NOTE TO: CENTRAL INTELLIGENCE AGENCY FROM THOMAS F. EAGLETON

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP81M00980R001200130024-9
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 3
• Document Creation Date: December 16, 2016
• Document Release Date: September 30, 2004
• Sequence Number: 24
• Publication Date: June 27, 1978
• Content Type: NOTES

Approved For Release 2004/10/12 : CIA-RDP81 M00980R001200130
'ZCnrf eb Zf of ez Zonate
June 27, 1978
Respectfully referred to:
Central Intelligence Agency
Legislative Counsel
Washington, D. C. 20505
IN REPLY, REFER TO #
Because of the desire of this office to be
responsive to all inquiries and communications,
your consideration of the attached is
requested. Your findings and views, in
duplicate form, along with return of the
enclosure, will be appreciated by
TFE:ajb
THOMAS... ?....EAGLETON ..................
U.S.S.
Approved For Release 2004/10/12 : CIA-RDP81 M00980R001200130024-9
 fl
ANdvd`d~6r' RKUHAAN COA$11MMAP200130024-9
111 WEST PORT PLAZA ? SUITE 704 ? ST. LOUIS, MISSOURI 63141
PHONE: [phone] ? TELEX- 44-7454
"j j l
June 16, 1978
Senator Thomas F. Eagleton
1213 Dirksen Senate Office Building
Washington, D.C. 20510
Dear Senator Eagleton:
Attached. is a photocopy of an article that appeared in a recent
issue of the Wall Street Journal. We are interested in obtaining
a copy of the CIA report reviewed in the article. Would you be
able to advise us where we might get a copy?
Will look forward to hearing from you. Thank you.
Yours truly,
METAL EXCHANGE CORPORATION
:[rline Caskey
Approved For Release 2004/10/12 : CIA-RDP81 M00980R001200130024-9
 `24 THE WALkpprAV FLY%%A 'e IXN1i21ntA&FRO 1 M00
Commodities
irut till Sleeping Giant in Production
Of Nonferrous Metes CIA. Repo10
rt-Finds
By SHIRLEY A. JACKEWICZ
.Staff Reporter of THE WALL STREET JOURNAL
NEW YORK-China, which has been
playing an increasing role in world comm6d-
ity markets, is still a sleeping giant when It
comes to producing nonferrous metals.
- That is the conclusion of the U.S. Central
Intelligence Agency, which recently issued a'
study of China's potential in nonferrous met-
als? which includes all metals but Iron and
steel.
China holds huge reserves of tin, tung-
sten and antimony, which are its main
metal exports, according to this study. It
also has ,large amounts of copper, zinc and
aluminum, but it lacks some key alloying
metals, such as cobalt, which are important
in the iron and steel industry.
"Production of most metals (in the 1970s)
has grown slowly despite the country's siz
COMMODITY INDEXES
Net
Close - Cho.
Dow Jaws Futures ........ 350.14 - 2.32
Cow ,Jones Spa ............ 357.80 - 0.86
A@sA r United Klegdtun ...:1523.0 + 0.02
Yr.
Ago
364.33 f
411.78
1616.9
able resource base," the CIA study says.
Furthermore, while Chinese government
leaders - notably Premier Hua Kuo;feng,
who said last February that the country
plants to build nine nonferrous metals com-
plexes by 1985-have placed "renewed em-
phasis on advancing output, it is likely that
progress will be slow," the'report says.
Tice main reason for China's lackluster
development in this area, according to the
report, is that its technology and equipment,
supplied largely by the Soviet Union in the
1950s, are badly outdated by Western stan-
dards- The Chinese "are verybackward tech-
nologically," agrees one New York metals
trader.
What's more, the CIA study' notes that
because new development is expected to be
costly and time-consuming, "China
will - . . remain dependent on imports of
many, vital metals well into the 1980s." In
fact? China finds it cheaper to import metals
than to produce them domestically, the
study contends.
In the I970-76 period. China's imports of
nonferrous metals--valued at $2.6 billion-
were four times greater than its exports o
those items in the same period. Major im-
ports included copper, aluminum, nickel and
lead, which together accounted for $320 mil-
season's
Open Nigh Lm Close Chance High Low
-GRANSAND FEEDS-
YM1Jtr (CBT)-5A01 ha; cents per bu.
July 32414 325' 3Y 317.318 -1hto644
341
243' o
See4 326 327>t. 31fV. 31911.-316'6-7n1o8u.
3441
24816
Dec 332 334 322 324323 -7k.1o81,
355
273'.'.
Mar 711 331 334 334 324 -7
354
2801.
M4nr 330 333 33 322 -7w
351
3101!2
Jute 323 325 314 31916 -3
340
319
Sates Ttwr..: 1.441 wMacts,
lion of the $358 million of metals China im-
ported in -1976. , - .
According to, the CIA study, "no single
country stood out as the dominant partner in
China's nonferrous trade" in 1976. Except
for Chile and Peru, the country's major cop-
per suppliers, only the U.S. and West Ger-'
many accounted for more than 5% of such
trade that year. ' In 1976, the U.S. Was the
third largest supplier of metals to China,
with sales of $29 million. It also was the
leading buyer from China, with $16 million
in purchases, notably of tin; tungsten and
antimony.-the report says...
