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UNITED STATES v. ALCOA

June 28, 1957

UNITED STATES of America, Plaintiff,
v.
ALUMINUM COMPANY OF AMERICA et al., Defendants



The opinion of the court was delivered by: CASHIN

This is an application by the United States under Section X of the final judgment of July 6, 1950 for an order modifying Section VIII of that final judgment so as to extend the jurisdiction of this Court an additional five years within which period, if conditions so warrant, the United States may petition this Court for further remedial relief.

Section X of the final judgment of July 6, 1950 entered by Judge Knox of this Court, provides:

 'Jurisdiction of this cause is retained for the purpose of enabling the plaintiff or Alcoa to apply to the Court at any time for such further orders and directions as may be necessary or appropriate for the construction or complete execution of this judgment, for the modification or termination of any of the provisions thereof, for the enforcement of compliance therewith and for the punishment of any violations thereof'.

 Section VIII of the final judgment of July 6, 1950 provides:

 'The divestiture of plants and properties of Alcoa, for which the plaintiff has petitioned, is presently denied; however, jurisdiction of this cause is retained for five years from the date of adoption by the Court of a plan, pursuant to paragraph V of this judgment, for the disposal of stock interests, within which period, if conditions so warrant, plaintiff may petition this Court for further and more complete relief.'

 Brief History of Case

 This anti-trust action has been actively litigated for over twenty years. Numerous ancillary proceedings have been held and determined. Fortunately, the purposes of this opinion will be served by a brief summary of the main course of events in its litigated history.

 This case was commenced by the United States against the Aluminum Company of American (hereafter called 'Alcoa') and numerous other defendants, on April 23, 1937. The United States charged Alcoa with numerous violations of Sections 1 and 2 of the Sherman Act, 15 U.S.C.A. §§ 1, 2, and after twenty-six months of trial this Court, through Judge Caffey, dismissed the Government's case on July 23, 1942.

 The Government appealed and, in the absence of a qualified quorum of the Supreme Court, the appeal by Special Act of Congress, 58 Stat. 272, Act June 9, 1944, 15 U.S.C.A. § 29, was heard and determined by the United States Circuit Court of Appeals for the Second Circuit sitting as the court of final appellate jurisdiction. On November 12, 1945 the Circuit Court of Appeals, 148 F.2d 416, through Judge Learned Hand, affirmed in part and reversed in part the trial court's determination.

 Insofar as is material here, the basis of the Circuit Court's reversal was that it found that Alcoa had unlawfully monopolized the aluminum ingot (primary aluminum) market in violation of Section 2 of the Sherman Act. The Circuit Court found that Alcoa's market control in aluminum ingots exceeded 90%. However, the Circuit Court directed that determination of what remedial relief was to be afforded the Government was to be held in abeyance pending the results and effects on competition of the Government's disposal of the huge aluminum manufacturing facilities constructed by it during World War II.

 In 1947 Alcoa applied to this Court for a determination that it no longer had a monopoly and that competitive conditions had been restored in the aluminum industry. In 1948 the Government filed a petition for divestiture and other relief, contending that competitive conditions in the aluminum industry had not been established. Issue having been so joined Judge Knox of this Court, after extensive hearings and in an exhaustive and learned opinion granted the Government's application for relief -- insofar as is material here -- only to the extent of requiring that certain stockholders of Alcoa divest themselves of either their Alcoa stock or Aluminum Limited stock. The Government's application for divestiture was denied, as was Alcoa's petition for a determination that it no longer had a monopoly and that competitive conditions had been restored in the aluminum industry.

 In denying the Government's application for divestiture Judge Knox stated (91 F.Supp. 333, 419):

 'Nevertheless, the Government, for a period of five years, if conditions so warrant, may petition the Court for further and more complete relief'.

 No appeal was taken by either party from Judge Knox' decision. The Government on this application, made within the five-year period, seeks no further or more complete relief other than an extension of the five-year period to make such an application.

 Judge Knox in his opinion made an exhaustive study and comprehensive analysis of the entire aluminum industry as it then existed. He correlated that analysis of the aluminum industry with a most learned exposition of the anti-trust law especially with respect to the function of a court in relief proceedings.

 For the purposes of this motion the parties have stipulated and agreed to certain facts and tables substantially within the framework of those factors considered by Judge Knox and which for the most part merely bring up to date those factors considered in 1950. The Tables so stipulated to are included in the Appendix of this opinion. (153 F.Supp. 172) The facts are as follows:

 '1. Korean Conflict.

