811.20 Defense (M) Chile/217: Telegram

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

1212. For Bridgman74 from Graham.

“Have had several discussions Minister of Commerce75 and other Chilean Government representatives. We have explained fully and clearly present situation indicating that in reality our only interest is in copper ores and concentrates and copper bars from Chagres and Naltagua. Their principal interest is in gold mining which in event no assistance would practically cease and cause unemployment several thousand men. They have submitted following requests:

Production costs between February and June have increased copper 18% manganese 28% gold 15% and costs rising. They state that in their belief we should increase purchase price materials so as to compensate for approximate increase 25 to 30 percent production cost during 6 months period.
Due lack gasoline and other transportation facilities they wish us to receive materials at source rather than ports with price reduction corresponding freight differential.
They are considering establishment small furnaces in northern ports to treat ores and produce matte and in old smelter Guayacan produce copper bars. For this they wish us aid obtain essential materials.
Extension contract to 3 years to allow exploitation present properties and develop new [apparent omission].
Increase price mercury to $192 per flask with payment 100 percent value against delivery.
Fix price for copper ores and concentrates with gold content over 35 grams and agreement that ores and copper products may contain one gram for each three kilos copper.
Include Los Vilos as port delivery.
Increase tolerances manganese ores silica to 16% copper 0.35 percent.

After long discussions we have informed Government representatives that no priorities can be expected for gold mining but that in gold ores which contain some copper, we would recommend (1) reduction refining charges from two cents to one cent for copper content in gold ores and concentrates. In addition would feed as much material as possible to local smelters purchasing f. o. b. smelter instead of f. o. b. ports in cases where freight charges to smelters less than to ports giving them credit freight differential and would eliminate charge for sacks used on concentrates, (2) in spite of extremely high price [Page 59] now being paid for copper concentrates that we would recommend increase price copper concentrates by 5% and copper ores by 10% and would eliminate sack charge on concentrates but would not allow freight differential, (3) would recommend inclusion Los Vilos as acceptable port against guarantee Miners Bank to increase loading equipment and port facilities, (4) we would recommend increase tolerances silica to 15% and copper to 0.35% in manganese ores with penalties if any fixed by Washington.

We stated that in our opinion moment was not opportune for extension contract to 3 years and that there would be no further concessions. In addition unless world prices increase considerably that no material revision could be expected upon termination second 6 months period. Naturally they are quite discontented terms indicated and are particularly anxious to have us develop some way to aid gold mining industry in which problem unemployment will soon develop. They use arguments good neighbor and hemisphere solidarity. Original prices set for copper, manganese, mercury were generous and in excess prices we would have offered if Japanese situation had not existed. In case gold prices were low because ore buyers and Japanese were not purchasing this material at time we made the contract. These gold ores are valuable for use as flux in present smelting operations Chagres and Naltagua and probably of value for shipment to Tacoma under ordinary peace conditions and commercial freight rates. We have endeavored to find some way that we could recommend to aid these gold mining operations but aside from suggestions above which aid some gold producers sufficiently but in some cases especially gold mines Coquimbo and Atacama Districts give no aid at all we are unable to suggest any scheme unless for special considerations you feel some help might be given. Please advise.[”]

  1. G. Temple Bridgman, executive vice president of the Metals Reserve Co.
  2. Pedro Alvarez Suárez.