EVALUATION OF CIA/RR PR-22, 'PRODUCTION AND CONSUMPTION OF ALUMINUM IN THE SOVIET BLOC'

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01093A000300050004-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 4
• Document Creation Date: November 9, 2016
• Document Release Date: February 17, 1999
• Sequence Number: 4
• Publication Date: February 12, 1953
• Content Type: MEMO

TO : AU/RR
FROM : OCh/R
DATE: 12 February 1953
SUBJECT: Evaluation of CIA/RR PR-22, "Production and Consumption of Aluminum
in the Soviet Bloc"
1. On two careful readings of parts III to VI of this report, I have been
unable to find any references to Parts I and II or even any passages where this
earlier material advances my understanding of the problem. My own feeling is
that a technical description of this kind, however interesting or erudite it
might be, just gets in the way. The average reader, not having been advised
to the contrary, is likely to feel that he has to carry this baggage through
the essential parts of our report and, if he doesn't see the relevance, will
frequently conclude that he has missed something. I suggest we deny ourselves
such purple passages unless necessary to the understanding of the problem at
hand.
tso#'st~}
stockpiling in the 401s). This would indicate that the
ponding figure for the year 1952-53 was 23% (after allowance for imports and
for stockpiling which obviously generates no old scrap - there was no net U. S.
2. The marginal material in Part II is very well documented, at least
on the surface, since Appendix C contains 23 specific references. In contrast,
the crucial figures in line 1 of table 2 and all the equally crucial estimates
in table 3 are described merely as CIA estimates. The reader is not given
the slightest hint as to whether these are firm figures, reasonable estimates
or wild guesses.
3. On page 13, 2nd paragraph, I cannot reconcile the figures in the first
two sentences. Hungary supplies more than 70 percent of USSR requirements,
(shown in table 2 to be 83 percent of total Bloc requirements) and presumably
all of its own requirements (another 12 percent of the Bloc total). How does
this add up to only 50 percent of the total for the Bloc?
4. The consumption of old scrap in th#'-year 1952/53 is estimated at
20,900 metric tons (first paragraph, page 2). This estimate is derived largely
from U. S. operating experience, and is I believe much too high sm the follow-
ing reason. It is well-known, and could indeed be derived from a priori
reasoning, that the generation of old scrap in a given year is not directly
related to the production of primary aluminum in that year, but is a complicated
and unknown function of past production and other variables such as price of
scrap aluminum and for that matter of scrap steel which would in most cases be
a more important determinant of the decision to scrap a piece of machinery.
In any case, past production is an important factor. For illustrative purposes,
suppose we assume that the volume of old scrap flowing to the secondary
refineries is directly related to the volume of primary production over the
past ten years. In the year 1949, from which the ratio was extracted, U. S.
primary production (and imports - exports) was some 11% of the total production
(and net imports) over the preceding ten years; for the Soviet Union the corres-
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is about twice what 3i6 should be. The matter is even worse for 1955. By
that time current B$3it, production is estimated 35 to LO% of the net production
for 19115-5b. In addition, it would appear that the scrappage rate would be
considerably lower for a scarcity economy like Russia's than for a lush one
such as ours with a high obsolescence rate. 2
In view of some of the large animals swallowed elsewhere in this
report it may seem silly to strain at this gnat which would not affect the
estimates by more than 3 or 1 percent even in 1955. However, in view of the
possibility that this report might be brought to the attention of some
picayunish aluminum expert, I believe it behooves us to show a little sophisti-
cation in these matters.
5. The documentation on consumption estimates leaves something to be
desired. "Since such a lack of accurate information was encountered, the
approach was taken of obtaining estimated aluminum consumptions by various
consuming industries, adding a more or less arbitrary factor--and totaling
the results." (Top of p. 18) There must be a great deal more in this than
meets the eye because in Appendix A (methodology) the consumption estimates
are declared to be "satisfactory.""
At the very least, the military estimates might have been tied into
the currently accepted estimates of aircraft production., requirements for
transmission lines to whatever we have on electric power, etc. This might
leave a sizeable residual but it appears to me preferable to tie some propor-
tion of our consumption estimates to the work of other Divisions, than to
guess at them all. If this were done, I wouldn't even despair of preparing
an estimate for 1955, which was not done in this report. I believe, further,
that in preparing consumption figures, the branch papers should stick to
honest estimates, honestly described, and leave it to the integrators (D/A)
to fill in the gaps where no genuine estimate is possible.