 'The Korean conflict began on June 24, 1950. Truce negotiations started on July 10, 1951. An armistice was formally concluded on July 27, 1953. With this exception, the United States has not been involved in war or armed conflict since September 30, 1949.

 '2. Government Control of Production, Distribution and Prices of Aluminum since September 30, 1949.

 '(a) The Defense Production Act of 1950 was enacted by Congress on September 8, 1950, 50 U.S.C.A.Appendix, § 2061 et seq., and subsequently amended from time to time. Pursuant to general authority in that Act to control production, distribution and prices, the Government first provided a priority system and control of inventories in order to channel aluminum into defense needs, essential civilian purposes, and less essential civilian purposes, in that order. The first of the regulations issued by the National Production Authority providing for these controls became effective on September 18, 1950. Under these regulations, aluminum remaining after allowing for requirements of National Defense was distributed on an historical basis, purchasers being permitted to use stated percentages of average monthly use during the base period of January 1, 1950-June 30, 1950.

 '(b) Subsequently, the Controlled Materials Plan supplemented the system of priorities, effective with respect to deliveries in the third calendar quarter of 1951 and subsequent calendar quarters. Under the Controlled Materials Plan, production schedules were promulgated for the producers of aluminum by Government authority, and production and fabrication of forms of aluminum were permitted as to form and amount only in accordance with such schedules, which were issued upon a determination by Government authority of the requirements of consumers for aluminum.

 '(c) The Controlled Materials Plan continued in effect through the second calendar quarter of 1953, when it was replaced by the so-called Defense Materials System. This system covered only military and atomic energy requirements and began with respect to deliveries in the third calendar quarter of 1953 and continues to the present time. Under the Defense Materials System, certain quantities of aluminum are directed by Government authority to be set aside for military and atomic energy requirements. Authorized purchases for these purposes take precedence over purchases of aluminum for any other purpose. The aluminum set aside for military and atomic energy requirements under the Defense Materials System has been decreasing in recent calendar quarters but, in general, has constituted approximately 10% of the supply of aluminum.

 '(d) Pursuant to authority contained in the Defense Production Act of 1950, sales of aluminum and aluminum products were generally subject to Government price regulation between January 26, 1951 and February 28, 1953, during which time two general price increases in aluminum were permitted. The price of 99% minimum average aluminum pig was increased in August 1952 from 18 cents to 19 cents per pound, and in January 1953 the price was further increased to 19.5 cents per pound, along with price increases in other forms of aluminum at both times.

 '(e) Apart from the foregoing, there have been no Government controls of production, distribution or prices of aluminum since September 30, 1949.

 '3. Market Conditions since September 30, 1949.

 'From September 30, 1949 until the present time -- except during a ten-month period from December 1953 to October 1954, when there was a buyers' market in primary aluminum in the United States, in which the supply exceeded the demand -- there has been a seller's market in primary aluminum in the United States, in which the demand has exceeded the supply, including in the supply imports of aluminum from Canada and elsewhere.

 '4. Government Aids in Expansion of Aluminum Producing Facilities.

 '(a) It was the policy of the executive and legislative branches of the Government during the Korean conflict and for some months thereafter to encourage expansion in the domestic aluminum smelting capacity. Such encouragement took two forms: (1) rapid tax amortization, whereby recipients of certificates of necessity granted by an executive agency were authorized for tax purposes to amortize a substantial portion (commonly 80 to 85%) of the cost of new facilities over a five-year period, in lieu of being restricted for tax purposes to take depreciation based on the estimated useful life of the facilities, and (2) government supply contracts, wherein the contractor agreed to construct facilities with its own money (Article I) and the Government agreed under certain conditions to guarantee loans obtained by the contractor to construct the facilities (Article X), and to purchase at prevailing prices the equivalent of five years' capacity production of the primary aluminum facilities to the extent that the contractor did not sell or utilize in its own fabricating operations the output from the newly constructed smelting facilities (Articles I, III 3).

