The rationale of investment in zinc mining

Index

CHAPTER PAGE

I Importance of the Zinc Industry 7

II Solidarity of the Zinc Mining Industry - - 12

III Profits in Zinc Mining - 16

IV Where Ores are Marketed Without Cost - 20 V Zinc Ore Market made in Jopiin District - - 23

VI Jopiin District Needs Capital - - - 26

VII Zinc Mining Offers Opportunities to Poor Man - 30

VIII Zinc Mining Offers Wide Range of Investment - 33

IX Confidence of Old Investors in Zinc Mining - 37

X "Investigate" is Password to Successful

Investment ------ 40

XI All Blind Investments are Risky - - 44

XII Value of the Geologists' Work - - - - 47

XIII Value of the Practical in Zinc Mining - - 50 XIV Competent Mine Management Essential to

Success - 53

XV Royalty — a Question to be Solved - - 57 XVI Importance of Lead Mining in Jopiin

District - - - - 61

XVII "Silicate" Mining is very Profitable - - - 64

XVIII Sheet Ground Mining Eliminates Speculation - 67 XIX Discovery of Deeper Ore Level Doubles

District's Importance - - - - 70

LOCATION OF TABLES

Ten Years' Prices of Spelter - - - - - 29

Jopiin Ore Production for Eleven Years - - - 52

Jopiin Ore Prices for Eleven Years - - - - 56

Introduction

In the preparation of the chapters of this book which were originally written for publication and appeared as a running series in the Joplin Daily Globe, particular attention was given to a concise and yet comprehensive treatment of the various topics which enter into the merits of investment in zinc mining. The various phases of investment were taken into account as fully as they suggested themselves, not only from the point of view of the favorable impressions, but as far as possible from the critical point of view. It was recognized from the very start that every avenue of investment has its demerits as well as its merits and that often its demerits may be corrected if the real causes are fully recognized and the remedies known.

The idea of collecting the whole series of articles suggested itself as perhaps furnishing the first attempt to place in a concise and readable manner not only the opportunities that exist in the zinc industry, but in a small way the actual conditions that confront the industry's future. Some of the problems are here disclosed on parallel pages to the opportunities presented. Neither all of the opportunities nor all of the problems are discussed but it is intended that the chapters contain the rudiments of a text book from the investment side of the industry. The various kinds of mining, the conditions found in each instance, the best methods of management, the pitfalls to be encountered, the processes that have proved successful for certain problems of mining, milling and management, are all touched upon, not with the idea of complete delineation but only suggestively and for the reading of the man who is searching for the suggestions which may help him in his own way of working out his own problems. It is also concise for the benefit of a busy public. The different topics are placed in chapters and the book indexed so that the busy man can turn to the particular topic in which he is interested.

In addition to the method of treatment of the various phases of zinc mine investment, it has been the intention to scrupulously avoid any mistake in the statement of facts. The zinc industry has reached an importance which is amply sustained by the facts and for that reason it needs no embellishment but the plain truth. The industry has attained a dignity to which those in it must subscribe respect and any statements about its opportunities and its problems should be expressed plainly instead of in hyperbolic fancies.

To the book are added tables showing the prices paid for ore and spelter for a period of years. A table is given also which shows the production and value of the Joplin District for a period of consecutive years. There is also a map indicating the respective centers of production in the states of Missouri, Kansas and Oklahoma.

Chapter I Importance Of The Zinc Industry

A complete understanding of the importance of any industry by the men engaged in it, where the understanding is based entirely upon the real facts, instills a certain pride and confidence, not only in its leaders, but the very rank and file of its workers, which eventually gives greater efficiency and promotes its further growth. So long as an industry has in it the personal effort, the actual thoughts and deeds of men, the products of that industry inspire its workers with pride and zeal. From the first maker of Damascus steel to the present day the steel workers of the world have taken pride in their work and today no industry has more loyal workers.

The zinc industry has been one of such rapid growth that those engaged in it have not as a whole grasped its real importance in the industrial world. Few people know that the production of spelter in the world in 1908 only lacked 17,000 tons of being equal to the world's production of copper. Yet everyone has been impressed with the importance of the copper industry. It is true that the value of the two outputs differed greatly, the copper value being practically three times as large, but the world's spelter value was equal to the astounding sum of $77,500,- 000. The actual tonnage of spelter was 799,644 tons. This represented a decrease of almost two per cent from the previous year, which had been the record year.

PRODUCTION AND CONSUMPTION INDICATES STANDING.

