the industry. Economic Distribution of Gold Ores. On economic grounds we cannot follow with any satisfaction any division according to the processes used. Various processes are often used simultaneously, one supplement- ing the other. I plan to discuss gold mines under the two general group- ings of placer deposits and vein deposits. Of placer deposits nothing more need be said here. Gold Veins or Gold Deposits in Situ. By far the most important source of gold known to-day may be called, for want of a better name, the quartz-pyrite lode. In these deposits quartz is always the main OCCURRENCE AND PRODUCTION 'OF GOLD 451 constituent. With the quartz there is always a certain proportion of iron pyrite, usually less than 5 per cent, of the mass, but varying from }/ per cent, to 50 per cent. Sulphides of lead, copper, and zinc may also be present, but usually in very subsidiary quantities. The lodes occur in every conceivable attitude and manner. They are of every geological age from the oldest to the youngest. The ores may fill open crevices or fissures caused by shrinkng or faulting in the rocks, they may be re- placements of other rocks, they may simply fill up the interstices of pebbly beds or conglomerate. In all cases it is highly probable that quartz-pyrite ores were deposited by hot waters of deep-seated origin. In many cases there is reason to believe they came from "magmatic" waters, waters once included in molten rock masses, that escaped when the pressure was released. In almost all cases there is some reason to believe that these deposits have a connection, not always explained, with igneous rocks. These ores occur in large volume. In many cases millions of tons are in sight. The Treadwell group in Alaska has mined 14,000,000 tons and reports 7,000,000 in sight, averaging $2.40 per ton. The Witwatersrand mines have treated 114,000,000 tons and expect to mine some 500,000,000 tons more, averaging $7 or $8 a ton. Four mines in the Mysore group in India have mined 7,300,000 tons, averaging $18.40 per ton, and have in sight 1,400,000 tons averaging $20. Three mines at El Oro, Mexico, have produced 2,450,000 tons averaging $16 per ton, and have in sight some 900,000 tons averaging $11. The Witwatersrand mines are now treating 20,000,000 tons a year. These figures show that this class of gold mines constitute a great industry carried on under con- ditions of stability not inferior to those of other kinds of mines. It will be shown later that they are as profitable as any. In these ores the gold is said to be almost entirely in a metallic state, scattered through the gangue in particles of varying size. Sometimes, for instance, at the North Star mine, in California, 90 per cent, of the gold can be recovered by amalgamation. In other cases, as at El Oro, Mexico, and Goldfield, Nevada, only 10 per cent, or even less will amal- gamate. The difference is due not to the state of the metal itself but to its degree of subdivision. In some cases the gold is in such minute par- ticles that, even with the finest grinding, it still remains partly imbedded in particles of gangue. The gold is much more apt to be imbedded in the sulphides than in the quartz, hence it often happens that the altera- tion of the sulphides by artificial oxidation or roasting sets free a good deal of it. But in this class of gold ores roasting is practically never necessary for a good extraction by leaching processes. It is here that the cyanide process has its great field. Cost of Mining and Milling Quartz-Pyrite Ores. In both mining and milling the cost is most affected by two dominant factors: 452 THE COST OF MINING (a) The richness of the ore. (6) The size of the deposits. The richness of the ore affects both departments of the operation through its effect on the elaboration of processes. In the case of low- grade ores the process must be cheap, therefore cheapness is secured if necessary by sacrificing part of the ore in both mining and milling. In the case of the Treadwell an ore is mined that assays $2.70 per ton. It is mined, let us say, for $1.15 and milled for $0.35 with an extraction of 75 per cent, by mining and 90 per cent, by milling, making a total sav- ing of 67J^ per cent. The profit per ton actually milled is $0.93. Now to save more of the ore, to save 90 per cent., would involve the institu- tion of another method of mining which would certainly be more expen- sive. Such a method would almost certainly cost over $2 a ton and would therefore wipe out the profits altogether. In the case of milling the only improvement that should be made would be by cyaniding the tailings which only run 27 cents a ton. Under the most favorable conditions this would not pay. But if we consider the Mysore mines in the same light we get utterly different results. These ores assay $20 a ton. To sacrifice 25 per cent, in mining such ores would be to leave $5 per ton in the ground. To spend $3 or $4 a ton more to secure this would be entirely proper, al- though such a figure is twice the whole cost of the Treadwell process. In milling a loss of 10 per cent, means $2 a ton, and likewise, to spend say $1 per ton more to save half the loss would be good business. In a word, the cost of $10 a ton for the Mysore ores may be just as sound busi- ness as the cost of $1.50 at the Treadwell; and this for no other reason than the greater value of the ore. Size of Orebodies. With orebodies of the same <*ize we may vary the cost within wide limits at will, as just shown; but human will has no effect on the size of orebodies: we must take them as they are. The size and attitude of the masses to be attacked hedge the cost of mining with limitations even more arbitrary than those imposed by the grade. A uniform bed 6 ft. thick of ore of this character can be handled at a total cost, on average conditions throughout the world, of $3 a ton. A bed 4 ft. thick will cost somewhat more, say $3.50 a ton. Below 4 ft. the cost will rise almost in inverse ratio to the thickness, so that a seam 1 ft. thick will cost $14 a ton, and so on. Now it often happens that most important gold ores do occur in such narrow streaks. In the Witwaters- rand the values are usually confined to streaks from 4 inches to 16 inches thick, worth from $20 to $100 a ton. Under the cost conditions ruling in that district a 4-inch seam would cost approximately $60 a ton. This would leave a profit, supposing the ore to assay $100 a ton and that the extraction is 95 per cent., of $35 a ton, equal to 35 per cent, of the assay value. But mining is not conducted that way. Such a OCCURRENCE AND PRODUCTION OF GOLD 453 seam is mined in a stope at least 4 ft. wide; the ore seam is mixed with an enormous amount of waste, ten or eleven times as much waste as ore. The ore going to the mill will run only $8 a ton and the cost is $5; but the proportion of profit is about the same. Wherever it is possible to mine such seams by themselves, it should be done; but on account of the friable nature of the streaks, in many cases there is so much danger of loss in breaking the ore that it is considered safer to mill most of the stuff broken regardless of its value. But these considerations do not affect the real cost of mining. In the case cited above the real orebody is only 4 in. thick and the cost is $60 a ton. That the value is diluted and the cost lower is only a matter of convenience. That such orebodies would be worthless if the ore streaks yielded even such apparently attractive assays as $40, $20, to say nothing of $5, a ton is too obvious to argue about. Strange as it may seem, great quantities of money are lost by attempting just such im- possibilities. Other Causes of Variation Quartz-pyrite ores are metallurgically simple, and outside of the two great factors mentioned above there is nothing to make very great differences in cost. So far as underground operations go the variations are so nearly wholly due to those factors that others may be neglected. In milling, the metallurgical problem, on average ores of say $10 a ton, will cause variations between a mini- mum of about 75 cents and a maximum of about $2. The process is in principle uniform throughout the world. It con- sists of one or all of the following steps: 1. Amalgamation after crushing in stamp batteries. 2. Concentration of refractory sulphides. 3. Leaching of tailings (or, in some cases, the original ore) by cya- nide or other solutions. Where concentration is undertaken, it is only in order to apply some special process to a small fraction of the ore. Such a process may be instituted at the mine, or the concentrates may be shipped to custom plants; but in any case the cost as applied to the crude ore is never very high, because for each ton of concentrates there will be from 10 to 100 tons of crude. So many examples of the cost of these processes in actual practice will be found in the following chapters, that I shall not discuss them further here. Other Gold Ores. In the type discussed above the gold is in the ore free, or native, i.e., it is mixed mechanically, not chemically, with the gangue. In Cripple Creek, Colorado; Kalgoorli, West Australia, and in a number of other less important districts, the gold occurs to a large extent as a true ore, namely as tellurides. Here the gold is involved in a chemical combination with tellurium and to a less extent with other 454 THE COST OF MINING elements. Here amalgamation, except to a limited extent in the oxid- ized zone, is utterly ine^ective. Dependence must be had on smelting or on leaching processes of a type inherently more expensive than those applied to quartz-pyrite ores. The reason for this is that in the raw state, the gold, or a large part of it, will not desert its companion miner- als to unite with those offered by the leaching solutions. To get around this difficulty it is necessary to break up the tellurides by roasting before attempting to leach. To do this costs $1.50 a ton. This cost is not wholly for the roasting itself, but is due partly to the fact that ordinary wet crushing by stamps is not desirable when roasting is to be done. It is necessary to resort to the much more costly process of dry crushing. PRODUCTION OF GOLD IN THE UNITED STATES, BY STATES (a) States 1915 1916 1917 1918 Fine Ounces Value (b) Fine Ounces Value (b) , Fine Ounces Value (b) Fine Ounces Value (b) Alabama Alaska 247 808,346 220,392 1,090,731 1,089,928 1,684 56,6,28 $5,100 16,710,000 4,555,900 22,547,400 22,530,800 34,800 1,170,600 358 780,037 197,989 1,063,302 928,075 987 51,195 $7,400 16,124,800 4,092,800 21,980,400 19,185,000 20,400 1,058,300 106 709,729 250,613 1,012,461 772,766 314 36,511 15 177,690 335,361 52,505 524 81,624 82 356,662 267 5 170,353 5 63 23,617 179 $2,200 14,671,400 5,180,600 20,920,400 15,974,500 6,500 754,800 300 3,673,200 6,932,500 1,085,400 10,800 1,687,300 1,700 7,372,900 5,500 100 3,522,100 100 1,300 488,200 3,700 36 440,622 278,647 842,389 621,791 169 30,764 10 153,375 322,276 30,871 38 60,951 328,305 263 5 152,018 47 20 16,556 18 $700 9,108,500 5,760,200 17,207,000 12,853,500 3,500 636,000 200 3,170,600 6,662,000 638,200 800 1,260,000 '6,786,766 5,400 100 3,142,500 800 400 342,300 400 Arizona California Colorado. Georgia Idaho Missouri Montana Nevada New Mexico North Carolina .... Oregon South Carolina. . . . South Dakota Tennessee Texas Utah Vermont Virginia Washington Wyoming Total Porto Rico Philippine Islands Total 240,825 574,874 70,632 8,258 90,321 174 358,145 329 87 189,045 "'24' . 22,330 672 4,978,300 11,883,700 1,460,100 170,700 1,867,100 3,600 7,403,500 6,800 1,800 3,907,900 ' '500 461,600 13,900 209,386 438,505 65,306 1,113 91,985 15 361,444 276 24 186,670 14 24 28,087 977 4,328,400 9,064,700 1,350,000 23,000 1,901,500 300 7,471,700 5,700 500 3,850,000 300 500 580,600 20,200 4,825,311 34 63,898 899,748,000 700 1,320,900 4,405,778 29 73,249 $91,075,500 600 1,514,200 3,981,482 5 69,953 $82,304,500 100 1,446,100 3,269,171 44,202 $67,579,800 913,700 4,887,604 $101,035,700 4,479,056 $92,590,300 4,051,440 $83,750,700 3,313,373 $68,493,500 (a) The statistics in this table are reported by the Director of the Mint, those for 1918 being the preliminary figures. (6) At $20.67 per oz. After roasting the processes usually proceed, so far as cost goes, about as in the case of quartz-pyrite ores of pretty high grade; for these tellu- rides ores are, on account of the high working cost, invariably of fairly high grade. They are often concentrated a good deal by hand sorting, so that when I speak of high grade I mean when they get to the mill or smelter. Referring to the rock actually broken in the stopes, the mini- mum grade of this type of ore that can be profitably worked is, under present conditions, about $8 a ton. OCCURRENCE AND PRODUCTION OF GOLD 455 Cost of Producing Gold per Ounce. It is to be remembered that fine gold is worth $20.67 per ounce. In order to gain some idea of the pro- portion of profit in gold mining as compared with other metals we may conveniently take the cost per ounce as an index. It is a current state- ment that gold costs more than it is worth. If one were to charge up against it the fruitless explorations and unprofitable enterprises of which it is the object it is impossible to conjecture how near true this statement might prove to be. Very likely those responsible for the statement and who believe it have never gone beyond the point of making a guess. In my judgment the statement is not any more true with reference to gold than with any other metal. Just as the selling price of copper is determined in the main by the costs obtained by the successful enter- prises which are responsible for the major portion of the output, so the value of gold is established by the correspondingly successful properties and districts which yield the greater part of it. In the Transvaal the proportion of total yield of gold that has been paid in dividends is almost exactly 25 per cent. The cost of gold, there- fore, in this district which is yielding one-third of the world's output has been to date three-quarters of $20.67, or about $15.50 an ounce. This proportion is holding good at present, the record for the year 1918 showing dividends equal to 24 per cent, of the gross value produced, indicating a cost per ounce of about $15.70. We might compare the record of the Robinson, at present the world's most profitable gold mine, against the Calumet & Hecla, the world's most profitable copper mine. The comparison is approximately as follows: The Calumet & Hecla: gross value of yield about $312,000,000; dividends $108,500,000, which is 35 per cent. The Robinson mine: gross value of yield $60,000,000; dividends $32,000,000, equal to 54 per cent. In Cripple Creek, Colorado, I estimate the cost of gold to have averaged about $17 per oz. or 82 per cent, of its value, while the prin- cipal mine the Portland has secured gold at a cost of $14.50 per oz. or 70 per cent, of its value. In Kalgoorlie, West Australia, I have no figures for the district at large, but seven or eight of the leading mines have paid dividends equal to approximately 40 per cent, of the yield in gold, so that the cost per ounce is only $12.40. These mines have furnished so large a proportion of the total yield of that district that it seems safe to conclude that the cost of the entire yield has not exceeded $15 per oz. In the Kolar district of India, the four leading mines responsible for nearly all the output paid dividends equal to 44 per cent, of the gross value. Hence we conclude that the cost of gold has not exceeded $12 for those mines, and probably not over $14 for the entire district. 456 THE COST OF MINING GOLD AND SILVER PRODUCTION OF THE WORLD, 1493-1850 According to Dr. Adolph Soetbeer Period Estimated pro- duction in kilograms Ratio of silver to gold, weight Ratio of gold to silver, value Period Estimated pro- duction in kilograms Ratio of silver to gold, weight Ratio of gold to silver, value Gold Silver Gold Silver 1493-1520 1521-1544 162,400 171,840 1,316,000 2,164,800 8.1 12.6 10.75 11.25 1701-1720 1721-1740 256,400 381,600 7,112,000 8,624,000 27.7 22.6 15.21 15.08 1545-1560 136,160 4,985,600 36.6 11.30 1740-1760 492,200 10,662,900 21.7 14.75 1561-1580 136,800 5,990,000 43.8 11.50 1761-1780 414,100 13,054,800 31.5 14 . 73 1581-1600 147,600 8,378,000 56.8 11.80 1781-1800 355,800 17,581,200 49.4 15.09 1601-1620 170,400 8,458,000 49.6 12.25 1801-1810 177,780 8,941,500 50.3 15.61 1621-1640 166,000 7,872,000 47.4 14.00 1811-1820 114,450 5,407,700 47.2 15.51 1641-1660 1661-1680 175,400 185,200 7,326,000 6,740,000 41.8 36.4 14.50 15.00 1821-1830 1831-1840 142,160 202,890 4,605,600 5,964,500 32.4 29.4 15.80 15.75 1681-1700 215,300 6,838,000 31.8 14.97 1841-1850 547,590 7,804,150 14.3 15.83 GOLD PRODUCTION OF THE WORLD. 1851-1918 Year Value Year Value Year Value Year Value 1851 $67,600,000 1871 $107,000,000 1891.... $130,650,000 1911 $464,346,495 1852 132,800,000 1872 99,600,000 1892.... 146,292,600 1912.... 474,322,664 1853 155,500,000 1873 96,200,000 1893.... 158,437,551 1913.... 462,669,558 1854 127,500,000 1874 90,800,000 1894.... 182,509,283 1914 439,078,260 1855 135,100,000 1875 97,500,000 1895.... 198,995,741 1915 470,466,200 1856 147,600,000 1876 103,700,000 1896.... 211,242,081 1916 454,176,500 1857 133,300,000 1877 114,000,000 1897.... 237,833,984 1917 423,590,200 1858 124,700,000 1878 119,000,000 1898.... 287,327,833 1918 373,000,000 1859 124,900,000 1879 109,000,000 1899 311,505,947 1860 119,300,000 1880 106,600,000 1900 258,829,703 1861 113,800,000 1881 103,102,000 1901. . . 260,877,429 1862 107,800,000 1882 102,000,000 1902 298,812,493 1863 107,000,000 1883 95,400,000 1903 329,475,401 1864 113,000,000 1884 101,700,000 1904 349,088,293 1865 120,200,000 1885 108,400,000 | 1905.... 378,411,754 1866 121,000,000 1886 106,000,000 1 1906. . . 405,551,022 1867 104,000,000 1887 105,775,000 1907.... 