Foreign Relations of the United States, 1952–1954, Africa and South Asia, Volume XI, Part 2

891.2546/3–1354: Telegram

The Ambassador in India (Allen) to the Department of State

secret

New Delhi, March 13, 1954—1 p.m.

1414. Thorium nitrate negotiations.

I. A. As stated in New Delhi despatch 1224 February 11, accompanying Embassy’s draft memo of commitment¹ pursuant to drafting instructions in Deptel 841 January 16, etc., the Indians were reluctant accept position that India obligate self to supply exportable surplus thorium nitrate exclusively to US during period under proposed contract.

B. After discussing with Nehru and reviewing their situation with great care in the six weeks since then, Indians at last called Embassy to receive and discuss their version draft memo of commitment. (This being air pouched Washington today as enclosure 1 to Embassy despatch 1436 March 12.)²

I. Verbatim text essential new points follow:—

“Quantity

2. The thorium-uranium plant of the Indian Atomic Energy Commission, Bombay is expected to commence production from 1st January 1955. The Indian Atomic Energy Commission, during the period 1st April 1954 to 30th September 1955, intends to dispose of an amount not exceeding 320 tons of thorium nitrate of mantle grade of the specification given in paragraph 1 above obtained from the treatment of thorium hydroxide produced by the Alwaye plant during the said period and in the period before 31st March 1954.

3. The steady commitment of the Indian Atomic Energy Commission for the sale of thorium nitrate for commercial purposes within India and to neighboring countries in the east (Pakistan, Burma, Ceylon, Philippine Islands, Australia, Hong Kong, Japan, Malaya and Indonesia) and Western Europe (UK, France, Belgium, Switzerland, Italy and Western Germany) for consumption only in the countries named is approximately 62.5 tons per annum, or 90 tons during the period 1st April 1954 to 30th September 1955. The Indian Atomic Energy Commission will therefore have available in the period from 1st April 1954 to 30th September 1955 a surplus not exceeding 230 tons of thorium nitrate. It is understood that the Indian Atomic Energy Commission does not propose to dispose of amounts larger than above-mentioned quantity (320 tons) in the said period.

4. The Government of the United States of America is prepared to purchase the whole of the above-mentioned surplus up to a maximum of 230 tons by the 30th September 1955 on the understanding that this constitutes the maximum amount which will be available for disposal outside the countries specified in clause 3 above.

5. The contract, which will be drawn upon the part of the United States of America by the General Services Administration, will contain the terms of the standard United States Atomic Energy Commission form of contract for such purposes, and will be transmitted to the Government of India as soon as possible on the completion of this memorandum of commitment.

Duration of Contract and Renewal.

6. The present contract shall be for a period of 18 months from the 1st April 1954 or until the delivery of 230 long tons of thorium nitrate, which ever is later. The 18-month contract of the General Services Administration will provide that in the event that the full amount of 230 long tons has not been shipped within the 18 months period of the contract, the General Services Administration will purchase up to the balance of the said amount in the succeeding period.

7. The contract shall provide for renewal on such terms and conditions as are mutually agreed upon.”

III. Comments:

A. Indian estimates total available quantity thorium nitrate two year period beginning April 1, 1954 at 506 tons (“new output” 306 tons, “backlog” about 200 tons); 21-month period 415 tons; 18-month period 320 tons. Reasons for increased availability as compared previous estimates (e.g. quoted in New Delhi telegram 1016 December 30) due (1) further accumulation in stockpile hydroxide at Always and (2) re-estimated levels “minimum economic operation” of mines, Always and Trombay.

B. Nehru and cabinet unwilling approve disposal to US of total amount thorium nitrate surplus to domestic needs for following reasons according to Bhabha and Bhatnagar: (1) GOI nonalignment policy, especially sensitive now; (2) though hopeful eventual long-term substantial sales US market, Indians realistically believe necessary establish and maintain commercial markets other countries.

C. Regarding security aspects, Bhabha and Bhatnagar state: (1) now aware leakage problem free ports and assure us will “make every effort” ascertain bona fide each purchaser and end-user; (2) willing accept Embassy counsel (from US check list, etc.) regarding direct purchasers; (3) Indians themselves establishing checking routine on purchasers through their Embassies, and (4) just as eager as US to avoid leakages bloc countries.

D. Indians will supply US 300 tons for contract period beginning January 1, 1954 ending December 31, 1955 on same terms if US desires.

IV. Embassy Evaluation:

A. Embassy recognizes Indian offer falls short absolute protection American interests but believes terms most realistic attainable existing domestic and international political situation.

B. In considering further action Department will please take note that Bhatnagar leaving India April 12 and Embassy believes desirable conclude this matter before end March.

Allen

1. Not printed; the record copy of despatch 1224, Feb. 11, enclosing the Embassy’s Draft Memorandum of Commitment, is in Department of State file 891.2546/2–1154.
2. Not printed; the record copy of despatch 1436, enclosing the Indian Revised Draft Memorandum of Commitment, is in Department of State file 891.2546/3–1254.