A significant thing as showing the substantial foundation of the zinc industry lies in a study of the relation of the production to the consumption in 1908. This was a general panic year the world over, and spelter consumption was expected to fall off heavily. While production fell off practically 16 per cent in the United States consumption only fell off 6 per cent. Following the market features up through 1909, even with the report of a heavy surplus of metal on hand at the beginning of the year, before ten months had elapsed spelter manufacturers reported that the surplus was wiped out and that they were preparing to run their furnaces at full capacity. Such facts are evidence of great solidarity to the future of the zinc industry.

The production of spelter in the United States for 1909 not only showed remarkable gains but broke all previous records and the most optimistic hopes of those engaged in the zinc industry. The total production is estimated at 268,215 tons. The estimated consumption for the year is 285,765 tons. This latter contains a large part of the previous year's surplus and does not take into consideration the fact that of the apparent consumption a large part of the stocks held by metal brokers may be included in this total. But such growth only accentuates the importance of the zinc industry.

The United States has gradually forged forward in spelter production until in 1907 it took first rank, passing Germany, its nearest rival. In 1908, because of the greater industrial stagnancy in this country, it again fell back to second place, but advanced to first place with this year's totals. For years Germany has held the head of the column. Its mining and smelting practice were the examples for the world. It passed easily ahead of Belgium, its nearest competitor for years, largely because of its supply of native ores, while England and France fell back to third and fourth place. The rapid rise of the United States and the passing of these old and established national industries has been due to the cheap fuels of this country and the great high grade spelter production of the Joplin district, which, with the numerous other localities in this country, has made it possible for the smelters to be independent of importations. Another fact contributing to the exceptional growth of the zinc industry in this country was the proximity of this cheap fuel to the ore deposits.

THE WORLD'S SPELTER PRODUCERS.

Germany —

Rhein District 77,459 80,696

Silesia District 152,611 158,379

France and Spain 61,438 61,533

Great Britain 61,286 60,049

Austria and Italy 12,522 15,680

Statistics mean little to the average man and yet the only way of comparing things or showing relative values lies in figures or percentages. For that reason the relative importance of the American zinc industry is shown in the above table. The world's production has grown 60 per cent during the last twelve years, while the American production has almost doubled. Figured on the basis of the 1908 production, the United States furnished 26 per cent of the world's spelter. In 1907 its production was over 30 per cent, which will be approximately the amount for 1909, according to the present outlook.

The part that Joplin plays in the great zinc industry is the most vital point to the men in this district. You occasionally hear the bombast who praises the Joplin district to the skies. He many times lays claim to exaggerated facts about this field. Such exaggerations and their inevitable downfall are always hurtful and the district has suffered greatly from such evils. But the real facts are amply sufficient to give this field the premier place in the production of high grade spelter ores the world over.

WHAT THIS DISTRICT DOES.

Returning to comparative statictics we find that the Joplin district in 1908 furnished 17 per cent of the world's output of spelter and in 1907 over 19 per cent. Of the American output the Joplin district supplied 63 per cent in 1907 and 64 per cent in 1908. These figures represent only the district's output that went into the production of metal alone. In addition to this there was a certain tonnage of ore that went into the manufacture of oxide which was comparatively unimportant but which should. not be lost sight of in any estimate of the importance of the district as a center for the zinc industry.

The spelter from the Joplin district alone for 1908 was 136,520 tons, in 1907 158,304. This is greater than any other single area in the world except Silesia, Germany, which had for the corresponding years 158,379 and 152,611 tons of metal. It would appear that the amount credited to Belgium is also larger, but it should be remembered that the Belgian spelter is made up of ores imported from many countries, the Belgian native ores forming only a small portion of the ores smelted.

A BIGGER TONNAGE OF ORE AND SPELTER.

The percentage of the Joplin district for 1909 will be greatly enhanced owing to the exceptional growth in the ore tonnage, as already demonstrated in the returns. For

1908 the output of ores was only 259,548 tons, while in

1909 the production was 300,000 tons, an increase of practically 40,000 tons in one year, equivalent to 20,000 tons of spelter.

LARGEST MINING DISTRICT IN WORLD IS JOPLIN.

Another feature showing the importance of the Joplin district in the zinc industry is the magnitude of the mining operations carried on. Few people realize that the real magnitude of mining operations depends upon the tonnage of crude ore hoisted out of the ground rather than upon the tonnage of concentrates sold from the bins. According to calculations made by the United States Geological Survey for 1907, the crude ore hoisted from Southwest Missouri mines alone was 8,097,108 tons. Adding to this the ore hoisted in the remaining camps of the district in Kansas and Oklahoma, the total should be in excess of 10,000,000 tons, or the greatest amount of crude ore hoisted in any single mining state of the Union. The nearest competitor would be Michigan with its crude copper ore, which is slightly less than ten million tons. Nor does this take into consideration the tonnage of dirt and rock hoisted as dead work in the opening up of new shafts and prospects. On this basis the Joplin zinc district represents the greatest mining district in the world. In the aggregate of its mining operations it therefore heads the list. Yet it is this very feature to which its own people are most blind, and which so appalls every mining man who first comes to the district after years of experience elsewhere.