416,101,396 1868 109,700,000 1888 110,197,000 1908 443,355,856 1869 106,200,000 1889 123,489,000 1909 458,424,058 1870 100,900,000 1890 118,848,700 1910 453,766,523 GOLD PRODUCTION OF THE WORLD, BY COUNTRIES 1 1916 1917 1918 Transvaal $192,182,900 $186,503,400 $173,479,000 Rhodesia 10,232,200 17,245,000 12,862,000 West Africa 7,860,100 7,445,600 6,467,000 Kongo, Madagascar, etc 3,673,700 3,420,000 3,200,000 Total Africa $222,948,900 $214,614,000 $196,008,900 United States $92,590,300 Mexico 7,690,700 Canada 19,235,000 Central America 3,517,600 $83,750,700 9,000,000 15,200,000 3,122,000 $68,493,500 10,000,000 14,687,000 3,000,000 Total North America $123,033,600 $111,072,700 $96,180,500 figures for 1916 and 1917 from Mint Report, 1918 estimated. OCCURRENCE AND PRODUCTION OF GOLD 457 Russia, including Siberia $22,500,000 France 1,000,000 Other Europe 1,019,900 $18,000,000 700,000 1,017,000 $10,000,000 500,000 500,000 Total Europe $24,519,900 $19,717,000 $11,000,000 British India $11,206,500 British and Dutch E. Indies 3,000,000 Japan and Chosen 9,308,000 China and others 4,495,400 $10,756,800 2,818,000 9,006,200 5,035,400 $10,029,000 2,500,000 8,500,000 4,500,000 Total Asia, not including Siberia $28,009,900 $27,606,400 $25,529,000 South America Australasia. . $15,188,400 40,475,800 $14,634,600 35,945,500 $14,000,000 29,800,000 Total for world $454,176,500 $423,590,200 $372,518,400 At El Oro, Mexico, the record of the three leading mines shows profits of 40 per cent., indicating cost of gold of only $12 per oz. It is not at all probable that the fruitless prospecting in that district would bring the total cost up to more than $14. While it is not probable that such favorable showings for gold- mining districts can be extended to cover the whole list of districts, it is evident that the successful gold mines are fully as profitable as suc- cessful copper mines. The value of gold produced in the world is almost twice the value of the copper production, so that I feel warranted in saying that the current belief that copper mining is the most profitable form of mining enterprise, and that gold mining is one of the least profit- able, is far from justified. It is to be remarked, however, that in the United States copper is a more important product than gold and it is in the hands of a smaller number of much larger concerns, which have paid larger dividends than any individual gold mine. In the world at large the reverse is true. This was in 1908. In 1918, owing partly to the change of prices, partly to the change in relative production, the value of copper produced was nearly twice that of the gold. If one were looking for an example of the comparative instability of precious-metal mines, and the dependence of the world for its supplies upon a constant search for deposits in all parts of the world, one would need go no further than to note the changes in the list of representative gold mines, selected particularly because they seemed the most substan- tial of their type. In the short interval of ten years the Alaska-Treatiwell group has practically gone out of existence. So has the Camp Bird, El Oro and Esperanza, the Robinson, the principal Kalgurli mines, and the Goldfield Consolidated. Of those still running, in some cases with a marked decrease of prosperity, one may name only the Homestake, the 458 THE COST OF MINING Liberty Bell, the Kolar mines, and the Portland. Thus the operations that have practically vanished are about ten out of seventeen, about 60 per cent. Decline in Producing Districts and Little Progress in Metallurgical Methods. This is not all. In the interval two great projects in Alaska for mining the low-grade gold ores of the Juneau district have been ini- tiated, supported enthusiastically, and have proved themselves dismal failures. Districts have not been so roughly treated as individual mines, but even districts have so nearly lost their importance that it is scarcely an exaggeration to say they have vanished. To specify such vanishing districts one may name Douglas Island, Juneau, Ouray, Goldfield, El Oro and Kalgurli. In Cripple Creek and Kolar the output is steadily on the decline. Only at the Homestake and the Transvaal has there been an increase. The latter district produces half the gold of the world, but substantially from a new group of operations, which, however, merely represent a migration, enforced, of course, to lower levels and outlying tracts. So far as I can learn, not a single radical or even important change in the processes of gold mining has taken root during the last ten years. The appliances are the same to all intents and purposes, although there has been a considerable substitution of ball mills for stamps, some improvements in drilling machines, and some changes in cyanide practice. But the ground work is the same, and results are about the same. The grand feature of the history of the business has been the progress of an economic cycle unfavorable to gold mining. CHAPTER XXVII QUARTZ-PYRITE GOLD MINES TREADWELL GROUP IN ALASKA EXHIBIT OF CONDITIONS AND COSTS HOMESTAKE SAN JUAN REGION IN COLORADO CAMP BIRD LIBERTY BELL EL ORO DISTRICT IN MEXICO ESPERANZA AND EL ORO MINES KOLAR DISTRICT IN MYSORE, INDIA DETAILS OF COST FACTORS RECORDS OF THE MINES A QUESTION OF BOOKKEEPING WlTWATERSRAND AVERAGE RESULTS THE ROBINSON MINE GENERALIZATIONS ON THE PRICE OF LABOR AND COSTS. Included in the class of quartz-pyrite mines are all of the properties of the Witwatersrand in the Transvaal, in fact all the gold mines of South Africa, nearly all the mines in eastern Australia, those of the Kolar dis- trict in India, of El Oro in Mexico, of California, Nevada, and Douglas Island, Alaska. In general, these ores are a light-colored or whitish quartz containing from 0.25 to 10 per cent, of iron pyrite and other sul- phides in varying but usually subsidiary amounts. The quartz and pyrite may fill open fissures, or they may be replacements of country rock, or the cementing material of beds of conglomerate. Deposits of this kind have proved to be extensive, often persistent to great depths, and are worked on a grand scale. Treadwell Group. The group of mines on Douglas Island, Alaska, known as the Treadwell, Mexican, and Ready Bullion, furnish ore for 780 stamps at the rate of 1,200,000 tons a year. This work with good reason stands at the head of the list of quartz-pyrite operations, furnish- ing an example of the simplest metallurgical problem, the lowest costs, and, I believe, the best management to be found in this class of mining. The external and internal factors which affect the results obtained are of great interest to the student of mine economics. Robert Kinzie, later superintendent of all the mines, published in Trans., A. I. M. E., Vol. XXXIV, a detailed account of these properties up to 1902; in addition to this we have the full and excellent . reports issued by the companies. On the whole the information available is definite and satisfactory. Along a great porphyry dike which cuts the black slate of Douglas Island, there are three or four large lenses or ore shoots where the dike has been profoundly altered and silicified by the action of magmatic waters. The largest and most northerly of these is the Treadwell ore- body, which was 400 ft. wide and 1000 ft. long at the surface. The Mexican and Ready Bullion orebodies are approximately 20 ft. thick 459 460 THE COST OF MINING and from 500 to 1000 ft. long in horizontal section. These orebodies are situated within a stone's throw of a splendid harbor on a sheltered waterway, which extends for 1000 miles from Puget Sound to Skagway. The most convenient and cheapest transportation facilities are thus provided for coal, timber, and other supplies. Concentrates, in the shape of auriferous iron pyrite, are shipped 800 miles to the Tacoma smelter at a cost of $1.72 per ton. The climate, though rainy, is mild and pleasant, corresponding to that of Scotland or southern Norway. While wages are not low, according to some standards (averaging about 32 cents per hour in actual cost), I believe that labor, owing to its effi- ciency, is really cheap. In addition to these advantages an abundance of water power is available. Little pumping is necessary in the mines. These external factors are so favorable as to be quite exceptional, per- haps unrivaled. Internal Factors. The internal factors are also exceptional. The orebodies are large and firm; standing nearly vertical between pretty solid walls, they came up under the glacial drift in large masses that could be attacked in open pits. The metallurgical problem is the simplest. Mining these orebodies, therefore, presented to the management the following factors: Several million tons of ore favorably situated for cheap handling, but containing less than $3 per ton. To make the maximum profit, or to make profits at all, required cheap methods both of mining and milling. These conditions as to mining were met at the beginning by the " milling" method in an open pit; and as to treatment by the adoption of a large, simple, water-actuated stamp mill in which ore could be amal- gamated and concentrated in wholesale quantities and at minimum cost. The simple metallurgical treatment proved amply effective, for the ore is thus treated at a cost of 17 to 27 cents a ton with an apparent extrac- tion of 90 per cent. As the mining proceeded it became increasingly difficult and finally impossible to maintain the required output from open pits and it became again imperative to devise a method of mining, this time underground, that would be cheap enough. It was a broader problem than the first because it involved the question of how much ore could be sacrificed on the one hand and how cheap the mining could be done on the other. It was discovered that about 75 per cent, of the ore could be mined with- out timbers from large chambers kept full of broken ore, only enough being drawn off at the bottom to afford room for the miners at the top. In the widest deposit this process costs $1.00 per ton and in the narrower bodies $1.20 per ton. No change being required in milling methods on account of increasing depth the inauguration of the method of mining described seems to have QUARTZ-PYRITE GOLD MINES 461 3 fc 5 8 3" i < w 3 s 0000000000000000000055 2^PS2SSa^[uns ijBtjg . . . . <0 O 00 dO 1 CO 1-1 1C 1C * CO -l punojgjapuri s^id aoBjang 'OOSIDUBJ^ UBg II saijddng jad PUB uoijinq ssoaS IB^OJ^ ^,^(^H^H T H^H^O'-H'-IOOO 2oo2oo^^^noooo dddddddo'o'dddd ^I^^H^H^H^I^HO'-H'-lOOO .-HOOOOOOOOOOOO odddddddddddd do'ddddddddddd 000000000000 CON 462 COST OF MINING QUARTZ-PYRITE GOLD MINES 463 solved the problem of making these ore-bodies pay to an indefinite depth as long as they maintain anything like their present size and value. The milling of the Treadwell ores, its results, the collection and ship- ment of concentrates, are all shown up to 1902 in the accompanying tables given by Mr. Kinzie. It is well to note that in each of the mines the value recovered is about equally divided between free gold saved by amalgamation, and auriferous pyrite which constitutes 2 per cent, or less of the original ore. The shipment and treatment of these concen- trates costs about $6.75 a ton and when spread over the original ore milled costs from 10 to 14 cents a ton. The actual results and average costs up to the end of the reports for 1907 for the various mines are as follows: Treadwell Mexican Ready Bullion Tons milled 8 485 085 2 447 063 1 841 07Q Tons in sight 4 982 883 794 924 1 378 651 Feet development work, 14 years Tons developed per foot approximate . . 74,717 120 59,960 54 27,362 100 Total value recovered per ton $2 44 $2 55 $1 89 Profits, operating, per ton 1 16 77 25 Total operating cost per ton 1 28 1 78 1 64 Last depreciation figures 21 23 35 Total estimated cost 1.49 2 01 1 99 From the above it appears that the Treadwell and Mexican mines have been very profitable, /but that the Ready Bullion has not as yet earned enough to justify the investment, but the improvements in grade at the bottom is such as to be very promising for the future. It further appears that the combined mines have treated 12,773,227 tons of quartz worth $30,446,947 or $2.38 per ton for a total operating cost of $1.43 per ton, to which is to be added 24 cents a ton as a fair estimate (it seems very liberal) of the value of the plants employed ; the total to be estimated for cost being $1.67 per ton and the profit 71 cents or 30 per cent, of the gross value recovered. Below are given, more in detail, the cost of these remarkable mines, for the Treadwell in the year ending May 31, 1907, and for the Mexican and Ready Bullion for the calendar year 1907, the ore all coming from underground stopes except 12 per cent, of the Treadwell ore which came from an open pit. In each case the costs, while not the lowest on record, are quite near the average. I believe in the case of the Treadwell that the costs are overstated, certain sums being credited to the receipts which might logically be deducted from the costs, but I have made no attempt to change the figures given. 464 THE COST OF MINING Treadwell Mexican Ready Bullion Tons milled 702,953 214,263 213,370 Cost mining and development Milling $1.00 0.17 $1.19 0.27 $1.00 0.36 Snipping and smelting concentrates 0.12 0.12 0.11 General expense 0.04 0.09 0.07 Construction . . . ..... r 0.04 0.01 0.01 Total operating $1.37 $1.68 $1.55 Depreciation . . . 0.21 0.23 0.35 Grand total $1.58 $1.91 $1.90 Homestake. From the Treadwell group one naturally turns to the Homestake mine in the Black Hills, South Dakota, to make comparisons. This is the greatest gold mine in the world in point both of tonnage and of gross value produced. In eight years out of the last nine the output has been as follows: Per Ton Tons milled 9,383,114 Gold recovered $34,638,518 $3.69 Cost 28,587,300 3.04 Profit 6,051,218 0.65 It is to be observed that the costs are nearly twice as high as at the Treadwell group. Why the difference should be so great does not appear. One is tempted to suspect that the management may have had something to do with it, although nothing is more dangerous than to jump at such a conclusion. The external conditions are not so favorable as at Douglas Island. The wages are about the same, but there is not such a good supply of water and timber, and transportation is more costly. The cost of water alone is approximately 10 cents a ton -at the Homestake. The internal factors would appear to be about the same. A vast body of silicified slate has been followed from the surface to a depth of nearly 1600 ft. The thickness is several hundred feet. The metal- lurgical problem seems to be simple; 4.7 tons are crushed per stamp per day. Amalgamation is followed by cyaniding the tailings at the very moderate cost of 18 cents per ton stamped. The finer slimes receive a further treatment not described in the reports. There are 1000 stamps employed on Homestake ore in six different mills. The whole milling process in 1907 cost as follows per ton: Milling and amalgamating 44c. Cyaniding 18c. Slime treatment and construction. . 24c. Total. 86c. QUARTZ-PYRITE GOLD MINES 465 The recent cost for mining and development is $2 a ton. For mining at the rate of 4000 tons a day from a single orebody this seems high. Possibly the methods are too good; a more wasteful one might be more profitable. Assuming that with the methods that have been used the profit now averages 75 cents a ton, it is demonstrable that the adoption of a method that would reduce the mining cost from $2 to $1.25 per ton at a sacrifice of 25 per cent, of the ore now saved would increase the value of the mine 60 per cent. If on the present basis 20,000,000 tons would be mined in fifteen years at a profit of $15,000,000, the present value, figuring interest on deferred payments at 4 per cent., would be $11,111,000, On the other basis, 15,000,000 tons mined in eleven years at a profit of $22,500,000 would give a present value of $17,700,000. MINES OF THE SAN JUAN REGION, COLORADO The external conditions at the Camp Bird property are unfavorable. The altitude of the mine is 11,200 ft. in steep and snowy mountains. In 1906 a snow slide destroyed the mill and delayed operations six months. Wages are about average for the Rocky Mountain region, but it is not to be supposed that men are capable of sustaining their best exertions at such an altitude. Supplies have to be hauled several miles from the railroad station, Ouray, over a steep mountain road often blocked with snow. The internal factors are as follows : The ore occurs in extensive shoots CAMP BIRD MINE FOR THE YEAR ENDING APRIL 30,1908 Blocking out ore $0 . 64 Ore breaking . 60 Timbering 0. 69 Loading and tramming . 78 Hoisting 0.18 Lighting and pumping 0.15 Engineering, sampling, and assaying 0.10 Foremen and bosses 0.17 Power 0.32 Maintenance . 44 Total mining, 78,966 tons 4 . 08 Transportation to mill 0.28 Stamp milling 80,087 tons 1 . 19 Cyaniding 0.61 Shipping and selling concentrates 1 . 42 General expense, consulting engineer, administration, taxes, etc . 1 . 50 Depreciation average five years . 78 Survey of unpatented claims . 06 London office expense . 