THE ECONOMIC DIMENSIONS OF THE ZAMBIA RESCUE OPERATION
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Approved For-Rub lease 2001104/27 :.Ci RDP7 VMj 2400210001=1
11b .' ' 6-R EIGI DISS `I
CIA/RR CB 65-71
November 1''965
Copy No
INTELLIGENCE
TrIE `ECONOMIC D M NSIQNS
OF' TIIE ZAMBIA RESCUE, OPERATION
IDYRECTORATETOP INT.",f NC
Office of Research = and" eports'
o FORE'I.GN J5IS,SEM
SECRET
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Excluded Frain automatic
dow grading and
de;Iasijfication
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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, UBC, Sees. 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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THE ECONOMIC DIMENSIONS
OF THE ZAMBIA RESCUE OPERATION*
In the emotional aftermath of Southern Rhodesia's unilateral declara-
tion of independence (UDI), Zambian President Kenneth Kaunda may feel
compelled to precipitate a complete economic break with Rhodesia.
Although it is less likely, initiative for such a break could come from
Rhodesia. An accumulation of actions and reactions could bring about a
complete severing of all economic ties between the two countries. How-
ever this break comes about, the consequences for Zambia would be serious.
One result of cutting the economic ties between Rhodesia and Zambia would
be the elimination of most of the 700, 000 short tons (st) of copper from world
markets otherwise expected in the next year because of the heavy dependence
of Zambian copper production on Rhodesian coal and electric power and be-
cause the major rail link to Zambia is through Rhodesia. Such an even-
tuality would pose difficult adjustment problems for much of the industrial-
ized West because copper is already in short supply. The pound sterling,
under these conditions, would probably come under severe pressure because
of the importance of Zambian copper to British export industries.
There is no way in the short run by which the United States or the
United Kingdom could offset the major consequences for Zambia of such
a breakdown. Three economic and financial problems would be created
immediately. First, the Free World need for Zambian copper is critical,
and efforts would have to be made to continue production. The remaining
limited supplies of copper from other Free World producers would have
to be rationed. Second, the Zambian economy would have to be kept afloat
at some minimum level and its dominant mining sector kept functioning,
at least on a care-and-maintenance basis. Finally, the financial loss to
the United Kingdom (estimated by the British at between US $400 million
and $700 million annually) would have to be eased in order to maintain
the stability of the pound sterling.
1. Rhodesia's Economic Stranglehold
Zambia's economic dependence on goods and services provided by
Rhodesia is almost complete. In order to maintain economic activity
at anything like the present levels, Zambia must have access to Mozam-
bique's Indian Ocean ports via Rhodesia, an uninterrupted flow of
? electricity from the jointly owned Kariba power complex, and a con-
tinuous supply of coal from Rhodesia's Wankie fields. Rail and road
* The estimates and conclusions in this brief represent the best judg-
ment of this Office as of 23 November 1965.
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routes to the sea, other than those transiting Rhodesia, are available
to Zambia. However, they collectively lack the capacity to offset the
loss?of access to the Rhodesian system. Zambia's embryonic coal
industry, under the most optimistic assumptions, could provide only
a small fraction of the coal Zambia would require if it is denied Wankie
coal. Although there is substantial unused thermal electric generating
capacity in Zambia, power generation from these plants would neces-
sarily depend on imported coal, and in any event Zambian generating
stations could not offset the loss of Kariba power.
2. Copper Production*
With the exception of a modest amount of electric power imported
from Katanga, Zambia's annual production of some 700, 000 st of copper
depends completely on electricity supplied from Kariba and on electricity
generated in Zambia's thermal powerplants, which use Rhodesian coal.
Substantial additional amounts of Wankie coal are consumed in process-
ing Zambian copper concentrates through the blister stage. Without
these supplies, it would not be possible to maintain production at
700, 000 st, and output would fall sharply. The limiting factor in the
first instance is the capacity of the Zambian thermal powerplants.
Although these plants now operate only intermittently, they could produce
at capacity 1. 13 billion kilowatt-hours per year. In addition, 400 million
kilowatt-hours probably can be imported per year from Katanga. Be-
cause of line losses and municipal and other uses, the net electric power
available to the copper companies annually would be about 1. 1 billion
kilowatt-hours. This amount of power would allow the mines to produce
annually about 450, 000 st of blister copper or 400, 000 st of electrolytic
copper. The coal required for this level of copper production would be
about 1. 5 million st -- 775, 000 st to generate domestic power, 400, 000 st
to smelt the copper, and about 325, 000 st to operate the railroad within
Zambia to service this level of economic activity. Such a rate of produc-
tion would be dependent, however, on the physical ability to import this
amount of coal in addition to the other mining supplies and foodstuffs
necessary to maintain the population at a level of austerity. The impor-
tation of such quantities of coal into Zambia is not believed to be possible.