CHEAP FUEL A FACTOR.

That there seems a certainty of a still greater growth for the American zinc industry which will bring with it an increasing importance for the Joplin district is foreshadowed by the relation of cheap fuel to the ore deposits of this country. The great difficulty with the foreign spelter industry lies in the constantly increasing cost of fuel and the steady depletion of the known ore reserves, which means more and more dependence upon imported ores. In America the growth of the ore reserves is one of the most striking features in zinc mining, and cheap fuel is assured for a long term of years, especially in the coal districts adjacent to the Joplin and Wisconsin zinc fields. This feature alone means a tremendous growth of the zinc industry and a concentration of its greatest activity in these great zinc ore fields of the United States. That the Joplin district is now the greatest center for the industry is assured, but that its present importance is very small as compared with its future promise seems doubly assured by the conditions which are so strongly in its favor.

The relation of the zinc industry to the other great metal industries is one of vital import. The four great metal industries are iron and steel, copper, lead and zinc. These metals represent the basis for the industrial uses of the world. Of these, zinc is a close contestant for second place, and may eventually occupy it. When one understands that galvanized products are becoming more and more used, and that 66 per cent of all the spelter consumed is used for this purpose, it become more easy to see why the two industries are so interdependent. When one is assured that every pound of brass has in it a certain percentage of zinc and copper, and that a majority of the bearings of all the machinery in the world is made of brass, one begins to realize the real importance of this metal to the mechanical world. Then the various alloys with copper, lead and other metals form a very important use. As zinc oxide mixed with white lead there is also a large consumption. All of these uses, it will be observed, are allied with the other great metals, and any increase of their use will help swell the consumption of zinc. These uses are sufficient to take up 75 per cent of the total production.

AS AN INDEPENDENT METAL.

Of the uses independent of all other metals there is a wide range, and in these uses lies a field for still greater growth to the industry. Spelter has had no "electrification age" as has copper, yet its growth has been remarkable. If the metal can be given the attention it deserves at the hands of its friends the uses will be still greatly increased and its importance and necessity made more permanent. The greatest factor in its future growth is the cheapness of the metal in comparison with copper and aluminum, whose place and uses it can fill in many instances with just as great durability and at greatly reduced cost. With the growing cost of lumber, it will take a still greater part in all roofing purposes. These various uses have never yet been stimulated by the metal producers, but when this is done the metal will then take second place with the great industrial metals. That means that the zinc industry, which is the industry of the Joplin district, is second only to iron and steel, and as far as filling a place in the industrial world is concerned is just as important.

Surely if occupying the premier place in a great American industry which has by its wonderful growth surpassed all its competitors should swell the breast with a justifiable pride, then the man interested in the making of the zinc industry in the Joplin district has that right. Being thus interested in a great industrial necessity whose future seems certain of a still greater growth and importance, the confidence thus inspired should be a great asset in not only making but keeping the Joplin district the center of the American zinc industry.

Chapter II

THE SOLIDARITY OF ZINC MINING INDUSTRY. CHAPTER II.

Any industry may have certain periods of great prosperity, periods which arise from multifarious conditions, both local and general. Nearly every industry has in its history such periods to which are assigned the name of "boom periods/' merely designatory of a fleeting and shortlived existence. These "boom periods," while bringing to certain elements prosperity, eventually result in utter ruin to the welfare of the industry as a whole. The "boom" is unnatural, there is nothing tangible behind it, and when there is any real pressure on the bubble it bursts, leaving dismay and chagrin behind.

The zinc mining industry has suffered from just such a boom period, and the marks of those trying days on the investing public still linger as scars, scars which retain their raw and irritated condition even with the passing of a decade of years. Yet with the passing of these years there has come to the industry a solidarity which places it upon a par with the excellence of any other industry that may be presented. Today the prospective investor is approached with an array of facts from which he can deduct the logical conclusion that there is a large legitimate profit in zinc mining. Formerly he was beguiled by the lurid claims of the "boom promoter." Between these two great periods there has been developed a real foundation upon which the future of zinc is being substantially reared.