35 Total cost per ton $10.27 30 466 THE COST OF MINING in a nearly vertical quartz vein 3 to 10 ft. thick, in a horizontal formation of bedded porphyries. In a total length of 4500 ft. explored there are four ore shoots aggregating 1700 ft. long. This has involved an expense for development of 76 cents a ton. Stoping is done as at the Treadwell by breaking the whole vein up- ward from the levels and drawing out only enough to make room for the miners, Up to April, 1907, about 489,000 tons had been taken out and milled; 112,000 tons remained broken in the stopes. Total values recovered were $25.90 per ton; of these 74.76 per cent, was obtained by amalgamation; 16.02 per cent, by concentration, and 9.22 per cent, by cyaniding. The extraction of the gold is given at 93.84 per cent. Adopting this as a rough estimate or the total extraction of all metals, we get $27.60 as the original value of the ore, so that the mill losses are approximately $1.70 per ton. It is interesting to compare this record with that of the Mysore mine in India, which extracts a somewhat lower grade of ore without any expense for the treatment of concentrates, and mined ore during the same year at a cost of $9.25 a ton, although the wages at the Mysore mine seem to have averaged only 36 cents a day. The number of men employed at the Camp Bird is approximately 300 for an output of 80,000 tons, while at the Mysore 8334 are employed for an output of 234,000 tons. It appears that the operations for the year given above were cheaper than for former years, an explanation being found in the fact that some 17,000 tons of ore were withdrawn from the stopes more than were broken in the stopes, and because the tonnage treated during the year was greater than ever before without any increase in the amount of general expense. During the past three years 184,605 tons were treated, averaging $28.90 per ton, and the earnings were $16 a ton, leaving $12.90 as the actual cost. It is stated that the extraction reported for 1908 was the highest on record. If we assume that the extraction has averaged 92 per cent, the performance of the mine may be calculated as follows : value of ore : $31 . 40 Loss in milling * 2 . 50 Yield 28.90 Total operating costs, including construction, development, and London expenses 12 . 90 Total costs and losses 15 . 40 Profit per ton 16 . 00 Percentage of profit 51 . 00 These costs are much higher than those of the Liberty Bell mine a few miles away. The reason undoubtedly is the higher grade of the Camp Bird ores; this accounts for higher costs in taxes, freight, and treatment, etc., and furnishes the excuse for pretty liberal fees and management. QUARTZ-PYRITE GOLD MINES 467 RESULTS OF OPERATIONS AT THE LIBERTY BELL MINE Tons mined and milled 510,720 Net receipts per ton $7 . 20 Costs: General expense $1 05 Mining and development 2 . 65 Tramming to mill 42 Milling i 70 Shipping concentrates 0.36 Total operating $6 . 34 Depreciation . 30 Total $6 . 64 Profit per ton . 56 At this mine 26,446 ft. of opening work has been' done in nine years, resulting in mining and developing about 900,000 tons of ore, or 34 tons to 1 ft. The cost per foot of development seems to be about $10, and per ton developed, $0.30. The stoping width is about 5 ft. Analyzing roughly the di ~."erence between the costs of the Camp Bird and the Liberty Bell it appears that the former is more expensive, as follows: Per ton Underground cost $1 . 46 Milling 0.15 Treatment charges 1.45 General expense 2 . 00 Depreciation of plant . 55 Total $5.61 It may be fairly said that the higher cost at the Camp Bird for milling and treatment charges are entirely justified by the higher grade of the ore. As to other expenses one may doubt their necessity. Other mines in the San Juan region whose reports are available are the Tomboy and the Smuggler Union. I have not investigated these reports, but in a general way the costs at these mines are not greatly different from those of the Liberty Bell. These mines have each re- ported costs lower than those given, for a single year, but it is doubtful if they would be lower if figured upon a long term of years. In general, mining in the San Juan region costs about $7 a ton. The external factors of a rough surface, a severe climate, costly transportation and a debilitating altitude are all unfavorable. The internal factors are such that only a small tonnage can be maintained. Metallurgically the ores are only fair, and while not markedly difficult, do not seem to permit of full treatment at a cost of less than $2 a ton. The explanation, therefore, of the big jump in costs from $1.50 at the Treadwell and $3 468 THE COST OF MINING at the Homestake to $7 in the San Juan is the cumulative effect of a variety of both external and internal factors. EL OHO, MEXICO The mines at El Oro, Mexico, are well managed; they pay good divi- dends and issue good reports. The two principal mines are the Esper- anza and El Oro on the San Rafael vein and the Dos Estrellas on a parallel vein to the westward. The Mexico mine just north of the Esperanza on the San Rafael lode is promising. The veins are large mineralized shear zones in slate or shale. There are numerous cross faults. The veins are for the most part obscured by a later flow of andesitic lava which covers the important orebodies to a depth of several hundred feet. The ore is quartz with pyrite sprinkled through it. The gold is very finely divided, and will yield by amalgamation only about 15 per cent. Grade of Ore and Output. It appears that the Esperanza mine up to the end of 1908 produced 1,176,117 tons averaging $19 per ton, and El Oro 1,080,000 tons to the end of 1907 averaging $11.39 per ton, in both cases by actual yield. Probably these figures indicate average ores produced by the principal mines in the district. If so, we get a yield of $16.33. It is probable that the extraction has averaged something like 88 per cent., so that the assay value of the ore as mined must be about $18.50 per ton. Two distinct types of ore have been worked; an oxidized cyaniding ore averaging about $13 a ton by assay value, by extraction about $11.40 as stated above for the material mined; and a narrower vein of sulphides discovered and worked on the Esperanza, and lately on the Mexico mine, the ore from which has been treated mainly in the smelters and has been of high grade, much of it running three or four ounces per ton. Below are given the figures for mining and milling at the El Oro and Esperanza up to the end of 1907, since which time the reports indicate nothing to warrant changing them. In general, the milling ores of the district may be described as follows : Assay value $13 . 00 Loss in milling 1 . 60 Yield 11.40 Costs mining and milling 7 . 00 Profit 4.40 Percentage of profit 34.00 Smelting ores produced by the Esperanza in 1906 were: Value per ton $74.50 Freight treatment and deductions $18. 75 Cost of mining per ton 5 . 00 Total cost ". . 23 . 75 Profit 50 . 75 Percentage of profit 68 . 00 QUARTZ-PYRITE GOLD MINES 469 The external conditions are probably about average for gold mining. The wages for natives are low and their labor inefficient. Water- generated electric power is furnished to the mine. The El Oro company owns a railroad, timber land, and a sawmill, and presumably supplies the other mines as well as its own with timber and transportation. The walls are heavy, and where broken by cross-faults become very soft. Ordinarily the square-set rooms can be kept open to a height of 40 to 50 ft.; then they must be filled. The mines are pretty hot. The ore forming in good-sized bodies is separated into streaks in different parts of the shear zone. The development of these requires considerable crosscutting and drifting along the intersected streaks. Work is also done on entirely distinct veins separated by some hundreds of feet of waste. The experience to date has shown the requirements in the way of development to be as follows: Feet Tons mined Tons developed El Oro 88,803 820,000 605,000 Esperanza 60,640 875,000 142,000 Total 149,440 1,695,000 747,000 About one foot of opening work to 16 tons discovered El Oro Esperanza Tons mined .... 1,080,788 450,000 Tons milled 1,027,282 333,330 Mining ... SI. 99 $2.80 Development 74 80 Milling .... 0.77 1 2.63 Cyaniding . . > 0.74 j Water 0.02 Other... 0.13 General 0.90 1.08 Construction . 0.36 0.19 Total $6.02 $7.50 The recovery of metals at the two mines is reported for 1906-7 as follows: Gold, per cent. Silver, per cent. Total value, per cent. Esperanza . . 90.64 57.33 86.20 El Oro 90.28 68.55 86.63 470 THE COST OF MINING Costs at the Esperanza have always been higher than at the El Oro both for mining and milling. There is nothing in the reports to explain why this should be so. KOLAR DISTRICT, MYSORE, INDIA In Vol. XXXIII, Part 1, of the " Memoirs of the Geological Survey of India," F. H. Hatch gives an excellent practical description of the Kolar mines as they were in 1900. Since that time certain changes have been introduced, notably water-generated electric power; the scale of operating has increased, and the costs diminished, but no specific descrip- tion of these changes has come to my attention. The reports of the various companies give abundant information about output, costs, mine developments etc. It is possible that something might be changed by Mr. Hatch if the descriptions were be to brought down to the present day, but on the whole the sources of information are satisfactory. One feels particularly like complimenting Messrs. John Taylor & Sons, who manage most of the mines, on their complete and detailed annual reports to their stockholders. The principal mines are the Mysore, Champion Reef, Ooregum, and Nundydroog: other mines are not very profitable. The district has been opened since 1882. The output has been steadily increasing, but the maximum seems to have been reached. The climate is tropical; the rainfall averages 30.13 in. per year, but is variable. This Indian gold-field is one of the most instructive examples to be found anywhere in studying the basic principles of mine economics. The center of the field is 183 miles from the important seaport of Mad- ras; the freight rate for various articles being as follows (presumably per long ton) : Coal in carloads $1 . 40 Timber less than 17 ft. long 1 . 90 Timber more than 17 ft. long 2 . 24 Steel, cast iron pipes, machinery, and kerosene 3 . 40 Wire ropes and galvanized iron pipes 4 .45 Machinery in small lots 5 . 87 Explosives 16. 67 Indian coal is delivered at the mines for $6.50 per ton; English coal for $9.75, and fire wood for $2.56. Ordinary mining timber costs from $20 to $45 per M., a large proportion being of the more expensive kinds. Dynamite costs about 27 cents per pound and blasting gelatin (93 per cent, nitroglycerin) 35 cents. These supplies, it will be observed, are all more expensive than in the United States in the proportion of perhaps two to one. Labor at Mysore. When we come to labor the situation is interest- ing. Men are employed in the following proportions : QUARTZ-PYRITE GOLD MINES 471 Europeans 2 . 2 per cent. Eurasians , 1.6 per cent. Natives 96 . 2 per cent. I have no means of computing, except approximately, the average wages earned by three classes. Europeans are paid by the month, on contract usually for three years. Transportation is provided by the companies to and from Europe, and quarters, furniture, fuel, lights, and servants also. Men laid up by sickness draw full pay. The salaries vary from $30 a month for some of the miners to $100 for smiths and machinists, and $250 to the highest paid chemists and foremen. Con- sidering the debilitating effect of the climate and the loss of time during illness, voyages, and holidays, it does not seem improbable that the work done by these men costs at least twice as much as work done in the United States would cost if done by men paid the same wages. Indeed I believe this estimate is too low. Wages of natives are as follows in cents per day. Carpenters 12 to 50 Smiths 8 to 48 Timbermen 16 to 43 Engine drivers 20 to 33 Trackmen. 20 to 41 Gang bosses 24 to 33 Machine men 20 to 33 Hand miners 16 to 24 Blasters 16 to 24 Landers 16 to 20 Trammers 16 to 18 Muckers 14 to 16 Firemen 12 to 16 Surface coolies 8 to 12 It is, of course, impossible to obtain from these details an exact esti- mate of the wages paid, but on the assumption that the wages of miners are somewhere near the average for natives and that Europeans average $5 a day including expenses, and Eurasians $2, we have: 2 . 2 Europeans at $5 equals $1 1 . 00 1 . 6 Eurasians at $2 equals 3 . 20 96.2 Natives at $0.23 equals 22.12 100.0 $36.32 This means an average wage of 36 cents or thereabouts, for all employees. Factors in Mining. The internal factors are a single marvelously persistent quartz vein, with a few branches, developed for a length of 472 THE COST OF MINING 17,500 ft. The vein occurs in a belt of schists which I suppose, from the presence of beds of quartzite, are undoubtedly in part metamor- phosed sediments. The belt seems to be a syncline, but it is invaded on both sides by intrusive granites. The bulk of the schist consists of altered traps or lavas. There are some later dikes of a basic character. The vein corresponds both in strike and dip, which is about 50 to 55 degrees west, with the foliation of the schists. The ore is a clean quartz containing 0.25 per cent, of pyrite. The quartz occurs in a number of shoots along the vein. Some of the shoots occur in sharp anticlinal folds where something like the saddle reefs of Bendigo, Australia, has been developed in the vein. The direction of other ore shoots along the plane of the vein seems to be about parallel to the axes of these folds. The extent of the shoots is variable; some of the largest are known to be more than 4000 ft. deep along the slope, and as much as 800 ft. wide, measured at right angles to the long axis. It is difficult to ascertain the thickness of the vein stoped; the average is probably between 3 and 4 ft. Taking the vein at large, the poor with the good, the average thickness of mill ore developed on the Mysore property in 1907 was 1.8 ft. Although these mines, particularly the Mysore, are looking exceed- ingly well in the bottom, the thickness and grade of the ore show some diminution. The greatest vertical depth reached is about 2400 ft. in the Edgar shaft of the Mysore. In earlier years, when the mines were less than 1000 ft. deep vertically, the ore shoots on the Mysore and Champion Reef mines seem to have averaged nearly 5 ft. in thickness. Method of Treatment. The milling practice is simple. The ore, when properly sorted, yields a clean quartz with very little clayey mat- ter in it. The process consists of amalgamation in a stamp battery followed by cyaniding the tailings. A special cyanide process is used for the comparatively small proportion of slimes. The only distinctive fact is that the crushing duty per stamp is low, being only 2.25 tons per day per 1050-lb. stamp. The pulp is put through screens averaging about 1600 apertures per square inch. The low stamp duty is made necessary by the high grade of the ore. In the Transvaal and at the Treadwell the duty per day is about five tons per stamp. A few years ago a striking and uneconomical feature of the metal- lurgical practice was that the work was done in a number of small mills instead of in a large central one on each property. This bad feature has been, I believe, largely corrected. It will be seen from the following table that the conditions and costs are fairly uniform for the four properties. Consequently it does not seem worth while to give details for more than one. For this purpose the Mysore mine serves excellently. It is an ex- traordinarily good and profitable property, situated at the south end QU ART Z-PY RITE GOLD MINES 473 OUTPUT AND VALUATION OF ORE PRODUCED BY THE FOUR PRINCIPAL MINES OF THE KOLAR DISTRICT OF INDIA REDUCED TO SHORT TONS AND AMERICAN CURRENCY. Name and date Tons mined Tons ore in sight Yield from ore mined Average per ton Dividends Average divi- dends per ton Cost per ton Mysore 1884-1898 Champion Reef 1892-1908 Nundyroog 1888-1908 Ooregum 1888-1908 Four mines 1S84-1908... 2,454,562 2,130,748 1,029,700 1,660,781 7,305,791 1,085,000 133,000 172,000 $52,624,000 40,340,000 17,736,000 23,580,000 1,388,000 ! $134,300,000 $21.18 19.00 17.24 14.20 18.40 $27,252,000 $10.96 17,148,000 7,163,000 7,852.000 59,655,000 8.05 4.74 8.18 $9.22 10.95 10.28 9.46 10.22 NOTE. There is reason to believe that the dividends are larger than the real profits because they include sums obrained from stockholders, for premiums and new stock issued to cover new construction and developments. This practice, however, has now been stopped and it may that the costs estimated are not far from the truth, on the theory that the money heretofore spent on plant will serve for the future operation of the mines, or at least for the ore in sight. of the district and covering 7700 ft. along the lode. It is developed to an extreme vertical depth of 2600 ft., equal to 4000 ft. along the incline. The ore is derived from three independent shoots of which the central one is the more prominent, but all three have proved persistent to the lowest workings. In 1907 the record was as follows, expressed in short tons and American currency: Tons mined and treated 233,825 Assay value of ore $20 . 00 Yield of ore 17. 12 Loss in milling 2 . 88 Extraction in mill 85 . 51 per cent. Costs per ton Plant and equipment, including a proportion of the work, average for eleven years $1 . 87 Administration . 20 Mining 4 . 68 Milling 0.63 Cyaniding tailings . 23 Repairs to buildings, machinery, and plant 0.90 Surface costs . 10 Pumping charges . 05 Transport and insurance of gold 0.15 Kolar Central Metallurgical Establishment 0.01 Medical Establishment . 04 Survey department 0.01 474 THE COST OF MINING Police and detective force Traveling expenses of employees ... . 04 Kolar Gold Field Electricity Department 0.01 Telegrams, postages, and incidental expenses in India 0.02 Directors' fees 0.11 Salaries and bonuses to managers and clerks 0. 15 Telegrams, postage, stationery, etc . 03 Total costs equalizing small differences in details 9.25 Net profit per ton 7 . 87 Profit on gross value of ore mined 39 per cent. Total costs and losses 12 . 