CERTIFICATION OF CLASSIFICATION OF ORR 42.769

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01049A001200110002-4
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 11
• Document Creation Date: November 17, 2016
• Document Release Date: July 7, 2000
• Sequence Number: 2
• Publication Date: June 29, 1955
• Content Type: MEMO

STANDARD FORM NO. 64
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Office Memorandum UNITED STATES GOVERNMENT
TO
m-nu
: Jt/m.
: Chief,
Chief
FROM :
STATI NTL
SUBJECT: . Certification of Classification of ORR 42.769
DATE: 29 June 1955
It is certified that the proper classification of the subject
project should be Confidential, CIA Internal Use Only.
STATINTLE
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owilta INTELLIGENCE AGENC7
Office of the Chief:, Econanic Research
Office of Research and Reports
MEAGRANDUli ra/g Chief) Economic Research
MENTICN: Chief2 Planning and Review staff
S TIVE
Transmission of Draft 'tcport, Chit Project Vo, 42.769
Titlss Sone Notes on the Develomme* of conaphia
N tonal Brazilian National Steel ConimiyitL
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Authort
.V.3211.
29 JUIN3
lbate-
ENCLCUME: Subject draft report (original and two copies)
1. Enclowe is forwarded herewith flNndewand
3,
4.
Statement of coordination attadhedo with initials
None needed
Arranuments for mvs
None needed
clod Dissemination
EIG Subcommittee
.a.1.4( Atm
5. Eaa information OR W
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6?
ori Rocci
2,t3g1"
RA
LcL
of individuals and _
graphics through St/TB with CiaTtegraphic Lt
tandard
Nk,
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j,eqqzoter -77 N6,7.:
Othero rein.n etc. (attack
ArievAto0,41
.err ed products or m pcy
'Tbeen 1130
RSA direct use been made of the intelligence or infornation of
another tc,enor? No
7. Eave All sources boon considered in the preparation oi\this ropent? No ? Not required
8. Man-hours utilized by this division in producing this report: 29
Branches of other CRIt Divisions contributing to this report" and rif
man-hours utilized by each:
9.
Estimate Cards:
610.2.0?01.........." ?Mr?lidgeMblwfatrno/v...=VMUM. .1...0000.14.11.11?0???.........,..
Eiii. . 'Have been submitted to Central 3conic Estimrtez
Are attached.
Not required
10. The anaIyut responsible for consultation is:
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11?
Name
098
Gaps in Intelligence procedmoes of the Analyst& Manual Notica (cheek on,Ji
n. Intelligence Information gape disclosed in h roXA a?c. aUt7ti.
specificaI4 in existing collection requirements.
Thoae intelligence information gaps disclosed in this sVady
not previously- filed as requirements hams been transmitted .Jit IA lu
of a requiremonts memorandum a copy of lihich is attached.
c. Notiw is inapplicable to this project. .".":7
12. Cements;
Prepared in answer to specific DDP/PP request
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-7 The aasvafGa;11 of this transmittal sheet will be changed to confera to
clasificatien of the draft report which covey
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The following is a
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The notes diocese thelkoononie role and future car*btfltins of the
Compamble Siderurgiee Nacional, Volta Redonda, Brasil,
The VS? backed icemehmaft in CBS beers au the earns
11032-liquideting lase. Tiros* business tsdpoint the conclndoi
that the loans are pries risk* is veil ssrit.d, and must be accepted.
nee the standpoint of benefit to the Brasilia eeenesty the %Dans hare
been equally- propitious* CL) They are economically justified. Steel
can be domestimeny produced and sad awe cheaply than it can be in,
ported. While this bee been especially true in the poet-her years, it
might possibly not had if the eruseiro Imre to gain strength in rola
tlem to currencies of steel exporting countries. However this event
does net appear likely in the forseeable future. (2) The Brazilian
economy
baa undeabtedly benefited end vill continue to benefit tram the
availabilUir of domestic steel during periods of hard currency
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and steel tetra tilt. (3) The dispersed steel capacity represented by
the Volta Redonda plant is of real strategies value to the free world
(4) CSR is a source of intense national pride. Partly as a consequent*
of this it bee benefited from excellent management and has been role-
timely free of polities. (5) The development of steel, through train-
ing of labor and manalgement and the development of suppliers and .
winery and secondary consumers, has undoubtedly contributed to the
development of Brazilian industry as a 'allele.