The solidarity of the industry is based upon its growing uses of zinc in the industrial world. It now fills a real need. This need is becoming more insistent every year and the cumulative process means a greater growth indefinitely. Of course, there will be periods of general depression and the industry will have to bear its part as it did in past years. But having found its place, its future growth is but a matter of wise development by those managing the various enterprises engaged in it.

ZINC A SAVING FACTOR.

There are several reasons why the zinc industry is now on a more solid foundation. One of the chief of these lies in the fact that zinc belongs to that great class of natural products which makes for conservation, a saving or prolonging the use of things. The conservation idea is growing more and more because of the increasing cost of every commodity and the steady depletion of many natural products. Zinc, because of its indestructibility or resistance to oxidation, enters into the problem as a saving factor, and for that reason is highly desired where it can be properly utilized. As a covering for iron it stops rusting and thus lengthens the life of the article. For this use of galvanizing 66 per cent of all the spelter now being produced is utilized every year.

Every year the iron and steel industry grows greater. The ore reserves are becoming smaller and iron is growing dearer. Its protection, therefore, is a matter of growing interest and galvanizing for that reason alone is but in its infancy. Many articles now ungalvanized will be galvanized in the future. For instance, a few years ago all nails and steeples were drawn from iron alone and marketed. They were free to rust in 75 per cent of the uses to which they were put. Today a large percentage of them are galvanized. In the cases of shingle nails the nails themselves are made of spelter. The wire industry has been revolutionized by galvanizing and the saving to the world by zinc in this case alone is of tremendous proportions.

NEW GALVANIZING METHODS.

But pure galvanizing, while filling a great place, has had some difficult things to overcome and for years could not be used in every respect where such use would have been eminently desirable. ' More recent discoveries in methods of coating iron with zinc has led to a hope of meeting these difficulties and thus greatly extending the use of galvanized iron. These new processes are known as electrozincing, cold galvanizing, sherardizing and cowperizing. In the use of the two latter methods a coating of zinc is placed on objects that even when broken or cracked by bending or abrasion does not allow rusting to take place. This property is due to the alloying of the zinc with the iron to a certain thickness. From this it is easy to recognize a great field for future development, especially when it is learned that these latter methods require less zinc to make the coating and there is no loss incurred as in the old hot method.

With such a close relation between iron, steel and zinc, the future of the zinc industry will be recognized as parallel to a large extent with the greatest metal industry in the world. The sales of iron and steel will become more and more a barometer of the trade conditions of zinc. The higher the cost of iron and steel and their greater depletion, the greater the need for spelter will become, for conservation will be only the more necessary.

ZINC USED AS SHINGLES.

Another feature where conservation will play an important part in the development of the needs for spelter lies in the use of sheet zinc or zinc shingles for roofing purposes in place of the rapidly diminishing wood shingle supply. That use has already reached considerable proportions in Europe and is growing rapidly in America, due largely to the rapidly diminishing lumber supply and the advance in the price of shingles. Yet with such an opening there has been no persistent or organized effort by the manufacturers of sheet zinc to occupy this important field. What has come has come through the natural demands of trade stimulated by the needs felt.

Here are but two great avenues for the consumption of spelter. There remain still the needs arising from the tremendous brass industry, which is also growing and taking a more important place in the industrial world. From these needs has been built up the solidarity which makes a firm foundation for the future prosperity of the entire zinc industry. The foundation is now recognized as firmly established, for the essentials are positive needs in the industrial world which spelter fills as no other product will fill it.

WHY CONSUMPTION IS AHEAD OF PROGRESS.

Moreover, in this industry there is one great fact that insures for the producer of zinc ore and spelter a constant demand for the product. This fact would seem to insure that consumption of spelter will always be slightly ahead of production, especially as long as galvanizing takes such a great proportion of the spelter. This fact is, that of all the spelter used in galvanizing there is little or none ever returned for use again as scrap. When spelter is used in galvanizing, it is gone forever.' And every year 66 per cent of the output is thus consumed. The only zinc ever returned for second use comes in old brasses or sheet. This is a very small percentage of the annual output, and as compared with other metals, like copper, lead and iron, forms a striking contrast. Everyone is familiar with the tremendous junk trade in those metals. The absence of any returned spelter to the channels of trade means that so far as the producer of raw material is concerned there is added only another great element of solidarity to the industry.

The years since the boom period of 1898 and 1899 have done many things for the zinc industry. The metal has become recognized as filling a certain place and as a necessary element in commerce. The needs it satisfies have been wonderfully increased. The profits between the miners and smelters have been more equitably distributed and each is more nearly aware of the position of the other. Each recognizes that they are but component parts of one industry, that the welfare of both must be carefully guarded if either is to prosper long. The fog has cleared away and the industry now more nearly understands itself, and with this decade of growth and education now presents a field of opportunity for all who care to enter a field in which those who are now interested feel confident.