13 A Question of Bookkeeping. To charge improvements to capital account, even if they are absolutely new, is a bookkeeping error into which nearly all mining companies fall. This error is, of course, in most cases theoretically rectified by writing off a certain amount of deprecia- tion. While in the case of these Kolar mines it appears that the deprecia- tion has kept pace with the increase of capital (for eleven years the Mysore company received from stockholders about 60,000 a year), this does not alter the fact that the money thus written off did not come out of the mine. To some extent, of course, the money thus provided was used to make a real increase in the company's resources, and to this extent it will be paid back in the shape of increased profits, or lower costs, in later years. But it should never be forgotten for a moment that there is always some work going on about a mine in the shape of permanent improvements, and that for a period of years the average amount thus expended should not be written off the balance sheet; it should be charged to operating. To pay operating expenses out of new capital is either a fraud or a bookkeeping sophistry. It is always a mistake more or less complete. It may be partly justified but never wholly. The accompanying table prepared by Mr. Hatch shows the distribu- tion of costs for the year 1899. These costs are a little higher than the average, but not so much as to give a seriously false impression. Within the past year or two considerable economy has been effected by the introduction of water-generated electric power from the Cauvery falls. In 1899 steam power cost $150 per horse-power year and the cost per ton for the power used was more than $3. Electric power is now furnished for $90 a year, reducing the power cost more than $1 per ton. I will not go into details regarding all the mines, but will give some further facts regarding the Mysore, the largest and best mine in the district. This property in the years 1902-1907, inclusive, did 163,691 ft. of development work, mined and milled 1,210,000 tons of ore, and increased its reserves from 380,800 tons to 1,012,480 tons. The actual ore developed during the period was 1,841,500 tons, being a trifle more than 11 tons per foot of development work. This development with approximate costs was made up as follows : QUARTZ-PYRITE GOLD MINES 475 Drifts and crosscuts, 117,912 ft. $10 equals. . . Raises, 24,041 ft. at $40 equals Winzes, 12,291 ft. at $40 equals Shafts, 9,447 ft. at $100 equals $1,179,120 960,000 490,000 944,700 Total $3,574,000 The costs are approximations from Hatch's report. COST AT THE MINES OF MYSORE IN 1899, ACCORDING TO HATCH Mysore Champion reef Ooregum Nundy- droog Balaghat Coro- mandel Mine costs $5.79 $7 15 $7 02 $12 12 4 7 Mill 1 28 1 68 1 41 1 41 1 60 Wheeler pans 69 $9 46 21 Cyanide 69 89 75 50 47 Administration General charges 0.28 75 0.27 61 0.44 49 0.51 48 0.79 31 0.76 49 Total $8 79 $11 29 $10 39 $10 38 $15 13 $8 19 Royalty on gold ore 1 58 1 51 86 1 12 63 21 Depreciation 41 26 14 40 2 20 50 London office 39 30 33 65 88 74 Grand total Reduced to short tons . . . $11.17 $10.00 $13.36 $11.93 $11.72 $10.47 $12.55 $11.21 $18.84 $16.82 $9.64 $8.61 High Development Cost. If these costs are anywhere near the actual, and I believe that they are, we have an average cost per ton developed of about $1.94 and per ton milled of $2.95. In the abstract of Hatch's figures for various kinds of work it is to be observed that the development accounts for about half the cost of mining. In this connection, however, it is well to point out that a considerable portion of the development work does not appear in the working costs, but is charged to capital account. The only place where this expenditure appears is in the balance sheet where certain sums are " written off" for depreciation, etc. These sums amount in six years to $2,122,000 on machinery, plant, etc. Of this a good deal must represent the cost and equipment of Edgar's and other shafts. To show how this bookkeeping works, let us take the revenue account for the year 1907. Here we find that administration and working costs, including directors' fees, insurance, and all general expenses, amount to $8 per ton. To this we must add from the balance sheet, in order to get the management's real estimate of the costs, the sum of $1.76 per ton for depreciation, this being the average for the last six years. With this addition the total cost is $9.76. This, it will be observed, is very close, both to Mr. Hatch's figures in 1899, and to my own estimate based on the output and dividends. Mr. Hatch comments as follows : 476 THE COST OF MINING "The working costs are high, but there is not much difficulty in accounting for this. First, the nature of the ore deposit dictates a high cost of working, as, for instance, the occurrence of the pay-ore in shoots, which, though of high grade, are of comparatively limited extent. This leads to a heavy expenditure in de- velopment, as much sinking, driving, and crosscutting must be done in waste rock in order to open up pay or shoot ore. The cost of this development work is in- cluded in the figures given for working costs. Then again the heaviness or instability of the ground in parts of the mines necessitates a big expenditure on timber to secure the stopes, shafts, and levels. Cost and Grade of Ore. " Further, it must not be forgotten that the cost of working a high-grade ore is of necessity greater than that of a low-grade ore, and the reason for this is plain. In mining low-grade stuff the main object is to ob- tain a large tonnage at a low cost; consequently the stopes are carried as wide as possible and the whole mass of the orebody is, as a rule, exploited, the exploratory or dead work being at a minimum. With high-grade stuff, on the other hand, the stopes are kept as narrow as possible, and great care is exercised only to extract the payable portions of the ore-body. Much exploratory work in waste rock is, therefore, necessary in order to locate the pay ore. Similar factors influence the metallurgical treatment. With low-grade stuff the ore is passed quickly through the mill, a high stamp duty being maintained by the use of coarse screening and a low discharge, and the cyanide process is relied upon to catch the gold that es- capes amalgamation. Whereas with high-grade ore the usual practice is to crush fine, and to catch as high a percentage of the gold as possible by amalgamation. "For these reasons it is impossible to compare the working costs of high-grade mines, such as those at Kolar, with the low-grade mines of other countries, as, for instance, those of the Witwatersrand in the Transvaal. At the same time, it must be admitted that a reduction in working expenses at Kolar could no doubt be effected by improvements in milling plant, and by the substitution of auto- matic mechanical means for native labor in the handling of the ore delivered at the shaft top, and of the tailings leaving the mill. The substitution of a large centrally-placed mill with heavy stamps for several small and scattered mills with light stamps, which at the present moment is being carried out on the Champion Reef, and is in anticipation at Ooregum, will decrease the cost of milling at these mines. The introduction of mechanical haulage, automatic sorting tables, tail- ings, wheels for elevating the tailings, and pointed boxes for classifying and filling directly into the cyanide vats, all these improvements would no doubt have a similar effect. So also will the introduction of water power transmitted by elec- tric current, as it is proposed to do by the Cauvery power scheme." DETAILS OF DEVELOPMENT COSTS, HATCH COST OF RAISING (10 X 5 FT.) 15.6 FT. PER MONTH Labor, white $8.25 Labor, native 4 . 50 Explosives 6 25 Supplies 4.90 Compressed air 21 . 00 $44.90 QUARTZ-PYRITE GOLD MINES COST OF DRIVING 477 Hand $9 per ft., rate 15 ft. per month. Machine $11 per ft., rate 30 to 35 ft. per month. Stoping in 4H-ft. vein without timbering costs about $1.25 per ton. COST PER FOOT OF SHAFT-SINKING IN KOLAR GOLDFIELDS Nundydroog 12 X 6 ft. Oakleys' 16 X 8 ft. Champion Reef 16 X 8 ft. Edgar's Mysore circ'r 18 ft. Labor .... $31 27 $32 68 Timber 7 88 25 22 Explosives and supplies 13 40 24 20 Compressed air Hoisting 32.84 10 93 33.88 4 84 Drill sharpening 49 Speed per month $96.81 15 ft $120.82 25 ft $145.91 28 ft $120 20 ft Equivalent work in the United States may be estimated as follows: Sinking large working shafts (Lake Superior, Butte, Coeur d'Alene, or Cripple Creek), average rate per month 50 ft., cost per ft $100 Raising with complete timbering, 10 X 6 ft 25 Drifting in average ground, 5 X 8 ft 9 Wages and Cost of Labor. I have given many details about the Kolar mines because I wish to illustrate the extraordinary lack of corre- spondence between the wages paid and the costs. There does not seem to be any detail in which work at these mines is done cheaper than in the United States. In Cripple Creek, or Butte, or the Coeur d'Alene, where wages average ten times as high as at Kolar, work can be done just as cheaply. This is true of drifting, of crosscutting, of raising, of shaft sinking, of stoping, of everything on which I can find data for comparison. It is true that supplies cost more than in the United States; neverthe- less out of working costs of $8.96 per ton I find that labor must account for about $5.50 or 60 per cent. This is the usual proportion in the United States. We find that the number of men employed to mine and mill 217,770 tons of rock in 1907 at the Mysore mine was 8334 or 26 tons per man per year. At the Camp Bird mine in Colorado, where external conditions are unfavorable, the ore being of higher grade and the costs nearly the same, the wages are ten times as high and the output per man ten times as great. It is inconceivable to me that the energy expended by a miner in Colorado is ten times as great as that expended by the Indian miner. The true explanation of the wonderful difference in performance lies in 478 THE COST OF MINING the industrial efficiency of the community by which the men are sur- rounded. THE RAND Witwatersrand. The great gold-mining field, Witwatersrand, pro- duces one-third of the world's annual yield of gold, and is so well known to the mining public, and even to the public at large, that any general description of it, other than such as will serve my purpose of illustrating the factors governing the cost of mining, is unnecessary. The occurrence of the ores here bears a resemblance to that of two important districts described elsewhere, i.e., to the copper conglomerates of Lake Superior and to the Kolar mines in India. Like the Calumet conglomerate the banket beds of the Transvaal are mineralized sedimen- tary beds, and the value of the material worked is not far from equivalent, but the "Rand" beds are thinner, more persistent, and workable over much greater areas. The Kolar mines, while on a vein of different geo- logical origin and producing ores of much higher value, bear a considerable resemblance in the persistence and abundance of the mineralization. Two recent papers by distinguished American engineers throw excellent light on the present condition of the industry. Ross E. Browne has written an exhaustive discussion of " Working Costs of the Mines of the Witwatersrand" (republished in the Mining Journal of London, in the issues of July, 1907) and Thomas H. Leggett (Trans. A. I. M. E., February, 1908), describes the " Present Mining Conditions on the Rand." Mr. Browne sizes up average conditions for the whole district as follows : ^ Per ton milled Working cost $5 . 85 Capital redemption 1 . 22 Total expense . $7.07 Yield 8.71 Profit 1 . 64 By capital redemption, I suppose, Mr. Browne means all capital, including probably large sums paid for mining claims. By the theory of costs used in this article such sums are profits paid to somebody by the working of ore from the land and are not, therefore, costs. Accordingly, Mr. Browne's estimate of the cost of capital redemption is somewhat high. A summary of the record of the Witwatersrand is as follows : Tons milled (1884-1908) 113,600,000 Value recovered $1,049,000,000.00 Dividends paid 273,655,000.00 Yield per ton $9 . 23 Dividends per ton 2.41 Cost per ton 6 . 82 QUARTZ-PYRITE GOLD MINES 479 In 1908 the figures were as follows: Tons milled 18,000,000 Value recovered $144,600,000 . 00 Dividends paid 41,800,000.00 Yield per ton 8 . 03 Dividends per ton 2 . 30 Cost per ton 5 . 73 It is probable that the dividends in these tables include sums that should properly be charged to redemption of capital, i.e., amortization of plants, and that the costs should be estimated a little higher. 'On the other hand, it is certain that these costs include all current construc- tion, or depreciation charges, and are a much better exhibit of the real dividend costs than the " working costs" ordinarily published. Almost all the production comes from dividend-paying mines. On nine representative mines in the district Mr. Browne finds the following average working conditions: Number of stamps operating Ill Working costs per ton milled $5.19 Percentage rejected by sorting (probably at surface only) .... 13 Ratio of tons developed to tons mined . 90 Width (thickness) of stopes in inches 69 Continuity of reefs, normal for the Rand, unrivaled elsewhere. Average depth of mining in feet 1200 Dip of reef 30 degrees Hardness of ground, solid quartzite and slate. Cost of timber per ton of ore mined 4 cents Cost of coal per ton delivered at plant $3.41 Gallons of water pumped from mine per ton of ore milled 313 Duty of stamp, tons milled per 24 hours 4 . 85 With the above average conditions the average costs are as follows: Development cost per ton $0 . 37 Other mining costs 2 . 63 Total cost per ton hoisted $3 . 00 Milling, crushing, and amalgamating . 69 Cyaniding . 64 General expense at mines 0. 25 General expense at head office 0. 18 Total $4.76 These figures represent the costs as they would be if all the ore hoisted were milled, but as 13 per cent, is rejected by sorting, the cost as divided by the tonnage actually milled is brought up to $5.19. A Comparison of Records. I cannot believe that these figures make a disadvantageous comparison with costs of similar operations elsewhere. 480 THE COST OF MINING This opinion is somewhat at variance with the general idea among min- ing men, and, as I have never been in South Africa, it is perhaps well to explain that I am going wholly upon the consideration of the basic principles involved. Mr. Browne sees hope of reducing costs to about $3.75 per ton by increasing the efficiency of white labor, by better direction of colored labor, and by reducing the cost of supplies. With this hope I certainly have no quarrel and it is probably not altogether extravagant. Con- siderable improvements are brought about by necessity and by long- continued effort. As the grade of ore diminishes the cost is inevitably diminished by the simple process, among other things, of refusing to work ores that present difficulties beyond a certain limit. But as a matter of practical experience, taking into consideration all the ins and outs, good luck, and bad accidents, it seems to me that the performance of the Rand mines is fully as good as that of other mines. To judge better of this let us look up the life history of the greatest of the Transvaal mines, the Robinson, and see how it compares with other great mines of which we have the records. ROBINSON GOLD MINING COMPANY, TO END OF 1906 Tons milled 2,657,768 Total value, $46,535,000 Per ton, $17 . 50 Working cost per ton 6.36 Construction and improvements 0. 8 Total cost per ton milled 7.14 Profit $27,680,000 Per ton 10.36 Dividends and cash in profit loss 24,219,000 Real estate, securities, and cash on hand. 3,461,000 Nearly 60 per cent, of the entire gross revenues is shown as clear profit. Few mines of this grade can equal this showing of costs. It would be an exceedingly laborious compilation to get the average costs in detail, so I shall content myself with giving the details in a year of which the costs approximate the average. Such a year is 1897 when the total cost was $6.09 divided between working cost at $6.65 and construc- tion at $0.25. In this year the tonnage hoisted was 203,597 of which 23,197 was sorted out on the surface. In addition the amount sorted out underground was estimated at 60,000 tons, making the total stoped about 263,500 tons. Since the sorting out of this waste underground serves no useful purpose in protecting the safety of the workings, it was sorted out entirely to avoid the expense of milling. It is probable that the sorting on the surface and stowing of waste underground cost fully as much as the tramming of ore for the mill. For comparing the work done here with certain other mines it is necessary to make these correction. These figures are as low as those of the Portland mine at Cripple Creek, figured on the same basis; they are not far above those of the Tons QUARTZ-PYRITE GOLD MINES MINING COSTS, ROBINSON GOLD MINING COMPANY 481 263,500 sloped $443,694 263,500 trammed 21,882 203,597 hoisted 19,671 263,500 mine maintenance and pumping 47,306 320,000 developed 178,334 Per ton $1.68 1.08 0.10 0.18 0.56 $2.60 Tamarack, or the Calumet & Hecla, where the volume of material in the same area is more than double, and lower than equivalent work in the Mysore mine. It is to be remembered that the mining is done at the Robinson on two beds, the Main Reef Leader of a payable width of 18 in. and the South Reef of a payable width of 42 in., on which there is not room for working. The effort is to carry the stopes as narrow as possible. MILLING COSTS Tons Total Per ton Crushing and sorting. . . 203 597 $18 134 $0 09 Transport to mill 180,400 5,465 0.03 Milling and n laintenance . . . 78 548 43 Power 40094 22 $0.77 SECONDARY TREATMENT Vanning, concentration 14,966. Cyaniding, chlorination 126,470. $0.07 0.70 $0.77 Total treatment $1 . 54 Here we have ore worth $20 a ton treated with an extraction of 89.3 per cent, at a cost that seems low enough. A certain correspondence obtains here as elsewhere between the value of ore treated and the cost of treatment, even by the same process. ROBINSON, GENERAL EXPENSE, 263,500 TONS Total Per ton General maintenance General charges $21,071 73,918 $0.08 28 IVIachinery plant and buildings 95,716 0.36 Special charges 23,531 0.09 Construction 46,038 0.18 $0.99 31 482 THE COST OF MINING If all the rock broken, therefore, were treated, we should find the following comparison with the costs as given: Per ton milled (as given) Per ton mined Mining $3 90 $2 60 Treatment 1 57 1 54 General expense . ... 