811.20 (D) E.D.B./1885: Telegram

The Ambassador in Chile ( Bowers ) to the Secretary of State

1663. Since Department’s airgram A–163, September 2188 states no copper expert will be sent, discussions have commenced with Undersecretary of Economy with participation of Miller, representative of Metals Reserve.

Copper problem has been further complicated by demand for 500 tons per month from Valdivia Steel Company in which Government has large interest. This quantity is in addition to the 1500 tons per month to which Anaconda tentatively agreed and its delivery is required by decree issued by Minister of Fomento [apparent omission] economy.

Undersecretary has now given Embassy text of proposed decree, reference my despatch 4618 of today’s date,88 regulating copper purchases whose principal provisions are as follows: (1) provision of copper tax law requiring producers to supply Chilean industries includes latters needs both for export and for domestic market; (2) all orders must be approved by Ministry of Economy and the copper used only for fabrication, sale in original form being prohibited; (3) producers must reserve up to 20,000 tons per annum or such other quantity as President may fix, to fill approved orders.

Consider it impossible to obtain modification provision (1) above and other general provisions appear advantageous. The question therefore is to limit the minimum the quantity producers must deliver. Requests presented to Government now exceed 2,000 tons per month. Attempt will be made to obtain agreement to 1500 tons per month without right to carry over any portion not ordered and on condition that Government furnish Embassy promptly details of all export permits issued, but it may be necessary to agree to 1666 tons or annual basis 20,000 tons as specified in draft decree. As purchasers must pay cash and there is a limit to sales possibilities it is hoped that after immediate demand is satisfied orders will fall off.

If Department has instructions to give, telegraph immediately as decision cannot be postponed.

Bowers
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