THE ATTACHED S-PROJECT NO. 6081,US FERROCHROME POSITION,

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001900020066-4
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 11
• Document Creation Date: December 19, 2016
• Document Release Date: July 29, 2005
• Sequence Number: 66
• Content Type: REPORT

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MEMORANDUM FOR:
Congressman
Ralph Regula on 10 April 1974.
STAI
STAT
The attached S-project No. 6081,
US Ferrochrome Position, was passed to
pistribution! (S-6081)
Orig. -
1 - D/OER
11 April 1974
TE
STA
STA:
(11 Apr. 74)
STA
A E,
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IoAUCHSA '0' WHICHREPLACES
MAY SEFORM
US'0' 101
ED.
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US Ferrochrome Position
Although reading like a litany of horrors, the
assessment of the US chrome position and the importance of
Rhodesian chrome is essentially correct. US dependence on
foreign ferrochrome is increasing very rapidly as shown in
Table 1, with imports rising from 41,000 tons in 1970 to
155,000 in 1973. It is interesting to note that Rhodesia
supplied 33% of that increase directly and probably a very
large part of it indirectly. Most of the ferrochrome
producing countries listed do not have indigenous deposits
and must import ore. Rhodesia is a major supplier of
metallurgical grade ore to many of these countries including
South Africa.
The reason for increased imports of ferrochrome by the
United States is two-fold. First, the US ferrochrome
industry is declining due primarily to its inability to compete
with foreign producers and in part to the difficulty of
obtaining metallurgical grade ore abroad. As shown in Table
2, US imports of metallurgical grade ores declined from
700,000 tons in 1970 to 380,000 tons in 1973. This decline
was made up by larger imports offerrochrome. The second
reason is an increase in requirements due to increased
production of specialty steels that require ferrochrome.
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During the UN embargo, the US essentially switched
from Rhodesian chromite to Russian chromite. Such a switch
is now more difficult because of the decline of the US
ferrochrome industry and its increased reliance on imports
of ferrochrome rather than chromite. We are not certain
how long it would take to reverse this trend and expand the
US ferrochrome industry to consume Soviet chromite but it
stands to reason that there would be difficulties and
expenses involved not to mention pollution problems. Secondly,
there is no assurance that Soviet chromite would be available.'
It might also be noted that dependence on the USSR is
not desirable in spite of the present detente. The USSR
stopped all chromite shipments to the US during the Korean
war and might well consider similar action should the Middle
East flare up again. In addition, prices for Soviet chromite
would almost certainly rise once again as they did during
the 1967-71 UN embargo period.
In effect a unilateral US embargo on Rhodesian ferro-
chrome would have-little effect on Rhodesia while penalzing
the US severely. Rhodesia had almost no difficulty disposing
of its chromite during the last embargo and there is no
reason to think the situation would be different this time.
South Africa has traditionally acted as a middleman for
Rhodesian trade and continues to do so. Moreover, many of
the embargoing nations found ways of circumventing the embargo
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at consiuerable profit to themselves and expense to the
U$ and this too would probably be repeated.
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 Table prod
T'erroc romium
y Country
(Short Tons)
1970
1971?
1972
1973
Low
Carbon
High.
Carbon
Low
Carbon
Hiyh
Carbon
Low
Carbon
High
Carbon
Low
Carbo
High
C
b
n
ar
on
Brazil
--
--
--
1,382
--
4,205
--
7,130
Canada
--
--
184
515
45
--
9
--
Finland
--
5,919
--
10,903
--
6,887
--
8,652
West Germany
2,579
4,458
5,033
6,738
2,949
2,316
1,07E
413
Japan
310
347
7,390
12,992
14,134
3,577
10,856
441
Mozambique
--
560
--
--
--
--
1,653
1,107
Norway
3,387
489
3,458
300
6,282
3,318
3,194
1,160
Rhodesia
--
--
--
--
3,578
11,835
4-;668
46,083
South Africa
19,735
560-
14,633
7,174
_23,095
30,890
13,218
41,360
Spain
--
--
--
--
--
--
--
1.395
Sweden
2,933
--
5,434
220
9,608
1,171
6,016
1,161
Turkey
--
--
1,120
--
6,802
--
1,653
--
Yugoslavia
--
--
--
--
1,117
4,844
3,307
France
28
-
1,08.6
4,255
465
Eclgium-Luxembourg
--
--
110
39
1,554
India
'-
"
2,260
--
? --
--
Italy
Netherlands
Total
1, C53
.28,972 12,333 40,598 X44 5gg 68s, 7310 7 73,344 112,1
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Table 2: US Imports for Consumption of Metallurgical-Grade Chromite
(Thousand Short Tons)
Country
1970
1971
1972
1973
Iran
31
12
--
--
Pakistan
31
35
27
21
Philippines
--
--
9
-
South Africa
97
140
104
34
Turkey
135
180
56
83
USSR
409
274
371
202
Rhodesia
--
26
65
43
Total
703
667
632
383
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 Sta in1ess steel ?_:: eate3 virt~:.ally every face u of our economy,
.from jet engine components to :: ed:ical equipment t0 house hold products.