1 18 81 Construction 25 18 $6.90 $5.13 The gradual diminution both of costs and the grade of ore is shown as follows : Yield per ton Working costs per ton 1890 1906 $46 . 20 13.84 $10.02 5.30 At the end of 1906, 2,180,000 tons of ore were blocked out, of which the development had been paid for by mining operations to date. The average assay value of the reserves was $14.50 per ton, and the extraction being realized was 93 per cent.; so that a net yield of 113.50 could be ex- pected. It seems plain from the steady reduction of costs that these reserves could be mined for all working and construction costs for $5 a ton, leaving a net profit of $8.50 per ton, or $18,500,000. I feel that this record of the Robinson mine shows, in a general way, the achievements and tendencies of the Rand industry; and that it is a monument, not of extravagance and carelessness, but of excellent engineer- ing and of broad-gaged and honest management. With this view of the cost problem on the Rand, Thomas H. Leggett is in full accord. I quote from his paper on the " Present Mining Condi- tions on the Rand," as follows: "As the mining camp grows older the working costs almost invariably de- crease, providing the camp maintains a healthful activity with advancing years, and this has been the case on the Witwatersrand, the result being as follows: 1898, average working costs of 65 companies 25s. 1 . 3d. 1899, average working costs of 24 companies (a) 25s. 2 . 7d. 1906, average working costs of 58 companies 22s. 1 . Qd. 1907, average working costs of 56 companies (6) 20s. 8. Od. a The Boer war broke out in October, hence the records are incomplete. b Two less than in 1906, due to exhaustion of the Bonanza mine and incomplete records from one other mine. QUARTZ-PYRITE GOLD MINES 483 "These costs include mining, development, crushing, and sorting, milling, cyaniding, maintenance, and general expense, but they do not cover depreciation and amortization, these items being more properly dealt with by the directors at the end of the year. These results show the very material decrease of 4s. 6rf. per ton since 1899, and are, therefore, approaching now to the 6s. reduction predicted by John Hays Hammond in 1901, but it has taken time to attain this result, as 1 then pointed out it would do. A comparison of the costs in 1907 with those of 1906 shows a decrease of Is. 5d., or 34 cents per ton, due chiefly to de- creased wages and increased efficiency of both white and colored labor, including the Chinese in the latter category, though increased crushing capacity through the use of heavier stamps (up to 1670 Ib. per stamp) and regrinding in tube mills have also aided. "In 1906 fifty-eight companies mined and milled 13,065,624 tons of ore at a total cost of 14,411,219, while in 1907 fifty-six companies milled and mined 14,861,234 tons at a total cost of 15,35., 749, being an increase of 1,795,610 tons for an increased cost of only 940,530. "Most of these economies were attained during the latter half of 1907, after the white miners' strike, and some mines made startling reductions, as, for in- stance, the Robinson, which reported costs of 14s. 9d. for November, and the Glencairn, of 15s. Id. per ton. "Such strenuous and successful efforts are now being made to reduce still more the working costs on the Rand, that I think it safe to anticipate another large decrease for the year 1908." Labor Cost not Excessive. I have expressed the opinion that costs on the Rand are not essentially different from those that would be ob- tained were the properties situated in the United States. What about wages? The only direct information I have is the statement of Mr. Browne that whites average $4. 60 a day and colored laborers $0.66 per ^ay, and are employed in the proportionof 9.2 colored men to one white m . Average wages about $1.18 per day; as the percentage of colored men varies, so the average wages will vary from time to time. In my judgment the figures demonstrate that the Rand is another proof of the fact that the rate of wages does not determine the cost of labor. Criticism of the Rand has been to the effect that costs are higher there than in the United States. Mr. Browne believes that California labor paid California prices on the Rand would be cheaper than the labor COSTS Per Foot Rand, average for shafts, drifts, raises, etc $20 Kolar, average for shafts, drifts, raises, etc 22 Cripple Creek, average for shafts, drifts, raises, etc 14 WAGES Per Day Rand $1.18 Kolar : 0.36 Cripple Creek 3.40 484 THE COST OF MINING actually employed by about 15 per cent. In California wages are approx- imately $3 per day. I have estimated average development costs at various places as shown above : An exact comparison cannot be made, because the rocks and condi- tions are different. In the Rand the rock is harder than at Cripple Creek, and the openings probably average larger, but on the other hand, there is less water to pump. Efficiency of Labor a Function of the Cost. The point I am seeking especially to bring out is that criticism has been applied to the inefficiency of Rand labor as if it were a special case, and that because wages average low on the Rand costs ought to be correspondingly low. I contend that this assumption, if carried beyond certain narrow limits, is an incorrect one, and if established it would be in opposition to a general economic law. President Roosevelt's great work has often been called a reaffirma- tion of the Decalogue. I am afraid that the conclusions I have arrived at are of the same class. You will remember the scriptural phrase, "The laborer is worthy of his hire," and the common proverb that the " Workman is known by his tools." These statements contain the essence of the problem of the cost of labor, always the fundamental and final element in the cost of anything. The gist of the whole subject was tersely stated by the first Lord Brassey, the great English contractor, who said that the same work costs the same money anywhere regardless of the price of wages. The workman, the tools, and the wages go hand in hand. Good wages command through competition, effective workers. Good workmen create efficient tools. On the other hand, it is a truism to say that high-class tools and machinery can only be used by men who have intelligence enough to secure the wages their efficiency justifies. Where a man's idea of moving dirt is to fill a basket with his hands and carry the basket on his head, his wages correspond with the fruitfulness of his idea; he earns 10 cents a day. Where dirt is moved by the complex organism of modern civilized industry which applies external power through the agency of railroads and steam shovels, the men who operate the tools are better paid. The master of the industrial enterprise, which may be described as the greatest tool of all, a mechanism fashioned by the combined efforts of countless brains to direct the united efforts of men and energy to useful work, is pretty sure to be a millionaire; the man who runs the steam shovel gets $5 a day; the laborer who moves the ties in front of the steam shovel gets $2 a day. In the world's market the product is worth the same thing whether it is the result of an industrial miracle or of infinite but stupid human labor. When mankind produces efficiency it gets a due return for it, a return which is expressed pretty accurately in wages. A Rule Without Exceptions. The only reason why these conclusions are not accepted as truisms is that people are suspicious of each other QUARTZ-PYRITE GOLD MINES 485 and are accustomed to doubt the fairness of the distribution of wealth. That this distribution is a matter the fairness of which can only be guaranteed by ceaseless vigilance, it is a folly to doubt; but on the whole I believe every body concerned does exert vigilance, a vigilance made instinctive by the fundamental laws of the evolution of life, and on the whole, the distribution is pretty fair. To avoid possible errors, however, we had best perhaps not apply this generalization to work of an ephemeral character but only to permanent or semi-permanent industries where labor has time to adjust itself to competition. But here we have to meet the question, Are not modern methods employed in South Africa and India? Have we not sent there our best engineers, our most modern machinery, and our best methods? If so, then why are not the men more efficient and the wages higher? I answer that it is indeed true that we have sent many cilivized appliances to those places, but not all. Among the things we have not sent are the surroundings, point of view, ambition, and energy of a civilized commu- nity. The few hundred or few thousand Europeans who operate mines in Africa or India are immersed in an ocean of black humanity, upon which the small foreign community has an influence, true enough, but not such an influence as to revolutionize the habits, aims, and expecta- tions of the natives.. An enterprise so situated must take into account at the beginning the state of mind of its future employees, and it would be silly to make such plans as might run counter to their prejudices; and, even if the manager hopes to make the natives eventually as effective as Europeans, he would have to plan his operations on a different basis. As a matter of fact, such an expectation is hopeless; an individual Kafir or Hindoo may fill a certain position as effectively as an European, but to expect a large body of such people to become collectively as effective as a body of Europeans whose ideas had been trained for generations along lines making for an entirely different standard of effort is quite absurd. A consid- erable body of whites may indeed supply a certain amount of mental and nervous energy to the natives which the latter could not supply for themselves, but in so doing the white men must use up energy in the direc- tion of others that they might otherwise use in their own labors. If a body of colored men in a colored man's country is going to turn out work under the direction of white men as cheaply as the white men can do it themselves in their own country, they must do it by working for lower wages. This is exactly what happens in every case. It is a rule to which there are no exceptions. Note in 1919. This chapter has been left as it was. In no other metal have there been so few vital changes. In regard to the Transvaal one pertinent remark may well be quoted from the " Mining Magazine" of London " about 60 per cent, of working profits are available for 486 THE COST OF MINING dividends." This is something that applies to all mines and all forms of business in varying degrees, of course, in particular cases. But a large part of so-called earnings are absorbed in various projects, overhead e xpenses and taxes. PRODUCTION OF GOLD IN THE TRANSVAAL Rand, oz. Elsewhere, oz. Total, oz. Value January 1918 694,121 19,991 714,182 3,033,653 February 637,571 22,188 659,759 2,802,477 March 677,008 19,273 696,281 2,957,614 April . 697,733 19,366 717,099 3,046,045 May June 720,539 708,908 20,778 18,788 741,317 727,696 3,148,915 3,091,058 July August September October 716,010 719,849 686,963 667,955 20,189 20,361 21,243 11,809 736,199 740,210 708,206 679,764 3,127,174 3,144,211 3,008,267 2,887,455 November 640,797 17,904 658,701 2,797,983 December 630,505 10,740 641,245 2,723,836 Year 1918 8,197,959 221,734 8,419,693 35,768,688 January, 1919 Februarv .... 662,205 621 188 13,854 15 540 676,059 636 728 2,871,718 2 704 647 March 694 825 17 554 712 379 Q 025 QQ2 April 676 702 18 242 694 944 2 951 936 NATIVES EMPLOYED IN THE TRANSVAAL MINES Gold mines Coal mines Diamond mines Total January 31, 1918 176 424 1 1 46Q 4 71 x 1 Q9 fiOS February 28 March 31 181,066 183 055 11,243 1 1 076 4,825 4- 74-^ 197,134 1 no Q7fi April 30 182 492 11 322 4 7^ 1 QC Kfi7 May 31 179 879 U91 1 4. 77Q 1 QC CAQ June 30 179 028 U47Q 47/17 I QK 9/1 si July 31 178 412 U7QO ^ 01 1 1 Q^ 91 *} August 31 179 390 nnr;n 4. 0^4. 1 Qfi 9Qzt September 30 October 31 179,399 ml KO 12,108 nS94. 4,889 4*7/4 O 196,395 November 30. . 160 275 U&9A , /'ly 4. 01 A ioy, / Jlo 1 ^A 117 December 31 152,606 11,851 3,180 1 / 0, 1 1 / 167,637 January 31, 1919 160 5QQ nQAQ 3CQQ mOQA February 28 172 359 nOfJO ,ooy 49A4. ,yoo 1 ftQ 4.O1 March 31 175 620 HI RS 5f)Q(\ j.ooj'iyi April 30 175 2fi7 nQOft ,UoU 5*7/19 ,oDo , l'i iyz,yio QUARTZ-PYRITE GOLD MINES 487 COST AND PROFIT ON THE RAND Compiled from official statistics published by the Transvaal Chamber of Mines. The profit available for dividends is about 60 per cent, of the working profit. Tons milled Yield per ton Working cost per ton Working profit per ton Total working profit January, 1918 February March 2,167,411 1,946,338 2 107 581 s. d. 27 1 27 8 27 1 s. d. 20 7 21 7 21 4 s. d. 6 4 5 11 Q 703,665 577,396 ^Q6 10Q April May 2,181,609 2,237 644 27 27 3 20 8 9Q 6 6 2 6 5 670,871 716 963 June 2,124,205 28 2 21 6 11 736 694 July.. 2,167,869 27 10 21 2 6 6 702 360 August 2,158,431 28 1 21 7 6 3 676 146 September October 2,060,635 2,015,144 28 2 28 22 22 5 5 10 5 3 600,330 531 774 November December 1,899,925 1,855,991 28 5 28 7 23 1 23 5 1 5 6 480,102 507,860 Year 1918 24,922,763 27 11 21 7 6 7,678,129 i January, 1919 1,942,329 28 9 23 5 8 547 793 February 1,816,352 28 9 23 2 5 6 498,204 PRODUCTION OF GOLD IN RHODESIA AND WEST AFRICA Rhodesia West Africa 1918 1919 1918 1919 January February 253,807 232,023 230,023 239,916 239,205 225,447 251,740 257,096 247,885 136,780 145,460 192,870 211,917 220,885 225,808 213,160 107,863 112,865 112,605 117,520 126,290 120,273 117,581 120,526 115,152 61,461 108,796 112,621 104,063 112,616' 112,543 109,570 March . . April May June .... July August September October November December . Total 2,652,250 871,770 1,333,553 438,792 TRANSVAAL GOLD OUTPUTS April 1919 Treated, tons Value Aurora West Bantjes. . 13,800 13,640 Barrett 674 Brakpan City & Suburban 47,500 17,342 88,908 28,374 City Deep 48,500 97209 Cons. Langlaagte Cons. Main Reef 45,000 47,300 55,546 7 753 Crown mines Durban Roodepoort Deep 158,000 25,200 217,122 35 025 East Rand P.M Ferreira Deep 110,000 32,300 138,201 56 264 Geduld 42,000 61,920 Geldenhuis Deep 47,500 54,081 Ginsberg 10,520 10081 Glynn's Lydenburg 3,970 7,217 Goch. 16 600 11 926 Government G.M. Areas Heriot 116,000 10 610 204,450 14 678 Jupiter 21 200 23 636 Kleinfontein * , Knights Central Knights Deep 57,900 20,000 82 900 71,179 29,963 70 507 Langlaagte Estate Luipaard's Vlei Meyer & Charlton Modderf ontein Modderfoncein B Modderf ontein Deep 40,000 20,000 13,640 82,000 54,000 41 100 52,331 39,396 173,162 121^206 88 943 New Unified 12 000 11 855 Nomse 38 100 KQ 824 Primrose 19 000 17 159 Princess Estate Randf ontein Central 19,400 138 000 25,382 162 705 Robinson . o qnn 41 81 9 Robinson Deep 4^ ,00 i 7^0 Roodepoort United 24,200 22 835 Rose Deep KQ ooo Q(\0 Simmer & Jack Simmer Deep 46,800 90 fiOO 45,652 QC 7CQ Springs 9,4 Q40 fi7 9Q7 Sub Nigel Transvaal G.M. Estates Van Ryn 9,519 14,980 QK I KQ 24,158 23,812 QQ Q74 Van Ryn Deep 4-7 400 1 HQ XKQ Village Deep Village Main Reef 43,400 17 700 62,547 22 935 West Rand Consolidated 32 000 Q7 71C Witwatersrand (Knights) Witwatersrand Deep 32,500 40,733 Wolhuter oc Knn OK oo r QUARTZ-PYRITE GOLD MINES WEST AFRICAN GOLD OUTPUTS 489 April, 1919 Treated, tons Value Abbontiakoon Abosso 8,002 7,100 16,217 12 255 Ashanti Goldfields 8 139 8 862 Prestea Block A Taquah 14,930 5,100 24,803 14,234 Wassau : 4,108 RHODESIAN GOLD OUTPUTS April, 1919 Treated, tons Value Antelope 3,200 4 722 Cam & IVIotor Eldorado Banket 4,021 10,233 Falcon 14,522 28,036* Gaika 3,066 5,310 Globe & Phoenix Lonely Reef 5,754 4,640 7,976f 24,434 Rezende 5,300 13,597J Rhodesia Ltd 345 1,271 Shamva . 56,595 33,916 Transvaal & Rhodesian Wanderer 1,800 10,070 5,400 3,286 *Gold, Silver, and Copper. t Ounces Gold. t Gold & Silver CHAPTER XXVIII CRIPPLE CREEK, KALGOORLIE, AND GOLDFIELD DEVELOPMENT OF CRIPPLE CREEK AND KALGOORLIE THE GEOLOGY OF CRIPPLE CREEK ESTIMATE OF AGGREGATE RESULTS PORTLAND MINE KALGOORLIE THE COSTS OF FIVE PROMINENT MINES COMPARISON OF CRIPPLE CREEK AND KALGOORLIE GOLDFIELD, NEVADA GOLDFIELD CONSOLIDATED MINES Co. ESTIMATE OF COSTS. CRIPPLE CREEK AND KALGOORLIE THESE two important gold-mining districts were discovered and opened on opposite sides of the globe at about the same time, shortly after 1890. Their appearance added greatly not only to the output of the yellow metal but also to the interest in mining enterprises. It was confidently believed for a number of years that they represented a type of ore deposits that had before been overlooked on account of their re- fractory nature and their elusive non-spectacular appearance; in other words, because they were hard to treat and hard to find, and that many other similar ones would be discovered. This expectation, though natural, has not been borne out by events; for no important new districts of the same type have been discovered since, and the original camps after a rrstory of less than twenty years find themselves already old and de- clining in real and comparative importance. Nevertheless, their develop- ment and exploitation have been exceedingly interesting episodes in the history of gold mining and the men who took part have added much to the science of mining and metallurgy not only in gold in but other metals. The parallellism between the two districts is, I believe, more apparent than real. About the only point in common is the occurrence of tellu- rides of gold, but even in that particular the similarity is not by any means complete. At Kalgoorlie only a part of the gold is associated with tellurium, while at Cripple Crreek it nearly all is. The result is that in the two camps' the metallurgical problem is different; at least it has been worked out differently. When we come to geological and structural relations there is little similarity. At Kalgoorlie the veins are in a volcanic formation, ap- parently of great geological age, that has been subjected to severe and deep-seated dynamic action, resulting in the formation of strong lodes in shear zones. 