Political and commercial geology and the world's mineral resources

by Unknown

COMMERCIAL CONTROL

Copper, lead and zinc form a class by themselves as regards industrial utility and tonnage produced, ranking after iron, which far outclasses them, as the most important base metals. The annual production of each is considerably more than a million tons. In view of the industrial importance of zinc and the fact that brass, an alloy of copper and zinc, is an indispensable material in modern industry, it is not strange that the great industrial nations have contrived many expedients in the endeavor to control the zinc industry.

The ownership and operative control of the mines has been a minor factor in the commercial control of this industry. Economic factors force the location of retort smelting plants in industrial districts adjacent to coal fields, the most important factors being availability and cost of fuel and labor, and proximity to a market for spelter. A lack of fuel and scarcity or high cost of labor has prevented smelting in some regions producing considerable ore. On the other hand, the smelting done in some countries has been entirely disproportionate to their ore output. The revival of nationalist sentiment as a result of the World War may make ownership and operative control a more important factor in the future.

Electrolytic and electro-thermic reduction of ores makes possible the economic production of spelter where previously impossible and may bring about some decentralization of the industry.

Ownership or control of the reduction plants has been an important basis for control of the industry. The most effective control has been exercised through marketing organizations or trade combinations of reduction works, ore-buying and metal-selling agencies, with interlocking directorates, joint ownership and long-term contracts for ores, concentrates and metals. In recent years these became world-wide in their scope and completely dominated the industry.

United States.

—Below are listed the most important zinc smelting companies in the United States, together with the percentage of the total reduction capacity that each controls:

	Percentage of production controlled
New Jersey Zinc Co.	13.4
American Metal Co.	15.2
Grasselli Chemical Co.	10.1
Anaconda Copper Mining Co.	10.0
United States Steel Corporation	7.7
American Smelting & Refining Co.	7.2
American Zinc, Lead & Smelting Co.	5.7
Beer, Sondheimer & Co.	4.7
L. Vogelstein & Co.	1.7
Various independents or of unknown affiliation	24.3

The close affiliations of L. Vogelstein & Co., Beer, Sondheimer & Co., the American Metal Co., and their subsidiary companies, comprising 27.3 per cent. of the smelting capacity, and various ore producers, with their metal-selling contracts with other smelters, enabled them to dominate the American metal market in the interest of the German “Trio.” The Alien Property Custodian took over all three companies during the war and eliminated all alien-enemy ownership and control by disposing of German-owned stock at auction.

The American Metal Co. completely owns the American Zinc & Chemical Co., South American Metal Transport Co., Bartlesville Zinc Co., and South American Metal Co.; it has large holdings of stock in the Ohio and Colorado Smelting & Refining Co., Compañia Minera de Peñoles, Compañia de Minerales y Metales, Compañia Metalurgica de Torreon, Compañia Minera Palmo y Cabrillos, Fundicion de Guayacan, Balbach Smelting & Refining Co., and Nichols Copper Co., some of which operate in Mexico and South America. The capital stock of the American Metal Co. comprised 70,000 shares, of which 34,644 were owned by aliens affiliated with the German “Trio”; 18,620 shares belong to American citizens who have had control of the management, and the remainder belonged to the Merton interests, of London, which has been reorganized by the British government, eliminating alien ownership. The alien-owned shares have been sold by the Alien Property Custodian and the control of the business for a period of five years was vested in a board of five trustees named by him.

The National Zinc Co. was owned by Beer, Sondheimer & Co., one of the German “Trio,” which also owned other metal-producing companies in the United States and Cuba.

The operative control of the American Zinc, Lead & Smelting Co. has been acquired by the Butte & Superior Mining Co., dominated by Hayden, Stone & Co., of New York and Boston. A large interest in the American Zinc, Lead & Smelting Co. was held by L. Vogelstein & Co., formerly the representative of the German Metallgesellschaft in the United States. The American Zinc, Lead & Smelting Co. controls the Wisconsin Zinc Co.; the American Zinc Co., of Illinois; the American Zinc Co., of Tennessee; and the American Zinc Ore Separating Co.

The New Jersey Zinc Co., an American concern, controls the New Jersey field, and, through its subsidiary, the Empire Zinc Co., owns and operates a number of mines in the western states and Mexico, and the Mineral Point Zinc Co., of Wisconsin, one of the three largest producers in that region, and four zinc smelters.

The Anaconda company operates a number of zinc-producing mines in the Butte district and has erected electrolytic plants for the treatment of its own concentrates, one of 25-tons’ capacity as an experimental plant at Anaconda and a plant of 200-tons’ daily capacity at Great Falls, Montana. It has treated some of the production of other companies, notably of the Butte & Superior Mining Co. It is an American company under American control but has many European stockholders.

Germany.

—The ambition of German commercial interests to control the metal markets and resources of the world was more nearly realized in the case of zinc than of any other metal.

