SOVIET CUTBACKS OF METALS AND MINERAL EXPORTS: AN UPDATE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T01058R000507580001-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 8
• Document Creation Date: December 22, 2016
• Document Release Date: November 9, 2009
• Sequence Number: 1
• Publication Date: May 1, 1985
• Content Type: REPORT

Sanitized Copy Approved for Release 2009/11/09: CIA-RDP85TO1058R000507580001-1 5X1
A- 1.
Central Intelligence Agency
DIRECTORATE OF INTELLIGENCE
10,
In October 1984 we reported that the USSR had sharply reduced supplies to
Western markets of selected minerals and strategic and precious metals in
1980-83 compared with export levels of the 1970s (see table 1). Moreover, we
deduced that preliminary evidence indicated that Soviet sales of most of these
commodities had been or may have been further reduced in 1984. This
onclusion was based on incom lete trade statistics
May 1985
Soviet Cutbacks of Metals
and Mineral Exports: An Update
Summary
attempts to manipulate the markets.
o
trend. The evidence is yet too fragmentary or us 25X1
general conclusion about sales of these commodities in 1985.
Recent analysis supports our original hypothesis that multiple
influences--rather than a m rehensive policy--were responsible for the
cutbacks. In particular, domestic production of 25X1
several minerals and metals has not met internal or CEMA demand and that
exports were reduced to close the gap. On the other hand, export availability
of gold, platinum, palladium, and diamonds--all important hard currency
earners--has been primarily affected by soft market conditions and the
Soviets' overall favorable trade position. Indeed, some of the earlier
reports of expected cutbacks in 1984 may have been the result of Soviet 25X1
exports of several other minerals and metals are part of a longer- erm
be able to draw an
f t
In the event, there were further export 25X1
declines in 1984 of only 4 of the 11 raw materials for which trade statistics
are available. Nevertheless, the more recent data reinforce our original
judgment that the cutbacks for the 4 commodities and the lack of resurgence in
25X1
i s memorandum was prepared by _ ? ,._ ? 125X1
ur rn ce OT 3uv i rL ? J I Q I J a I , ? -- -- - -- - - - - 25X1
addressed to Acting Chief, Economic Performance Division, SOVA,
SOVA M 85-10089
DECL OADR
DRVD FM MET 18-82
Sanitized Copy Approved for Release 2009/11/09: CIA-RDP85T01058R000507580001-1
 Sanitized Copy Approved for Release 2009/11/09: CIA-RDP85T01058R000507580001-1
2DAl
1984 Revisited
In our original memorandum, we reported that exports to hard
currency markets of selected minerals and strategic and precious
metals fell in the early 1980s compared to levels of the 1970s
and that deliveries declined even further in 1984.1 We could not
establish, however, that the USSR had curbed exports as part of a
comprehensive economic or military policy and we proposed several
alternative explanations including (a) an improved hard currency
position, (b) soft market prices in the West, (c) Soviet attempts
to manipulate prices, (d) slower growth of domestic production,
(e) increased domestic requirements, and (f) rising demand in
other CEMA countries. Although exports of these commodities in
1984 generally remained well below sales in the 1970s, deliveries
did not decline across the board
Recent reports and trade statistics indicate that exports to
the West of several metals including aluminum, gold, and rhodium
remained roughly constant in 1984 relative to 1983 levels, albeit
well below sales in the 1970s. Indeed, exports of some items--
platinum, palladium, iron ore, refined copper, and coal--rose
from 1983 to 1984 (see table 2). On the other hand, exports of
chromium ore and titanium fell to the lowest level since at least
the 1960s. 25X1
Sanitized Copy Approved for Release 2009/11/09: CIA-RDP85T01058R000507580001-1
 Sanitized Copy Approved for Release 2009/11/09: CIA-RDP85TO1058R000507580001_1
We still do not believe the cutbacks observed since the
1970s are part of a single, comprehensive policy such as a stepup
in a stockpiling program to deal with production bottlenecks or
to enhance mobilization readiness. We believe our original
hypothesis that multiple influences are involved remains valid.
In particular, recent information suggests that domestic
production of several minerals and metals has not met Soviet
domestic or CEMA demand and that hard currency exports were
reduced to close the gap. On the other hand, export avai l abl ity
of gold, platinum, palladium and diamonds--all important hard-
currency earners--has been primarily affected by soft market
conditions and the Soviets' overall favorable trade position.
Exports of these commodities accounted for roughly 5 percent of
Soviet hard currency earnings in 1983. The Soviets seem to set
hard currency earnings targets, selling only enough to meet these
? Gold sales in 1984 were roughly in line with 1983
A Review of Recent Evidence
We have not been able to detect any major changes in Soviet
precious metals (gold and platinum group metals) export trends
since late 1984. The volume of precious metals sales remains at
a lower level than in the 1970s, but this is probably the result
of the sharp improvement in the Soviet hard currency position
since 1981 and relatively low prices in today's metals markets.
goals.
25X1
Sanitized Copy Approved for Release 2009/11/09: CIA-RDP85T01058R000507580001-1
 Sanitized Copy Approved for Release 2009/11/09: CIA-RDP85T01058R000507580001-1
? Despite Soviet announcements that less metal would be
v
ilable the Soviets increased exports of platinum and
a
a
palladium in 1984.
