811.20 Defense (M) Brazil/103: Telegram

The Secretary of State to the Ambassador in Brazil ( Caffery )

1141. Your despatch 5665, October 24 and telegrams 1670, November 6, 3 p.m. and 1697, November 8, 8 p.m.7 Department and Metals Reserve agree with the Embassy that the purchase agreement should be extended to include cobalt, tungsten, and nickel ore. You will be notified by telegram as soon as a decision is reached concerning tantalite, columbite, and carbonados. It is not likely that there will be any recommendation to purchase aquamarines or other semi-precious stones.

The terms suggested for cobalt are a maximum of 300 tons of cobalt ore per year of not less than 4 percent cobalt content at a price of 50 cents per pound of contained cobalt c.i.f. New York.

The terms proposed for tungsten are a maximum of 180 tons of tungsten concentrates per year with WO3 content of 30 percent or better. The price would be $21 per unit c.i.f. New York for concentrates with WO3 content of 65%. A schedule of grades, penalties, and bonuses similar to those in other Metals Reserve contracts will be forwarded later.

In the case of nickel ore, a different procedure is suggested. The terms of the agreement would be changed to substitute nickel for ferro-nickel, which would bring all classes of nickel-bearing materials within the scope of the agreement. The maximum quantity of contained nickel to be purchased would be increased to 150 metric tons per year, and the price would be based on the current domestic quotation of 29.5 cents per pound for refined nickel f.o.b. New York, less transportation costs and appropriate treatment charges for conversion into refined nickel.

When these three commodities are added to the purchase agreement they will of course become subject to all its provisions, and as to them the agreement will terminate on the same date on which it terminates as to the other commodities. Revision of cobalt, tungsten, and nickel prices will be considered every 6 months simultaneously with revision of the prices of other materials, and the export of cobalt, tungsten, and nickel from Brazil will be restricted exactly as the export of the other strategic materials in the agreement is restricted.

The Department requests that with the aid of the Federal Loan Agency representative you enter into negotiations with the Brazilian authorities for the inclusion of these products in the agreement, and telegraph the form of note that will be proposed to put the arrangement [Page 549] into effect. If the Brazilian Government is willing to have these products added to the agreement, it is important that they be placed under export control immediately, so that there will be no opportunity for undesirable sales contracts to be filed before the new export regulations become effective. In this connection, you are requested to notify the Department what contracts for the sale of cobalt, tungsten and nickel are now recorded with the Bank of Brazil.

  1. None printed.