differ from one another primarily in chrome content and impurities. Far and away the most important is metallurgical grade chromite. Fully 75 per cent or more of the ferrochrome alloys consumed in the U.S. are made from metallurgical grade ore.

Before metallurgical chromite can be used by the steel industry and other industrial consumers, it must first be converted by a high temperature smelting and reduction process into one of several types of ferrochrome alloy. This is the job of the feroalloys industry, which also converts manganese ore and quartzite into various types of ferromanganese and ferrosilicon alloys esential to the production of a variety of important steel and aluminum products.

Union Carbine has been an important factor in the U.S. ferroalloy industry since that industry's inception more than 50 years ago. It has owned chrome mining and processing properties in Rhodesia since 1923. However, since the imposition of U.N. sanctions, these holdings have been under the control of the Rhodesian Government, which directs the production and marketing of their

STRATEGIC AND ECONOMIC IMPORTANCE

Chromium is one of the most important and indispensable industrial metals. When the U.S. began to designate strategic materials for stockpiling and defense purposes in 1939, chromium was one of the first four commodities listed.

Ferrochromium alloy is irreplaceable for the production of stainless steel and other types of high-performance steels and superalloys, where the chromium imparts vital resistance to heat and corrosion. About 10 per cent of domestic production of these steels goes directly to military and defense applications. Modern jet airplanes and nuclear submarines and warships, for instance, cannot be built without metallurgical chrome. Eighty-five per cent of stainless steel output is devoted to other uses essential to our security and economy, such as oil refineries, hospital equipment, food processing machinery and chemical plants. Contrary to popular belief only about 5 per cent of U.S. stainless steel production goes for household appliances and kitchen tools. Metallurgical chrome of the type found in Rhodesia is not used for chrome plating or other decorative uses.

U.S. DEPENDENCE ON RHODESIAN CHROME

The importance of Rhodesia as a source of metallurgical chrome can be brought into sharper focus beginning with the following table. As shown, fully 67 per cent of the world's metallurgical chrome is found in Rhodesia.

Since there is no domestic production of chrome ore, the U.S. is wholly dependent upon imports for its chrome needs. Prior to the imposition of sanctions against Rhodesia, about 40 per cent of U.S. imports of metallurgical grade chrome ore came from that country; about 40 per cent from the Soviet Union; and the remainder from South Africa, Turkey, Iran and other countries.

With the adoption of the Byrd Amendment, Rhodesia has again become an important source of supply for this nation's growing chrome demands. The following table shows the sources of U.S. supply of steelmaking chrome for 1974.

The U.S. Bureau of Mines in 1970 pegged recoverable domestic chromite reserves at some 1.8 million tons (contained chromium content). The entire reserve is made up of low grade ore and is mostly in small deposits. The ore is chemical grade. not metallurgical grade. Recovery is not economically feasible now nor is it likely to be anytime in the foreseeable future.

Prior to sanction, U.S. chrome imports from Rhodesia were entirely in the form of chrome ore. During the sanction period (1967-1971), Rhodesia installed ferrochrome capacity to upgrade the quality of its exports, Consequently, when the Byrd Amendment became law in late 1971, a combination of ore and ferrochrome alloy was available to the U.S. market and Rhodesia has given preference to export of ferrochrome.

This is consistent with the growing trend among mineral rich countries to upgrade their products as much as possible prior to export. As a result, producing countries--those who produce manganese as well as chrome ore--are seeking to upgrade their products into ferroalloys and retain for themselves the economic benefits of such processing. Rhodesia, South Africa and Turkey are doing this. The Soviet Union, too, has asked for bids on a mammouth 320,000 tons-a-year ferrochrome plant, which would be the largest ferrochrome plant in the world— 31⁄2 times larger, in fact, than the largest U.S. chrome plant.

Forward integration efforts such as those by mineral-rich countries are spurred by specific savings that can be realized in transportation costs which may, in the case of chrome, account for 25 percent or more of ore costs.

CHROME DEMAND AND SUPPLY

Chrome ore and ferrochrome were in critical short supply worldwide throughout 1974. Although the supply crunch has eased temporarily, the economic resurgence forecast for 1976 and thereafter will again see chrome demand exceed supply. These projections assume the continued availability of Rhodesian ore and ferrochrome material which supply some 17% of the total world demand for metallurgical chrome.

