Foreign Relations of the United States, 1952–1954, The American Republics, Volume IV

823.2542/8–3054

Memorandum by the Assistant Secretary of State for Inter-American Affairs (Holland) to the Secretary of State ¹

confidential

[Washington,] August 30, 1954.

Subject:

• Joint Private U.S. Government Financing of the Toquepala Copper Project in Peru.

Discussion:

On April 14, 1953 the American Smelting and Refining Company presented a proposal to the Export-Import Bank for a loan of $120 million to finance a $168 million development of the Toquepala copper mine in southern Peru. It was contemplated that $60 million of the loan would be from the defense funds and $60 million from the Eximbank’s own funds.

On July 7, 1954 the American Smelting and Refining Company submitted new data which represent a sharp reduction in the Government participation and a corresponding increase in the capital to be provided from private sources.² Roughly the new proposal amounts to private capital in the amount of approximately $98 million and Eximbank loans and capital totalling approximately $98 million.

This latter figure is very close to the recommendations currently being made by the Eximbank staff which contemplate Eximbank loans and guarantees totalling $90 million. (Tab A).³

I should like to stress the political importance of such a large private investment and especially when it is being made in a country that has handled its economy in a manner thoroughly in keeping with U.S. principles. I should also like to stress the significance that the approval of this project would have in clarifying U.S. principles and objectives prior to the Rio Economic Conference.⁴

We and the Commerce Department have strongly favored the development of Toquepala and it is believed that FOA has a similar opinion. I also understand that the Office of Defense Mobilization still views the Toquepala Copper Project as very important for the United States and one which it hoped could be brought into production in spite of the absence of defense funds for the purpose.

Mr. Brownell,⁵ President of the American Smelting and Refining Company, will probably discuss and urge approval of this project with Secretary Humphrey. (The Treasury Department has thus far not signified its approval.) I hope that Mr. Brownell will be able to persuade Mr. Humphrey of the wisdom of the U.S. helping to finance this project. In the meantime the project will continue to be considered at the Eximbank.

Recommendation:

While I hope the above measures will be adequate to obtain approval for this project, I recommend that you authorize me to continue support of this project, including an approach by you or possibly Mr. Hoover if this is felt necessary.⁶

1. Drafted by Director of the Office of South American Affairs Atwood; concurred in by Assistant Secretary Waugh.
2. In a memorandum to Mr. Holland, dated Sept. 2, 1954, Mr. Waugh stated in part the following: “At my suggestion they [American Smelting and Refining Company] revamped their application in accordance with present conditions.” (823.2542/9–254)
3. Not printed.
4. Reference is to the Meeting of Ministers of Finance or Economy of the American Republics as the Fourth Extraordinary Meeting of the Inter-American Economic and Social Council (popularly referred to as the Rio Economic Conference), held at Quitandinha, Brazil, Nov. 22–Dec. 2, 1954; for documentation on the meeting, see pp. 313 ff.
5. Kenneth Brownell.
6. The source text contains no indication of the Secretary’s action on this recommendation.