 '(b) A company receiving these Government aids undertook to construct new aluminum smelting facilities, with its own money, of a size and at a location approved by the Government, to give the Government a call on all or any part of the production of such facilities to the extent of the equivalent of five years' capacity production therefrom at prevailing prices (Article III 1(a)), and, during such call period, to offer aluminum in pig, ingot or billet form to domestic nonintegrated users of aluminum to the extent of two-thirds of the production of such facilities in any quarter-yearly period, less such amount of aluminum as the Government purchased under its call rights (Article III 2(a)). The contractor further agreed, for a period of fifteen years after the initial put and call period described above, to offer each year, to nonintegrated domestic users, aluminum pig, ingot or billet in an aggregate amount not less than 25% of the annual capacity of the aluminum smelting facilities constructed pursuant to such contracts (Article VII).

 '(c) The primary aluminum expansion program was closed by the Government on September 22, 1955, acting by Arthur S. Flemming, Director of the Office of Defense Mobilization, after consultation with members of the Defense Mobilization Board. The reason given by the Office of Defense Mobilization for closing the goal was that the aluminum smelting capacity then existing and anticipated had surpassed the stated objectives of the Government and that such existing and anticipated total capacity appeared sufficient to meet the current stockpile and defense programs of the Government, as well as the needs of the military, military supporting facilities, and the essential civilian economy in the event of a defense emergency.

 '(d) Considerable quantities of primary aluminum, the exact figures being a secret of state, have been purchased by the Government and set aside for military stockpile purposes since the institution of the Government-aided expansion program. According to the Stockpile Report to the Congress for July-December 1955, submitted by the Office of Defense Mobilization in March 1956, the minimum stockpile objective had been reached for aluminum, a revision of the supply outlook for aluminum, based chiefly on industry projects for expanding production capacity, having made it possible, according to the said Report, during the second half of 1955 to reduce materially the aluminum stockpile objective. The Defense Mobilization Administrator stated on April 11, 1956, when testifying before the Joint Committee on Defense Production, that achievement of the minimum stockpile objective has made it possible for the Government to forego for the present its right to call a certain amount of aluminum for the stockpile, but that since the long-term stockpile objective had not been reached, the Government would resume calls when it found that it could do so without hurting the civilian economy.

 '5. Expansion of Aluminum Producing Facilities, 1950-1955.

 '(a) Alcoa

 '(i) In November 1950, Alcoa, at the request of the Government, agreed to reactivate aluminum smelting facilities at Badin, North Carolina, and Massena, New York, capable of producing aluminum at the rate of approximately 158 million pounds per year in the aggregate, and the Government agreed to purchase the aluminum produced by such facilities to a total of 672.5 million pounds, or approximately the production of four years of operation. The Government agreed to pay the cost of 'high-cost' purchased power necessary for the operation of such facilities above 5 mills per kilowatt hour. The contract was cancelled as of November 1, 1955, after approximately 617 million pounds had been delivered.

 '(ii) In addition to the reactivation of the above-mentioned stand-by or emergency smelting facilities, Alcoa undertook in 1950 and 1951 a substantial expansion of its facilities, in large part under government supply contracts. This program, as it eventuated, involved an estimated expenditure of approximately $ 360 million, of which approximately $ 255 million was for the facilities covered by the government supply contracts. Of the $ 360 million, over $ 345 million had been expended as of December 31, 1955.

 '(iii) Alcoa entered into two government supply contracts with the United States, acting through the Administrator of General Services, of the type described in stipulated fact 4, above, dated June 7, 1951, effective December 19, 1950, and October 19, 1951. In these supply contracts Alcoa agreed, among other things, to construct new facilities designed to produce approximately 410 million pounds of aluminum per year (see Table below, 153 F.Supp. 172). Such facilities consisted of two new aluminum smelting plants, one located near Wenatchee, Washington, and the other located near Rockdale, Texas, and two new potlines at the existing smelting plant located at Point Comfort, Texas. Adjacent to the new Rockdale plant, Alcoa has constructed a steam electric generating power plant adapted to the use of lignite as a fuel and intends to construct a plant for the removal of tar and tar derivatives from lignite.

 '(iv) Alcoa's government supply contracts also provided for the expansion of alumina producing facilities and bauxite mining operations. They covered a new alumina plant at Bauxite, Arkansas, designed to produce approximately 803 million pounds of alumina annually and new facilities of approximately 340 million pounds annual capacity at the alumina plant at Mobile, Alabama, where Alcoa's expansion was designed, because of technical reasons, to increase its capacity by approximately 438 million pounds annually. The new alumina plant in Arkansas utilizes reserves of low-grade bauxite situated in the vicinity. Bauxite mining and processing operations in Suriname have also been expanded.

