823.2542/12–2052
The Assistant Secretary of State for Economic Affairs ( Linder ) to the Administrator of the Defense Materials Procurement Agency ( Larson )1
Dear Mr. Larson : This is in reply to your letter of December 202 in which you invited the Department’s comments on the proposal of the Defense Materials Procurement Agency to assist the American Smelting and Refining Company in the development of the Toquepala copper deposits in Peru. I am very glad to give you our views.
As you have recognized, there are important aspects of this question that are outside the competence of the Department of State. We are, nevertheless, very much interested in certain results which would follow from a development of this sort.
At a time when nationalistic feeling seems to be rising in Latin America and declarations in favor of nationalization of mineral resources have become the fashion, it would be very salutory if a large private development, offering substantial benefits to the country concerned, could be begun. It would be especially fortunate if this could take place in Peru, which has recently adopted a mining code unusually favorable to foreign private investment. On the other hand, since the Company’s plan has received public attention in Peru and other Latin American countries, the failure of the United States Government to lend whatever assistance is appropriate, or any decision on the part of the Company not to proceed, might give additional impetus to the nationalization drive, with serious consequences to our future supplies of industrial raw materials.
This Department is also particularly conscious of the problems created by the heavy dependence of the United States on copper imports from a single source—Chile. In our negotiations with Chile for the copper agreement which Chile denounced last spring, and in our subsequent efforts to assure a continued flow of copper to the United States at reasonable prices, we have been handicapped by that dependence. The development of an alternative source of the magnitude of Toquepala would greatly improve the bargaining power of this Government and of American private industry.
In the light of the foregoing, the Department believes that the Toquepala project is in the interest of our foreign policy and, if it meets the requirements of the Defense Production Act, is hopeful that it can be favorably considered by your agency.
Sincerely yours,