3. Austerity in Zambia*,:*
At the current level of economic activity, Zambia imports about
2 million st of goods annually. To maintain the Zambian economy at
For details on required inputs of electric power, see Appendix A.
For details on inputs necessary to sustain the Zambian economy
at austerity levels, see Appendix B.
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an austerity level and to keep the mining industry on a care-and-
maintenance basis, it is estimated that imports could be reduced to
about 900, 000 st as follows:
Commodity Thousand Short Tons
Coal 415.
POL 150
Food 144
Other 190
This estimate of coal requirements assumes a doubling of imports of
Katangan power to 400 million kilowatt-hours annually, and hence is
probably conservative. The estimate of coal imports could be reduced
if Zambia's own fields at Kandabwe could begin significant pt6du:ction.
Conflicting estimates suggest that Kandabwe could produce at an annual
rate of between 200, 000 and 400, 000 st. Depending on the level of
Kandabwe production (and the present level is negligible), the volume
of all imports needed to sustain the economy on a care-and-maintenance
basis would total between 500, 000 and 700, 000 st,annually.
4. Transport Alternatives*
In the final analysis the controlling factor limiting the effectiveness
of any Zambia rescue operation will be the availability of transport
capacity on routes which avoid Rhodesia. The three possibilities are
rail, road, and air, which in turn are limited primarily by port capacity
in East Africa. The estimated excess inbound capacity of all roads from
Zambia to Tanzanian Indian Ocean ports is about 100, 000 st annually.
suggests 1:1?AX6
0, 000 st per year is the maximum that can be carried, using readily
available aircraft and without time-consuming improvements to East
African airports. In addition, by using the East African railroad system,
another 100, 000 st can be made available to Zambia. Thus the combined
inbound rail, road, and airlift capacity through Tanzania is 300, 000 st
per -year. 'The rail-river transport system through Congo (Leopoldville)
might also carry an additional 100, 000 st of inbound cargo.
The only major rail route from Zambia to the sea that does not
pass through Rhodesia is the Benguela Railroad through Portuguese
Angola. The surplus capacity of this wood-burning railroad is subject
to considerable conjecture, but it is probably at least 600, 000 st --
400, 000 st inbound toward Zambia and 200, 000 st outbound.
For details on transport facilities, see Appendix C.
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Theoretically, Zambia would be able to draw on a total inbound
capacity by rail, road, river, and air of about 800, 000 st. Katanga,
however, would very likely have first call on the surplus inbound
capacity of the Benguela Railroad to offset the 450, 000 st of goods now
imported through Rhodesia, including 300, 000 st of Wankie coal and
150, 000 st of general merchandise, and thus would more than offset
the available surplus inbound capacity.
As indicated above, under favorable circumstances, between
500, 000 and 700, 000 st of imports annually are required to support
Zambia on a care-and-maintenance basis. If only 300, 000 st of
imports are available through Tanzania and an additional 100, 000 st
through the Congo (Leopoldville), it is apparent that it would be vir-
tually impossible to support Zambia adequately, even at a sharply
reduced level of economic activity.
It is possible that the report of the railroad expert now investigat-
ing the Benguela route will increase the current estimate of surplus
capacity available on this route. However, the upward revision of
capacity would have to be very large to alter the conclusions of this
brief substantially.
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APPENDIX A
LIMITATIONS IMPOSED ON THE MAXIMUM PRODUCTION
OF ZAMBIAN COPPER
BY AVAILABILITY OF ELECTRIC POWER
The availability of electric power in Zambia places rigid limitations
on copper production. The maximum quantity of Zambian copper which
can be produced in the absence of Kariba power and Wankie coal from
Rhodesia has been estimated in the following fashion. It was assumed
that all Zambian thermal powerplants will operate at full capacity and
that the availability of coal will not be a limiting factor. Furthermore,
the present import of 200 million kilowatt-hours of electricity from
Katanga was doubled to 400 million kilowatt-hours. Allowing for various
losses and other essential uses, it was estimated that Zambia would. have
access to 1. 1 billion kilowatt-hours annually under these maximum
assumptions. Using the experience factors below, it was determined
that a maximum of 450, 000 st of blister copper could be produced if
refining facilities were shut down to conserve electricity. If refining
were carried on, only 400, 000 st of electrolytically refined copper
could be produced.
