811.20 Defense (M) Chile/8: Telegram

The Ambassador in Chile (Bowers) to the Secretary of State

422. Reference my despatch No. 1779, August 25. The Chilean Commission appointed by Rossetti has submitted to Miller an informal unsigned memorandum outlining its views regarding the basis for an over-all agreement with Metals Reserve. According to the Commission the agreement should:

Cover all minerals produced including gold ore and concentrates, and any probable increases over previous production of manganese, zinc, cobalt and mercury.
That prices should not be less than those ruling in the market and should be established for production placed Chilean ports with payments 90% against delivery.
That the length of the agreement should be for not less than 3 years.
That long term loans should be made available for the development of new production of copper and manganese.
That priority and export licenses be granted for the Paipote smelter materials.
That Chile be able to count on obtaining steel, repair parts and other materials essential to the mining industry.

Our reaction is that any agreement with Metals Reserve should be conditioned on a satisfactory solution of the copper tax problem but if it is believed desirable that we proceed with negotiations then it would be helpful to receive from Metals Reserve final prices for all mineral products including antimony and zinc, also authority to discuss an agreement up to 18 months if necessary but refusing any commitments with respect to points 4, 5 and 6.