490 CRIPPLE CREEK, KALGOORLIE, AND GOLDFIELD 491 CRIPPLE CREEK MINES Cripple Creek, on the other hand, presents deposits in an extinct but geologically recent volcano. The rocks have not been subject to dynamic or metamorphic action, except those incident to the formation of the veins. The productive area is elliptical in outline with a length of about five miles from N.W. to S.E. and a width of three miles from N.E. to S.W., and contains numerous veins throughout, but the most- valuable ones seem to be near the periphery of the volcanic mass, many being in the enclosing granites at or near the contact. The veins are apparently all of the same age and of the same charac- ter, being deposits in fissures that result from adjustments following the cooling of the volcano. There was very little faulting along the veins either preceding or following the mineralization. The deposits vary in character according to the intensity of the mineralization along the fissures and according to the character of the rocks traversed by the fissures. In some cases a vein will be merely the quartz filling of an open crevice with very little impregnation of the wall rocks. In other cases, the deposit of quartz in the fracture planes is minute in quantity, but extends out into innumerable joint planes along which there has been a limited impregnation of the wall rocks. In this case the workable ores have the form of a stock-work. In still other cases the walls of a fissure are altered considerably for several feet on each side of the crevice by the introduction of new quartz replacing certain minerals in the original rocks. This occurs more commonly in the granite, but some- times in basalt dikes, and wherever it happens the ore becomes a homo- geneous mass. Speaking generally, the ore deposits are either too small or too im- perfectly mineralized to allow of the mining of merchantable ore in mass. A large amount of waste must be broken, of such character that it can better be rejected by hand sorting than by any other means. While it is not possible to give exact figures on this point it is a fair estimate that only 40 per cent, of the material stoped is shipped to the mills. The amount of development work required is very great. Up to 1903 it appears that some 2,300,000 ft. of shafts, drifts, crosscuts, raises, and winzes had been dug for a total output of some 3^ million tons of shipping ore and some 9 million tons of ore stoped. Since the development work may be estimated io average some $14 a foot, it appears that it must have cost at least $8 a ton for all ore shipped from the district up to that time, for development alone. The cost of stoping the same ores must have averaged not less than $8 a ton more. The cost of freight and treatment in mills and smelters may be estimated at an additional $9 or $10, so that the total cost, exclusive of plant, was $26 per ton shipped and certainly more than $10 per ton stoped. 492 THE COST OF MINING If we add the plants, the total estimate for all ores will not fall far short of $30 per ton shipped, and $12 per ton stoped. The ores averaged probably $36 a ton, leaving a profit of about $6 a ton or less than 18 per cent, of the gross value. These figures being for the district as a FIG. 11. Illustration of the development work in the Portland mine and vicinity, where 1 foot of opening work has been necessary for mining 4^ tons of shipping ore. whole, they naturally include a good many failures. Some of the mines have secured lower costs throughout their history, and many are securing much lower costs now. The dominant factor, however, in lower costs is the lowering grade of the ore. In 1899 the ore shipped averaged $36.73 per ton. In 1906 the average had fallen to $20.35 per ton. CRIPPLE CREEK, KALGOORLIE, AND GOLDFIELD 493 POETLAND MINE This is the best mine in the district and it presents good examples of all the types of deposit known in Cripple Creek. Most of the ore has come from an area of some 60 acres in which there have been done up to the end of 1908 above the 1500 ft. level no less than 212,593 ft. of development work. This development was necessary to open up a great number of veins, some of which were independent and others had a mineralized connection with other veins. The total production of shipped ore was 949,382 tons, valued at $29,430,842, giving an average of $31 per ton. The total amount stoped may be estimated at 2,400,000 tons, so that we may estimate that it required one foot of development work for every 4J^ tons shipped and for every 11 tons stoped. The dividends paid up to 1908 amounted to $8,227,800 1 and the quick assets to approximately $500,000 more, making total earnings $8,727,000, equal to $9.30 per ton shipped. A rough estimate of average costs is as follows: Per ton, shipped Per ton, crude Development $3 00 $1 20 Plant 1.50 0.60 Stoping 8.00 3.20 Freight treatment and deductions 9 20 3 68 Total $21.70 8.68 The recent history of the mine shows much lower costs largely due to a diminution of the grade of the ore and of the amount of develop- ment work done, and also to the fact that the company has been milling its own ores. In 1903 the mine was shipping ores at averaging $30 per ton and doing one foot of development work for 4^ tons shipped. In 1908 the grade of the ore had fallen to $19.45 per ton shipped and the development work was only one foot to 16 tons shipped. The last report that gives operating costs in detail is that for 1905, from which I get the following data: The costs were as follows: Tons shipped 109,232 Average yield per ton after deducting mill losses 21 . 96 Development work accomplished 21,073 feet, equal to one foot to 5^ tons. Grouping the costs per ton shipped it appears that the expenses at the mine were $9.36 and those at the mill, including transporation, $5.94. The extraction of the mill was 95.82 per cent. 1 In the ten years since this date the mine has paid only about $2,000,000. 494 THE COST OF MINING Per ton, shipped Per ton, sloped esti- mated at 2^ times amount shipped Qf onincr $7.85 $3.14 0.29 0.12 1.22 0.49 1.37 0.55 IVIillins ftiid construction 3.49 1.40 1.00 0.40 frpTiprfll pxDPiise 0.08 0.03 Total cost $15.30 $6.12 Profit per ton 6.66 2.26 When we consider that the ore thus treated is obtained by rejecting at the mine a large part of the ore stoped, and that the rejection means a loss of some low-grade ore which must be computed to average some $2.50 per ton, we find that the losses from sorting, assuming that 60 per cent, is rejected, must equal $1.50 per ton stoped. On this basis it appears that the grade of ore that can be mined under the conditions exhibited is approximately $>8 per ton where sorting can be practised, and where the ore can be shipped without sorting it must be $10 per ton. With the still lower grade ores which have been mined since 1905 a certain lessening of cost is obtained by diminishing the proportion of development work and on account of the lower transportation cost for lower grade ores. The freights from the mine to the mill are based on a sliding scale according to the grade of the ore. MILLING 1 The mill in which the ores were treated was built in 1901 at Colo- rado Springs, some forty-five miles from the mine. The cost of the milling plant is given at $910,000. Owing to the steady diminution both in volume and in grade of the ore it does not seem unfair to expect the practical exhaustion of the mine within a few years. The amount of ore treated in the past by the mill is approximately 600,000 tons and it does not seem unreasonable to charge the ore with $1 per ton for the amortization of capital in the mill. It must be remembered that this capital was obtained by withholding dividends from the stockholders, and the ore now being treated is enjoying the value thus created. The mill treatment consists of dry crushing, followed by careful roasting of all the pulp; chlorination in barrels and concentration of the 1 This mill was recently abandoned in favor of the improved cyanide process at the Golden Cycle mill. CRIPPLE CREEK, KALGOORLIE, AND GOLDFIELD 495 tailings. The concentrates shipped amount, I believe, to about 1 per cent, of the ore. The Portland mine while representative in a way of the whole Cripple Creek district is decidedly a better mine than most of the others. Its costs are undoubtedly below the average, although there may be some like the Strong and the Golden Cycle, which have enjoyed lower mining costs on account of having a more homogeneous ore. Its history is fairly indicative of the district in which variation in costs is probably due in the main to development work. Many properties that have pro- duced just as good ore on the average as the Portland have not been profitable because their output has been spasmodic and the earnings from an occasional bonanza have been absorbed in propecting. The Portland mine has been well and energetically managed from its very beginning. It has created its plant out of earnings and has con- sistently made money for its stockholders. From time to time there has been criticism of its management and methods, but I am convinced that such criticism has on the whole been ill-considered, being based largely on comparison with other properties that have issued only partial state- ments of costs for limited periods. Cripple Creek is a good example of a mining camp where results have not been fully understood. For instance, it is, or was, commonly believed that labor in Cripple Creek was exorbitantly paid and ineffective. In my opinion the truth is the exact contrary of this. The miners of Cripple Creek have always been an exceedingly intelligent and effective lot of men. The wages average, it is true, some $3.40 for the eight-hour shift, but competition for the places has allowed operators to work with selected men. While the climate is fairly healthful the altitude of 10,000 ft. above the sea certainly diminishes one's endurance as compared with sea level conditions; but to clinch the argument as to comparative effici- 896 FT. DRIFTS AVERAGING 5 FT. BY 7 FT. Labor Costs Per Foot Tramming $898 38 $1 00 Pipe and trackmen . . 125.12 0.14 Machine men .... 1,686 00 1.88 Total labor $2,709.50 $3.02 Other Costs: Use of machines air etc . . . $867 . 57 $0 97 Repair A cars etc 69 98 08 Explosives 1,279.76 1.43 Hoisting . 414 53 0.46 General expense surveying assaying, bosses 515 20 58 Grand total $5,556 54 $6.20 496 THE COST OF MINING 1229 FT. CROSSCUTS 5 FT. BY 7 FT. Tramming $1,138.87 $0.93 149 37 12 Machine men 2,473.49 2.02 Total labor $3,761.73 $3.07 Other Costs: Use of machines air etc $1,191.24 $0.97 Repairs cars etc 111 28 08 Explosives 2,044.65 1.66 Hoisting 656 . 67 0.53 General expense, surveying, assaying, bosses 819.26 0.67 Grand total $8,684 83 $7 07 112 FT. RAISES AND WINZES Tramming . . $105.76 $0.094 Pipe and truckmen Timbermen 3.37 133 17 0.03 1.19 Machinemen . . 354.50 3.17 Total labor . . 596 80 $5.33 Other Costs: Use of machines, air, etc $186 25 $1 66 Repairs, cars, etc 6 84 06 Explosives 158 52 1 41 Lumber and timber 170.65 1.51 Hoisting 44 41 40 General, bosses, assaying, etc 50 37 0.45 Grand total $1 213 84 $10 84 ency of the highly paid labor of Cripple Creek with that of other places I will give the preceding figures on the cost of development work in the Portland mine for the first half of 1903. The grand total cost for all underground labor was $7.068 for 2237 ft. of development work, equal to $3.11 per ft. While it is not possible to pretend that these figures are an average for the history of the mine, it is evident that they exhibit a good record of labor efficiency. The rocks through which these openings were made might be classed as erup- tive rocks of average hardness, being andesites and granites. There was no pumping charged against these costs. This is another evidence of the lack of correspondence in mining costs between rate of wages and the cost of labor. If the same kind of work is done cheaper anywhere I have not been able to find the place. 1919 Note. Under present conditions it is hard to see how any of the Cripple Creek mines can pay. CRIPPLE CREEK, KALGOORLIE, AND GOLDFIELD 497 KALGOOBLIE MINES As remarked above, the resemblance of Kalgoorlie to Cripple Creek is more apparent than real, being based largely on the occurrence of telluride ores in both places. The external factors at Kalgoorlie are much less favorable on account of a dry hot climate and long distances from populous centers. The internal factors are more favorable than those of Cripple Creek. The lodes in Kalgoorlie are much larger, more persistent, and better mineralized. Instead of being split up into a multitude of small veins containing short and inconstant ore shoots, Kalgoorlie mines have only a few lodes which present ore shoots of an average stoping width of 11J-2 ft. The lodes have been found to be payable to a depth of 2600 ft. Comparing the two districts at large, it is probable that Kalgoorlie has one capital advantage in having a much smaller proportion of develop- ment work to do. Recollecting that all Cripple Creek mines seem to require one foot of development work for every four tons stoped, making a cost of more than $3 per ton for that account alone, it seems that Kal- goorlie enjoys a considerable advantage in that particular. I have, however, no means of obtaining full figures for the whole district of Kalgoorlie, upon which to base an exact comparison, but am compelled to draw conclusions from the records of some individual mines as com- pared with the Portland mine. In stoping the Kalgoorlie mines have a marked advantage in being able to avoid sorting. The ore is sent to the mills practically as it is broken in stopes of considerable width. There is no evidence, however, that the cost per ton of rock handled is any lower in Kalgoorlie than it is in Cripple Creek. When we come to milling we find that the figures are somewhat in favor of the Australian district. The ores are milled on the spot, thus avoiding railroad transportation charges. The processes themselves are slightly cheaper than those employed at Cripple Creek, but the ex- traction of the gold is somewhat less perfect, being from 85 per cent, to 93 per cent, as against about 96 per cent, in the Colorado camp. Two distinct methods are employed about equally. The first method is wet crushing in stamp mills followed by amalgamation, by concentration and cyaniding of sands and slimes, the concentrates alone being roasted and then treated by a special cyanide process. This process effects a saving of from 85 to 93 per cent, of gold at a cost of from $2.21 to $3.92 per ton, varying according to the size of the mills and the grade of ore. The alternative process consists of dry crushing in ball mills followed by roasting the entire pulp and then cyaniding. This process saves from 90 per cent, to 92 per cent, of the gold at a cost which seems to average 32 498 THE COST OF MINING somewhat higher than the other processes, averaging for two mines $4.20 per ton in 1905. The largest mills in Kalgoorlie have a capacity of more than 20,000 tons a month as against 10,000 tons for the Portland mill. It is possible that if Cripple Creek ores were milled on the same scale, the costs would be lower than they are. When we come to con- sider the difference in natural advantages between the two points, it is evident that the Kalgoorlie ores are at a disadvantage. They have to be treated under the most unfavorable conditions: water, coal, and all supplies being extremely expensive, while in Colorado the mills pay little or nothing for water and are situated in proximity to coal mines. The following is given as a characteristic analysis of ore: Silica 60 Percent. Alumina u P er cent - Ferrous oxide. 5^ per cent. Pyrites 7 P er cent - Calcium carbonate 7^ per cent. Magnesium carbonate 6 percent. Soda and potash 1^ per cent. Water 1^ per cent. The following table illustrates the diminishing grade of ore with increasing depth in the Great Boulder mine : 300-400 $29.60 400-500 39.90 500-600 49.50 600-700 18.80 700-800 28.70 800-900 27.20 900-1000 27.30 1000-1100 24.60 1100-1200 19.70 1200-1300 19.80 1300-1400 13.40 1400-1500 14. 60 1500-1900. . . 12.70 If we assume that this ore is worked with an extraction of 90 per cent., the actual yield would be somewhat less than $20 per ton. These figures are quoted from an article by Mr. G. W. Williams on " Mining Practice in Kalgoorlie," in the Engineering and Mining Journal of January 25, 1908. Our English friends have been disposed to believe that their practice in Kalgoorlie has been superior to that of Colorado. It is possible that they may be right in this contention, but it must be remembered that they do not secure as high an extraction as the Colorado mills, and in making comparisons of costs they may overlook some of the dominant factors. In order to convey in general terms a comparison of the opera- tions in the two camps I present the following tables showing the results CRIPPLE CREEK, KALGOORLIE, AND GOLDFIELD 499 in 1905 at five of the principal properties of Kalgoorlie, trying in each case to present the figures as nearly as possible in the same manner as those given for Cripple Creek, and reducing all statements to short tons and American currency. Note in 1919. The output of this district has declined enormously. KALGOORLIE MINES WHERE ORES ARE CRUSHED WET IN STAMP MILLS AND ONLY CONCENTRATES ROASTED. RECORD FOR 1905 SHORT TONS Ivanhoe Oroya-Brownhill Golden Horse- shoe Tons 196 569 112 713 249 800 Assay value per ton $15 50 $30 21 $14 87 Loss in milling 2 36 2 11 1 65 Yield 13 14 28 10 13 22 Feet development for year 6,808 12,285 8.047 Cost development per ton . . . $0 82 $1.43 $0 49 Current construction 65 2 17 1 08 Working Costs: Breaking ore 1 50 83 Filling stopes 24 0.28 Tramming and hoisting 0.40 0.58 Total mining 2 12 1.69 2.24 Rock breaking 09 0.16) Ore transport 03 0.12 Milling 50 > 0.51 1 1.32 Concentrating 0.12 o.isj Roasting concentrates } 1 ton con- 10 (1 in 16) 0.12] Cyaniding concentrates t centrates Fine grinding concentrates J to 18 crude Fine grinding sands 0.06 0.02 16 0.07 0.09J 0.31 0.10 Cyanide by percolation 0.21 0.98 Cyanide by agitation .... 