811.20 Defense (M) Colombia/14: Telegram

The Secretary of State to the Ambassador in Colombia (Braden)

460. Your 585, November 26. From this telegram and from a letter dated November 17 from the Banco de la Republica to Metals Reserve Company received recently, Metals Reserve has the impression that Colombian authorities now regard the price of $38 an ounce for fine platinum, c. i. f. New York, as an offer by Metals Reserve without a corresponding obligation on the part of the Colombian Government. This is not the case however. The offer of the Metals Reserve Company to pay $38 an ounce was conditioned on the understanding that the Colombian Government would deliver the total annual Colombian production up to 40,000 ounces during the period of one year, less amounts sold direct to the trade in the United States, and that accordingly exports to other countries would be prohibited.

In recognition of such effective export control, Metals Reserve offered to take such net total annual production at the $38 price which is in excess of the current market price in the United States.

Metals Reserve requests that the Banco de la Republica be advised that Baker and Company has estimated the cost of refining at $1.50 per ounce of crude platinum. Metals Reserve understands from the aforementioned letter of November 17 that Banco de la Republica is prepared to assume the cost of refining.

With the understanding that the prices for gold and palladium are definitely fixed, but that the osmiridium price will be half the price paid for platinum, Metals Reserve will further agree that in the event the official United States market price for platinum exceeds $38 per ounce, it would be willing, at least, to consider with the Banco de la Republica possible price increase, providing the Banco de la Republica would similarly be prepared to consider revision downward if the official United States market price declined below present market of approximately $34.

The National City Bank branch in Bogotá was placed in funds in mid-September, and Metals Reserve was prepared to purchase the first lot of 1,900 ounces at Cali. The delay in effecting delivery of this [Page 53] material is apparently caused by the failure of the Banco de la Republica to act on Metals Reserve agreement forwarded September 23 outlining in detail its agreement between representatives of our respective Governments, the Banco de la Republica, and the Federal Loan Agency. Settlement in New York after delivery assaying and refining is, of course, entirely satisfactory, and with this additional information it would appear that a conclusion should be effected without further delay. Please urge the Colombians to expedite this matter.

Charge Metals Reserve.