THE FERROUS METALLURGICAL INDUSTRY OF HUNGARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01093A001200020009-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 83
• Document Creation Date: November 9, 2016
• Document Release Date: February 11, 1999
• Sequence Number: 9
• Publication Date: March 13, 1957
• Content Type: IR

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-SEC R CT
PROVISIONAL INTELLIGENCE REPORT
N? 1
THE FERROUS METALLURGICAL INDUSTRY
OF HUNGARY
CIA/RR PR-153
13 March 1957
CENTRAL INTELLIGENCE AGENCY
OFFICE OF RESEARCH AND REPORTS
DOCUMOTNO.
NO CNAIrGE IN MASS. 0
C) LAS$WIED ?'. p CT
CLASS. CHANGED TO. TS S CC; EGR-F-- -
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This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
Title 18, USC, Secs. 793 and 794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
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OFFICE OF RESEARCH AND REPORTS
Control- Staff
Control Sheet
Supplementary Source References for
Seriea Number CIA /RR PR -153
Date of Document
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a....
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OFFICE OF RESEARCH AND REPORTS
Control Sheet
Supplementary Source References for
Series Number CIA/RR PR -153
Date of Document 13 Mar 57
CONFIDENTIAL
Number of copies
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S-E-C-R-E-T
PROVISIONAL INTELLIGENCE REPORT
THE FERROUS METALLURGICAL INDUSTRY OF HUNGARY
CIA/RR PR-153
(ORR Project 23.603)
NOTICE
The data and conclusions contained in this report
do not necessarily represent the final position of
ORR and should be regarded as provisional only and
subject to revision. Comments and data which may
be available to the user are solicited.
Office of Research and Reports
S -E-C -R-E-T
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FOREWORD
This report analyzes the ferrous metallurgical industry of Hungary
as it existed before the October 1956 uprising. In addition to a
description of the iron and steel industry, the report includes a
discussion of resources and supplies of the principal raw and alloying
materials essential to that industry.
Because of the limitations of source material, it has not been
possible to establish patterns of product mix, of consumption, and of
distribution or to relate the output of the industry to the gross
national product of the country.
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CONTENTS
Summary . . . . . . . . . . . . . . . . . . . . . . . . . .
I. Introduction . . . . . . . . . . . . . . . . . . . .
A. Position of the Industry . . . . . . . . . . . . . . 3
B. History and Development . . . . . . . . . . . . . . 4
C. Plans . . . . . . . . . . . . . . . . . . . . . . . 6
D. Organization and Administration . . . . . . . . . . 7
II. Supply . . . . . . . ... . . . . . . . . . . . . . . . 7
A. Pig Iron and Steel . . . . . . . . . . . . . . . . . 7
1. General . . . . . . . . . . . . . . . . . . . . 7
2. Pig Iron and Iron and Steel Scrap . . . . . . . 9
a. Pig Iron . . . . . . . . . . . . . . . . . .
b. Iron and Steel Scrap . . . . . . . . .
9
11
3- Crude Steel . . . . . . . . . . . . . . . . . . 11
4. Finished Steel . . . . . . . . . . ? ? . ? . . . 13
B. Basic Raw Materials . . . . . . . . . . . . . . . . 16
1. Iron Ore . . . . . . . . . . . . . . . . . . . . 16
a. Reserves . . . . . . . . . . . . . . . . . . 16
b. Production . . . . . . . . . . . ? ? ? ? ? ? 17
c. Foreign Trade . . . . . . . . . . . . . . . 18
2. Manganese Ore . . . . . . . . . . . . . . . . .
18
a. Reserves . . . . . . . . . . . . . . . . . . 19
b. Production . . . . . . . . . . . . . . . . . 20
C. Consumption . . . . . . . . . . . . . . . . 21
d. Foreign Trade . . . . . . . . . . . . . . . 21
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Page
3- Metallurgical Coke . . . . . . . . . . . . . . . 22
a. Reserves of Coking Coals . . . . . . . . . . 22
b. Production . . . . . . . . . . . . . . . . . 22
c. Foreign Trade . . . . . . . . . . . . . . . 23
C. Alloying Materials . . . . . . . . . . . . . . . . . 23
1. Ferroalloy Ores, Concentrates, and Metals . . . 25
2. Ferroalloys . . . . . . . . . . . . . . . . . . 26
III. Technology . . . . . . . . . . . . . . . . . . . . 26
IV. Investments, Costs, and Prices . . . . . . . . . . . . . 28
A. Investments . . . . . . . . . . . . . . . . . . . . 28
B. Costs and Prices . . . . . . . . . . . . . . . . . . 29
V. Capabilities, Vulnerabilities, and Intentions . . . . . 30
A. Capabilities . . . . . . . . . . . . . . . . . . .
B. Vulnerabilities . . . . . . . . . . . . . . . . . .
C. Intentions . . . . . . . . . . . . . . . . . . .
Appendixes
Appendix A. Ferrous Metallurgical Plants in Hungary
in1956 ...................
Appendix B. Reserves, Mines, and Processing Facilities
for Iron Ore and Manganese Ore in Hungary
30
31
31
1956 ..................... 39
Appendix C. Statistical Tables . . . . . . . . . . . . . . 43
Appendix D. Methodology . . . . . . . . . . . . . . . . . . 61
Appendix E. Gaps in Intelligence . . . . . . . . . . . . . 63
Appendix F. Source References . . . . . . . . . . . . . . 65
- vi -
S-E-C-R-E-T
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S-E-C-R-E-T
Tables
Page
1. Production of Crude Steel in the Sino-Soviet Bloc,
1955 . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2. Planned and Actual Production of Pig Iron
and Steel in Hungary, 1938 and 1946-55 . . . . . . . . . 8
3. Planned and Actual Production of Pig Iron
in Hungary, 1950-55 and 1960 . . . . . . . . . . . . . . 10
4. Planned and Actual Production of Crude Steel
in Hungary, 1950-55 and 1960 . . . . . . . . . . . . . . 12
5. Planned and Actual Production of Rolled Steel
in Hungary, 1950-55 and 1960 . . . . . . . . . . . . . . 13
6. Estimated Imports of Semifinished and Finished Steel
by Hungary, 1954-55 . . . . . . . . . . . . . . . . . . 15
7. Supply of Iron Ore in Hungary, 1938 and 1948-55 . . . . . 19
8. Estimated Hungarian Imports of Metallurgical Coke,
by Country of Origin, 1950-55 . . . . . . . . . . . . . 24
9. Reserves, Mines, and Processing Facilities
for Iron Ore and Manganese Ore in Hungary, 1956 . . . . 1+0
10. Planned Production of Iron and Steel in Hungary,
1947 - 5 6 and 196o . . . . . . . . . . . . . . . . . . . . 44
11. Locations and Estimated Capacities of Blast Furnaces
in Hungary, 1956 . . . . . . . . . . . . . . . . . . . . 45
12. Locations and Estimated Capacities of Steelmaking
Furnaces in Hungary, 1956 . . . . . . . . . . . . . . . 46
13. Facilities for Producing Finished Steel in Hungary,
1956 ..........................
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Pa_
14. Prices of Raw Materials and Iron and Steel Products
in Hungary and the US, 1 January 1956 . . . . . . . 53
15. The Forint/Dollar Ratio in the Ferrous Metallurgical
Industry in Hungary, 1 January 1956 . . . . . . . . 57
16. Estimated Supply and Consumption of Manganese Ore
and Concentrates in Hungary, 1946-55 ? ? ? ? ? ? ? 59
17. Imports and Production of Alloying Materials
in Hungary, 1938 and 1946-55 . . . . . . . . . . . 60
M
Hungary: Iron Ore, Manganese, and Principal Iron and Inside
Steel Plants, 1955 . . . . . . . . . . . . . . . . . . Back Cover
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CIA/RR PR-153 S-E-C-R-E-T
(ORR Project 23.608)
THE FERROUS METALLURGICAL INDUSTRY OF HUNGARY'
Summary
The ferrous metallurgical industry of Hungary lacks an adequate
domestic supply of' raw materials, operates inefficiently and at very
high cost, fails to provide for domestic requirements for finished
steel products, and is heavily subsidized. In spite of these many
deficiencies the maintenance of the industry is justified by the fact
that it supplies the Hungarian economy with steel products which could
not otherwise be obtained. Although the ferrous metallurgical industry
of the USSR is highly developed and provides adequately for Soviet
needs, it is not capable of fulfilling the requirements of the steel-
short economies of the European Satellites. The ferrous metallurgical
industry of Hungary, like those of the other European Satellites and
Communist China, is necessary to the over-all economy of the Sino-
Soviet Bloc.
Production of crude steel** in Hungary in 1955 was 1.629 million
metric tons,xxx 2.6 percent of the total production of crude steel in
the Sino-Soviet Bloc, 11.5 percent of that of the European Satellites,
and about equal to the annual production of one US steel plant of
medium size. Of the basic raw materials required to produce 1.629
million tons of crude steel, Hungary supplied from indigenous resources
only 23 percent of the iron ore and 10 percent of the metallurgical
coke.
Production of iron ore in Hungary in 1955 was less than 1 percent
of the total production of the Sino-Soviet Bloc. The known deposits
of Hungarian iron ore are small and low in grade. At the rate of ex-
traction planned for 1960, the deposits will be exhausted by 1970.