 '(v) Alcoa did not call upon the Government to guarantee any loans obtained by Alcoa in connection with construction under the government supply contracts.

 '(vi) Certificates of necessity have been issued, permitting amortization over a five-year period of an estimated $ 265 million of the cost of the aforementioned facilities added since 1950. Of this sum, approximately $ 138 million has been amortized through December 31, 1955. Additional facilities estimated to cost $ 10 million have been certified for similar amortization, but the company has not yet begun construction.

 '(b) Reynolds

 '(i) From 1950 through 1955 Reynolds substantially expanded its facilities, in large part under three government supply contracts with the United States, acting through the Administrator of General Services, of the type described in stipulated fact 4 above, dated July 18, 1951, effective as of December 19, 1950, August 24, 1951 and October 22, 1952, effective as of October 11, 1951. In these supply contracts, Reynolds agreed, among other things, to construct new facilities designed to produce approximately 360 million pounds of aluminum per year (see Table below, 153 F.Supp. 172). The facilities embraced by the expansion program included a new reduction plant at Corpus Christi, Texas, with an annual capacity of 160 million pounds, including a gas diesel electric power generating plant capable of generating 189,000 kilowatts, representing an investment of $ 80 million. In addition, the annual capacity of the Longview, Washington, reduction plant was expanded by 40 million pounds at a cost of approximately $ 12 million, which sum was advanced by the Government on a loan bearing 4% interest and which was to be retired by metal deliveries over a five-year period. The loan has been paid off. An additional potline was installed at the Jones Mills, Arkansas, reduction plant and additional facilities were added at Jones Mills and Troutdale, Oregon, to increase capacity by 50 million pounds per year. These increases in Jones Mills and Troutdale involved an investment of approximately $ 5 million. A new reduction plant was built at Arkadelphia, Arkansas, with a capacity of 110 million pounds per year at a cost of $ 34 million.

 '(ii) Under the government supply contracts, a new alumina plant was constructed at Corpus Christi, Texas, with a capacity of 730 million pounds per year at a cost of $ 43 million, and the company also expanded the capacity of the Hurricane Creek alumina plant by 220 million pounds per year at a cost of $ 3 million. Bauxite mining facilities were expanded to supply this capacity.

 '(iii) The Government, pursuant to provisions of the government supply contracts, and at the insistence of banks and insurance companies which lent the money, but not at the insistence of Reynolds, guaranteed loans of $ 76.75 million obtained by Reynolds in October 1952. These loans were refunded in July 1955 and there is no longer any Government guaranty outstanding.

 '(iv) In connection with this expansion, certain facilities were certified as necessary in the interest of national defense, permitting the amortization over periods of five years for Federal income tax purposes of percentages averaging 81.7% of the total cost of approximately $ 194.6 million. As of October 31, 1955, the total unexpended cost of the expansion and improvements then in progress was approximately $ 59 million. At December 31, 1955, costs in the amount of approximately $ 64.4 million remained to be amortized for tax purposes.

 '(c) Kaiser

 '(i) Since 1950, Kaiser has completed a substantial expansion of its facilities, in large part under four government supply contracts with the United States, acting through the Administrator of General Services, of the type described in stipulated fact 4 above, dated February 2, 1951, effective as of December 19, 1950, December 7, 1951, effective as of November 6, 1951, May 1954, effective as of February 28, 1952, and June 23, 1954, effective as of October 31, 1951. The expansion program included the construction of a new aluminum reduction plant at Chalmette, Louisiana, with a designed capacity of 400 million pounds of primary aluminum per year and an electric power generating plant of 478,200 kilowatt capacity. The estimated capital investment in these facilities was $ 150 million. At the Mead and Tacoma, Washington, reduction plants, additional facilities were installed to increase the annual capacity of these plants by 56.4 million pounds per year (see Table below, 153 F.Supp. 172).

 '(ii) In addition, the expansion program included the construction and installation of facilities for the exploitation of the company's Jamaican bauxite reserves estimated to cost $ 12 million. The Baton Rouge, Louisiana, alumina plant was modified to permit the use of Jamaican and other bauxite and to expand its capacity to 1,600 million pounds of alumina per year.