The estimated electric power requirements in Zambia pe:x,.short ton,
of refined copper are as follows*:
Kilowatt-Hours
per Short Ton
Percent
Mining
C
795
29.2
oncentrating
S
l
1,270
46.7
me
ting and converting
Ele
t
l
205
7.5
c
ro
ytic refining
A
il
180
6.6
ux
iary shops .
270
10.0
2,720
100.0
Thus the tonnage of copper that can be produced is derived by
dividing the amount of power available by 2, 720 kilowatt-hours. This
* Thirty-nine short tons of ore are required to recover one short ton
of refined copper.
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Will give the amount of electrolytic (refined) copper that can be pro-
duced. To arrive at an estimate for smelter (blister) copper, 180
kilowatt-hours per st were subtracted, thus further reducing the
power input required by using a slightly lower figure for the needs
of auxiliary shops.
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MINIMUM INPUTS NECESSARY
TO SUSTAIN THE ZAMBIAN ECONOMY AT AUSTERITY LEVELS
AND THE MINING INDUSTRY
ON A CARE-AND-MAINTENANCE BASIS
AND MAXIMUM TRANSPORT CAPABILITIES AVAILABLE
Under the assumption that Rhodesia cuts off supplies of electric: power
from Kariba, halts shipments of Wankie coal, and denies Zambia the use
of rail transit facilities, the estimated annual imports necessary for main-
tenance of the Zambian mines and a minimum level of other economic
activities are as follows:
Thousand Short Tons
Coal 415
POL, food, and other 480
Total 900 (rounded)
Potential domestic production of fuel amounts to 200, 000 to
400, 000 st, leaving a deficit of 500, 000 to 700, 000 st that would have,
to be met by imports. Available inbound transport capacity, however,
amounts to only 400, 000 st, leaving an import shortfall of 100, 000 to
300, 000 st.
In order to provide for care and maintenance of the mines and to
provide a minimum level of other activity, this Office estimates that
415, 000 st of coal per year would be required. Other estimates of
these requirements are as follows:
Thousand Short Tons
per Year
780
fining company J 770
Mining company official a/ 432
Ex-adviser to President Kaunda a/ 360
a. These estimates include care and maintenance of the
mines and only a small portion of the coal needed for
other essential activities.
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A mining company official estimated that 100 megawatts of power
capacity is needed for the care and maintenance of all Zambian copper
mines. A large portion of these needs can be imported from hydroelec-
tric facilities in Congo (Leopoldville). The estimates of the ability of
Congo (Leopoldville) to make power capacity available, however, have
ranged from 40 to 100 megawatts. The midpoint of these estimates,
70 megawatts, is used. Coal requirements of 130, 000 st needed to con-
vert the remaining 30 megawatt capacity into electrical output is obtained
by applying factors developed in Appendix C. Municipal needs and line
losses in 1964 totaled 250 million kilowatt-hours. Coal inputs of
200, 000 st needed to generate this output is obtained by applying the
fuel consumption/power production ratio derived in Appendix C. This
coal figure is for present consumption; therefore, 135, 000 st of coal,
is used here to indicate a lower
level of activities. The rai ro need 150, 000 st of coal, assuming
a much reduced level of activity.
In addition to coal, estimated annual Zambian import requirements
for a minimum level of economic activities are as follows:
Thousand Short Tons
Food
140
POL
150
Other
190
Total
480
Some domestic fuel production is possible. Zambia plans to extract
coal starting in early 1966 from the Kandabwe coalfield. Annual produc-
tion is projected at 180, 000 st. Emergency deliveries in amounts up to
360, 000 st yearly may be available. Both of these estimates are believed
to be overly optimistic, however. An additional 20, 000 to 40, 000 st of
coal-equivalent in cordwood for use in thermal powerplants has been in-
cluded to give a range of 200, 000 to 400, 000 st for domestic fuel supplies.
The estimated annual inbound transportation capacity is as follows:
-8-
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Thousand Short Tons
Benguela Railroad
400
Through Tanzania by road, rail, and airlift
300
Congo (Lo.opoldville), Katanga to Matadi
100
Maximum excess capacity available
800
The Congo (Leopoldville) mining industry, which is the main user of
the Benguela route, probably would absorb all this line's excess
capacity in order to replace lost tonnages imported via Rhodesian
Railways. Thus the remaining maximum inbound capacity available to
Zambia is 400, 000 st and includes the 300, 000 st shipped via Tanzania
and the 100, 000 st transported from Katanga to Matadi.