Hungarian coking coal is high in ash and sulfur content and is not
suitable for the production of high-grade metallurgical coke. The
only steelmaking raw material in which Hungary is self-sufficient is
The estimates and conclusions contained in this report represent
the best judgment of ORR as of 1 December 1956.
** Crude steel includes steel ingots and steel for castings.
KHM Tonnages are given in metric tons throughout this report.
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manganese. The deposits of manganese are of low grade, but they supply
the Hungarian industry and provide a surplus for export.
Hungary imports iron ore chiefly from the USSR, but some shipments
come from Communist China, Bulgaria, and the Free World. Hungarian
imports of metallurgical coke come principally from Poland and
Czechoslovakia. Production of pig iron in Hungary does not meet the
requirements of the ferrous metallurgical industry, and considerable
pig iron is imported from the USSR. Of steelmaking raw materials and
steel products, only manganese is exported by Hungary -- to the other
European Satellites and to the USSR.
Investments in the ferrous metallurgical industry of Hungary in
the First Five Year Plan (1950-54) amounted to 5.7 billion forints.
Under the Second Five Year Plan (1956-60), investment in the industry
is to be only 3 billion forints, a reduction of almost 50 percent.
In spite of this reduction the Second Five Year Plan calls for sub-
stantial increases in production. The Plan sets a 1960 goal for
production of pig iron of 1.41 million tons, a 66-percent increase
over production in 1955; production of crude steel is to increase by
40 percent over the period of the Plan, to 2.24 million tons in 1960,
and production of finished steel is to increase by 59 percent, to 1.4
million tons in 1960.
It appears that the planned increases in production of iron and
steel in Hungary are to come from the increased efficiency to be
achieved by the modernization, expansion, and better utilization of
existing facilities. The Plan does not call for the construction of
new plants. It is possible that the Second Five Year Plan goals for
production of iron and steel can be reached even though investment
funds have been sharply reduced. Modernization of existing facilities
is much less expensive than construction of new plants, and modernized
facilities operated efficiently could provide the planned increases.
Also it is possible that investment funds can be used more effectively
during the 1956-60 period than they were during the First Five Year
Plan, when shifting political policies nullified the effect of large
parts of the invested capital. Obviously, the success or failure of
the ferrous metallurgical industry of Hungary will depend on the
political developments following the October 1956 uprising in the
country.
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I. Introduction.
A. Position of the Industry.
Production of the small Hungarian iron and steel industry does
not fulfill the apparent consumption requirements of the economy. Fin-
ished steel, as well as large quantities of raw materials for making
both iron and steel, must be imported.
Production of crude steel in Hungary constitutes only 2.6 per-
cent of the total Sino-Soviet Bloc production and 11.3 percent of that
of the European Satellites. The production of crude steel in the Sino-
Soviet Bloc in 1955 is shown in Table 1.
Production of Crude Steel in the Sino-Soviet Bloc a
1955
Country
Production
(Million Metric Tons)
Percent
of Total
USSR
453
72.5
Bulgaria
0.1
0.2
Czechoslovakia
4.5
7.2
East Germany
2.7
4.3
Hungary
1.6
2.6
Poland
4.4
7.0
Rumania
0.8
1.3
Communist China
2.9
4.6
North Korea
0.2
0.3
62.5 100.0
a. 1 (For serially numbered source references, see
Appendix F.)
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B. History and Development.
In 1914 when the iron and steel industry of Hungary had an ade-
quate supply of materials, approximately 500,000 tons of crude steel
were produced. Territorial changes following World War I deprived
Hungary of the larger part of its former iron ore reserves and nearly
75 percent of its former coal deposits, the lack of which has handi-
capped the development of the industry. J
In 1938 the iron and steel industry of Hungary produced 61i-7,000
tons of crude steel and a small range of finished steel products.
During World War II the industry was operated by the Germans. Although
some war damage was sustained, the most serious destruction resulted
from the dismantling of plants, first by Germany and later by the USSR,
both of whom shipped large quantities of equipment out of the country..
The rehabilitation of the iron and steel industry began
shortly after Hungary was proclaimed a republic in January 1946. The
Three Year Plan (1947-49), which went into operation on 1 August 1947;*
was designed to raise production of industry as a whole to the level
of 1938, but goals for the iron and steel industry were slightly higher
than the production rates of 1938. Planned investments for the metal-
lurgical industry were scheduled at 390 million forints and included
allocations for the expansion of the three principal plants, the Ozd
Iron and Steel Plant at Ozd, the Lenin Metallurgical Works at Diosgyor,
and the Matyas Rakosi Metallurgical Trust on Csepel Island near Budapest.
In general, the plan was achieved, and targets in some branches of
the iron and steel industry were overfulfilled and accomplished ahead
of schedule.
The development of a socialized iron and steel industry in
Hungary began on 28 March 1948 with the nationalization of all indus-
tries which employed more than 100 persons. Except for a few small
iron foundries, all iron and steel plants were placed under the control
of the Hungarian government. J (For descriptions of the ferrous metal-
lurgical plants in Hungary, see Appendix A, and for the location of
these plants, see the map, inside back cover.)
From 19+7 through 1949 the Hungarian fiscal year ran from 1 August
through 31 July.
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The First Five Year Plan (1950-54), which was announced early
in 1949,* emphasized the expansion of heavy industry and provided for
substantial increases in the production of the ferrous metals industry.
Goals for 1954 were as follows: 2.25 million tons of iron ore,
950,000 tons of pig iron, 1.6 million tons of crude steel, and 1.1
million tons of rolled steel. Planned investments in the industry
averaged approximately 1.1 billion forints annually, six times the
annual investment rate of the Three Year Plan. J The most important
project of the First Five Year Plan was the construction of Hungary's
first fully integrated steel plant at Mohacs, the building of which
had actually started in 1947-48. The combine was to produce metal-
lurgical coke from coal mined at nearby Pecs, and the blast furnaces
were to operate on iron ore principally from Yugoslavia and from
Krivoy Rog in the Ukraine, which was to be delivered by barge via the
Danube River. Construction at Mohacs, which was close to the Yugoslav
border, was abandoned as a result of the Tito-Cominform break in 1948.
A new site was chosen at Dunapentele, on the Danube River just south of
Budapest, and the building of the Sztalinvaros Metallurgical Combine
began in late 1948. 1/
The original goals for 1954 under the First Five Year Plan
were revised upward in 1951, when the Hungarian government made the
decision to expand heavy industry. This policy decision for the iron
and steel industry, together with the anticipated completion of the
Sztalinvaros Metallurgical Combine which was expected to produce more
crude steel in 1954 than was produced in all of Hungary in 1949,
resulted in goals for pig iron and crude steel that were 35 percent
higher than those set originally. The production goal for rolled
steel probably was increased also, but neither that goal nor the re-
vised goal for iron ore was announced. J
The revised Plan remained in effect until 1953, when a con-
flict developed in the Hungarian government over the disproportionate
expansion between heavy industry and consumer goods industries. As a
result, the goals of heavy industry were reduced for the remainder of
the First Five Year Plan. In the iron and steel industry, the 1954
goal for pig iron was reduced approximately one-third to a level about
10 percent below that set by the original Plan in 1949, and the 1954
goal for crude steel was cut by approximately 23 percent of the 1955
revised Plan production. q! Neither of these goals was met in 1954;
in fact, production was lower than in 1953.
* The fiscal year was changed to run from 1 January through 31 Decem-
ber to coincide with the fiscal years of other Soviet Bloc countries.
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In Hungary, 1955 was a transitory period of preparation for
the Second Five Year Plan (1956-60). Specific goals for the iron
and steel industry were not announced, but it was announced that pro-
duction was to be raised to the 1953 levels and that production costs
were to be reduced. According to official claims the production of
crude steel in 1955 was approximately 7 percent higher than in 1954. 10
C. Plans.
The goals for the ferrous metals industry in Hungary under
the Second Five Year Plan* were as follows: (1) a 166-percent increase
in the production of pig iron in 1960 compared with 1955, 140 percent
in production of crude steel, and 159 percent in production of rolled
steel products; (2) by 1960, 33 percent of metallurgical coke require-
ments to be produced in Hungary, and 28 to 30 percent of iron ore
requirements to be from domestic mines; (3) production costs to be re-
duced 16 percent, of which 9 percent is to be saved by the better use
of raw materials, 5 percent from labor saving, and 2 percent in admin-
istrative expenses; and (4) technological practices to be improved, and
production from existing facilities to be increased by the use of high-
pressure tops on blast furnaces and by the use of oxygen for flame en-
richment and carbon reduction in steelmaking furnaces. Investments in
the Hungarian metallurgical industry are planned at 3 billion forints,
50 percent less than the 6 billion actually invested in the First Five
Year Plan. Eli
A summary of the planned production of the three economic plans
for pig iron, crude steel, and rolled steel products for 1947-56 and
1960 is given in Appendix C.
Long-range plans for economic coordination of the economies of
the countries of the Sino-Soviet Bloc include the coordination of the
Hungarian iron and steel industry with the steel industries of other
Bloc countries. Primary goals consist of the specialization of each
industry on that branch of production which can be developed most
economically. These long-range plans will be administered by the
Council of Mutual Economic Assistance (CEMA), which will coordinate
economic plans, procure and allocate raw materials, standardize
* In the Second Five Year Plan, goals were stated at 165 percent for
pig iron and 132 percent for crude steel, but the absolute figures in
the Plan were calculated at the percentages included above.
