ECONOMIC PLANNING; METALLURGY, ALUMINUM AND POWER PRODUCTION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00810A002700440003-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 5
• Document Creation Date: December 22, 2016
• Document Release Date: March 15, 2011
• Sequence Number: 3
• Publication Date: October 29, 1953
• Content Type: REPORT

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CENTRAL INTELLIGENCE AGENCY
INFORMATION REPORT
DATE DISTR.
NO. OF PAGES 5
REQUIREMENT NO. RD
REFERENCES
THE SOURCE EVALUATIONS IN THIS REPORT ARE DEFINITIVE.
THE APPRAISAL OP CONTENT IS TENTATIVE.
(FOR KEY SEE REVERSE)
Economic planning in Hungary since the and of the war may be summarized
as follows8.
1. The Three-Year Plan, which was carried out between 1 August 1947 and 31
December 19490 was designed to rebuild the country after the devasta-
t1ons of the war. This plan was completed successfully; it had been
prepared entirely by Hungarian experts.
2. The Five Year Plan, with the exception of certain points was also pre-
pared by Hungarian experts. Its purpose was, essentially, the integra-
ted development of all branches of the national economy.
a. After the beginning of the Korean war and the intensification of the
cold war, however,.the situation underwent a radical change. At
that time, in an effort to enhance war production, the USSR inter-
fered radically in the management of Hungary's national economy.
This intervention manifested itself in the subsequent increase of
the Five-Year Plan, which was announced in 1951.
b...,.With a view to meeting Soviet demands, Hungary was. compelled to
develop to the maximum its output of bauxite, alumina, aluminum,
iron, and steel. As early as 1951, and increasingly in 1952, the
results of this Soviet intervention manifested themselves in con-
siderable delays in production, and the augmented Five-Year Plan
could not be fulfilled.
This Document contains information affecting the Na-
tional Defense of the United States, within the mean-
ing of Title 18, Sections 793 and 794, of the U.S. Code, as
amended. Its transmission or revelation of its contents
to or receipt by an unauthorized person is prohibited
by law. The reproduction of this form is prohibited.
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SECURITY INFORMATION
Hungary
Economic Planning: Metallurgy,
Aluminum and Power Production
The result of the intervention into. metallurgy:anf'.the aluminum
industry was that coal and-electric power production could not keep
up with Soviet requirements. The failure of the Five-Year Plan is
basically due to the fact that coal and power output is insufficient,
As a matter of.fact the situation is so acute that the National
Planning Office cannot prepare plans for a single year, or even for
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STATE X ARMY
AIR
FBI
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ORR E1, x
29 October 1953
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a few months, but must constantly modify the plan figures as a
result of the shortages in coal and electric power.
3. For all practical purposes, the Five-Year Plan -- that is, economic
planning on a national scale -- has been scrapped. The enterprises
are operating only on the basis of temporary instructions. To remedy
this situation, feverish preparations are being made with a view to
opening up new sources of energy.
Aluminum Industry.
a. Bauxite Minim.
Year
Bauxite Production
in Tons
1938
353,985
1942
974,477
1943
997,507
1944
731,480
1945
47,165
1946
74,125
1949
560,000
1952
1,250,000
b. Alumina Production.
1.) The largest part of the bauxite mined is used for the produc.
tion of alumina. Approximately 5-6 percent of the bauxite are
used for the production of bauxite cement. The latter product
has been employed sucessfully in the building industry, because
it settles faster than Portland cement.
2.) Currently, the following three factories produce alumina in
Hp ga?y: Magyarovar, 15,000 tons, A.jka, 20,000 tons; and Almas-
f zit""o, 60,000 tons.
3.) Bauxite mining exceeds Hungarian requirements. Before the war,
90 percent of the bauxite was exported to Germany. Exports
during recent years are shown in the following table (in tons)-.
Bauxite
Year
Consumption
in Hungary
Bauxite
Exports
Alumina
Production
1938
34,040
319,945
3,200
1942
48,509
925,968
18,500
1943
53,087
944,420
20,868
1944
45,770
685,710
20,500
1945
7, 221
39, 944
2,100
1946
11,350
62,775
4,500
1947
45,000
281,041
12,000
1949
77,000
483,000
34,000
1952
260,000
990,000
85,000
Previously, approximately 7 percent of the bauxite mined stayed in Hungary. This ratio has, however, changed as a result of
the establishment of the new alumina works at AlmAsfuzit'c. Thu-i,.2
in 1952, 19 percent of the bauxite remained in Hungary.
Aluminum Manufacture.
1.) Hungary has three aluminum smelting establishments (annual
capacity appended): at Felsogalla, 4,000 tons; at the Matyas
Rakosi Works, Csepel, 4,500 tons; and at A.jka, 10,000 tons.
Due to the enlargement of the power plant which serves the
Ajka smelter, the capacity of the latter was recently increased
by 10,000 tons per year.
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2.) Currently, a fourth aluminum smelter is under construction at
Inota, near the new electric power plant which is already in
operation. The new smelter will have an annual capacity of
Approximately 30,000 tons. As a result, Hungary's aluminum
production will be doubled when the new smelter is placed in
operation.
3.) The following table shows the development of Hungary's aluminum
production since 1938:
Hungary's Aluminum Production
Year
Product ion
in Tons
1938
1,516
1943
8,904
1945
1, 021
1946
2,147
1947
6,9300
1949
16,824
1952
25,157
This extraordinary development can be explained only by Soviet
demands for aluminum.
