Department of State Atomic Energy Files

Memorandum by Mr. R. Gordon Arneson to the Secretary of State

top secret

Subject: South African Uranium

Background

Since 1946, certain scientific groups in the United States under AEC contracts (for the CDA) have been collaborating with South African technicians on the extraction of uranium from the tailings of the gold ores milled in the Witwatersrand District of the Union of South Africa. The uranium content of these ores is very small (a few ounces per ton of ore) but with respect to those ores containing over .015% U3O8, research achievements to date give promise of eventual successful economical extraction of very significant total tonnages which may [Page 510]make South Africa our main source when the Belgian Congo deposits are depleted. Some of the new gold mines being developed in the Orange Free State will also become important producers of uranium.

In view of progress made in solution of the primary problem of producing a low-grade concentrate (1% to 3% U3O8) from tailings of the gold mills, representatives of the U.K., the U.S. and South Africa met in Washington in June 19481 to explore very informally the basis for an eventual contractual agreement between the agencies of those governments. The contract formula resulting from these discussions proposed a purchase of 10,000 tons of contained U3O8 in a high-grade concentrate, the successful production of which will require further research and pilot-plant experience. It was further proposed that the selling prices, of necessity reflecting for the time being only the cost of producing the low-grade concentrate, would be based on the actual cost of production as certified by the seller inclusive of direct costs for amortization of treatment plants on a ten-year basis, and allocated overhead, plus profit and royalty. Of the total amount of 10,000 tons, the seller would have the option of delivering up to 1500 tons at a maximum annual rate of 150 tons at a price not to exceed $25.00 per pound U3O8. The balance of the contract would be fulfilled at a minimum annual rate of 400 tons to be sold at a price not to exceed $9.00 per pound. Payments under the contract would be made half in American dollars and half in pounds sterling. It was envisaged that production might commence in 1952 and eventually increase to 2,000 tons annually in a few years.

It was contemplated that discussions regarding the proposed contract would be resumed in South Africa this spring. For various reasons the meeting has been deferred, but it now appears that talks definitely will take place in November of this year.

Current Status

1.
The South African Government proposed on July 29, 1949 that discussions with a joint U.S.–U.K. Mission might commence November 7, and requested the names of the American delegates and the approximate time of their arrival. We do not yet know whether the British are disposed to accept this timing.
2.
Following the return of Carroll Wilson on August 22 we will consider the composition of the American delegation and its terms of reference. Subsequently a CPC meeting should be held to approve instructions for the guidance of the combined U.S.–U.K. Mission.
3.
The CD A will attempt to conclude a straight commercial contract with the South African Atomic Energy Board for the purchase of uranium over a period of years. It may be necessary to back this [Page 511]commercial agreement with a tripartite governmental understanding. Recommendations as to the manner and form which this should take will be worked out by Messrs. Fisher and Volpe.
4.
Announcement was made in June by the Minister of Mines and Economy before Parliament that representatives of the British Ministry of Supply and the U.S. Atomic Energy Commission would visit South Africa in a few months at the Government’s invitation to discuss “the production of atomic energy.” In view of this, it would appear that no great secrecy will be maintained regarding the presence of the U.S.–U.K. Mission in South Africa. It will be imperative nevertheless for security reasons to attempt to avoid disclosure of the tonnages and grades of uranium materials which will be produced from the South African operations.
5.
We have at various times in the past been successful in seeing that other matters concerning our relations with the South Africans2 rest on their own merits independent of our uranium desiderata; nevertheless these issues do tend to become related psychologically and have a definite effect on the climate in which the uranium matter is handled. For this reason we have followed and are continuing to follow developments with respect to the more important problems in which the South Africans and the U.S. are parties, particularly the following:
a.
The South African request for financial assistance from the Export-Import Bank which apparently has not been met with a reception satisfactory to the South Africans.
b.
The South African desires for an increase in the price for gold.
c.
Devaluation of the pound sterling, and possibly of the South African pound, which might require review of the pricing formula agreed upon in the preliminary talks held in Washington in June 1948.
d.
Expected request of the South African Government for U.S. military aid.
e.
The touchy issues involving South Africa which will again come before the General Assembly.

R. Gordon Arneson
  1. For information on these negotiations, see Foreign Relations, 1948, vol. i, Part 2, pp. 677 ff.
  2. Documentation on United States relations with the Union of South Africa is scheduled for publication in volume vi.