The Ambassador in the Soviet Union (Steinhardt) to the Secretary of State

No. 269

Sir: I have the honor to refer to the Embassy’s despatch No. 2312, of May 10, 1939,9 transmitting a memorandum relating to the self-sufficiency and export capacity of the Soviet Union in respect of twenty-five essential raw materials, and to present below in summary form the gist of comment which has recently been published in the central and trade press concerning the utilization of Soviet resources of certain rare metals and of iron ore and coal.

Rare Metals.

Pravda of January 4, 1940, carries an article in which it is pointed out that the requirements of the domestic demand for such rare metals as tungsten, molybdenum, cobalt, tin and others have not been fully supplied by home production, but must be met to a greater or lesser degree by importation. The article raises the query as to whether it would be possible to expand domestic output so as to render possible the elimination of imports, and answers this question in the affirmative, claiming that Soviet resources are sufficient to enable the country to become self-supporting in these minerals. It is pointed out that the mining and smelting of rare metals is largely under the supervision and control of the Chief Administration of the Rare Metals Industry, which works ore deposits having a comparatively high content of the metals in question. Such deposits, on the other hand, it [Page 182] is stated, constitute only a small fraction of the total known resources of rare metals within the confines of Soviet territory.

The article continues that the major portion of Soviet resources of rare metals are found in combination with other minerals, as secondary metal. Thus, for example, 70 percent of the total known reserves of molybdenum are encountered as secondary or accompanying metal in the copper ores of the Conrad, Pirdoudan and other mines. None of these mines, however, is engaged in the extraction of molybdenum. A similar condition prevails with respect to cobalt. Only 2 percent of the total resources of this metal are directly encountered, 80 percent being met with in combination with nickel and 18 percent in iron and manganese ores. The situation with regard to other rare metals such as tungsten and cadmium is stated to be the same. Such metals as indium and germanium, it is added, are only obtained as byproducts from tailings of other metals, which they accompany.

The article urges that there is every reason to organize the intensive extraction of rare metals from ferrous and non-ferrous ores, to be undertaken, of course, in conjunction with increased mining of those ores in which rare metals appear as basic element. At present such extraction is conducted on a very small scale only and is disproportionate with the large possibilities it offers, according to the cited source. The main obstacle to the greater development of the extraction of secondary metals is stated to be the predominance of the so-called “moo-metallist” theory among Soviet engineers and scientific organizations. Many of them, the article alleges, have the vaguest idea of the properties and usefulness of rare metals, and concentrate their attention upon the production of the basic metal, making the increased output of this their main concern. In the last 10 years, the article concludes, millions of rubles have been invested in the enterprises of the Chief Administration of the Rare Metals Industry, but the returns on this investment are being realized very slowly, the volume of production being low and the cost high.

The comment may be made in connection with the article which has been summarized above that the problem of rare metal supply is one of the utmost importance in the Soviet Union, since, as has been suggested and as the Department is aware, the major portion of the country’s requirements in many of these metals, which are essential to the war industries, has hitherto been met by importation. Deterioration of the already strained relations between the Soviet Union and Great Britain might lead to stoppage of the inflow of these metals and threaten to cause a dangerous shortage. On the other hand, the extraction and separation of rare metals from other ores is not a simple matter. It would in many instances require complex processing schemes, involving the employment of special equipment.

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Iron Ore.

Pravda of January 5. 1940, contains an article discussing the problem of a better utilization of the iron ore resources of the Soviet Union. Emphasis is placed by this article on the need for an intensified working of low-grade iron ore deposits, mentioning in particular those found in the Krivoi Rog basins. It is averred that experimental data which have been assembled leave no doubt as to the possibilities for the practicable employment of such ores in the Soviet metallurgical industry.

Industriya of January 8, 1940, also carries a number of articles discussing the problems of iron ore shortage and of the highest possible utilization of low-grade iron ores. The content and general tone of these articles clearly disclose the anxiety which the Soviet authorities feel concerning the growing scarcity of iron ore, with its direct influence upon the country’s steel industry.

The foregoing material is seen to confirm earlier information reported by the Embassy to the effect that the Soviet steel industry is seriously threatened with a shortage of iron ore and that the existing deposits of rich ores are being rapidly depleted. The problem of low-grade ore utilization, moreover, presents considerable difficulties, since this would entail the construction of a good many ore dressing plants, and since the Soviet blast furnaces and particularly their operators are poorly adapted for the execution of this task, the latter having neither sufficient experience nor the requisite training.


Industriya of January 4, 1940, publishes a leading article dealing with the extremely low utilization of productive capacities in the Soviet coal industry and pointing to the very large sums invested annually in the construction of shafts and other coal mining equipment, without a commensurate increase in the output of coal. The article remarks that a majority of the shafts which have been put into operation in recent years are operating only to a portion of their normal capacity, which results in a noticeable disproportion between the productive capacity of the coal industry and the actual output of coal. Thus, large capital investments are immobilized and the national economy is deprived of adequate coal supplies.

Izvestiya of January 6, 1940, offers a leading article discussing developments in the coal industry during 1939. It states that the functioning of this industrial branch was unsatisfactory. Although the total production is stated to have exceeded the preceding year, the State plan was nevertheless not fulfilled. Poor technical management and a shortage of experienced and qualified workers are blamed for this condition.

Respectfully yours,

Laurence A. Steinhardt