Unlike platinum and palladium, the prices of some minor
platinum group metals, including rhodium, have dramatically
increased recently. According to a US metals journal, rhodium
from the USSR continues to be in short supply. Western metals
traders have blamed Eastern Europe's growing rhodium requirements
for chemical production for straining the Soviet supply, which
has never been plentiful.
Moscow may currently be withholding
supplies of platinum group metals in anticipation of a market
upturn if the European Community imposes pollution control
regulations that would increase demand for these metals.2 Such
rumors in the past have raised prices--in the Soviets' favor.
Indeed, the Soviets may have deliberately misled Western traders
in late 1983 and 1984 for just this purpose.
Traditionally, exports of other commodites have generally
been more volatile than those of precious metals and diamonds,
largely because exports to the West are a residual claimant once
domestic and client state needs are satisfied. The loss of these
2 Platinum group metals are used in automobile catalytic converters, and no
substitutes are currently available. 25X1
Sanitized Copy Approved for Release 2009/11/09: CIA-RDP85T01058R000507580001-1
 Sanitized Copy Approved for Release 2009/11/09: CIA-RDP85T01058R000507580001-1 I
markets would not seriously impair hard currency earnings
ability, and meeting domestic and CEMA obligations apparently
takes precedence.3
scandium oxide exported in 1984 dropped off substantially from
1983 levels, sales have not ceased entirely. At the same time,
sales of chromium ore and beryllium-copper alloys are apparently
although the quantity of
being cut further.
We believe that domestic production problems and supply
bottlenecks probably are responsible for the cutback in chromium
ore and beryllium-copper alloy exports to the West. The Soviets
continue to wrestle with chromium ore production problems caused
by the exhaustion of existing ore bodies and slower-than-expected
development of new deposits.
The Soviets lost a source of supply in
1981 when China stopped exporting beryllium ore to the USSR.
25X1
25X1
25X1
In contrast to most of the commodities we looked at, Soviet
nickel exports are higher now than they were in the 1970s.
access to Western markets.
3 Soviet actions, however, could encourage Western buyers to seek more
reliable suppliers of these commodities and possibly reduce future Soviet
Sanitized Copy Approved for Release 2009/11/09: CIA-RDP85T01058R000507580001-1
 Sanitized Copy Approved for Release 2009/11/09: CIA-RDP85T01058R000507580001-1
The reduction in titanium exports in
1978-83, however, apparently continued into 1984.
25X1
25X1
25X1
25X1
Sanitized Copy Approved for Release 2009/11/09: CIA-RDP85TO1058R000507580001-1
 Sanitized Copy Approved for Release 2009/11/09: CIA-RDP85T01058R000507580001 Jx1
Commodities Examined
-Major Uses
Jewelry, store of value,
electronics
Plati n`um group metals
(platinum,
palladium, and
rhodium)
Iron ore
Manganese ore
Unwrought al uminuma
Refined copper.
Unwrought nickela
Unwrought titaniuma
Beryllium-Copper alloys
Neodymium
Phosphate rock
Automotive (catalytic
converters), jewelry,
chemical fertilizers,
glass, electronics.
Jewelry, mining, abrasives
Stainless and special
alloy steels
Aerospace, vehicle engine
components, construction,
packaging
Electronics, construction
Stainless steels,
chemicals, electronics
Aerospace, steel,
chemical processing
equipment, marine appli-
cations
Petroleum production,
lamps
Petroleum refining,
glass, electronics,
lasers, steel
Boiler and furnace fuel,
metallurgy
Sanitized Copy Approved for Release 2009/11/09: CIA-RDP85TO1058R000507580001-1
 L I. I I
Sanitized Copy Approved for Release 2009/11/09: CIA-RDP85T01058R000507580001-1
25X1
Table 2
USSR:
Exports to the West of Selected Minerals and Metals
T
housand
metric tons
,
exce
pt where
noted
1971-75 1976-78
(annual average)
1979 1
980
1981 19
82
1983
1984
Goldab
152
354
220
80
200 1
00
55-60
60-80
Platinum and
palladiumac
70
61
59
39
40
45
45
52
Rhodiumad
NA
1.0
1.1
0.6
0.5 0
.7
1.0
1.0
Chromium ore
806
396
352
132
144 1
08
98
32
Iron Ore
4,293
3,923
1,891 1,
070
900 8
31
846
1,120f
Manganese ore
198
71
0
0
0
0
0
0
Unwrought
aluminum
482
577
155
146
141 2
05
185
177
Refined copper
67.0
37.0
7.3
5.8
6.4e 14
.3
16.1
34.5
Unwrought
nickel
19
15
28
32
26
31
30
31
Unwrought
titanium
4.8
2.8
4.0
3.5
1.5 1
.2
1.0
0.6
Coal
10,200
9,933
10,100 7,
100
3,600 3,3
00
5,000e
4,256f
a Metric tons.
h CIA estimate.
c We have revised this series to include West German import data along with that available
from US and Japanese official 'trade books. These countries normally account for 90 percent
of total Soviet exports of these metals.
d Only data on US and Japanese imports from the Soviet Union are available because most
countries do not report rhodium as a separate commodity in their trade statistics.
e Revised.
f January-September.
-*n1 0 F . 1P! -- Sanitized Copy Approved for Release 2009/11/09: CIA-RDP85T01058R000507580001-1