CHILEAN COPPER

• Document Type: CREST
• Collection: Library of Congress
• Document Number (FOIA) /ESDN (CREST): LOC-HAK-460-5-10-4
• Release Decision: RIFLIM
• Original Classification: T
• Document Page Count: 2
• Document Creation Date: January 11, 2017
• Document Release Date: December 2, 2010
• Sequence Number: 10
• Content Type: MEMO

No Objection to Declassification in Full 2010/12/02 : LOC-HAK-460-5-10-4 `d""F,, 24510
MEMORANDUM
ON-FILE NSC RELEASE
INSTRUCTIONS APPLY
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70
THE WHITE HOUSE
MEMORANDUM FOR:
FROM:
SUBJECT:
INFORMATION
DOS Review Completed.
THE PRESIDENT
Henry A. Kissinger
Chilean Copper
In the discussion on U. S. policy toward Chile in a recent NSC meeting,
you directed that General. Lincoln prepare a study on possible develop-
ments in world copper markets and U. S. stockpile disposal actions as
they may affect the marketing of Chilean copper. General Lincoln's
response (Tab A) and the NSC staff review indicate:
- The world market price of copper has fallen sharply in recent
months and may remain at lower levels for a considerable period.
Copper was selling for 80 cents a pound in April 1970 but is now down
to less than 50 cents a pound. Excess capacity in the free world's
copper mines will probably tend to hold copper prices down for the next
several years. Excess supply on the world market has already led to
the accumulation in private hands of stockpiles in Britain and Belgium
totalling 380, 000 tons, a total amount more than 50%6 greater than the
U. S. stockpile,
-- Since Chilean copper exports generate about 80% of Chile's
total foreign exchange earnings, the decline in the world copper price
has had and will continue to have a substantial adverse impact on the
Chilean economy.
- The U. S. stockpile of copper is 250, 000 tons. Initial findings
,stockpile for national security purposes. However, Congressional
authorization is necessary before this copper can be disposed of.
of the stockpile analysis suggest that copper need not be retained in the
-- Disposal of the U. S. copper stockpile would bring about a
tion indicates that the effect on the market price would not be substantial
or long-lasting.
temporary further softening of copper prices. It is difficult to estimate the
effect of this disposal on the world market price of copper; but the
fact that the American stockpile is only about 3% of annual world produc-
'O No Objection to Declassification in Full 2010/12/02: LOC-HAK-460-5-10-4
 No Objection to Declassification in Full 2010/12/02: LOC-HAK-460-5-10-4
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-- Any softening of the world copper price caused by disposal of the
U. S. copper stockpile would affect those countries that rely on exports of
copper for foreign exchange earnings -- primarily Chile, Zambia, Congo
(Kinshasha), and Peru and secondarily Canada, South Africa, and the
Philippines.
Several considerations seem to argue that disposal of the U. S. copper
stockpile would not be an effective or desirable instrument with which
to affect the Chilean economy:
1. Immediate or near-term disposal of the U. S. copper stockpile
would not be possible because of the need to obtain prior Congressional
authorization.
2. Disposal of the stockpile would not have a significant lasting
effect on Chile's export earnings.
3. Other exporters of copper would be hurt along with Chile by any
fall in the world copper price caused by U. S. disposal of the copper
stockpile.
4. Disposal of the U.S. stockpile might well cause exporting
countries to blame the United States for the low level of copper prices,
which has in fact been brought about by market forces unrelated to U. S.
stockpile policy.
We are looking into other possible approaches involving Chilean copper
exports. The U. S. now buys about 15% of Chile's annual exports of
copper, and vessels under contract to U. S. copper-producing companies
carry a substantial quantity of Chile's exports. The complexities of the
world copper market and the arrangements involved in production and
shipping' are such that the` feasibility of possible U. S. actions to affect
production, shipping and purchase of Chilean copper can be determined
only after detailed study. These possibilities are now being examined in
depth to determine whether they might offer opportunities for effective action
by the U. S. should we wish to take some action to affect the Chilean
economy.
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No Objection to Declassification in Full 2010/12/02: LOC-HAK-460-5-10-4