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products according to Soviet GOST (Gosudarstvennyy obshchesoyuznyy
standart -- All-Union State Standard) specifications, and set prices. 2/
D. Organization and Administration.
Before the October 1956 revolt in Hungary, the iron and steel
industry was under the direct administration of the Deputy Minister
for Metallurgical Production in the Ministry of Metallurgy and Machine
Industry. Since World War II the administrative organizations for the
iron and steel industry had undergone a series of changes and regroup-
ings at the ministerial level. The latest of these reorganizations
took place in June 1953, when the Ministries of General Engineering,
Medium Machinery, and Metallurgical Industries were merged into the
Ministry of Metallurgy and Machine Industries. This Ministry is be-
lieved to have been responsible also for the administration of the
iron ore mining industry, which had been under the Ministry of Mining
and Power. The production of manganese is believed to have been under
the Ministry of the Chemical Industry and Electricity. 13
The National Council for Technical Development was created by
the Council of Ministers in August 1955. Its functions included the
direction and coordination of all industrial technical developments
and the preparation of recommendations for the Council of Ministers
on the more important aspects of such developments. Jozsef Mekis was
appointed president of the National Council for Technical Development
on 10 October 1955. l~+
II. Supply.
A. Pig Iron and Steel.
1. General.
According to official Hungarian announcements, 855,000
tons of pig iron, 1.629 million tons of crude steel, and 883,000 tons
of rolled steel were produced in 1955. The 1955 production was 2.55,
2.52, and 1.8 times the 1938 production of pig iron, crude steel,
and rolled steel, respectively.. Planned and actual production of
pig iron and steel in Hungary in 1938 and 1946-55 are shown in Table 2.*
* Table 2 follows on p. 8.
-7-
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In Hungary the steelmaking practice is to use 70 percent pig
iron in the open hearth charge, 23 and the estimated 1955 production
of pig iron, 855,000 tons, would not be adequate for the production of
1.629 million tons of crude steel. The domestic supply of pig
produc-
must have been augmented by imports from the USSR. R. Announced
tion of rolled steel amounted to only 55 percent
required the importation of approximately 80,000 tons of finished
steel products to meet apparent consumption.
Although official statements frequently criticize individual
plants and the industry as a whole for failures to meet production
quotas, an analysis of the availability of raw materials and of pro-
ductive capacity does not provide concrete evidence that refutes the
official claims of production of pig iron, crude steel, and rolled
steel.
2. Pig Iron and Iron and Steel Scrap.
a. Pig Iron.
Blast furnaces of the Hungarian iron and steel industry
are claimed to have produced 855,000 tons of pig iron ill 1955. Eighty
percent of blast furnace capacity is concentrated in two plants, the
Lenin Metallurgical Works at Diosgyor and the Ozd Iron and Steel
and the remainder in the Sztalinvaros Metallurgical Combine, According
to official announcements, production goals were fulfilled each year
of the First Five Year Plan -- except for 1954. Production of pig
iron is supplemented by imports, principally from the USSR, but the
amount of these shipments is not known. Planned and actual production
of pig iron in Hungary in 1950-55 and 1960 are shown in Table 3.*
In 1956, 9 blast furnaces were producing pig iron at 3
iron and steel plants in Hungary.`'
Hungarian blast furnaces are small and of conventional
design. Capacities range from 180 to 500 tons per day, with furnaces
rated at 250 tons or less accounting for 60 percent of total production.
Until July 1956 there were no coke batteries in operation at plants
producing pig iron.*** Prewar furnaces have been modernized but not
Table 3 follows on p. 10.
For a detailed description, see Table 11, Appendix C, p. 45, below.
See B. 3, below.
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enlarged. Since the nationalization of the iron and steel industry in
1948 a 250-ton blast furnace at the Ozd Iron and Steel Plant, a 500-
ton furnace at the Lenin Metallurgical Works, and a Soviet-designed
500-ton furnace at the Sztalinvaros Metallurgical Combine at Dunapentele
have been constructed and represent approximately 14 percent of current
capacity.*
Table 3
Planned and Actual Production of Pig Iron in Hungary
1950-55 and 1960
Thousand M
t
i
e
r
c Tons
Production
1950
1951
1952
195
4
3
195
195 5
1
960
_
_
Planned
400 of
400 a/
500 a/
650 of
860
N.A.
1,110 c/
(1953 Re-
Actual
4).
524
vision)
e
J
579 e/
705 e/
820 e/
855 e/
a. 2
b. 25/
c.
d. Official Hungarian
figures.
e. 27
Plans for increasing pig iron capacity to 1.41 million
tons by 1960 include the following: (1) the construction of a second
Soviet-designed 500-ton blast furnace at the Sztalinvaros Metallurgical
Combine; (2) a Hungarian-designed blast furnace at Ozd, similar to the
500-ton furnace at the Sztalinvaros Metallurgical Combine; (3) the
complete mechanization of all blast furnaces; (4) the gradual installa-
tion of high-pressure tops in furnaces; and (5) the increasing of pro-
duction by 250,000 tons through the better preparation of iron ore.. 2$
* Information is based on detailed plant studies available in CIA files.
9
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b. Iron and Steel Scrap.
The shortage of iron and steel scrap in Hungary was a
problem in the early years of the First Five Year Plan. Deficiencies
in scrap developed when supplies created by World War II were ex1iausted.
As shortages increased, inputs of pig iron into open hearth furnaces
rose from 50 percent of the charge in 1949 to 70 and 75 percent in
1954 and 1955, respectively. 29 Only sporadic imports of scrap iron
and steel are known to have been received in recent years. The latest
reported import of scrap occurred in 1952, when 137,000 tons were ob-
tained abroad, including 125,000 tons from Turkey. The announced pro-
duction of rolled and crude steel indicates that, in combination with
available pig iron, sufficient scrap was generated by the steel mills
and from manufacturing plants to provide the metallics needed to produce
1.629 million tons of crude steel.
3. Crude Steel.*
Approximately 60 percent of the steelmaking capacity of
Hungary is concentrated in 2 plants in northeast Hungary, the Lenin
Metallurgical Works at Diosgyor and the Ozd Iron and Steel Works at
Ozd; 12 percent is in the Sztalinvaros Metallurgical Combine at
Dunapentele, 40 kilometers south of Budapest; 15 percent is in the
Matyas Rakosi Metallurgical Trust on Csepel Island at Budapest; and
the remainder is in steel foundries at various locations. Approximately
80 percent of the steelmaking capacity is located in plants which have
blast furnaces to provide hot metal. Goals for the production of crude
steel** were achieved in each year of the First Five Year Plan, except
in 1954, when production amounted to 89 percent of the target. Planned
and actual production of crude steel in Hungary in 1950-55 and 1960
are shown in Table 4.***
Approximately 92 percent of crude steel production capacity
is from open hearth furnaces and 8 percent from electric furnaces.
Open hearth furnaces are small, the average capacity being 45 to 50
tons.
* For the location and capacity of steelmaking furnaces in Hungary,
see Table 12, Appendix c, p. 46, below.
Including both open hearth and electric furnace steel.
Table 4 follows on p. 12.
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Table 4
Planned and Actual Production of Crude Steel in Hungary
1950-55 and 1960
Thousand Met:^ic Tons
Production 1950 1951 1952 1953 1954 1955 1960
Planned 800 to 81+0 J 900.2/ 1,000 J 1,200 J 1,680 J N.A. 2,240 J
Actual / 1,048 e/ 1,290 e/ 1,459 J 1,543 e/ 1,491 of 1,629 J
a? 30T ~~ d. Official Hungarian
b. Ti/ figures.
c. 32 e. 33/
Modernization and expansion of steelmaking facilities accom-
plished since the nationalization of the iron and steel industry in
Hungary resulted in approximately 400,000 tons of additional capacity.
Open hearth furnaces were enlarged, a 180-ton open hearth furnace re-
placed two 60-ton furnaces at the Lenin Metallurgical Works, 3 new 125
ton open hearths were built at the Sztalinvaros Metallurgical Combine,
and several electric furnaces were installed in steel foundries.*
Plans to increase production of crude steel in Hungary to
2.24 million tons by 1960 include (1) the construction of two 125-ton
open hearth furnaces at the Sztalinvaros Metallurgical Combine; (2) the
construction of steel converters to produce 10 percent, 225,000 tons,
of the total crude steel production; (3) the addition of a new open
hearth shop at the Lenin Metallurgical Works; (4) the rebuilding of the
open hearth furnaces at the Ozd Iron and Steel Works to 70-ton capaci-
ties; and (5) the use of oxygen in the making of steel. / It is
estimated that if these plans are accomplished, an increase in capacity
of 775,000 tons will be realized annually -- 200,000 tons from the
Sztalinvaros Metallurgical Combine, 225,000 tons from steel converters,
and 350,000 tons from the enlarged furnaces at the Ozd Iron and Steel
Works. This estimated increase does not include any production from
the open hearth shop planned at Lenin or from increased production
from the use of oxygen at existing facilities. Because this additional
* Information is based on detailed plant studies available in CIA.
files.