+' he i ndispen sage .7 - o ec.-f e, . . v 3. _n a W a ...... e s s
. st8 I '
, ? .i r$ c.i.co. 1i. ..,1. #?aOSjir
grades of t is special steep : rodixct contain upwards to 18 percent
of chrom~f.u.~. .actme :t of
8005 ::o?,;~.d place in serious ;;eopardy
the Via3ilitf of t is cou-.tr;?s stai:.+ess steel industry That bill
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would prohibit t e
i ?or tat:Lo n of chrome
fro y Southern Rhodesia.
Rhodesia has t;ro-th:.rds of the w=orld's metallurgical grade chro:rite
ore reserves and has rapidly deve_oped as a'~major converter of that
ore into ferrochrome. ?erroc -ro ne--not c hro.:.e ore--is V- a essential
ingredient' in the production of stai,rless steel. Chro u, to ore in its
raw state cannot be used 1.1'. the steel producing furnaces. H.R. 8005
would place Rhodes'"a's h gr. grade ore out of the reach of U.S. producers
and like:-rise would deprive our stainless industry of Rhodesia's high
grade ferrochro.e . a nest largest producer of chrome is South Africa
.zich , i ; most instances, must upgrade tr.e quality of its ore by
Introducing R'ro~,es_an ore in order to produce ferrochro me.
The Soviet l:nfo : ;?ro . t e nce become the only major available
alternative to Rhodesia as a source of metallurgical grade crromite.
wring the period of 150?-?1 v,- :en a N. inspired J.S. embargo of
Rhodesia was in effect, this country imported more than half
its total
reC;L`.i remer.ts fro.;: russia. Burl no that period, the price of chrome
doubled. Based on this istorical pa. -tern, -tie can reasonably pro;'ect
r.. s cant price increase if Russia regains its r,-onopolistic
position. Turkey, Finland, and Brazil--the major holders of the small
;proportion of chrome not at :er., ise accounted for--cannot be relied
upon to supply our needs in the future. In addition to a long-term
yoAj$?oMcfd'F9r WiQ;d 2@U5It 1 F: AA5Rl34a't-eP8r5kM*906b2v 4 s high
l
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grade chro.,.{ to resources are be rapid:.y ::ep ' e red . ?ir._anci and
quantities of chrome.
Braz 1 do not have the c u, ali ty ore cr cap ac! .1%;y to supply are
Nor is the U.S. strategic stockpile a reliable source, since
near? half of the . J' I',? t ?' ,? of c' .f ~. A.
.~y c.._r~..... *e conta:._,s is o_ such :.o*., cud:.-%,y as Vo
be virtually useless. Since 1962, t .he stcc:.pile of netallur`:
grade chronite has dec:.=.red over `3 percent, and with current proposal
to further liquidate the stockpe, our rational inventory mould be
reduced to less Jt;han. a six-month supply of high-grade metallurgical
chro.niite., The Administration has proposed to reduce that grade of ore
to 444,710 tens. In the first quarter of 1973, the metallurgical
industry cons=axed 457,155 tons of chro ite. According to the U. S.
Bureau of oes, the :..-dustr:al stock of metallurgical chromate is at
lowest level in five years.
No chromite ore has been mined in the U.S. since 19061. in
, U.S. .'-ports of metallurgical chror3te ore
addition to this fact
have declined steadily because for most compan:Las it is no longer
economical to produce ferrochrome In the ;:::iced States. A number of.
factors contribute to this. Ferrochroxe pr cd wction , is largely
dependent upon low cost elector.-Le po::*er. Because power costs in the
U.S. are considerably above those of some foreign producers whose
electric po e '. consumption is subs:.dizec c their governments, ferro-
alloy manufacturers find It extremely difficult to remain competitive .
Like,~tise, large expenditures for pollution control devices 'nave places:
the industry at a further competitive disadvantage. In addition,
many producers decided to withdra:: from the market during the previous
Rhodesian sanctions period because of the relative unavailab'.lity of
rat, materials. Fina:.ly, the Rhodesians developed during the embargo
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a S'_[;::'_fican ie~=cC:::'0:.? p 1:NNLL':Lo: capac_;.y .ti: _C is expected to
a_::cs u acuo_e the U.S.
exceed ~00,0O0 torts per year c?.._ ing :97 --
consumers can expect* to pay in_f_ated prices for the re::air.der
capacity.
If the Rhode scan and South A_ rican supplies are cut off, U. S
t hat :.S avai_able. :n 1972, the hcdes ran price of Y22S
per ton: or
average and
producers.
but dr~?. e
currently
..s t -?:e ser _o i n f at o.. ra_r. p_rob' ems
;,_,,.z ? ws _ __,.~_ .,.
those fires by excluding a : artet which as traditionally been availab
at a cheaper price.
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::carbon ferrocrame was 30 perce .1t 10e1 -t tohe Japanese
$100 per ton helot: that offered by German a^d icorwed_an
no" help
:nterse pressures on these .rLted -ar :ets car