445A.119/4–1752
Memorandum by William L. Kilcoin of the Office of British Commonwealth and Northern European Affairs to the Director of the Office of International Materials Policy (Brown)
African Manganese and Chrome
The dangers inherent in proposals for adoption of a discriminatory allocation policy to coerce South Africa to increase manganese and chrome railings1 were stressed in our memo of April 10 to Mr. Liebhafsky.2
We emphasized particularly that pressures of this kind would strain our friendly relations and might invite retaliation in other areas in which we require South African cooperation and support.
There are, moreover, a number of other considerations of a very practical nature, aside from possible impairment of our relations, which might give us pause. These can be briefly summarized as follows:
- 1.
- South Africa is in a stronger bargaining position than the United States. If discriminatory and retaliatory measures should be evoked by the two countries, we would be immeasurably the losers. In addition to chrome and manganese, South Africa is a large producer of high grade asbestos and other materials which we urgently require. A slow-down of production or diversion of these materials would have a serious effect on our defense economy. Furthermore, because of the United States interest in the planned uranium production in South Africa, it is unlikely that the US Government would be willing to consider any measures which might have repercussions on this program. Restrictions or curtailment of US exports would probably seriously inconvenience and dislocate the South African economy, but except for sulphur, a few other raw materials, automotive and agricultural implements and industrial machinery spares and components and petroleum products, alternative sources of supply could probably be found. As US firms moreover dominate many of these industries in South Africa, it is questionable if discriminatory measures of an effective nature could be applied.
- 2.
- There is influential support in South Africa for a policy to curtail exports of manganese ores in order to conserve reserves for the Union’s future needs. The present policy is to permit unrestricted exports (this, of course, is limited by capabilities of railroads to move ores) but any undue pressures might result in a reversal of this policy. The Minister of Commerce, Mr. Eric Louw has stated that the South [Page 910] African supply of manganese is not inexhaustible. It is BNA’s impression that he would favor curtailment of exports and he might seize on any suggestions that we were considering adopting a discriminatory allocation policy to vigorously press for limitations.
- 3.
- U.S. capital investments in South Africa are substantial and are expanding. At the present time US capital can operate freely in South Africa and is welcomed. Capital transfers to non-sterling countries are subject to discretionary treatment and the general policy is freely to permit repatriation of capital as well as transfer of dividends, interest, etc. The party in power, however, is ultra-nationalistic and should we apply restrictive measures. South Africa might retaliate by granting less favorable treatment to American capital investments on the Union.
In sum we need more from South Africa than she does from us. If discriminatory measures were instituted by both countries we would be the heavy losers. We feel therefore it would be extremely unwise to pursue these proposals further.
- Studies proposing this course of action were being prepared within the Metals and Minerals Staff. On Feb. 20, 1952, the Chief of the Metals and Minerals Staff, Harlan P. Bramble, forwarded to the Director of the Office of International Materials Policy, Winthrop G. Brown, a memorandum entitled “Strategic Materials from Union of South Africa,” which suggested that the United States utilize South Africa’s need for U.S. steel and equipment as a lever in negotiations. (845A.2547/2–2052)↩
- Not found in Department of State files. Herbert H. Liebhafsky was attached to the Metals and Minerals Staff.↩