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capacity is greater than that required to meet the 1960 goal of 2.25
million tons, the plan probably makes allowance for the retirement of
some obsolescent facilities.
The procurement of an adequate supply of alloyed and
special-quality steels has always been a problem of the Hungarian engi-
neering industry. Although the iron and steel industry has sufficient
electric furnace capacity, production of alloy and special steels is
limited by the shortages of alloying metals, so that much of the
electric furnace capacity is being used for standard grades of steel
commonly produced in open hearth furnaces.
4. Finished Steel.
Production of finished steel in Hungary does not meet
apparent consumption requirements and is supplemented by imports,
principally from the Free. World.
Information on the production of finished steel, rolled
products, and castings and forgings by category is lacking. Planned
and actual production of rolled steel in Hungary for 1950-55 and 1960
are shown in Table 5.
Table 5
Planned and Actual Production of Rolled Steel in Hungary
1950-55 and 1960
Thousand Metric Tons
Production
1950
1951
1952 1953
1954
1955
1960
Planned
600 a
650 a
650 a 800
1,100 b
N.A.
1,400 J
Actual J
508 ,/
662 /
792 / 844 J
819 ,J
883 J
a.
361
d. Official Hungarian.
b.
1949 Plan.
figures.
C.
.V
e.
The inadequacy. of Hungarian production of rolled steel in
relation to the apparent consumption of the engineering and manufactur-
ing industries appears to be partly, if not wholly, the result of the
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apparently low yield of rolled steel products obtained from steel
ingots. Hungarian rolled steel production ranged from 48 to 55 percent
of crude steel production in 1950-55, according to the official announce-
ments, in contrast with yields of rolled products from crude steel of
70 percent or better in most steel producing countries. ,2 This loss
in yield of 200,000 to 300,000 tons of rolled steel products exceeds
the known volume of imports.
The Second Five Year Plan of Hungary provides for a pro-
duction of rolled and crude steel in a ratio of 62.5 percent -- an
improvement, but still below normal yields. The assumption that pro-
duction of crude steel includes steel for castings, the production of
which is not reported, would account for only a small part of the
discrepancy. The explanation for the discrepancy may lie in some
peculiarity in Hungarian statistical procedures, particularly in recent
years, or in the conversion or sale of Hungarian ingots outside the
country. There is, however, no evidence of the latter practice in
significant quantity.
The shortage of finished steel products in Hungary is
aggravated further by the failure of the iron and steel industry to
produce the types of steel needed to fulfill the requirements of steel
consumers. L0 The pressure to meet planned goals and the policy of
basing wages on the achievement of production norms may have contrib-
uted to the industrywide practice of concentrating on items easily pro-
duced rather than on the types of steel in demand.
The quality of Hungarian steel products deteriorated
during the First Five Year Plan. In 195+ the rate of mill rejects
increased 150 percent, only 83 percent of the rolled products produced
met the specification of consumers, and stocks of unmarketable steel
products were estimated to have amounted to one-third of total pro-
duction of rolled steel. ~l
Information on Hungarian foreign trade in finished steel
is fragmentary, and known imports in recent years, particularly from
Soviet Bloc countries, are believed to be considerably less than the
actual total. In 1951 the USSR supplied most of the 200,000-tons
of finished steel imported, but since 1951 known imports originated
principally in Western Europe. Estimated imports of semifinished and
finished steel by Hungary in 195+-55 are shown in Table 6.*
* Table 6 follows on p. 15.
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Table 6
Estimated Imports of Semifinished and Finished Steel by Hungary a/
195+-55
1954
_ 1955
USSR
Negligible
Negligible
Austria
30.0
32.0
Belgium-Luxembourg Economic
Union
8.0
8.8
Czechoslovakia
Negligible
Negligible
East Germany
N.A.
N.A.
France
3.3
15.0
Italy
Negligible
2.0
Japan
0
N.A.
West Germany
15.0
19.0
UK
Negligible
2.0
US
0
N.A.
56.3
78.8
a. 2
A brief description of facilities for producing finished
steel in Hungary is given in Table 13,* Appendix C.
With only a few exceptions, finishing facilities of the
Hungarian iron and steel industry are obsolescent. Since the nation-
alization of the industry, some improvements have been made, including
the mechanization of rolling mills at the Ozd Iron and Steel Plant and
the addition of a structural mill, a large-diameter pipe mill, and two
steel foundries.** One of the principal objectives of the industry,
however, continues to be the modernization of existing finishing facil-
ities.
The Second Five Year Plan in Hungary calls for the completion
of a plate and sheet mill for the Sztalinvaros Metallurgical Combine, which
P. ~1, below.
Information is based on detailed plant studies available in CIA
files.
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will increase the output of plates 110 percent and of sheets 160 percent
within 5 years. A tube mill is also to be installed at the Lenin 'Metal-
lurgical Works. Production of sheet is to be increased from 79,000
tons in 1955 to 196,000 tons in 1960, which the Hungarians claim will
be sufficient to take care of requirements.
B. Basic Raw Materials.
1. Iron Ore.
a. Reserves.
The major part of the iron ore reserves which once
belonged to Hungary were lost in 1920 under the Treaty of Trianon to
Czechoslovakia and Rumania. Some mines in Czechoslovakia, however,
remained under Hungarian private ownership until after World War I'I.
' Currently, domestic production of iron ore in Hungary
is principally from three mines in the Rudabanya district north of
Miskolc and near the Czechoslovak border. (See Table 9,* Appendix B.)
Proved and probable reserves at Rudabanya, the only commercially
important deposit in Hungary, do not exceed 21 million tons, of which
about 9 million tons have been developed for working. / The iron
content is highly variable, the best ore containing only 22 to 31
percent iron and the poorer ores as little as 7 percent iron. Much
of the ore contains considerable amounts of barite and silica, both of
which are detrimental to efficient blast furnace operation. The
physical structure also varies widely, ranging from large, coarse :Lumps
to powdery fines. As mining progresses in depth, the quality of the
ore is expected to decline. Limited quantities of limonite containing
32 to 36 percent iron are located in the vicinity of Pecs and may be
mined for smelting at the Sztalinvaros Metallurgical Combine.
Intensive prospecting and exploration for new iron ore
deposits have a continuing high priority but thus far appear to have
been unsuccessful. In 1951 the Ministry of Mining and Power, which
controlled the mining of iron ore, announced the discovery of new iron
ore deposits in the Matra Mountains, northeast of Budapest, which were
estimated to contain 20 million tons of ore. 45 This discovery, how-
ever, is questionable. No development or mining activity in that area
has been reported, and it is unlikely that a significant discovery
would remain undeveloped for long.
* P. 40, below.
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b. Production.
Estimated output of iron ore in Hungary in 1955 was
353,000 tons, about 1.3 times the 1938 production (see Table 7*),
but it accounted for only 20 percent of apparent consumption in that
year, compared with 42 percent in 1938. L6 The production of iron ore
in 1956 is planned to exceed that of 1955 by 12 percent. 3
Failure to meet plans and to keep pace with growing
domestic requirements reflects not only the lack of adequate facilities
for ore processing but also a failure to recognize the limitations of
the meager iron ore resources of Hungary. The First Five Year Plan
called for the production of 1 million tons of iron ore in 1950, more
than 3 times that of 1949, and for an expansion to 2.25 million tons by
1954. L8 Such a rate of mining would have exhausted Hungary's known
reserves by the end of 1960.
The Second Five Year Plan calls for production suffi-
cient to meet 28 to 30 percent of the iron ore requirements of Hungary
by 1960. ~9 Based on the planned production of pig iron of 1.41
million tons in 1960 1=! and an estimated average as-mined iron content
of 30 percent, production of ore in 1960 would have to be about 1.4
million tons. Assuming a gradual approach to the planned production by
1960 and continued annual production at the same level, it is estimated
that presently known reserves of iron ore will near depletion by 1970.
Apart from raising home production of iron ore, the
Second Five Year Plan recognizes the need for developing adequate means
of preparation and concentration of iron ore. To implement this phase
of the program, construction of a large ore dressing plant at Rudabanya
has been resumed and is scheduled for completion by the beginning of
j Another ore dressing plant now under construction at the
1958. 51
Sztalinvaros Metallurgical Combine is expected to begin operations late
in 1956. 52 Some domestic ores will be processed at Sztalinvaros,
but the plant is intended primarily for the agglomeration and blending
of imported Soviet ores. Elementary ore dressing facilities are
believed to be in operation at the Lenin Metallurgical Works at Diosgyor
and at the Ozd Iron and Steel Works.
P. 19, below.
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c. Foreign Trade.
The inadequacy of domestic iron ore supply has compelled
Hungary to rely heavily on imports since before World War II. For the
extent of Hungary's imports of iron ore for 1938 and 1948-56, see
Table 7.*
The USSR has been the principal source of iron ore for
Hungary since 1948. In recent years, some ore has been imported on an
irregular basis from Free World nations, including Sweden, Norway,
India, Portuguese India, and Iran; and additional supplies have been
received from Communist China, Bulgaria, Czechoslovakia, and Poland.
Because Czechoslovakia and Poland also must import a large portion of
their iron ore requirements, shipments from these countries probably
represent transshipments. Combined imports from the West and from
the Sino-Soviet Bloc, exclusive of the USSR, probably account for less
than one-third of the total imports of Hungary.