6. With respect to reserves, p. 19 and 20, these figures are obviously
so important that I believe the reader is entitled to know how they are
arrived at. After all, one does have to go through some mental process to
arrive at a figure and if this process can't be described I would be inclined
not to publish a figure.
7. In the last paragraph on p. 20, I fail to see even the appearance
of a contradiction in the policy of importing materials to build up a stock-
pile. In fact, our own stockpile consisted originally of materials for which
we were dependent in whole or in large part on foreign sources of supply, and
therefore could be built up only by imports. More recently the list has been
There is a further upward bias in the estimate owing to a rather peculiar
assumption in the method of deriving it. On page 14 it is stated that the
ratio of all secondary production (new and old) to total production'is 30
percent for the USSR, 'as compared to 23 percent for the US for 1949. However,
the US ratio of old to total scrap is applied, not to the 23 percent but to
the 30 percent. This implies that the generation of old scrap is somehow
directly related to the scrappage factor at the mills, obviously an absurdity.
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expanded because of the increasing probability of atomic attack against
vulnerable industries. The straw man device is effective only if the straw
is hidden from the reader and is skillfully revealed by the shrewd analytical
powers of the writer.
8. The statement on vulnerabilities (p. 21) is a little perplexing.
Granted it would be annoying to the aluminum producer to have his electric
power stopped. It might also be embarrassing to have an atomic bomb dropped
on the mill itself. Is a thermal plant more vulnerable than a hydroelectric
plant? According to table 3 primary aluminum is produced in only 7 plants
and of these, 2 plants produce something over 50 percent. If I wanted to
cripple the aluminum industry I'd be inclined to do it directly rather than
hunt around for the plants that produce the switchgear required for the power
plant that serves the aluminum mill.
9. Again, in the intents of sophistication, we might suggest some
skepticism or at least surprise that the Russians would store a substantial
proportion of their aluminum stockpile in Moscow, which the Russians must
consider a high priority target area. (p. 20) Even we wouldn't do that.
10. On the whole, the conclusions (p. 21) and the summary (pp. 1 & 2)
do a good job of pulling together the considerations advanced in the text.
I believe, however, that the first sentence in part VII is very misleading.
If I were to summarize the textual material on the crucial matters of produc-
tion consumption and reserves I would not represent the results as conclusions
drawn from the evidence but would put the matter somewhat as follows: "We
have some evidence that the Soviet Union has accumulated reserve stockpiles
of aluminum for use in a,war emergency. We do not know, however, what these
stockpiles now amount to, when they were. accumulated or whether and to what
extent they are now being increased. In view of the importance of aluminum
and the industry's vulnerability to bombing, it is reasonable to assume that
stockpiling would be given priority over all current requirements except
military and the most essential industrial uses. If, as estimated, current
production and imports are set at something over 300,000'metric tons, and
military and essential civilian requirements at 230 thousand metric tons,
the current year's addition to the stockpile would be something short of
90,000 tons."
11. I don't believe that statements such as "any great expansion would
cause a strain on the present Soviet Bloc economy." (p. 21) Apart from the
vagueness of the expression "any great expansion," it needs to be recognized
that in an economy operating under forced draft, everything causes a strain
and there is no point in singling out a particular activity unless there is
reason to believe that this is a marginal item and would be dropped or
curtailed if the over-all strain proved to be unbearable.
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To sum up, the documentation supplied with this report is quite in-
adequate. The statement in Appendix A that the estimates Mare based on the
review of hundreds of sources and a plant by plant survey of the Soviet and
European Satellites" (p. 23) is superficially impressive but may well be
misleading. The man who must base policy decision on intelligence reports
is interested in the results of the search, not the duration thereof. He
certainly is entitled to more than a statement that one set of estimates,
accounting for'17 percent of the total are more firm than another, accounting
for 83 percent. Incidentally, I can't resist pointing to the rather peculiar
alternative offered the reader in the second sentence of Appendix A. If the
satellite estimates are not more firm than the Soviet, then the former are
at least accurate within a narrow margin of error. But that means that the
Soviet estimates, being now the firmer of the two, are mare accurate within
an even narrower margin of error. In the absence of adequate documentation,
I feel that much of this report is of limited usefulness as a research
report, and worthless as a guide to policy-making.
OCh/R
12 Feb 53
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Distribution:
2 - OCh/R
25X1A9a
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