 '(iii) Substantially all of the facilities were constructed pursuant to certificates of necessity, which permitted the amortization over a five-year period for Federal income tax purposes of approximately $ 250 million, or about 81% of the cost thereof (exclusive of land). Of this amount, approximately $ 108 million had been amortized prior to February 29, 1956.

 '(iv) Kaiser did not call upon the Government to guarantee any loans obtained by Kaiser in connection with construction under the government supply contracts.

 '(d) Anaconda 'Anaconda, owned 95% by Anaconda Copper Company (now Anaconda Company) and 5% by Harvey, completed an aluminum smelter at Columbia Falls, Montana, in 1955, representing an investment of $ 65.3 million, initial production starting in August and full production being attained in December of that year. The Anaconda plant has an annual capacity of 120 million pounds of primary aluminum. The company received a certificate of necessity giving it the right to amortize 85% of the cost of this facility over a five-year period, but declined a government supply contract of the character described in stipulated fact 4 above because it did not want the provision requiring it to sell to nonintegrated fabricators. Anaconda purchases its requirements of electric power from Bonneville Power Administration. The company has obtained its alumina requirements from Reynolds under a five-year contract which expires December 1, 1960. Anaconda, in 1956, entered into a contract with Kaiser for the purchase of alumina to commence between July 1958 and January 1961, as more fully described in stipulated fact 11(c). Anaconda has no present plans to manufacture alumina on a commercial basis, nor has it any present plans to expand its reduction capacity. The company cannot presently be characterized as an integrated aluminum producer since it does not have fabricating facilities capable of converting aluminum pig, ingot or billet directly into semi-fabricated aluminum products. As of December 31, 1955, the Anaconda Company (parent of Anaconda Aluminum Company) had a net worth of $ 701 million and for the year 1955 its gross income before taxes was $ 152 million and its net income after taxes was $ 65 million. '(e) Table of Government-Aided Primary Aluminum Expansion, 1950-1955 Annual Con- tractual Smelting Capacity Year of (Thousands Company and Plant Site Completion of Pounds) Alcoa Point Comfort, Texas 1952 70,000 Wenatchee, Washington 1953 170,000 Rockdale, Texas 1954 170,000 410,000 Reynolds Jones Mills, Arkansas) ) 1952 50,000 Troutdale, Oregon ) Corpus Christi (San (1952 150,000( Patricio), Texas (1954 10,000( Longview, Washington 1952 40,000 Arkadelphia, Arkansas 1954 110,000 360,000 Kaiser (1952 200,000( Chalmette, Louisiana (1953 200,000( Mead, Washington 1952 40,000 Tacoma, Washington 1952 16,400 456,400 Anaconda Columbia Falls, Montana 1955 120,000

 '(f) Production under Government Supply Contracts 'The total amount of aluminum which each of Alcoa, Reynolds and Kaiser is obligated to produce under its government supply contracts, and, as of September 30, 1955, the approximate amount produced and the approximate amount to be produced, are as follows, stated in thousands of pounds: Total Obligation Produced To be Produced Alcoa 2,050,000 1,019,495 1,030,505 Reynolds 1,800,000 754,326 1,045,674 Kaiser 2,282,000 1,016,600 1,265,400

 '6. Domestic Smelting Capacities as of September 30, 1955. '(a) As of September 30, 1955, the annual smelting capacities of domestic primary aluminum producers, based solely upon the capacity of equipment in place, without regard to the availability of economic power, were as follows: Plant Capacity Company and Plant Site (Thousands of Pounds) Alcoa Alcoa, Tennessee 314,200 Badin, North Carolina 94,300 Massena, New York 224,500 Point Comfort, Texas 190,000 Rockdale, Texas 200,000 Vancouver, Washington 190,000 Wenatchee, Washington 200,000 Total 1,413,000 Reynolds Listerhill, Alabama 100,000 Longview, Washington 100,000 Jones Mills, Arkansas 194,000 Troutdale, Oregon 165,000 Corpus Christi, Texas 160,000 Arkadelphia, Arkansas 110,000 Total 829,000 Kaiser Mead, Washington 350,000 Tacoma, Washington 66,400 Chalmette, Louisiana 400,000 Total 816,400 Anaconda Columbia Falls, Montana 120,000

 '(b) The foregoing table reflects such increased capacities over design or original capacities as had been demonstrated by operations as of September 30, 1955.

 '7. Domestic Smelting Facilities to be Added Subsequent to September 30, 1955.