The dependence of Hungary on ore from the USSR is a
direct consequence of the withdrawal of Yugoslavia from the Cominform
in 1948. Before World War II, Yugoslavia and Hungarian-owned mines
in Czechoslovakia supplied most of the imports of Hungary. When con-
trol of the mines in Czechoslovakia was lost, Yugoslavia became the
principal source of imported ore, until Tito's break with the Cominform.
From 1948 to 1954, when minor shipments reportedly were resumed, 53/
Yugoslav ore was not available to Hungary. The resumption of Yugoslav
ore shipments on a major scale would increase considerably the Hun-
garian supply of iron ore. The supply of iron ore in Hungary in 1938
and 1948-56 is shown in Table 7.*
2. Manganese Ore.
Production of manganese in Hungary in 1955 amounted to
280,000 tons 54 of unprocessed ore, about 110,000 tons of concen-
trates with 40 percent metallic content. This production is small
compared with that of the major world producers. Hungary ranked
fourth among Soviet Bloc producers in tons of manganese ore mined.
Only the USSR, Rumania, and Czechoslovakia produced more. Manganese
produced in Rumania and Czechoslovakia, however, is not suitable for
the production of ferromanganese. Domestic requirements in Hungary
take approximately 60 percent of annual production, leaving the
* Table 7 follows on p. 19.
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Table 7
Supply of Iron Ore in Hungary
1938 and 1948-55
Year
Estimated
Production
Estimated
Imports
Apparent
Consumption
1938
279.0
419.0 b
698.0
1948
276.5
880.0 /
1,156.5
1949
0 of
339
b
570.0
909.0
1950
.
of
369.0
693.5
1,008.5
1951
311.0 of
828.5 /
1,139.5
1952
316.0 of
931.0 b
1,247.0
1953
359.0 /
1,148.5
1,507.5
1954
428.0 of
1,339.5
1,767.5
1955
353.0 a/
1,440.5 b
1,793.5
a. 55
b. Estimate based on metallics (iron content)
required to produce the announced tonnages of
pig iron, allowing for iron content contained in
domestic ores (30 percent iron content) and using
an iron content of 52 percent (USSR shipping ore
average) for imported ore.
c . 56
d? 57
remainder for export, principally to Czechoslovakia. (For production,
apparent consumption, and the apparent amount available for stocks
and export, see Table 16,* Appendix C.)
a. Reserves.
Although deposits of manganese ore are scattered
throughout Hungary, only those at Urkut, the principal producer, and
Epleny, in Western Hungary, are of commercial importance. In 1952,
total proved and probable reserves suitable for industrial use were
* P. 59, below.
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estimated to have been 5 million to 10 million tons of oxide ore at
Urkut and at the almost depleted deposit at Epleny. 58 Since that
time, however, the discovery of deposits at Urkut containing 30
million to 50 million tons of 18 to 20 percent manganese carbonate
ore have been reported. 59 New deposits of oxide ore of more than
500,000 tons at Urkut and 300,000 tons at Epleny have been reported. 60
If proved, these new discoveries will increase Hungarian reserves sub-
stantially. (See Table 9,* Appendix B, for detailed data on manganese
reserves.)
Production of manganese ore in 1955 is estimated to
have been 280,000 tons, of which 250,000 tons were produced at Urkut 61
and 30,000 tons at Epleny.
The ore at Urkut contains 18 to 26
2-41
percent manganese and was beneficiated to 80,000 tons of 40 percent
manganese concentrates. The ore produced from the Epleny deposit aver-
ages 28 percent manganese and was shipped before processing.
The quality of mined ore in Hungary has deteriorated
considerably during the past 10 years, and a large amount of gangue and
fines are extracted with the ores. 63 This resulted in a large loss
of manganese in the tailings during the beneficiation process. In 1953,
hydrocyclones for reconcentrating the tailings were installed, and an
additional recovery of 15 to 20 percent (a total of 70 to 75 percent)
of the manganese content of the raw ore was reported. 6/ Smelting
problems were encountered because of excessive fines, silica, and
moisture, and at times the reconcentrated material was refused by the
steel industry. !L5/, Attempts at drying and agglomerating the tailings
have met with only moderate success. 66
In order to preserve the oxide ores for production of
ferromanganese, the Hungarian government planned to mine the newly
discovered carbonate ores for blast furnace use, with a cutback in the
production of oxide. It is estimated that 50.,000 tons of oxide ore
per year would be sufficient to meet internal requirements for pro-
duction of ferromanganese. Long-range plans call for an annual pro-
duction of 400,000 tons of the carbonate ore. 67 To implement this
plan, the Second Five Year Plan provides for the completion of a new
concentrating plant for processing carbonate manganese ores at the
Sztalinvaros Metallurgical Combine.
* P. 40, below.
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c. Consumption.
The average consumption of manganese in terms of metal-
lic content per ton of steel ingots produced in Hungary is about 49
kilograms (kg),* compared with 54 kg in the Ukrainian SSR and only
6 kg** in the US. The production of pig iron, which requires an esti-
mated 42 kg of metallic manganese per ton of pig iron produced,
accounts for most of the Hungarian consumption of manganese. In part,
this reflects the dependence of Hungary on the low-manganese ore from
Krivoy Rog and on the high-sulfur coke from the Donets. The Hungarian
practice of blending domestic high-manganese iron ore (2.9 percent
manganese) from Rudabanya with lean Soviet ore (0.06 to 0.2 percent
manganese), however, effects a considerable saving of manganese ore in
the blast furnace charge.
The use of powdery manganese ore and fines in the blast
furnaces,. which results in appreciable losses in the flue dust, is
another reason for the high manganese consumption of Hungary. Moreover,
manganese specifications for pig iron are higher in Hungary and the
USSR than in the US. Conversion pig iron in Hungary contains 2 to 3.5
percent manganese, compared with a range in the US of from 0.5 to 2
percent manganese. 69
Consumption of manganese ferroalloys in Hungary for
deoxidation, desulfurization, and alloying additions in steelmaking is
about the same as in major steel producing countries, 5 to 7 kg of
contained manganese per ton of steel ingots produced.
d. Foreign Trade.
Since 1952, approximately 40 percent of production of
manganese in Hungary reportedly has been exported, mainly to Czechoslo-
vakia, 70 but no annual data on these or other exports of manganese
are available for recent years. Manganese ore appeared as an export
item in a Hungarian trade agreement with East Germany in 1953. 71
Because East Germany is deficient in manganese, it is likely that
Hungary still exports this commodity to East Germany. Hungarian im-
ports of manganese are limited to small shipments of either high-grade
metallurgical and chemical ores to supplement its own lower grade pro-
duct or manganese imported for transshipment. 72
For methodology, see Appendix D.
Consumption in the US does not include manganese recovered from
the use of open hearth slags.
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3. Metallurgical Coke.
In May 1956, Hungary had no facilities for the production
of metallurgical coke of a satisfactory quality. The first byproduct'
coke battery began operations on 9 July 1956. In 1955, however, gas
coke plants produced an estimated 75,000 tons of coke, which were
mixed with the better grades of the 1 million tons of metallurgical
coke imported during the year. An aim of the Second Five Year Plan is
to produce 33 percent of metallurgical coke requirements by 1960 ---
based on the 1960 production goal for pig iron, approximately 500,000
tons of coke. 73/
a. Reserves of Coking Coals.
Reserves of coking coals in Hungary are limited to the
bituminous deposits of the Pecs and Komlo areas, located in the Mecsek
Mountains. These reserves are estimated at approximately 33 million
tons, enough to last for about 40 years at the rate of consumption of
coke planned for 1960. Because of high-ash and high-sulfur content,
these reserves are not considered to be good coking coals. Blending
with better imported coking coals will be necessary to produce a
satisfactory product for blast furnace use.
If the ferrous metallurgical industry in Hungary is
successful in developing a low-temperature, metallurgical-grade coke
from brown coal at the Kazincbarcika coke plant, which is still to be
constructed, the good-quality brown coal reserves of 313 million tons
located near Tatabanya and Dorog could be considered as coking coal.
reserves. This contemplated process is similar to the process used.
at Lauchhammer, in East Germany, which has been only moderately suc-
cessful in producing metallurgical-grade coke. 74
b. Production.
Production of metallurgical-grade coke in Hungary
throughout the First Five Year Plan was meager, reaching a total of
only 75,000 tons in 1955, all of which was produced in the gas coke
plants at Pecs and Budapest. 75
The goal of the Second Five Year Plan calls for an
annual coke production by 1960 of approximately 500,000 tons, 33
percent of metallurgical coke requirements. 76 To implement this
plan, the first of two byproduct coke batteries to be erected at the
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Sztalinvaros Metallurgical Combine was completed and began production
in July 1956. 77 During the remainder of 1956 this battery is sched-
uled to produce 70,000 tons of metallurgical coke, and full capacity is
rated at 280,000 tons annually. 78
The battery at Sztalinvaros will be charged with coal
from the Pecs and Komlo areas, delivered with 1.9 percent sulfur content
after treatment. 79 The use of coke produced from such high-sulfur
coal will result in a poor grade of pig iron, unless the local coals or
coke are blended with better grades of coal or coke imported from other
countries.
c. Foreign Trade.