60 1.70 Filter pressing Precipitation and smelting 0.15 0.11 0.40 0.11 0.13 Re -treating . . . 01 0.22 Maintenance 0.06 Total treatment 2.21 3.92 2.59 General expense London and Kalgoorlie. . . . Realization of bullion Deduct profit on stores 0.51 0.14 0.10 0.64 0.25 0.14 0.42 0.02 Net working costs 4.94 6.36 Taxes 0.30 0.80 0.31 Freight and treatment on ore shipped (Golden Horseshoe = $22.79 per ton) Total estimate of cost 6.45 10.76 2.11 9.26 Losses in milling 2.36 2.11 1.65 Total costs and losses 8.81 12.97 10.91 Profit per ton 6.69 17.24 3.96 Percentage profit 43 57 27 500 THE COST OF MINING KALGOORLIE MINES WHERE ALL ORES ARE ROASTED Great Boulder Proprietary Great Boulder Persever- Tons 147,900 165,465 Assay 'value' $20.56 13.94 Loss in milling 2.47 1.30 Yield 18.09 12.64 Development feet incl. diamond drilling 7,373 14,163 Costs per ton treated Plant expense 1-41 0.51 Development 1-07 (average 3 yrs.) ; 1 . 60 Mining Ore breaking. ! 2.07 2.20 Treatment Sulphides 2 13 Cyanide plant (tailings) . . 1.01 95 Tailings distribution j .... 0. 12 Tailings transport j .... 35 Realization of bullion 0.05 0.16 Purchase tailings . 04 Insurance General expense London 0.31 24 Kalgoorlie j 0.39 0.29 Taxes Australia j 0.49 0.11 Grand total cost per short ton 8.93 10.48 Mill losses 2.47 1 .30 I $11.40 ! $11.78 Profit per ton 9. 16 2. 16 Percentage profit 44 5 15.5 Casting up an average of the ore produced by these mines we find that the assay value of all five was about SI 7. 60 per ton. It may be interesting to make a sort of comparison between these mines and the Portland of Cripple Creek in order to observe the difference in results obtained on an ore of equivalent value in the two districts. In order to avoid the labor of averaging costs let us take the results of the Ivanhoe mine, which produces ores nearest the average in grade, and assume that the Portland mine were producing the same grade of ore, using the costs reported by each for the year 1905. Comparison of results at Ivanhoe and Portland mines, assuming that each produces ore averaging by assay $15.50 per ton, but that the Port- land mine rejects by sorting 60 per cent, of ore stoped and that the waste rejected averages $2.50 per ton: (Table follows.) The Ivanhoe is stated by Mr. J. H. Curie ("Gold Mines of the World") to be the best managed mine in Kalgoorlie. Furthermore, it is one in which the wet crushing method is used. Undeniably it is CRIPPLE CREEK, KALGOORLIE, AND GOLDFIELD 501 Ivanhoe Portland Tons mined per foot development . . Cost development 27 $0 82 Tons mined per foot development . Cost development 13 $0 4.Q Cost for current construction mine and mill 65 Current construction mine only . . . 0.12 Mining 2 12 IVIining and sorting q 14. Sorting losses 00 Sortinsr loss f>0 tipr ppnt nf fl?9 ^0 1 ^ft Transportation to mill 0.03 40 per cent, of $2 00 80 Milling 2 18 40 per cent of $3 50 1 40 Amortization of mill (included under construction) . . . 00 40 ner cent of ft1 OQ n 4ft General expenses 85 (included in costs mainlv) 003 Loss in milling 2.36 4 per cent of $35 00 1 40 Total costs and losses 9.01 9 28 Deduct profit on stores 0.10 00 Net cost 8.91 9 28 Profit per ton 6.69 6 22 Percentage profit 43 40 the one with which the Portland can least afford to compare itself. Were we to take the Great Boulder and the Perseverance for comparison we should find the figures very much in favor of the Colorado property. Those properties show milling costs of $3.19 and $5.39 respectively, and exhibit the following comparison (using the same figures for the Portland as before). Great Boulder Proprietary Great Boulder Perseverance Portland Assay value of ore $20 56 $13 94 $15.50 Total operating costs 8 93 10 48 6 38 Loss in milling and sorting 2 47 1 30 2 90 Total costs and losses 11 40 $11 78 $9 28 It is plain that there is no ground for making a comparison favorable to one district and unfavorable to the other; and that if the manage- ments in the two districts were to be exchanged the stockholders would not have much cause to worry. Since 1905 the mines have undoubtedly succeeded in lowering their costs somewhat, as in the case of Cripple Creek, in proportion to the diminishing grade of the ore. The Golden Horseshoe mine in the years 1907 and 1908 treated 554,131 tons with an average yield of $10.95. The dividends paid were $2,405,600, equal to $4.34. Assuming that the 502 THE COST OF MINING dividends equaled the actual profit, the cost figures out at $6.61 per ton. This compares with the total of $7.15 for the same mine in 1905. It is to be remarked that in the tables given above the Golden Horseshoe ships 7 per cent, of its ore to smelters in the form of concentrates and high-grade ore. This imposed a further cost of $2.11. This mine is still securing a profit of 40 per cent, of the gross value of gold produced. Its complete record for eleven years' operation shows an output of $33,- 154,000 in gold, from which $13,468,000 have been paid in dividends, equal to 41 per cent, of the gross yield. The total number of tons treated is not given, but it will approximate two million, so that the yield for the life of the mine has been about $16.70 per ton and profits $6.70, leaving $10 a^ihe cost of operating, including all plant and development. The records of the mine, however, do not indicate the expenses and deductions incurred for shipping ore to the smelters, simply reporting the sums received net from such shipments. If these expenses were included it is probable that they would make an addition of something more than $2 per ton to the costs and to the yield of gold, making the total costs something more than $12, and the yield of gold approximately $19 per ton. If the extraction averaged 90 per cent., the gross assay value of the ores mined would be about $21, which approximates very closely to that of the Great Boulder. No mines in Cripple Creek have produced anything like such quantities of ore of this grade, nor have they earned such large dividends. The fact is that the Kalgoorlie camp contains only nine or ten mines of first-class importance, but these have produced nearly all the gold and all of the dividends of the district. In them the values have been con- centrated into a much smaller space than in the case of Cripple Creek, where the output has come from a large number of comparatively small producers, and where payable values have practically ceased at a depth of 1200 ft. This group of dividend-paying properties are therefore better and higher grade mines than any in Cripple Creek. Their outlook for the future is also far more attractive. The Ivanhoe reports reserves of 934,000 tons, averaging $11.75 per ton, and good ore at the 1970 ft. level; the Golden Horseshoe 1,065,000 tons averaging $12, with $15 ore on the 2000 ft. level; the Great Boulder 731,000 tons, averaging $16, and good ore on the 2600 ft. level; the Associated 483,517 tons, averaging $10 per ton; in each case assuring the product for 3 to 4 years, and an aver- age profit of 40 per cent, of the gross value. It would not be surprising if they proved payable to much greater depths. GOLDFIELD, NEVADA This district was discovered in 1903 about twenty miles south of the somewhat older camp of Tonapah, the success of which had served to attract many prospectors to the comparatively old mining regions of CRIPPLE CREEK, KALGOORLIE, AND GOLDFIELD 503 Nevada. The discovery in that year of some rich ore on the Jumbo and Combination mines started a considerable excitement during 1904 fol- lowed by comparative quiescence during the latter part of 1905; but the discovery of an extraordinary bonanza on the Mohawk claim in April, 1906, encouraged the recrudescence of the mining boom not only in Goldfield but in other parts of Nevada, until the excitement reached by the end of 1906 a degree of extravagance for which it would be hard to find a parallel. About that time the owners of the Mohawk, pursuing their good fortune with commendable intelligence and energy, secured most of the promising ground in the camp and formed the Goldfield Consolidated Mines Company, which is to-day, after a period of re- organization and development, the most productive and profitable gold mine in the world. The Goldfield district is in a region of volcanic rocks of doubtful but probably rather recent geological age. A series of great quartz veins, or rather zones of silification is found, indicated by a series of bold outcrops which have a strike usually nearly north and south. It seems probable that the gold belongs to a later mineralization, because the quartz masses are nearly or quite barren. The rich ore shoots seem confined to smaller fissures that traverse the great quartz masses in various directions and have produced a considerable amount of brecciation in them. These later fissures often cut the great quartz reefs at right angles and the ore shoots seem rather more apt to occur along the flanks than in the interior of the reefs. There have been discovered a number of rich bonanzas, probably due in considerable measure to a process of reconcentration near the surface, but exploration has not proceeded deep enough to establish this as more than a probability. The grade of the ore is already diminishing rapidly owing to causes that are universal in such districts. Owing to lack of treatment facilities on the ground, and to the high cost of transportation, at the beginning, only high-grade ores could be shipped. In 1906 the Mohawk bonanza produced in eight months upwards of 70,000 tons of ore averaging $120 per ton. With the institution of milling plants on a large scale, lower grade ores can be treated so that at present the Goldfield Consolidated is mining 20,000 tons a month of ore averaging $40 a ton. That such values will be maintained is an unreasonable expectation that has never been indulged in by the management. I am led to believe that the actual developments indicate about one-half a million tons of ore that will average between $20 and $25. During 1907 'and 1908 the efforts of the management have been directed towards the completion of a satisfactory organization, the prose- cution of development and the construction of a new mill. This was done so successfully that at the beginning of 1909 the property was ready to begin extensive operations on a new basis. A magnificent modern mill 504 THE COST OF MINING was built with a capacity of 600 tons a day with a railroad to provide for transportations of ores to it, together with some additions to the mining plant at a total expense of $900,000. During 1908 17,460 ft. of development work was done by the com- pany at an average cost of $17.60 a foot and 20,463 ft. were done by leasers. The amount of ore developed by this work is not stated, but the lessees shipped only 25,600 tons and probably did not put much ore in sight, so that this portion of the development work only seems to have opened up to lj^ tons per foot. What the cost for development will average is a question that probably will only be determined after several years' experience, but judging from the large amounts done to date, it is hardly likely that the cost per ton will be less than $2 from this item. The cost of stoping will undoubtedly vary according to the extent to which ore must be sought in narrow seams, but experience to date seems to indicate that ore of the milling grade will be found in fairly wide stopes, so that the cost of stoping will probably be about $2. In addition to this the report for 1908 seems to indicate that general expenses will approxi- mate 30 cents per ton on an output of 240,000 tons a year. It would seem therefore, that the cost of mining might be calculated at about $4.30. MILLING Mr. J. H. MacKenzie, manager, describes the milling process briefly as follows: "Crushing in gyratory rock breakers and stamps, with regrinding to slime and tube mills; amalgamation over copper plates both before and after milling; concentration by means of Deister slime tables; cyanidation of tailings from cone ntrators with the aid of Pachuca agitators and Butters filters and zinc dust precipitation. Concentrates are treated in an auxiliary plant by means of a modification of the cyaniding process, and products from all departments of the mill are refined and shipped directly to the mint as gold bullion." This process is very similar to that employed at Kalgoorlie and it is very probable that the costs will be approximately the same. Experience in actual operation has not gone far enough to demonstrate exactly what it will be, but it is worth remarking that the mill is an extremely good one and works with the greatest precision, giving an extraction of about 94 per cent. gold. If we assume that the costs will be the same as at the Ivanhoe in Kalgoorlie, which is a modern mill of the same size, namely, 100 stamps, we may calculate the cost of treatment at $2.20 a ton in- cluding transportation from the mines. It is to be remembered that the cost of the plant is approximately $900,000. Owing to the erratic character of the ore it would seem wise to amortize the plants in five years, which would make a calculation for 75 cents a ton. We may also calculate that current construction will CRIPPLE CREEK, KALGOORLIE, AND GOLDFIELD 505 amount to about 25 cents a ton, making a total plant cost of $1 per ton treated. On this basis we might calculate the costs as follows: Mining $4 . 30 Milling 2.20 Construction . 25 Total current costs $6 . 75 Add for amortization , . 75 Total cost per ton $7 . 50 With an extraction of 94 per cent, these costs indicate that the minimum assay value of a payable ore should be $8 a ton. While the above figures are given only as approximations it is never- theless true that they are made with some reference to the figures un- officially given out by the company for the present year and they may be accepted with some confidence. For the present, year the yield of gold from this property promises to be enormous, perhaps $8,000,000 gross, on which net profits upwards of $5,000,000 may be realized. Such an output will be a new record among the gold mines of the world. Note in 1919. All these hopes were more than realized for a few years. In 1910 and 1911 more than $14,000,000 was paid in dividends, but by 1915 the mine had become practically unprofitable and is now shut down. For details of cost see Peele's Handbook. CHAPTER XXIX SILVER MINING AT COBALT AND GUANAJUATO PHENOMENON OF THE SUDDEN DECLINE OF THE PRICE OF SILVER COMPARED WITH GOLD PRESENT INFERIOR POSITION OF SILVER MINING COBALT AS AN EXAMPLE OF HIGH MINING COSTS LOGIC OF COSTS KfiRR LAKE TlNTIC CHIEF CONSOLI- DATED GUANAJUATO TOMBSTONE. SILVER MINING BY far the greater portion of the silver of the world is now obtained as a by-product from mines that are operated chiefly for lead, copper, or gold; and in this connection the metal has been frequently touched upon in preceding chapters. There are only a few conspicuous districts now where silver is the primary object of the mining industry. Some FIG. 12. The drop in value of silver. remarks on two of these, Cobalt, Ontario, and Guanajuato, Mexico, are sufficiently interesting to warrant insertion. The present obscure position of silver mining is due to one of the most remarkable economic revolutions in history. In the course of twenty- five years in the latter part of the nineteenth century silver declined in value from $1.30 to about 55 cents per ounce, and in so doing suddenly lost, apparently forever, a position of importance as the companion of gold that it had held in the estimation of mankind for thousands of years. It is no wonder that such a violent and unprecedented fall 506 SILVER MINING AT COBALT AND GUANAJUATO 507 astounded the generation that beheld it, and put in play that instinct which attributes any mysterious unpleasant happening to design, and which, in this instance, took the form among the half -informed of an accusation against financiers of a gigantic " conspiracy." It is infinitely more probable that the financiers of the world understood the reasons for the fall of siver as little as other people. It is no part of the present work to offer an explanation; merely to point it out as the most conspicu- ous example of a great commodity suddenly taking a price level radically different from its traditional one. The comparatively unimportant position now held by silver mines would be very different had not the fall in prices taken place, for with silver at $1.29 an ounce, many of the important mining districts would be more valuable for their silver than for anything else. The Cceur d'Alenes, Park City, Tintic, and many other districts would be so changed in the relative importance of the metals they produce that they could safely be called silver-mining camps producing lead, gold, and copper as by-products. COBALT DISTRICT, ONTARIO Cobalt is unique not only on account of the geological occurrence of its ores, but also because it is an example of the absolute inconsequence of high costs per ton in precious metal mining. So far as I know the Cobalt ores are mined at the highest cost of any ores of importance in the world, yet their silver contents are secured at the lowest cost, with the largest margin of profit. The district belongs to the same series of pre-Cambrian rock formations that has proved so prolific in iron, copper, and nickel near the shores of Lake Superior; but at Cobalt the orebodies instead of having the grandiose character so universal in Lake Superior, are exceedingly small, disconnected, and rich. The geological resem- blance to Lake Superior extends to the character of the surface, which is highly glaciated and covered with swamps and lakes with low rounded knobs of more resistant rocks forming occasional eminences above the generally level country. The rocks consist of the ancient greenstone schists, usually called the Keewatin, with some troughs of Huronian quartzites and conglomerates, the latter invaded by dykes, and