About 70 percent of the ferrochrome used in the world goes to make stainless steel. Stainless steel production, which worldwide has been growing at an average of 7 percent a year over the past 10 years, experienced particularly rapid growth in 1973 and 1974.

To the traditional broad-based demand for stainless steel (in chemical manufacture, petroleum refining, nuclear power generation, automotive manufacture, etc.) was added the catalytic converter for the 1975 automobiles which have a "type 409" stainless steel case. The catalytic converter, alone, is forecast to increase the market demand for stainless steel by at least 10 percent for the next several years.

U.S. demand for ferrochrome is outstripping domestic production capacity. The low return on investment of the U.S. ferroalloy industry during the 1960's and early 1970's discouraged investment in new domestic production facilities. New ferrochrome facilities are now under construction offshore but will not be adequate to relieve the shortages until 1978 at the earliest.

The Soviet Union's decision to restrict exports of chrome ore to the U.S.. the unstable political conditions in Mozambique restricting flow of Rhodesian and South African chrome exports, South Africa's lag in developing adequate rail and port facilities for chrome shipment-these and other factors contribute to chrome suppply problems. The most nagging problem affecting U.S. chrome supplies, however, is the persisting uncertainties surrounding the continued availability of Rhodesian chrome.

These uncertainties are manifest in Congress' frequent consideration of Byrd Amendment repeal legislation such as the measure presently under consideration by this Committee. With the threat of imminent repeal constantly hanging over the Byrd Amendment, Rhodesia is understandably reluctant to alter its established chrome marketing plans in favor of greater commitments to U.S. markets. The continued availability of Rhodesian chrome is essential if the U.S. is to meet its long-term chrome needs. This year, the U.S. is expected to receive some 80,000 to 100,000 tons of chrome ore and more than 50,000 tons of ferrochrome from Rhodesia.

STOCKPILE INADEQUACIES

Those who advocate the renewal of the embargo make much of the availability of the U.S. national security stockpile of chrome and ferrochrome. But, here too. the facts are not comforting or reassuring. A recent study by the Center for Advanced International Studies of the University of Miami estimates that the reserves in the U.S. stockpile would last only 18 months if the sanctions against Rhodesia were reimposed and after that there would be serious doubts about the availability of adequate supplies.

Such a course of action leaves wide open the question of the national security needs for stockpiled chrome in the event of a true national security emergency. The matter of the adequacies of the government's stockpile of critical and strategic material is currently under comprehensive study. In Union Carbide's opinion the stockpile should be evaluated, not only as to its adequacy to meet military/defense and industrial mobilization needs, but also as to its adequacy to serve as a buffer stock against shifts in world trade that would seriously affect the nation's economic health. The existence of such a reserve could serve as a positive force to discourage mineral producing countries from employing resource diplomacy for political or economic gain. The experience of the Arab oil embargo and the subsequent enormous increase in oil prices are too painful for the U.S. not to take precautions against similar occurrences in the future by other resource-rich nations.

Undue reliance upon Russia as the source of a strategic and critical material such as a metallurgical chrome was a principal reason for Congressional approval of the Byrd Amendment. In this connection, an article by A. C. Sutton from the November-December, 1969 issue of Ordnance Magazine entitled “Soviet Export Strategy" explains the "weak-link commodity" theory propounded by Major General A. N. Lagovskiy of the Red Army. General Lagovskiy is a Doctor of Military Science, a leading Soviet specialist in economic warfare and the author of "Strategy and Economics", a text on economic warfare recommended for study in the Soviet armed forces.

In discussing trade as a weak-link in the economy during a war, he notes the great dependence of modern warfare on certain materials, such as chrome and platinum, and the lack of major deposits of such raw materials in the U.S. and other capitalist countries. As a consequence, he suggests "the strategic material solution continues to be an urgent problem in war production for the U.S.A." Application of Lagovskiy's principle would require the Soviet Union to avoid import of weak-link mineral commodities, while simultaneously encouraging a potential adversary, such as the U.S., to accept such exports from the Soviet Union. Except for synthetic rubber, the Soviets do not import such mineral commodities from the U.S. In contrast, the U.S. is a remarkable heavy importer of "weak-link" commodities from Russia. Lagovskiy takes an American jet plane as his principal example and lists the amount of critical materials required in the construction of a single aircraft. According to Lagovskiy, it is clear, therefore, that a jet aircraft cannot be produced in the U.S. by utilizing only domestic raw materials, “since domestic production of the most important types of raw materials for it amounts to only 3 to 24 percent of requirements."