For most of its metallurgical coke supply, Hungary has
always depended on imports, which in 1955 amounted to 93 percent of
requirements. During 1950-55 the main suppliers of metallurgical coke
have been Poland and Czechoslovakia. Throughout this period, annual
imports of coke from Czechoslovakia have remained constant, at approx-
imately 300,000 tons a year. Shipments from Poland in 1950-51 were
about 200,000 tons annually, rising to approximately half a million tons
annually in 1952-55.
Beginning in 1953 and continuing through 1955, Hungary
obtained substantial imports of metallurgical coke from West Germany
and Belgium. Estimated Hungarian imports of metallurgical coke, by
country of origin, in 1950-55 are shown in Table 8.*
C. Alloying Materials.
With the exception of vanadium (which is derived in small quan-
tities from Hungarian bauxite deposits), manganese, and silicon, Hungary
has no indigenous deposits of alloying minerals. Almost all other
alloying additives for its small alloy steel industry are imported from
.Soviet Bloc countries, and only small quantities come from the West.
Production of ferroalloys is limited to ferromanganese and ferrosilicon.
The USSR is the principal supplier of alloying materials. Al-
though chromite is obtained from Albania, and molybdenum and tungsten
concentrates are imported from Communist China, some alloying materials
are obtained intermittently from the Free World, frequently at prices
* Table 8 follows on p. 21l.
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considerably higher than world prices. The flow of imports from the
West and from the Soviet Bloc is irregular and does not fill Hungarian
requirements for most alloying materials. (Estimated production and
imports of alloying materials for which data are available are shown
in Table 17.*)
Estimated Hungarian Imports of Metallurgical Coke
by Country of Origin a/
1950-55
Country of Origin 1950 1951 1952 1953 195+ 1955
Belgium 15 99 36
Czechoslovakia 301 301 300 310 320 320
Poland c/ 214 314 430 510 404 500 d/
West Germany 35 212 166 e/
Others 0
Total f/ 520 620 730 870
1, 040
1,050
a. 0
b. January-July shipments.
c. Including some unknown quantities of Polish coke con-
tracted for by the USSR for resale to Hungary.
d. No figures are available, but Hungary is known to have
received coke from Poland. These shipments are estimated
to be in the same magnitude as in the previous 3 years to
meet the coke requirements for the production of pig iron.
e. January-August shipments.
f. Because of rounding, figures do not add to the totals
shown.
* Appendix C, p. 60, below.
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1. Ferroalloy Ores, Concentrates, and Metals.
Chrome ore, used in Hungary principally in the production of
chrome-magnesite refractories for domestic use and for export, .81 is
imported from Albania, which was the sole source of supply from 1950 to
1955. Two Free World sources were developed in 1955, when trade agree-
ments with Yugoslavia and Iran provided for imports of unspecified
amounts of chrome ore. 82 Chrome for metallurgical rather than refrac-
tory use is imported as ferrochrome, principally from Sweden and the
USSR through 1953 and, in part, from Great Britain in 1954. 83
It is known that through 1954 the USSR furnished cobalt used
in steels produced in Hungary for Soviet account. Total requirements,
including those for Soviet steel, are about 50 tons annually. Known
imports including sporadic shipments of cobalt, cobalt oxide, and cobalt
chemicals from the West have never reached this level. It is not known
whether or not the deteriorating supply situation has been alleviated
by shipments against a Soviet credit granted late in 1954. 84
The reluctance of the USSR to furnish a larger portion of
Hungarian cobalt requirements appears to apply to nickel as well. In
1952, 80 percent of the nickel imports were from the USSR. 85 Despite
the growing demand of Hungary for cobalt and the increased difficulty
of obtaining supplies from the West, there is substantial evidence that
Soviet shipments have remained constant and in 1955 may have amounted
to no more than 50 percent of the total imports. Shipments from the
West consist of nickel, nickel cathodes, nickel sulfates, permalloy
(80 percent nickel), and chrome-nickel wire. 86
Molybdenite concentrate (75 percent molybdenite) and wolfram
concentrate (65 percent wolfram trioxide) are imported from Communist
China, which replaced the USSR as the principal supplier in 1952. Be-
cause Hungary has no known conversion facilities, these concentrates
are processed elsewhere in Europe, possibly in East Germany, / 87/ and
provide most of the approximately 50 tons of molybdenum (metallic con-
tent) and all of the 200 tons of tungsten used annually in Hungary.
Additional small quantities of metallic molybdenum are imported occa-
sionally from the West. 88
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2. Ferroalloys.
Production of ferromanganese and ferrosilicon in Hungary is
almost sufficient to meet domestic requirements. The Second Five Year
Plan (1956-60) provides for facilities to produce ferrotitanium from
"red mud," a byproduct of Hungarian production of alumina.
Blast furnace ferromanganese is produced at the Ozd Iran
and Steel Plant at Ozd, at the Lenin Metallurgical Works at Diosgyor,
and probably at Sztalinvaros. 90 Since 1950, domestic production has
supplied all of the requirements of Hungary except for small amounts of
special grades. The First Five Year Plan provided for the construction
of a special ferromanganese plant near Urkut, but this plant was not
built. A special ferromanganese furnace, presumably electric, was
to be installed in the open hearth shop at the Lenin Metallurgical
Works at Diosgyor late in 1955. 91
Since 1949, ferrosilicon has been produced -- mainly at the
Hungarian Ferrosilicon Factory at Zagyvarona and, in minor quantities,
at the Felsogalla Carbide Plant. In 1947 the Felsogalla plant was the
principal producer of ferrosilicon in Hungary, but its facilities have
been shifted almost entirely to the production of calcium carbide.
The Zagyvarona plant, which was constructed in 1939 and dismantled by
the Germans during World War II, was reopened in 1948 with one electric
furnace. A second furnace was added in 1952, and two additional f-ar-
naces were installed in 1953. 92/ Since 1954, domestic production of
ferrosilicon (45 percent silicon) is believed to have been sufficient
to meet requirements for all but higher grade ferrosilicon (75 to 90 per-
cent silicon), which is imported, presumably for use in the production
of silicon steels for electrical sheets. Sweden and West Germany have
supplied most of the imports since 1951. Earlier sources were Norway,
Switzerland, Italy, and the USSR.
III. Technology.
About 50 percent of present blast furnace capacity and 25 percent
of crude steel capacity of the ferrous metallurgical industry of Hun-
gary were installed during the First Five Year Plan.* Much of the new
equipment is of Soviet design, and although units are relatively small,
they compare favorably with similar equipment in other countries.
* Information is based on detailed plant studies available in CIA files.
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Finishing facilities, with few exceptions, are obsolescent and are oper-
ated inefficiently, and modernization is a primary current objective. 93
Considerable emphasis has been given to the need for improvement
in the technological practices of the Hungarian industry. At a November
meeting of the Central Leadership of the Hungarian Workerst Party, it
was pointed out that the increased utilization of local basic materials,
the reduction of the coke consumption rate, the better utilization of
production facilities, and the more complete exploitation of ores must
be accomplished.
The status of blast furnace operation has been considerably below
that of the USSR and Communist China. The iron and steel industry of
Hungary averages only 500 tons of pig iron per day from a 700-cubic-
meter blast furnace, a coefficient of utilization of about 1.4 cubic-
meters of effective volume required to produce 1 ton of pig iron.
The national coefficient in Communist China is 0.877 cubic meter and in
the USSR 0.8 cubic meter. To date there are no indications that Hun-
garian blast furnaces are equipped for high top pressure or employ
moisture control of the blast. Both of these practices are to be inau-
gurated during the Second Five Year Plan. In most industries which
maintain a high level of blast furnace technology -- including the US,
the USSR, and Communist China -- the rate of coke consumption per ton
of pig iron has been decreasing, but in Hungary the rate has been in-
creasing. Current consumption of 1.2 tons of coke per ton of pig iron
greatly exceeds the average of 0.95 ton attained in the USSR in
1955. 94/
Hungarian technology of;steelmaking and processing also has been
considered to be behind that of the USSR and other Bloc countries.
The use of oxygen to increase production in open hearth and electric
furnaces is to be adopted during the 1956-60 period. The introduction
of the oxygen converter method of making steel is planned also and is
expected to account for 225,000 tons of steel production annually by
1960. 95
The industry has accomplished little in the fields of stainless,
high-temperature alloys and special-quality steels, even though elec-
tric furnace capacity exists to produce these items.
Exploitation of "red mud," a byproduct of the separation of alumina
from bauxite which contains up to 30 percent iron oxide, if proved tech-
nically and economically sound, may provide up to 50,000 tons of iron
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oxide a year. The presence of 20 to 24+ percent of titanium in the resi-
due may lend economic feasibility to this development. 96/
IV. Investments, Costs, and Prices.
A. Investments.
The iron and steel industry in Hungary was allotted 160 million
forints* for capital investments during the Three Year Plan (19.7-L9),
32 percent of total capital investments for heavy industry. In addi-
tion, 100 million forints were made available for renovation of exist-
ing plants. Investment allotments were to be distributed as follows 97/:
Ore preparation and increasing production
of pig iron
35.5
Increasing production of crude
steel
22.0
Rolling mills
14.0
Tube plants
31.0
Forge shops
7.0
Iron foundries
23.0
Steel foundries
26.0
Other
1.5
During the First Five Year Plan, 5.7 billion forints, 31.2 per-
cent of all investments in industry, were spent in the development of
the iron and steel industry. This amount was 2.2 percent of the Hun-
garian announced national net materials product** of 265.5 billion
forints for the period, based on fixed 19+9 prices. ?"1
Although the Hungarian Second Five Year Plan provides for a
4-percent increase over the preceding plan for heavy industry, the
allocation to the metallurgical industry is reduced 50 percent to 3
billion forints, 9 percent of total investments in industry. The share
to be allocated to the iron and steel industry is not known, but in the
First Five Year Plan the investments in nonferrous metallurgy amounted
to only 5 percent of total investments in metallurgy. 99
Official rate of exchange of 1 forint equals US $0.085.