sills of biabase. The veins occur in all of the rocks to some extent, but chiefly in the sedimentary formations. The superficial extent of the district is several thousand acres, but the individual orebodies are so small that they might almost be described as minute. They are usually only from one inch to six inches wide and from a few feet to 150 ft. long, and ordinarily of no great depth. This at least applies to the ore shoots. Some veins that are barren on the surface contain ores at greater depth. While the absolute bottom of the district has not been reached, the hopes of the operators are more fixed 508 THE COST OF MINING on discovering new veins than on following old ones in depth. The vein filling is largely calcite with some quartz. The ore consists largely of native silver, but associated with it are some of the richer sulphides, dyscrasite, argentite, pyrargyrite. With the silver occurs cobalt, nickel, and arsenic in smaltite, niccolite, and other minerals. The problem of mining such ores consists largely in finding them. Once found the principal problem is to extract them cleanly no con- centrating process being so efficient for the purpose as hand sorting. FIG. IB. The ores once secured are shipped to the smelters at a cost for freight, treatment, and deductions of over $50 a ton. But the ores thus mined contain 750 oz. of silver per ton, so that $50 for all treatment charges only means 7 cents an ounce. The cost of mining in the whole district, outside of treatment charges, seems to have averaged about $145 a ton, probably divided about equally between development and extraction. Even this high figure only means 20 cents an ounce. It is almost amusing to speculate on the surprise that a Lake Superior SILVER MINING AT COBALT AND GUANAJUATO 509 miner must feel at such tremendous costs per ton; nevertheless, there is not the slightest ground for supposing that these high costs do not represent just as good mining practice as any in Lake Superior. It is for the purpose of illustrating this fact that the mines at Cobalt are interest- ing in a work on the cost of mining. Let us neglect the question of finding ores and assume that it costs $75 a ton to get them out of the ground. What does this mean in com- parison with the cost of say $1 a ton for mining the ore at the Wolverine? Simply that it takes seventy-five times as much work to get it out. That this should be so is a direct result of the size and thickness of the ore bodies. In the case of the Wolverine the thickness is 15 ft. or 180 in. and the ore is placed on surface for $1 per ton. It is probable that if the ore body were only 4 ft. thick and as continuous as it actually is, the mining cost at the Wolverine would be about $2 a ton. Now since an opening 4 ft. wide is about the least that can be made, a cost greater than $2 a ton will be simply an inverse ratio of the actual thickness to 4 ft. If the Cobalt ore is to cost $75 per ton we might calculate the thickness of it at 48 in. -h 7% = 1.28 in. A continuous seam, then, of ore 1.28 in. thick ought to cost $75 a ton for mining. It means exactly the same thing if a series of bunches, averaged up, amount to a mean of 1.28 in. In the light of the figures there is no mystery in the fact that an ore- body 1.28 in. thick may be a bonanza. It is worth $400 a ton. If this value were scattered through 4 ft. of a continuous orebody, it would give a value to the whole mass of $11 a ton, equal at average prices to 75 Ib. of copper, which every one would recognize as a bonanza. Such an orebody would give, under the costs prevailing among Lake Superior amygdaloid mines, figures something as follows: Mining per ton $2 . 00 Surface expense, transportation, and milling . 90 Construction and amortization . 50 Smelting, refining, and marketing . 80 Total S4.20 Cost per pound copper about 5.6 cents. At fifteen-cent copper the profit would be 63 per cent, of the gross value. If we scatter the values through a mass 15 ft. thick, there would be the equivalent of 20 Ib. copper per ton, and the costs would be: Mining $1.00 Surface, expense, transportation, and milling . 65 Construction and amortization . 30 Smelting, refining, and marketing . 22 Total $2. 17 Cost per pound copper, 11 cents. Profit on gross value, 27 per cent. 510 THE COST OF MINING In the case of the 4-ft. orebody the costs per ton would be approxi- mately twice as high as in the case of the 15-ft. orebody containing the same copper, but the cost of copper would be only half as great and the profit more than twice as much. This makes it plain enough that the concentration of values is a great economic advantage. In the case of the Cobalt orebody 1.28 in. thick (always neglecting the question of prospecting), on the theory of a continuous seam, the results are as follows: Mining per ton $75. CC Smelting and marketing 50 . 00 Total cost per ton Value per ton, $400; profit, 69 per cent. $125.00 But in Cobalt there is no continuity. The ore must be looked for at an additional cost of $70 a ton so that the actual profit is reduced to 52 per cent. Nevertheless it is quite simple to show that a natural concentration in values involving enormous increases of cost per ton is a distinct economic advantage. RECORD OF COBALT AS A WHOLE Tons Ounces silver Value Dividends 1904-1908 48,545 35,083,300 $19,495,000 $10,000,000 9,495,000 Cost per ton = 43 545" = * Value per ounce, 55.7 cents Cost per ounce, 27 cents NIPISSING MINE 1904-1908 .8,449 8,145,834 $4,540,000 $2,640,000 Cost per ton _ -ifJ99 _ ,184 Cost per ounce, 16 cents NIPISSING MINE, 1908 Tons shipped, 3505; ounces silver, 2,893,931; ounces per ton, 826 Costs Dollars Per ton Per ounce, silver Operation $361,274 85 $105 46 $0.13011 Depreciation 44631 66 13 03 01607 Marketing ore 174,775 66 51 02 0.06294 Legal, etc 22 292 51 6 50 00803 Less income $27 761 61 $8 10 $0 01000 Total $575 213 07 $167 91 $0 20715 SILVER MINING AT COBALT AND GUANAJUATO 511 There is good reason to believe that the above figures for 1908 are ample. They include a depreciation charge on plant and buildings of 24 per cent. It appears that the cost of " prospecting" " exploration," and " development" (whatever they may separately mean) amounts to some 37 per cent, of the total cost of " operation." KERR LAKE MINING COMPANY For the year ending August 31, 1908, this company showed the following record : Tons mined, 528; ounces silver, 1,473,712; ounces per ton, 2790. Costs Production and development $139 530 Per ton $264 25 Per ounce $0 0947 Shipping and smelting 76 093 144 30 0516 General expense 32 904 62 30 0223 Plant and machinery 57419 108 75 0390 Total $305,946 $579.44 $0.2076 This is probably a new record for high costs per ton, yet silver was produced for less than 21 cents per ounce and the profit was nearly 70 per cent, of the gross value. Not all of the Cobalt ores are of such high grade, several of the mines being now equipped with mills for concentrating, but the mills only handle a small tonnage and it is safe to say that if Cobalt had to depend on the low-grade ores it would never have been heard of. The Kerr Lake in 1918 had the following record which illustrates I suppose the changes that have taken place in 10 years. About 2,583,000 ounces of silver were taken from 48,542 tons of rock hoisted. The costs were Mining Per ton rock 5.11 Per ounce silver, cents 9.6 Treatment etc 3.34 1.0 General 0.50 2.3 Outside explorations 1.24 2.3 Taxes 4.70 9.0 Total about 14.89 28.1 Mining Cost per Ton of Rock Hoisted September 1, 1917, to August 31, 1918 Tons rock hoisted, 48,542 Ore 43,129 tons Mine waste 5,413 tons Sacking ore, 1st Grade No. 1 Ag. Co No. 2 Ag. Co 400 tons 610 tons 7 tons Mill ore. . . 27,835 tons 28,852 tons Waste from bumping table 14,277 tons The following were the costs: Total 43,129 tons 48,542 tons rook hoisted at a mining cost of $5. 11 per ton 2,582,992 . 82 ounces silver at a mining cost of 9 . 6 c. per ounce 512 THE COST OF MINING Operating and Profit and Loss Account For the Year Ended August 31st, 1918 Cost of production and development: Stoping $25,515.52 Development 24,946 . 05 Power, light and heat. .. 25,658.51 Ore sorting and jigging . . 15,725. 75 Tramming 29,152.96 Hoisting 7,023.18 Timbering 22,224 . 75 Pumping 2,809.55 Mine expense 13,961.70 Sampling and assaying. . 5,062.82 Proceeds of ore $2,122,951.04 Less: Ore on hand, at smelters, and in transit, August 31st, 1917 (es- timated) 335,141.04 $1,787,810.00 6,652.67 1,735.59 Repairs to plant and 3,259.64 Surface maintenance Stable expense Boarding house expense. . Insurance Timber berth... 10,475.99 6,150.17 1,698.15 2,361.44 2,090.90 Plus: Ore on hand, at smelters, and in transit August 31st, 1918 (es- mated) 549,335.67 $2,337,145.67 Taxes 27,632.72 $247,847.07 Interest. Shipment, treatment and other charges: Shipment expense $4,228 . 32 Milling 8,747.15 Freight 14,043.52 Ore treatment 110,017 . 85 Assaying and sampling . . 4,941,89 Insurance 19,950.30 161,929.03 Administration and general expenses: Directors' fees $620 . 00 Donation to Red Cross . . . 5,000 . 00 General expense 9,596.11 Compensation of manager and engineers 8,899 . 99 Travelling expense 243 . 20 57,073.69 24,359.30 Expenses in connection with lake draining and exploration of outside properties Estimated for taxes Balance, being profit transferred to bal- ance sheet 60,270.42 227,496.90 1,672,316.64 $2,394,219.36 $2,394,219.3 TINTIC DISTRICT A conspicuous example of several important features of the mining industry is afforded by the Tintic district of Utah, situated about 90 miles south of Salt Lake City. Perhaps it should always have been described as a silver mining camp but during the low prices for that metal considerable attention was paid to the copper, lead and gold which the ores also contain. A great series of quartzites, limestones and shales of Paleozoic age forms a mountain ridge known as the Oquirrh Range, the summits of which SILVER MINING AT COBALT AND GUANAJUATO 513 rise to heights of about 8000 ft. Toward the east the ground slopes down regularly toward Utah Lake, which is the southward continuation of the Great Salt Lake valley and lies with an elevation of only 4400 ft. at the foot of the abrupt and imposing uplift of the Wahsatch; toward the west there is a desert valley the elevation of which is about 6000 above sea level. The crest of the range is a great syncline, the western side of which stands nearly verical; but the east side dips rather gently toward the west. This syncline is broken by two intrusive masses each of which occupies a roughly, quadrangular section across nearly the whole range. Of these the southerly one is a granitic batholith which contains within its body a number of productive fissure veins; the northerly one is a funnel shaped mass of rhyolite apparently spread out like a mushroom at the top. It is quite unmineralized. Between these two masses the great syncline of limestone contains numerous tortuous channels of ore which must have emanated at greater depth from the monzonite magma. There is nothing impossible in the supposition that the rhyolite also may be a superficial phase of an offshoot from the same magma. The mon- zonite mass has produced a good deal of contact metamorphism, turning a fringe of the limestones into marble, but the rhyolite has not affected them noticeably. The eruptive masses hold water at, or near, the sur- face; the intervening or underlying limestones were thoroughly drained by nature almost down to the level of Utah Lake, and the ores oxidized to that depth, that is to say, to an average of not less than 2000 feet below the surface. Up to the end of 1917 this mass of limestone partially explored down to, say, 2000 ft., had produced ores containing a gross value of $170,000- 000 from an area of 2200 acres. I suppose the tonnage shipped must have been about 7,000,000. The mass of limestone would weigh about 2200 times as much as the ore that has come from it. How much more it may contain is of course unknown, but there certainly would be nothing startling in supposing that such a proportion of ore might be increased. The output of the district shows little signs of falling off, if any, but the principal locus of extraction varies from time to time as discoveries are made. The profits of such mines as have paid at all have been a scant 20 per cent, of the gross value of the metals shipped by them. CHIEF CONSOLIDATED For some years this mine has been the largest producer of the district. It occupies a large part of the northern portion of the productive area. This land was, in the earlier life of the camp, thought to be entirely unmineralized because the surface is occupied by the barren rhyolite that was mentioned above. But below these volcanics the limestones are mineralized to an unknown distance northward, Acting on this knowledge the company has acquired lands in that direction until it has 33 514 THE COST OF MINING expanded its holdings from about 100 acres in 1909 to about 5000 acres at present. The output in eight years up to the end of 1917 was 323,803 tons with a gross value at average prices of about $7,500,000 as follows : Gold 0.13 oz. at $20.67 $2.68 Silver 22.4 oz. at 0.60 13.44 Lead 151 pounds at 0.045 cents 6. 75 Copper 1.1 pounds at 0. 15 cents 0. 16 Zinc 7 . pounds at . 55 cents . 38 Total $23.41 Less smelter costs and deductions about 11 . 41 Average net value at the mine 12 . 00 Cost of equipment mining and development 6 . 60 Mining profit $5 . 40 But a policy of constantly buying more property in order to provide opportunity to open up ore has cost something like $1.00 a ton additional, even estimating that the ground thus secured will eventually yield several times the tonnage already produced; so that the actual net profits can hardly average more than about $4.40. These were oxidized ores, occurring in long tortuous channels through the limestone. The mineralization consists principally of quartz, with lead, silver etc., scattered irregularly through it. But on reaching the water level at about 1800 feet depth a different grade of ore was encountered. This is shown by the report for 1918. The ore is now a sulphide, presumably somewhat enriched in silver. Gold0.68oz. at $20.67 $1.40 Silver 39.7oz. at 0.986 39.15 Lead 111 pounds at 0.07 7.77 Total $48.32 Smelter deductions 14 . 82 Net to mine 33 . 50 Cost of mining, development and equipment 17. 17 Mining profit 16 . 33 It will be observed that the costs are enormously higher than before. This is explained by the fact that when earnings are large a proportion- ately larger sum is spent on development and improvements. Besides this additional cost is incurred in pumping. But of course the main cause of the rise was the general war inflation. In this mine it has re- quired on the average 1 foot of development work for 4 tons extracted. GUANAJUATO, MEXICO, 1908 Guanajuato has the reputation of having been the most productive silver-mining district in the world; its total output exceeding one thou- sand million ounces. It is the very reverse of the Cobalt district in SILVER MINING AT COBALT AND GUANAJUATO 515 geological structure, ore deposits, and methods. The rocks, instead of belonging to the ancient Algonkian series, belong to the comparatively recent Cretaceous. Instead of the multitude of small veins there are four or five very large fault fissures carrying a strong mineralization of quartz and silver sulphides. The mining methods, instead of depending on the careful sorting of small streaks of rich smelting ore, are designed to extract large quantities, and finally, the treatment, instead of being smelting as at Cobalt, is confined almost entirely to cyaniding. In the early days (and by early days I mean the period of more than two hun- dred and fifty years following 1550, during which an occasional bonanza was discovered) it is probable that Guanajuato bore a much closer resem- blance to Cobalt than it does to-day. It is likely that a very large amount of high-grade ore was then mined and that the lower-grade ores of the present day have become valuable more because the rich ores of former times are no longer to be had than for any other reason. In other words it is probable that if the high-grade ores of former. times were now avail- able the ores being mined at present would not excite much attention. It has often been remarked that Guanajuato bears a close resemblance to the Comstock lode in Nevada, and its history has been similar; but its life has been longer and its output greater. The longer life of the Mexican camp has been chiefly due to the fact that until recently it has not been worked with American appliances and energy, the result being that at Guanajuato, after a life of three hundred and fifty years, the deepest mines have reached a depth of only 2000 ft., while on the Comstock lode explorations reached a depth of over 3000 ft. within thirty years after the first discovery. The present mining activity of Guanajuato is chiefly in the hands of Americans and is extremely recent, dating back only to 1904 when it was first satisfactorily demonstrated that the ores could be economically worked by the cyanide process. Since that time the output of the camp has increased very rapidly. It has now reached an annual output of about ten million ounces, divided among some eight or ten producing mines. The average ore is probably worth some $7 or $8 per ton, the values consisting of about 13 oz. of silver and 0.05 oz. of an ounce of gold. The economics of the districts are somewhat as follows: Labor is very cheap and just as poor as it is cheap; miners earning from $1 a day down. There is no evidence here any more than in India or South Africa that low wages means cheap operating. Water-generated electric power has been brought into the district by American enterprise from a distance of some 110 miles. This power was first used by the mines in 1905 and its introduction proved a great advantage and has much to do with the success of the mining enterprises. 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