The German Zinc Syndicate (Zinkhüttenverband) was organized in 1909, by three powerful interests: (1) The Merton group, comprising the Metallgesellschaft, the Metallbank and Metallurgische Gesellschaft, all of Frankfurt, and the Merton companies of London; (2) Beer, Sondheimer & Co., which through the Tellus stock company controlled over a dozen metal and chemical concerns; and (3) Aron Hirsch & Sohn, at Halberstadt; and was immediately joined by all the important Silesian and Rhenish-Westphalian zinc concerns. The organizers were made exclusive selling agencies for the syndicate and purchases from any foreign sources were made in unison. The syndicate immediately made agreements with Austrian and Belgian producers including the Vieille Montagne, which has mines, works and agencies in many parts of the world. It was also joined by a Dutch concern, Zincs de la Campine. The syndicate embraced altogether 18 firms and regulated both their output and prices. By the end of 1912 this German syndicate controlled directly one-half of the world’s output of zinc and three-fourths of the European production.

Two Belgian and some French works formed another syndicate. A third was formed by six English works, and the competition of United States firms drove all three into the International Zinc Syndicate, which endured up to April, 1914. The International regulated the output of its members but did not fix exact prices. Through the American Metal Co., and affiliated companies, the German syndicate was rapidly becoming a factor of importance in the control of American, Mexican, and Australian zinc production at its source. The German syndicate maintained its dominancy and was rapidly extending and strengthening it throughout the world through banks, holding companies, affiliations with syndicates and cartels, interlocking directorates, and joint shareholdings.

As a result of the war, the Australian zinc concentrates are permanently diverted from German reduction works, and all German control is eliminated. The activities of the Alien Property Custodian have tended to eliminate German interests in the United States. The re-establishment of the nation of Poland may take from Germany all the Silesian deposits and reduction plants, leaving only those of the Rhenish-Westphalian, Harz and Erzgebirge regions, with only one-third the former domestic production of ore. Poland should be twice as important as Germany in the zinc industry, unless Germany should be able to import ores and concentrates on a large scale.

Australia.

—At the outbreak of the World War the Australian zinc industry was in the grip of the great German zinc syndicate, described in more detail above under “Germany.” This controlled the world’s spelter market, determined output and prices and manipulated the market in the interests of Germany. This was possible through long-term contracts for zinc concentrates, in which form nearly the whole zinc product was exported for reduction in Belgium and Germany. Only 10 per cent. of the concentrates was smelted at Port Pirie or in England.

During the war these contracts were cancelled by the Australian and British governments and the work of reconstructing the industry on a purely Australian and British basis was undertaken, the idea being to provide for the treatment, so far as possible, of all ores in Australia, so that they could be marketed in their finished state. The Australian government first formed a metals exchange, through which all metals produced in Australia must pass for sale. The Zinc Producers’ Association Proprietary, Ltd., was registered May 20, 1916, in Victoria, Australia, to market products of the member companies producing zinc ores, concentrates, and metals in the Commonwealth of Australia and Tasmania, all of which have sold their entire output to the association for fifty years. The shares, 100,000 of £1 each, are held by the following companies: Amalgamated Zinc (De Bavay’s); Broken Hill Proprietary, Block 14; Zinc Corporation; Broken Hill Proprietary; Electrolytic Zinc Smelters; Junction North; North Broken Hill; Sulphide Corporation; British Broken Hill; Broken Hill Associated Smelters; Broken Hill Junction; Broken Hill South Silver; Broken Hill Proprietary, Block 10; Mount Lyell Mining & Railway Co.

The Australian federal government, acting through the Zinc Producers’ Association, contracted to sell to the British government the whole output of zinc concentrates in Australia for the period of the war and ten years thereafter. Previously the Prime Minister had contracted for the sale to the imperial government of 100,000 tons of zinc concentrates and 45,000 tons of electrolytic zinc and spelter for ten years. The arrangement provided for the British government taking the stocks of zinc concentrates on hand December 31, 1917, less a definite percentage reserve, and thereafter 250,000 tons per annum for the period of the war, and 300,000 tons annually for the following nine years. Provision was also made for supplying the requirements of the Australian zinc-refining works and the fulfilling of Japanese contracts during the period covered by the British contract. Under normal conditions the Australian output of zinc concentrates, averaging from 46 to 48 per cent. zinc, is about 450,000 tons per annum, valued at $25,000,000.

The effect of the above arrangements is to transfer permanently the control of the Australian zinc industry from German to British citizens under a system jointly commercial and political. The mines and works always were owned by British and Australian capital.

The Zinc Producers’ Association is co-operative in character, guaranteeing to all members equality of treatment irrespective of tonnage. The commonwealth is represented on the board. The federal government is also encouraging in every possible way the establishment of reduction works, particularly electrolytic zinc works. It has been reported that the Burma Corporation was a stockholder of the Zinc Producers’ Association, but this report has not been satisfactorily confirmed. In case it should be true the association may ultimately control the sale of 85 to 95 per cent. of the zinc ores of the British Empire. Having smelting capacity for a considerable part of their production and acting as a unit in selling the surplus, the Australian zinc producers should hereafter be in a strong position in dealing with German, Dutch and Belgian smelters. The smelting capacity will not be largely increased in the near future.

France.

—The nationalist movement in France during the war resulted in the formation of trade associations known as “consortiums,” comprising the principal factor in each industry.[139]

[139] For a description of the consortium covering the mineral industry, the Société Minerais et Metaux, see the Chapter on Lead, [pages 284] and [285].