Net materials product is the value of final goods and services,, ex-
cluding the value of personal services but including transportation and
those services employed in the production of goods.
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In spite of the drastic reduction in investment funds, the pro-
jected increase in the tonnage output of pig iron and crude steel in
Hungary scheduled in the First and Second Five Year Plans are approxi-
mately the same. In the absence of a detailed breakdown of the projects
covered by the two Plans and of accounting practices followed in. the
the commitment of funds, no satisfactory explanation can be offered
for this apparent discrepancy. A partial explanation lies in the facts
that during the current Plan substantial increases in production may
be realized from improved raw materials, the cost of which may be
included in the allocations to the mining industry, and that technical
improvements require less investment than new construction. It is also
possible that all the funds required for the Sztalinvaros Metallurgical
Combine, by far the most expensive project in the industryts program of
expansion, may be charged against the First Five Year Plan, although
construction was not completed, as scheduled, during that period. 100
B. Costs and Prices.
The composition and operating methods of the iron and steel in-
dustry of Hungary are indicative of high costs. Raw materials are
reported to comprise 80 percent of the cost of the industry, in contrast
to 1+5 to 50 percent in the US and 55 percent in Czechoslovakia. Further
evidence of high costs was provided by a group from the Austrian steel
industry which visited Hungary in the spring of 1956 and reported that
the costs of producing iron and steel in Hungary were the highest in
the world. 101
The reduction of costs of producing raw materials and iron and
steel products in Hungary has been an objective of both Five Year Plans.
The first plan called for a reduction of costs of 20 to 25 percent.
Prime costs of producing pig iron, however, instead of decreasing, rose
8.3 percent in 1953 and 14.3 percent in 1954 above those of 1952. 102
The plan for the reduction of costs in the ferrous metallurgical in-
dustry during the second Five Year Plan is not specified. It is direc-
ted, however, that industry as a whole is to effect a reduction of 16
percent, 9 percent of which is to come from the more efficient use of
raw materials. 103
The practice of subsidization is confirmed by the fact that
the high cost of materials is not offset entirely by low wages. Pric-
ing policies in Hungary may be similar to those which were in effect
in East Germany before April 1955, when up to 50 percent of the costs
of the iron and steel industry was covered by subsidies. 101+
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Prices of iron and steel products, published for planning pur-
poses by the Hungarian National Planning Office (see Table 14*), indi-
cate that the prices for hot rolled products such as bars may be under-
priced in relation to the price of steel ingots. If the cost of ingots
to the finishing mills is the same as the quoted planning price of
910 forints per ton and the ingot to finished bar yield is the same as
the apparent over-all yield of finished steel (55 percent), the cost
of ingots alone would amount to 1,656 forints, compared with the plan-
ning price of 1,300 forints per ton of hot rolled bars. Even at the
finished steel yield of 72 percent normally attained in most steel
industries, the cost of ingots per ton of bars would be 1,264 forints.
This would allow only 2.8 percent of the selling price for conversion
costs (exclusive of the cost of steel), compared with an estimated
25 to 30 percent in the US.
A series of forint-to-dollar ratios, based on Hungarian plan-
ning prices and US lease prices, for ironmaking and steelmaking raw
materials and finished steel products shows considerable variation
(see Table 14*). The forint-to-dollar ratios for iron ore and hot
rolled bars approximate the official rate of exchange, but those for
sheet and strip are higher, indicative of the scarcity of flat rolled
products and the fact that those items are produced on old, outmoded
handmills, a high-cost operation.
V. Capabilities, Vulnerabilities, and Intentions.
A. Capabilities.
The ferrous metallurgical industry of Hungary is handicapped
by inadequate resources of raw materials, inefficient economic planning,
and poor management. In view of the chronic shortages of steel that
have existed among the European Satellites since the initiation of pro-
grams of industrialization, the industry provides support for Hungarian
manufacturers with supplies of steel which otherwise might not be avail-
able. The relatively high costs of these supplies, a result of the
necessity of importing raw materials and of inefficient processing, are
offset to an undetermined extent by subsidization.
Although the allocation of investment funds to the industry was
drastically reduced in the Second Five Year Plan, the planned goals
probably will be reached because of increases in production resulting
* Appendix C, p. 53, below.
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from the introduction of modern technology, more efficient operating
practices, and additional facilities provided for in the Plan.
The principal vulnerability of the ferrous metallurgical indus-
try of Hungary is its dependence on imported raw materials. Most of
the coking coal and metallurgical coke is procured from Czechoslovakia
and Poland, and more than 1 million tons of iron ore are obtained
annually from Krivoy Rog in the Ukraine. Stopping the flow of these
essential raw materials would seriously cripple the industry.
High costs resulting from an inadequate raw material base and
from inefficient planning and operating methods constitute an economic
vulnerability. Inefficient planning and operating methods may improve
under more stable political conditions.
The planned increase in production of iron and steel in Hungary
appears to be commensurate with the planned expansion of heavy industry.
The reduction in investment funds allocated to the industry and the
absence of plans for major expansion during the Second Five Year Plan
suggest an intention to deemphasize the development of the iron and
steel industry and to place a greater reliance on imports of finished
steel in future years. Further evidence of such intentions may be
provided if decisions are reached by the Council of Mutual Economic
Assistance (CEMA) for Hungary to specialize on the production of certain
types of finished steel and to depend on imports to meet requirements
of other finished steel products.
Unless Hungary begins to accumulate larger-than-economic stocks
of raw materials, direct indications of military intentions are not
likely to be provided by observation of the Hungarian iron and steel.
industry. If the information were available, a study of the product
mix might indicate an excessive output of items associated with mili-
tary use, but such evidence would be identified more readily by analy-
ses of budgetary and military activities.
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APPENDIX A
FERROUS METALLURGICAL PLANTS IN HUNGARY IN 1956*
1. Borsodnadasd Rolling Mill at Borsodnadasd (48?08' N - 20015_'_E)-
The Borsodnadasd Rolling Mill produces special steels, steel sheet,
and dynamo and transformer sheet.
Two 1.5-ton electric furnaces produce an estimated 3,000 tons of
special steels annually. Finishing facilities include a sheet mill and
a pickling shop.. Production in 1956 is estimated at 100,000 to 120,000
tons of steel sheet.
2. Ganz Railroad Car and Machine Factory at Kobanya
728' N-1?0' E).
The Ganz Railroad Car and Machine Factory is one of the largest pro-
ducers of locomotives, railroad cars, diesel engines, and machinery in
Hungary. It contains an iron foundry, a steel foundry, and a forge shop.
Steelmaking facilities consist of at least 2 electric furnaces, a
3-ton. Italian furnace and an 8-ton Italian furnace installed in 1953,
facilities which have an estimated total annual production of 11,000
tons of steel.
The forge shop produces approximately 4,000 tons of forgings annually.
3. Felsogalla Carbide Plant (Also Known as the Felsogalla Coal Distill-
ing Chemical Plant the Tatabanya Carbide Plant and the Felsogalla
Ferroalloy Plant) at Felsogalla 7 32' N - 1 2 ' E).
The Felsogalla Carbide Plant, established in 1938-39, was the
principal producer of ferrosilicon in Hungary in 1947. Its facilities
have been shifted almost entirely to the production of calcium carbides,
and the production of ferrosilicon in 1956 cannot be estimated.
* The information in this appendix was taken from detailed plant
studies which are available in CIA files.
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4. Gheorghiu Dej Shipyard (Formerly Known as the Ganz Shipyard) at
Budapest 7 30 N - 19 05 E).
The Gheorghiu Dej Shipyard contains a steel foundry for the making
of steel castings. There are an unknown number of electric furnaces
for making crude steel.
5. Kobanya Iron and Steel Foundry (Formerly Known as the Hubert and
Sigmund Steel and Metal Parts Plant) at Kobanya (47028' N -
19009' E).
The Kobanya Iron and Steel Foundry is a small plant producing
special alloy steel castings, such as magnet cores, cylinder linings,
and metalworking tips for the engineering industry of Hungary.
The steel foundry contains two electric furnaces of unknown size
which produce steel for castings.
6. Lang Engineering Works at Budapest (47030' N - 19?05' E).
The Lang Engineering Works produces a wide range of machinery and
equipment, including locomotives, railroad cars, and diesel engines.
It contains an iron foundry, a steel foundry, and a forge shop. A 'pre-
cision centrifugal casting machine was installed in late 1955.
The furnaces for producing steel are not known, but the 1949-50
production plan called for production of 20,000 tons of steel.
