The Acting Secretary of State to the Ambassador in Chile (Bowers)
622. From Gardiner and Bateman,37 FEA, for Low, Rickard.38 Despite previous intentions discontinue small mines operations on July 31, USCC Board has agreed continuance purchase maximum 3500 tons contained copper at present prices if delivered during Aug. and Sept., and also to continue Chagres Smelter Contract until operations completed about Oct. 15. Authorization contemplates continuation of purchase of gold ore and concentrates on present price basis, but only to cover such material as is delivered to smelter by Sept. 30 and as is necessary to use for fluxing purposes during period.[Page 804]
In reaching this decision, USCC considered reduced costs of Chagres operation, and advisability of avoiding charges of discrimination if Chagres were discontinued on July 31 while production at Andes was continued through Sept. 30 at higher costs. Suggest now may be the time to arrange smelter operate on toll basis, and in any case believe toll arrangement essential for period following Sept. 30.
You should understand that the decision is not based on need for copper, and that we are faced with a very substantial cutback in 4th quarter copper procurement program in Chile and other countries. Our action is based on belief that a voluntary agreement made at this time by USCC may materially assist in our future negotiations with Chilenos on further programs.
We leave you to deal with closing phases of program locally in manner similar to handling of discontinuance manganese purchase program. [Gardiner and Bateman.]