Evening star. [volume] (Washington, D.C.) 1854-1972, 1962-08-18

fixed price OF So per ton sub
ject to adjustment for nickel
content and oscillation.
The Government agreed to
advance to a corporation
formed for the purpose by Han
ma but wholly financed by the
Government sufficient funds
approximately $22 million to
Immediately build a full-scale
commercial plant of Hanna's
design, but with no profit to
Hanna, and thus gain time
which the Government desired.
If the process turned out not
to be feasible, Hanna could con-
vey the plant to the Govern
ment in satisfaction of the ad-
vanceS. And in consideration
Of turning over all its research
and technical knowledge to the
Government without any pay
ment to Hanna, Hanna had the
right at any time to acquire
full title to the plant by pay
ing off all unpaid Government
advances, plus a bonus Of 71a
per cent of the original cost
Hanna agreed to not only
design and construct, but also
to operate the plant to produce
ferronickel for sale to the Cow
eminent at cost, with no profit
to Hanna from its operation
until the plant had produced
the full tonnage of nickel then
desired by the Government and
contracted for at cost. Hanna
received a flat fee of 100000
a year toward the expense of
providing the salaries and costs
of its organization.
Both parties realized that the
plant had no value except to
operate on ore from this par
ticular mine.
U. S. Had Sway Role
Now, how did this work out
for the Government and for
Hanna? The Government acted
here in three capacities-first,
as banker, advancing the funds
to build the smelling plant and
the working capital to run it;
second, as customer, purchas-
ing the ore from the mine to
run the plant to make nickel
for the stockpile through oper-
alton Of the plant at cost; and
third, as the agency responsible
for national defense, to broad
en- the mobilization base by
creating the one and only
source of domestic capacity to
produce a material in critically
short supply.
First, as banker, the Govern
ment advanced approximately
1928 million to build the smelt-
er and $3.3 million for working
capital and has been repaid
the whole amount, plus 5 per
cent interest.
Second, as customer, the
Government has now bought
108 million pounds of nickel,
has II million more due under
contract at less than market,
and had sold 80 million pounds
at a profit of $4,153, 900 dur
ing the period of acute short
age.
When deliveries are complet-
ed, the Government will have
acquired an inventory of 95
million pounds of nickel for the
stockpile at a cost per pound
of about II cents. This cost
per pound reflects the Govern
ment's total outlay, reduced by
the $4,153,000 of profit which
the Government got for the 80
million pounds it sold and by
the SIT million of bonus that
Hanna paid it on transfer of
the smelter, and also by 81, 799.-
600 of interest already paid to
the Government on its loans.
For purposes of comparison,
the market price of ferronickel
has ranged recently from n
cents to rs cents per pound.
Third, toward its objective of
broadening our mobilization
base, the Government has by
this transaction stimulated the
creation of the only United
States facility for the produc-
ton of nickel, with a capacity