Chapter III Profits In Zinc Mining

The question of the investor on coming to a zinc district is always, "Is zinc mining profitable ?" The question is not only one which should be asked and answered truthfully, but the various reasons why it is profitable, and the concrete proofs of the mines that have been great profitmakers should be given in detail. The facts are amply sufficient to make zinc mining attractive withotit any addition in glowing statements which might not bear close investigation. The honest promoter or mining man will not hesitate to give these facts plainly, and nothing is more distasteful to the substantial men engaged in the industry than the bombastic operations carried on by the "curbstoners" or "seatwarmers" with which every mining district is to a certain extent cursed.

The first proofs needed to show that zinc and lead mining is profitable lies in the great country built up from the industry since its inception. The Joplin district is covered with cities which in themselves are concrete examples of the substantial gains which have been obtained by the men engaged in the industry. These cities are equal to those of any other industrial community, and their rapid growth and advancement is the measure of the prosperity they have enjoyed. A population of 200,000 Americans, most of whom live in modern homes and in comfortable circumstances, certainly is the first proof that the industry in which they are engaged is a profitable one.

VALUE OF YEARLY OUTPUT.

The value of the yearly output of the industry is also a criterion of no mean value. An industry which annually markets products to the value of $12,000,000 to $15,000,000 certainly presents opportunities for profit, or else the capital already engaged in it would seek other fields for investment.

But these are the generalities, the proofs which anyone should be able to discern but which sometimes are entirely overlooked, just because they are so palpable, so common, so taken-for-granted. Yet were these taken away the idea of profitable investment would not come so easy, and proofs more concrete would have to be submitted.

In the case of the Joplin district it is easy to submit the concrete proofs. Certainly the men who represent the district as its substantial business men, the men who now represent the investing class or leaders in all industrial movements, should form a very good exhibit of the prosperity to be gained in investment in zinc mining. The men of wealth through the zinc district will be pointed out almost universally as having made their wealth in mining or investment in mining lands, and what is perhaps most striking in such evidence is the fact that the majority of these men have risen from the very wielders of the pick and shovel. Of course, the pessimist is prone to say they are merely "lucky." But if such is the case, Dame Fortune is especially prodigal in the Joplin district.

THE COST OF PRODUCTION.

But what about relative costs of production? What is the cost of producing a ton of ore? What investment will have to be made before there is a return upon it? Here are the questions that are really to the point and which the practical mining man takes pleasure in demonstrating. The answer lies wholly in the accumulated mining data from the companies which have been operating in the field for years. For instance, the mining men during 1909 took a careful canvass of the entire mining field during the tariff agitation to ascertain mining costs. These figures are as reliable as can be ascertained anywhere, as they comprise reports from many properties operating under all conditions throughout the field. From such data a fair average should be ascertained, as well as a knowledge of the extremes to be encountered.

Taking six of these mines as representative of the varying conditions to be found, the cost for the production of a ton of concentrate ranges from $28.08 to $44.91. They run along from $28.08, $33.67, $34.54, $36.83, $38.75 to $44.91. The average of the whole lot is $36.13. These mines are mines that had been operating from month to month. There were others, some with production costs very much below the minimum here taken, but they were not taken into consideration because the bulk of the mines had costs more nearly within the limits here shown. There were mines that showed a higher cost of production, but they were considered the failures, the impossibles. These costs represent the actual costs of producing the ore ready to ship, including royalty and amortization of the plant equipment.

FIGURES SHOWING PROFITS.

Taking these as a basis of figuring the profits in zinc mining, at present prices of $50 to $52 per ton, it is ascertained the profit per ton on the lowest cost production is $21.92. On the others in their order the profits are $16.33,

$15.46, $13.17, $11.25, while the very maximum production cost still gives a profit of $5.09 per ton.

Here is a concrete case of a lease with a 200-ton mill upon it. The mill is run one shift per twenty-four hours. It recovers 3 per cent in concentrate. Its mining cost is $35 per ton of concentrate. Its initial investment was $35,000. With $50 ore its profits per week are $540. A year's run of forty weeks, allowing the remainder of the time for contingencies such as break-downs, fuel shortage, dead work and miscellaneous hindrances that will always arise in mining, gives an annual return of over $20,000. In two years' time the capital investment should be returned with an additional dividend. Given the average life of the mines in the district, it will yield three more years of continuous dividends.