Is summary the aid given Brasil in developing CS appears to have
been iroonontioally justified. Its administration has been excellent and
relatively free of politics. It could well serve an a model for future
aid to underdeveloped countries.
Brasiliam Reed for ;144
there was a continuing and increasingly
large unsatisfied. in Brasil. This observation was sub.
stantiatedly a amber of
despite a large
apj*rently reliabl, sources.
growth of steel production, increasing Brazilian demand would be such
that production met increase unCh farther =lees Import e were to to
inereaeed. One coerce forecasted rolled steel ooneumption would reach
1.7 *mien metric tone in 1955 and 1.9 million metric, tons in 1960 en
that steel productice $muld have to increase free 2.3 to 2.58 million
metric tons to meet this demand. Flanned steel expansion as of late
last year was *bout 2.1 million tons for 1960. The gap between expected
dausad and Planned capacity in 1960 would have to be met, by Imports.
This would adversely affect Brasil's. balance of payments.
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including Brazilian and destie
did not give a groat deal of atten ion to
pointed out that
of moot *McKee
1c& itbr it ntrdn.d sad became tbowili
hisy true that
Volta Redonda
United tate' s.
rmsaade the point that la efficiency was
an *oar
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to worker welfare and contin'tmant.
Although productivity at the Brazilian plant is not so high an in
similar plants In the Malted States this does not moan that tho im-
vmstmont or enlargement of capacity projected at CSX la uneconomic=
In fact, the domestic cost if imported stoel#
is so high as to ash* domostically produood steel prices quite 'tom-
petitive. This is to say that while the Volta Redonda operation is an
internally economic one, it is not nscessaray an internationally
competitive one.
the future. acme U.S. steal eompanies do
have at good
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afield rate for
definitely vas not a
high esteem throughout the gove
los little or no government inter-
ougb chief officers mere government
ry ram*.
$ bad teen given a relatively
moe World II sod before, Brasil hes
f mattes. CS11, beoause its large
coal 'orris-es, and other supplies
concerned with the hard currency
9 position *loco it peys an
?bt is in a 6011101 it gets a sabsidy co
rate of exobange on its pil expenditures, debt services coal,at
similer purchases. Partly as a oonsequenee of this favored position
0511 has never felled to meet? its debt aervioe or amortisation payments.
peys
g? 5 -
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the 4,.velopment
is e,ctri imp?
steel is to Brasil
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us a small premium per dollar, mbile tbe
neigtborbood of 75 or ruzetroo and
200 sruseiros per dollar.
to remember that if Brazil were to tave to
in bard currency or relatively bard currency
lties would be -?Treatly 3J?d.Tbus
e and growth of a domestic steel Industry
Brazing; national economy. fromeorent of
question of the relative pr
versus domestic steel but rather a question
f iu orted
vrilabi ty of bard
currency to purobee steal from abroa4 at all addit on there is
ct course, the political and military importan e of ev.ioptng a domes
I indmstry
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T be Sank eentiy urtes t lime of credit of $
under their ewn responsibilit and substantially more under Export.
Import Bank guarantee.
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Ca
buys on usual domestic open accornt except when purchasing special
purpose machinery, a eign or nancreurly good financial strength or
fOreign *OMpluly. CSN Is momently carrying out an expansion program
ter raise capacity 4 million tons. There is no question
expansion in am economic
in the best Interests of the Brasil *cowry. 25X1C
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cenfience
im CSI is shared by k4 Logsdon, end South merlons finencia1
inatitutione contacted There la mo doubt thip that CSN i* * prime
risk or in one officer's words ?no risk ct a11.11
7 0,
011,
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tympany and its i
e to eselmate the
e.
loan
k.;iP,
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tion as to futurepros .e*a
d stic le/concur if a request
et.aUtie5 of this stook.
consulting tservioes
ta? it their files.
7 ?
0,
USE OAY
pl
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3r, 1 A
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952.
taggievi
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