4.) It may be added that Hungarian aluminum cannot compete in price
with world production. This is due to the fact that the recent
boost of production figures was possible only in a Communist
state, where the enterprises and products are not always gov-
erned by the requirements of economy in operations. For exam-
ple, the transportation costs of Hungarian bauxite to the USSR
amount to four times the cost of mining and to 1.4 times the
world price for bauxite. Hungarian bauxite could compete in
the Western markets only if the cost of electric power were
reduced to 8 fillers per kilowatt-hour. Currently, however,
this item fluctuates between 16 and 31 fillers per kilowatt-
hour.
5. Ferrous Metallurgy.
Since a great deal of detailed information has been published on Hun-
gary's ferrous metallurgy, the following table includes only data which
have bearing on the evaluation of electric power consumption:
Iron Production
in Tons
Steel Production
in Tons
1938
334,880
647,506
1942
417,784
784,496
1943
415,099
7760386
1944
295,000
530,000
1945
76,515
128,784
1946
91,181
352,826
1947
305, 092
5870340
1949,
427,976
849,000
1952
636,332
1,305,016
6. Coal and Electric Power Production.
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50X1-HUM
Year
Total Coal
Production
in Thousand Tons
Elect
Pro
Calories in Mil
ric Power
duction
lion tw.-hs.
1938
9,350
4,272
1,173
1943
11,515
4,100
1,832
1945
4,186
3,850
684
1946
6,224
3,863
1947
?
3,960
1,408
1949
11,844
3,993
2,200
1950
13,300
3,897
2,600
1951
15,300
3,805
3,112
1952
18,500
3,720
3,680
b. The foregoing table shows a definite increase in electric power
production in face of a substantial decline in the caloric value
of the coal mined. The three principal groups of coal consumers
are (annual consumption appended)', electric power production,
3,800,000 tons; ferrous metallurgy (in addition to coke which must
be imported), 2,100,000 tons; and the railroads, 2,000,000 tons.
o. The following list includes all Hungarian electric power plants in
operation, with the exception of smaller plants serving certain
Industrial establishments. The figures indicate actual output
capaoitiess
Actual Capacity
Location of Plant in 1,000 Kilowatts
1.) Power Plants in Operation Before 1950.
Budapest-Kelenfbld
110
Banhida
66
Tatabanya
60
Dorog
20
Salgotarjan
15
Barcika
4.5
Ljka
arpalota
40
12
PKcs industrial region
17
Municipal power plants
30
Hydro-electric power plants
10
Total 384.5
2.) Power Plants Completed by the End of 1950.
Matra Mountain region
128
Mgt' as Rakosi Works, Cs
epel
15
3Somla
7.5
pi?sgy?r
6.5
Ozd
9
Inota (will'be in full
by the end of 1953)
capacity
operation
160
Total
326
3.) Power Plants Under Construction.
Sztalinvaros
60
Tiszalo'k
10
Kazinobarcika
200
Total
270
Grand Total
980 kw.
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7. Analysis of the Foregoing Data.
a. Production of coal, the basic raw material of electric power, was
doubled between 1938 and 1952. This result, however, could only be
achieved by lowering the caloric value by 10 percent. For this
reason, coal production was actually increased by only 90 percent.
On the other hand, electric power output increased from 1,113,000,000
to 3,680,000,000 kilowatt-hours, that is, triple the original amount.
be By disregarding the decline in the quality of coal, and assuming that
one kilowatt-hour of electric power can be produced by firing one
kilogram of coal of 4,000 calories (which is not entirely accurate,
because Budapest-Kelenf'dld, for example, requires 4,600 calories to
produce one kilowatt-hour), it will be seen that, in 1938, 1,113,000
tons of coal, or 11.9 percent of the annual production, were used
for electric power production. In 1952, a total of 3,680,000 tons,
or 19.68 percent of the annual coal production, were used for the
same purpose*
a. The combined iron and steel production doubled between 1938 and 1952.
In 1938, iron and steel production consumed one million tons of coal
and 180 million kilowatt-hours of electric power.
d. As regards alumina production, coal requirements increased from
80,000 tons to 212,500 tons, that is, by 265 percent as against an
increase of only 90 percent in coal output*
e. Electric power consumption by the aluminum industry rose from
37,900,000 kilowatt-hours 'to 628,900,000 kilowatt-hours, or by
1p659 percent. This industry alone consumes 17.1 percent of the
total annual electric power production of Hungary.
f. From the foregoing it appears that ferrous metallurgy and the alum-
inum industry are consuming increasing quantities of energy (coal
and electric power), while the production of energy fails to keep
abreast of these requirements. It is believed that this is the main
reason for the failure of the Five-Year Plan. Modifications in the
plan had to be improvised from day to day, to maintain a fictitious
equilibrium to the detriment of other branches of industry. This
trend will become even more pronounced in the future. Energy re-
quirements will continue to increase due to the enlargement of he
Ajka aluminum smelting establishment and the Inota and ft-talinvaros
projects.
g. On the other hand, a further increase in coal mining appears impos-
sible; also Hungary's hydro-electric power possibilities are limited.
Consequently, it may be expected that, unless Hungary can find a way
to import coal from abroad, an increasing number of industrial
projects of secondary importance will be scrapped in the future.
h. Petroleum, as a source of energy, has not been discussed in this
analysis, because practically all of Hungaryts petroleum production
is exported to the USSR.
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