 '(a) Existing Producers

 '(i) Alcoa

 'A new potline, which was under construction by Alcoa at its Point Comfort, Texas, Works on September 30, 1955, reached full capacity of 40 million pounds per year in 1956. Two additional potlines at the Rockdale, Texas, Works, also under construction on that date, bringing in an additional capacity of 100 million pounds per year, are in operation and will reach full capacity by the end of 1956. The installation of additional pots and certain modifications of existing facilities, now partially accomplished and the balance in progress, at the Vancouver and Wenatchee, Washington, Works, will increase capacity by an additional 22 million pounds per year by the end of 1956. On April 17, 1956, Alcoa announced plans for the construction of a new smelting plant, including 375,000 kilowatt coal-fired electric power generating facilities, near Evansville, Indiana, to have an annual installed capacity of 300 million pounds, at an estimated investment of $ 80 million. Alcoa expects that this plant will begin operation in 1957 and will be in full operation by the end of 1958, but actual construction work has not begun as of the date of this stipulation. Alcoa is constructing an additional hydroelectric development on the Little Tennessee River estimated to cost $ 13 million. The foregoing expansion is without Government aids.

 '(ii) Reynolds

 'Under an expansion and improvement program in which Reynolds is now engaged, the annual rated capacities of all of its existing smelting plants except Arkadelphia will be increased by an aggregate of 91 million pounds. This additional smelting capacity is expected to come into operation by the end of 1956. In addition, Reynolds plans to construct a new smelting plant at Listerhill, Alabama, with an annual rated capacity of 200 million pounds of primary aluminum. Bids for general construction work have been invited and certain equipment has been ordered. In connection with the construction of this plant Reynolds has entered into a contract with Ford Motor Company for the sale of primary aluminum in molten form for a ten-year period beginning in the fall of 1957, which Ford at its option may extend for five years if it does so before the end of 1964. Under the contract Ford may purchase a minimum of 64 million pounds and a maximum of 164 million pounds per year, subject to the terms and conditions of the contract. A contract has been entered into by Reynolds with Tennessee Valley Authority to provide power for this new plant. Under the contract, Reynolds is to receive firm power increasing from 52,000 kilowatts in November 1957 to 225,000 kilowatts beginning in September 1958, and continuing thereafter during the term of the contract, which expires in 1967, with the right in Reynolds to require TVA to continue to supply firm power for an additional term of ten years. These facilities are expected to begin operation in the fall of 1957 and to reach full scale operation during 1958. The foregoing expansion is without Government aids.

 '(iii) Kaiser

 'Since September 30, 1955, Kaiser has increased its capacity at the Tacoma, Washington, smelting plant by 10.6 million pounds. It has also announced an expansion of its Mead, Washington, smelting plant by 2 million pounds. The installed capacity of its Chalmette, Louisiana, plant was restated, on the basis of operating results, as 440 million pounds, rather than the 400 million founds for which it was designed, and Kaiser has, in addition, announced plans for the construction of an additional potline at this plant having a rated capacity of 55 million pounds. Kaiser has announced an expansion program estimated to cost an aggregate of $ 178 million, including, in addition to the aforementioned expansion of capacity to the Chalmette plant, the construction of a smelting plant at Ravenswood, West Virginia, with an annual rated capacity of 250 million pounds. Power for the proposed new potline at Chalmette will be obtained from existing generating facilities, supplemented by purchases under a long-term contract with Louisiana Power and Light Company. A thirty-year contract, renewable under certain conditions for two additional five-year periods, with Ohio Power Company will be the source of power for the new Ravenswood smelting plant. As of the date of this stipulation, bids have been invited for the construction of this plant, but ground has not been broken. The entire expansion program is expected to be completed by early 1958. The foregoing expansion is without Government aids.