7. Lenin Metallurgical Works (Also Known as the Hungarian State Iron
and Steel Works the Diosgyor Metallurgical Works, and Mava 'r
at Diosgyor (4d'-'0b' N - 200411 E).
The Lenin Metallurgical Works, one of the two largest in Hungary,
produces pig iron, open hearth and electric furnace steel, iron and
steel castings, forgings, structurals, rails, sheet and plate, and nuts
and bolts. Two 350-cubic-meter blast furnaces and one 700-cubic-meter
blast furnace have a total annual capacity of 299,200 tons of pig iron.
Seven open hearth furnaces -- three 40-ton, one 70-ton, two 80-ton, and
one 180-ton -- have a total annual capacity of 432,500 tons of crude
steel. There are also 5 electric furnaces -- one 2-ton, one 3-ton,
one 6-ton, and two 10-ton -- which have a total annual capacity of
31,000 tons. Total crude steel capacity is estimated at 463,200 tons
per year.
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Finishing facilities include a blooming mill, a 3-high billet and
structural mill installed in January 1955, a universal mill, a bar mill,
a medium structural and rail mill, a steel foundry, a forge shop, and
a nut and bolt shop.
8. Lorinci Rolling Mill at Pestszentlorinc (47?26' N - 19?12' E)..
In 1950 an obsolescent, 3-high heavy plate mill was moved from the
Lenin Metallurgical Works in Diosgyor to the site of the former Liptak
Factory, which was abandoned in 1919. It was planned that the Lorinci
Rolling Mill, the only producer of heavy plate in Hungary, would operate
only until the plate mill at the Sztalinvaros Metallurgical Combine went
into operation. Production in 1956 is estimated to have been 100,000
tons.
9. Matyas Rakosi Metallurgical Trust (Also Known as M.R. Kohaszat, the
Csepel Island Steel Plant, and Formerly Known as the Manfred Weiss
Metal Works) at Cse el an Island Near Budapest (47025' N -
19u05' E .
The Manfred Weiss Metal Works was in operation before World War I
and was one of the largest industrial combines in Hungary. With nation-
alization of industry, the works was divided into two separate organi-
zations, the Matyas Rakosi Metallurgical Trust and the Matyas Rakosi
Engineering Trust.
The Matyas Rakosi Metallurgical Trust produces crude steel, steel
castings, plate, skelp, welded and seamless pipes and tubes, structur-
als, and wire products.
Five 35- to 1+0-ton open hearth furnaces have a total production
capacity of 175,1+00 to 23+,000 tons of steel. Five electric furnaces --
one 3-ton, one 5-ton, two 6-ton, and one 9-ton -- have a total annual
capacity of 29,000 tons. Total crude steel capacity is estimated at
201+,000 tons to 263,000 tons annually.
Finishing facilities include a blooming and structural mill, a
3-high bar mill, 2 plate and skelp mills, 2 pipe and tube mills, 2
steel foundries, and a forge shop. A cold drawn tube mill is scheduled
for completion by the end of 1957?
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10. Ozd Iron and Steel Plant (Formerly Known as the Rimamurany-
Salgotarjan Ironworks, Ltd.) at Ozd 13 N - 20018'
E .
The Ozd Iron and Steel Plant, one of the two largest iron and steel
plants in Hungary, did not suffer any damage during World War II. The
Russians, however, dismantled equipment in 1945-46, including a'stru.c-
tural mill which had been installed by the Germans. A blast furnace
was added, the open hearth shop was enlarged, and a sintering plant
was built during the Three Year Plan. The First Five Year Plan provided
funds for modernization and for enlarging open hearth furnaces. The
Second Five Year Plan contains funds for building a new open hearth shop
and for other improvements. The plant produces pig iron, crude steel,
iron and steel castings, bars, billets, structural shapes, rails, rods,
wire, plate, sheet, and hoop steel.
Five blast furnaces, with daily capacities ranging from 180 to 250
tons, have an annual capacity of 377,400 to 391,000 tons of pig iron..
Twelve open hearth furnaces, each with a daily capacity of 35 to 40 tons,
have a total annual capacity of 409,000 to 463,000 tons of crude steel.
No electric furnaces are known to be installed.
Finishing facilities include a single-stand, 2-high reversing bloom-
ing mill; a single-stand, 2-high reversing structural and rail mill; a
single-stand, 2-high reversing plate mill; a single-stand, 3-high medium
rolling mill; a fine rolling mill; a wire mill with eight 2-high stands;
a hoop mill; and a steel foundry.
11. Wilhelm Pieck Railroad Car and Machine Works (Formerly Known as the
Hungarian Railroad and Machine Works and as the Magyar Wagon Works)
at Gyor (470411 N - 1703 E).
The Wilhelm Pieck Railroad Car and Machine Works is one of the
largest machine building plants in Hungary. It was approximately
90 percent destroyed during World War II.
Two foundries in the plant produce iron and steel castings. The old
foundry contains 2 small open hearth furnaces and 4 electric furnaces --
one 4-ton, two 2-ton, and one 1-ton. The new foundry, completed in
December 1954, has one 3-ton electric furnace. The plant has an annual
production capacity of 14,000 tons of crude steel.
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12. Red Star Tractor Works (Also Known as the Hofherr, Schrantz
Clayton, and Shuttleworth Machinery Plant at Kis st 7 27' N -
190001 E).
The Red Star Tractor Works is an important producer of agricultural
equipment. It contains an iron foundry and two steel foundries. Two
small open hearth furnaces and two 3-ton electric furnaces have a total
annual capacity of 15,700 tons of crude steel.
13. SalgotarJan Steel Goods Factory at Salgotarjan (48007' N - 19048' E).
The Salgotarjan Steel Goods Factory was in operation before World
War I. The First Five Year Plan provided 75 million forints for modern-
ization and for the installation of new wire-drawing machines, a nail
machine, a laboratory, and a modern cold rolling mill. -
The plant produces electric furnace steel, wire, nails, ingot molds,
light iron and steel castings, forgings, and stampings.
The steel foundry contains an unknown number of electric furnaces.
Finishing facilities include a wire-drawing plant, a nail shop, a
galvanizing shop, and a forge shop and steel foundry. A steel-pickling
plant was being installed in February 1956.
14, Soroksar Iron and Steel Foundry at Soroksar (47024' N - 19007' E).
The Soroksar Iron and Steel Foundry, which by 1960 is to be the
largest and most modern foundry in Hungary, contains an unknown number
of electric furnaces for the production of steel for castings.
15? Sztalinvaros Metallurgical Combine (Also Known as the Dunapentele
Metallurgical Combine) at Sztalinvaros (460>01 N - 18056' E).
In 1948, plans were made to build an integrated steel plant at
Mohacs on the Danube River, close to the Yugoslav border. The primary
objective of the First Five Year Plan was that the Mohacs Steel Combine
was to operate on coal from the nearby Pecs mines and on iron ore from
Yugoslavia and the Krivoy Rog mines in the Ukraine, which was to be
delivered by barge via the Danube River. Construction was abandoned
when Tito broke with the Cominform in 1948, and a new site was selected
near Dunapentele, about 65 kilometers south of Budapest on the Danube.
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Completion of the Sztalinvaros Metallurgical Combine was to raise
the steel production of Hungary to 2.2 million tons by the end of 19,54.
Progress has been slow, and schedules for completion of installations
have not been met. Two coke batteries of 55 ovens each are planned,
one of which went into production in July 1956. Four blast furnaces
were planned, two of which were to be completed by the end of 1954.
Only one 700-cubic-meter blast furnace is in operation, with an esti-
mated annual capacity of 170,000 tons. Eight open hearth furnaces,
with a total planned production of 1 million tons per year, are to be
completed by the end of 1960. Only 3 open hearth furnaces, with an
annual production capacity of 100,000 tons each, are in operation;
the third furnace was fired on 21 April 1956. An unknown number of
electric furnaces are in operation in the steel foundry. Two Soviet-
designed rolling mills -- a plate mill and a fine sheet mill -- are to
be in operation during the Second Five Year Plan.
16. Zagyvarona Ferroalloy Plant Also Known as the Salgotarjan Ferro-
alloy Plant and as the Hungarian Ferrosilicon Plant) at Zagyvarona
0 N - 19051' E).
The Zagyvarona Ferroalloy Plant, established in 1938-39 and largely
destroyed during World War II, was reopened in 194+8. With four electric
furnaces, it is the principal producer of ferrosilicon in Hungary. Pro-
duction capacity is not known.
- 38 -
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 Approved For Release 1999/09/02 : CIA-RDP79-01093A001200020009-5
S-E-C-R-E-T
APPENDIX B
RESERVES, MINES, AND PROCESSING FACILITIES
FOR IRON ORE AND MANGANESE ORE IN HUNGARY
1956
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 Approved For Release 1999/09/02 : CIA-RDP79-01093AO01200020009-5
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For Release 1999/09/02 : CIA-RDP79-01093AO01200020009-5
 Approved For Release 1999/09/02 : CIA-RDP79-01093AO01200020009-5
STATISTICAL TABLES
-43-
Approved For Release 1999/09/02 : CIA-RDP79-01093AO01200020009-5
 Approved For Release 1999/09/02 : CIA-RDP79-01093AO01200020009-5
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