However, the `metals trader notes, the
U.S.."started fairly late in metals dealings"
with China; the Chinese, he says,' have been
known to deal with London nonferrous met-
als merchants instead He also asserts that
the Chinese "play very close to the vest"
and "don't give any warning when they're
going to be buyers or sellers" of metals. For
political reasons, China avoided trade with
the U.S. until recently. .
Another dealer here calls the develop-
ment of the Chinese nonferrous trade with
the U.S. "a slow, grinding process" with
"an awful lot of potential." Only a few years
ago, he says, "We were very excited and en-
thusiastic about things having opened up" in
political relations between the U.S. and
China- But "it's been very disappointing in
the lack of any real business," he asserts.
The CIA study says Peking has given the
development of nonferrous metals produc-
tion rather low priority in terms of new cap-
ital investment. Instead, it has emphasized
agricultural development and directed Its ef-
forts toward-the petroleum, transportation
and chemical fertilizer industries.
The following observations on China's
key nonferrous metals are made in the CIA
report: - _ ,
COPPER: Reserves are estimated at six
million tons, an amounted projected to last
only 20 years and regarded as insufficient to
support a significant expansion of domestic
use. Further prospecting is likely to result in
more copper-ore discoveries.'
Still, the industry has stagnated, largely
because new refinery capacity hasn't been
added since the 1960s, although Peking cur-
rently is negotiating for the purchase of a
Futures
Prices
9AP9e BP4'l?itoi?3A1r0n reached an esti
mated 300,000 tons in 1976, up only 10,000
tons from 1970. To meet growing demand at
a time of slow domestic production, China
has imported copper, taking in an average
120,000 tons annually during 1970-76. Chile
and Peru together supplied more than one-
half of such imports in 1976.
TIN: Reserves are especially hhge, prob-
ably totaling 500,000-tons. Although yearly
production jumped to about 30,000 tons in
the late 1950s due to technical assistance
from the Soviet Union, output has slipped
since then. In 1976, it stood at 11,000 tons, of
which 6,400 tons were exported. Tin sales to
the U.S., a major importer, peaked in 1975,
when shipments rose to 6,400 tons before
r^,
to
bu
crc
Cl'
ALUMINUM---While reserves of ores also n'
are large, ranging up to an estimated 360 1 p'
million tons of recoverable aluminum, the dia
ores are viewed as "uneconomic-by Western
stan dards." But production has grown rap-
idly-1976 output of 375,000 tons was double o^
the 1970 level-due to capital investments in
mc 17101
ining capacity to meet domestic demand. t 17,
Even so, China has had to import big
quantities of aluminum to satisfy demand.
Imports surged to 408,000 tons in 1975, mak-
ing China one of the world's largest im-
less
dro
ear.
i
porte of the metal that year, imports i '?iei--- ,.
dropped, however, to 177,000 tons in 1976. cr,.T,
Peking is expected to build some aluminum The
plants of it own, and it is said to be shopping pled
for a modern aluminum plant in Japan and offst
Western Europe. mor
TUNGSTEN: Estimated at about one
million tons, China's reserves of this metal
are the world's largest. Production of 11,900
tons in 1976, of which 6,100 tons were ex-
pected, stood 36% below the peak of 1973:
The declining trend in output of tungsten,
which is used mainly in light filaments.
carbides and tool steels, has resulted for the
most part from production problems in the
steel industry. Otherwise, there is evidence
that the most easily accessible ores already
have been tapped.
ZINC: While estimates of reserves aren't
available, they are believed to be large, and
production totals about 125,000 tons yearly.
Exports jumped to 7,800 tons, in 1976 from
only 300 tons in 1970, so that China is proj-
ected to become a net exporter of this metal
in the years ahead. -
ANTIMONY: China holds two million
tops of ore, or about one-half of the world's
reserves of this metal, which is used to
harden other metals. Production has proven
erratic during the past 30 years; in the 1970-
.76 period, it ranged from 5,000 tons to 10,600
tons a year, most of which was exported.
Because both world use and domestic use
aren't rising much, "little expansion is fore-
seen in the industry."
Season's
Open High Low Close CMnQe H,gh Law
Oct - 253.00 253.00 253.00 253.60 + 1A0 267.00 231.90
Jars ,,, ,-? 258.20 +1.20 271.50 238.00
Est, sales tA25; sales Thurs.: 7.x17 contracts.
GOLD (CMX)-100 troy ot; S per trey eta
June 180.50 181.50 180.50 181.50 - .50 195.70 144.00
July ? 181.30161.30181.30182.40
Aug 183.10 184.10 182.20 183.50
Oct ' 185 60 186.30 18A.90 186.20
Dec -188 50 109.50 187.60 189,00
- s0
- s0
167.00 173,90
196.78 146.10
201.50 149.9;
204.30 153.50
207.00 161.60
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Approved For Release 2004/10/12 : CIA-RDP81 M00980R001200130024-9