 '(b) Possible Future Producers

 '(i) Olin

 'Olin, a company engaged in the manufacture of chemicals, paper products, small arms and ammunition, and metal products including aluminum extrusions and tubing, has finalized plans for entering the primary aluminum industry with an investment of $ 89 million. Its new facilities will consist of an alumina plant with an annual capacity of 460 million pounds to cost $ 20.5 million, a reduction plant having an annual capacity of 120 million pounds to cost $ 32.2 million, and a rolling mill of 128 million pounds annual capacity to cost $ 36.3 million. The company has been granted certificates of necessity permitting it to amortize up to 85% of the construction costs of the alumina and reduction plants and up to 50% of the construction costs of the rolling mill and related facilities over a five-year period. It declined a government supply contract because the contract offered did not contain a provision for Government guaranty of loans. All the facilities will be located on the Ohio River, near Clarington, Ohio. The electric power requirements will be furnished under a long-term contract with Ohio Power Company, a subsidiary of American Gas & Electric Company. Pittsburgh Consolidation Coal Company will supply coal for the power generation. Olin has signed a long-term contract for bauxite from Suriname with initial deliveries scheduled for January 1, 1957. The anticipated date of initial production of all three plants is January 1, 1958 and capacity operations are anticipated for April 1, 1958. The construction of these facilities will be financed partly out of the company's own resources and partly through arrangements with an insurance company which has agreed to buy 3 3/4% 20-year notes of the company. Olin had a net worth as of December 31, 1955 of slightly less than $ 343 million. During the year 1955 it reported profit from operations and other income of approximately $ 95 million, and net income after taxes of approximately $ 44.5 million. Alcoa made the offer to Olin which was directed by the Order entered in this case on April 23, 1954, but it was not accepted. However, on June 16, 1955, Alcoa agreed with Olin to sell it 118 million pounds of aluminum over the period 1955 through 1960.

 '(ii) Harvey

 'Harvey, a fabricator of aluminum, including extrusions and forgings, plans to construct an aluminum smelting plant at The Dalles, Oregon, with an estimated annual capacity of 108 million pounds of primary aluminum, at an estimated cost of $ 65 million. Initial production is scheduled for approximately January 1, 1958, and the plant is scheduled to be in full production later in 1958. Harvey has been granted a certificate of necessity giving it the right to amortize 85% of the cost of these facilities over a five-year period, and has a government supply contract of the type described in stipulated fact 4 above. The contract obligates the Government upon request of Harvey to guarantee loans for the construction of the reduction plant, the alumina plant and the bauxite facilities. Alternatively, the contract provides that Harvey may call upon the Government to make advance payments for the construction of the reduction plant, the alumina plant and the bauxite facilities, with provisions for payment of interest at the rate of 5% per annum and for repayment in full before the expiration of the term of the government supply contract. Harvey has a contract for power with the Bonneville Power Administration. As of September 30, 1955, Harvey had a net worth of slightly less than $ 25 million and its net sales during the year ended September 30, 1955 amounted to approximately $ 34 million.

 '(c) Table of Projected Smelting Capacities If and when the foregoing expansion is completed, the annual smelting capacities of domestic companies, based solely upon the capacity of equipment in place, without regard to the availability of economic power, and the years in which full production is expected to be attained (designated 1955 if attained at any time before 1956), are as follows: "(i) Existing Producers Plant Capacity Company and Plant Site (Thousands of Pounds) Date Alcoa Alcoa, Tennessee 314,200 1955 Badin, North Carolina 94,300 1955 Massena, New York 224,500 1955 Point Comfort, Texas 240,000 1956 Rockdale, Texas 300,000 1956 Vancouver, Washington 195,000 1956 Wenatchee, Washington 217,000 1956 New Plant (near Evansville, Indiana) 300,000 1958 Total 1,885,000 Reynolds Listerhill, Alabama 140,000 1956 Longview, Washington 108,000 1956 Jones Hills, Arkansas 206,000 1956 Troutdale, Oregon 173,000 1956 Corpus Christi, Texas 183,000 1956 Arkadelphia, Arkansas 110,000 1955 New Plant (Listerhill, Alabama) 200,000 1958 Total 1,120,000 Kaiser Mead, Washington 352,000 1956 Tacoma, Washington 77,000 1955 Chalmette, Louisiana 495,000 1957 New Plant (Ravenswood, West Virginia) 250,000 1958 Total 1,174,000 Anaconda Columbia Falls, Montana 120,000 1955 "(ii) Possible Future Producers Plant Capacity Company and Plant Site (Thousands of Pounds) Date Olin Clarington, Ohio 120,000 1958 Harvey The Dalles, Oregon 108,000 1958

 '(d) Fuel for Power Generation

 'Since 1950, a substantial part of the expansion of aluminum smelting capacity has been based on electric power generated in facilities fired by natural gas. A substantial part of the smelting capacity to be constructed subsequent to September 30, 1955 will rely ...


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