Other estimates of the capacity of the Benguela Railroad are as
follows :
Thousand Short Tons
Report of transportation experts to the
Zambian ove 300
goo
Oicial of the Benguela Railroad 276
Financial Mail, Lusaka 144
Transportation experts from Brookings
Institute 1,200
road, and airlift capacity through Tanzania was estimated)
at 300, 000 st. (This volume is limited by the
ing capacity of the Tanzanian ports.) A report to the
Zambian government by transportation experts estimated that no in-
bound capacity existed via Tanzania and added that none existed from
Congo (Leopoldville) to Matadi.
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MAXIMUM ELECTRIC POWER AVAILABLE
TO THE ZAMBIAN COPPER INDUSTRY
AND THE NECESSARY COAL INPUT
If Rhodesia cuts off supplies of electric power from Kariba, it is
estimated that Zambian thermal powerplants which service the copper-
belt can generate power at the rate of 1, 130 million kilowatt-hours per
year. In addition it is assumed that 400 million kilowatt-hours can be
imported from Congo (Leopoldville). Of this total of 1, 530 million
kilowatt-hours, 430 million will be consumed by municipalities and by
line loss, leaving 1, 100 million kilowatt-hours available for the copper
mines. It is also estimated that about 775, 000 short tons of coal are
needed by Zambian thermal powerplants to generate 1, 130 million
kilowatt-hours.
Current maximum electric power obtainable from Zambian thermal
powerplants is determined by applying the 1954 operating factor (when
these plants were operating near capacity) to the present capacity. Thus
in 1954, thermal powerplants servicing the Zambian copperbelt had a
capacity of 168. 2 megawatts and an output of 904 million kilowatt-hours.
The generating plants, therefore, operated 5, 375 hours that year. The
present capacity of 205 megawatts multiplied by a rounded operating
factor of 5, 500 hours yields an annual output of 1, 130 million kilowatt-
hours.
The 1954 fuel input for Zambian thermal powerplants on the copper-
belt is shown below in terms of coal equivalents:
Thousand Short Tons
Coal 354+
Cordwood 232
Wasteheat steam 139
Oil 5
Total 730
11
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Coal requirements of 912, 000 short tons were determined by
applying the above fuel consumption/power production ratio to the
estimated maximum thermal generating output. Wasteheat steam from
the copper smelters represents the equivalent of 139,000 short tons of
coal. Thus about 775, 000 short tons of coal would be needed to reach
maximum output.
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CONTROL RECORD FOR SUPPLEMENTAL DISTRIBUTION
SERIES NUMBER
CIA/RR CB 65-71
DATE OF DOCUMENT
Novae ber 1965
25X1A ^
CLASSIFICATION OF REPORT DISTRIBUTION TO RC
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14
SA/RR
26 Nov 65
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CGS HR O s 1G81 25X1A
it
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179
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Recipient
65-71. The Economic
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I December 1965
MEMORANDUM FOR: Chief, Dissemination Control Branch, DD/CR
FROM Chief, Publications Staff, ORR
SUBJECT Transmittal of Material
It is requested that the attached copies of CIA/RR CB 65-71, The Economic
Dimensions of the Zambia Rescue Operation , November 1965, Becret/NUTF flE v N "~.~
D S ,: be orwarded as follows.-
State, INR Communications Center,
Room 6527, State Dept. Bldg.
Suggested distribution for
Embassies in Lisbon, London,
Yaounde, Leopoldville, Addis Ababa,
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Khartoum, tuni.sp Pretoria, Algiers,.
Cotonou, Dakar, and Bamako
25X1A
Attachments:
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CC$/Rl3 (with Copy No. 200 of CB 65-71)
Thu.daicm'mnati8rt rtr.:guested by
this memorendstm hac bP.gn W,mpW94
AY;
lpaite- '-
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Project No. 48.5290
Report Series CIA/RR CB 65-71
Title: The Economic Dimensions of the Zambia Rescue
November 1965 (Secret/NO FOREIGN DISSEM)
Responsible Analyst and Branch I/AF 25X1A
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Addis Ababa, Ethopia
ckccra, Ghana,
Abidjan, Ivory Coast
&Nairobi, Kenya
Monrovia, Liberia
ripoii, Libya
iR"abat, Morocco
Lagos, Nigeria
d)4ogadiscio, Somal
c-Khartoum, Sudan
ZFUnis, Tunisia
Pretoria, South Africa
Algiers, Algeria
Jotonou, Dahomey
/Dakar, Senegal
mako, Mali
Approved For Release 2001/04/27 CIA-RDP79T01003AOQ2:4OQ210p01-1
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