2 The Economic Impact of U.S. Restrictions on Trade with Rhodesia: A Preliminary View, by Roger LeRoy Miller.

Chrome is required for production of alloys for jet engines, gas turbines, guns, and armor-piercing projectiles; it is used in both aircraft and water vehicle manufacture. The U.S. accounts for about two-thirds of the entire Westernworld consumption. Lagovskiy points up as a "weak-link" the "enormous geographic disparity" between world production and consumption regions. "The imperialist countries, considering the enormous significance of chrome in war production and lack of deposits of it in places where it is consumed, do not spare funds for the development of chrome reserves," he states. “However, this does not free them from the necessity of importing chrome ore in wartime as well."

CONCLUSION

In Union Carbide's view, a divisive public debate on Rhodesia and the chrome issue could jeopardize the progress currently being made toward effecting a peaceful, lasting solution to the Rhodesian problem.

Reimposition of the ban in imports of Rhodesian chrome would significantly worsen the U.S. chrome supply situation, drive up domestic prices of chrome and the myriad "downstream" chrome-containing products and weaken the ferroalloy, stainless steel and other essential U.S. industries.

The United States Government clearly should do everything possible to encourage the current negotiations over the future of Rhodesia. The people of Rhodesia and their African neighbors--those who must. after all, ultimately live with whatever solutions may be forthcoming-should be allowed to work out their differences on their own and without outside interference or pressure.

Repeal of the Byrd Amendment would not reduce the amount of Rhodesian chrome available to world markets. It would only deny the U.S. a strategic raw material and, in the process, impose a threat to our nation's security and economy. "Moral" considerations-conflicts with American ideals of human rights and dignity-remain the principal driving force behind the perennial push for repeal of the Byrd Amendment. In that context, it is important to note that the two countries that would benefit most from a reimposition of the ban on Rhodesian chrome imports, the Soviet Union and the Republic of South Africa. both have political systems and pursue policies that are at least as morally unacceptable to most Americans as the political structure and racial policies of Rhodesia. Yet. there is no similar movement afoot to boycott Russian and South African goods. Quite to the contrary, "détente"--getting along with countries with different idealogies, political systems, laws and customs-seems to be the order of the day for U.S. foreign policy. The only apparent exception to that policy is Rhodesia. Since our domestic resources of chrome are so limited and uneconomic, we as a nation have no choice but to secure chromium from those areas of the world where it is found in more abundant quantities. We should not be--in fact, cannot afford to be subject to artificial restraints.

The world's important sources of metallurgical chrome are located in countries with which people of the United States may have moral, political, religious, or social differences. As Americans, we do not, of course, endorse the policies of South Africa or Rhodesia towards blacks. Nor do we support the treatment of the Soviet Union accords Jews-any more than we condone many of the events that have transpired in the long-standing Arab-Israeli dispute. Our nation's purchase of essential and critical raw materials, whether chrome or oil, in no way indicates the support of the American people or the U.S. Government for these policies, practices, or attitudes--nor should it be so interpreted.

For these reasons, Union Carbide opposes the enactment of H.R. 1287.

Mr. CHARLES BENNETT,

H. C. MACAULAY FOUNDRY CO., INC.,
Berkeley, Calif., July 22, 1975.

Subcommittee on Seapower and Strategic and Critical Material, Rayburn House Office Building, Room 2110, Washington, D.C.

DEAR MR. CHAIRMAN: Our Foundry like so many other cast metals producers is dependent upon the addition of Ferro Chrome Alloys for the production of high strength, chemical resistant and abrasive resistant ferrous castings.

Over the past few years increased world production demands, coupled with world political turbulance has greatly depleted world stockpiles and strained

world production. This was evident with seizure of Turkish ships, political strife in Rhodesia, serious reduction of U.S. stockpiles and other nations' reserves and the inability of major ore producing nations to supply world market demands. This shortage was also supported by our nation's continued shipments of stainless steel scrap, High Nickel and Chrome Alloys to the open world scrap market. The Department of Commerce chose not to restrict the export of stainless steel in spite of withdrawals of Chrome from our national stockpile. Inasmuch as we are in the battle for control of resources, it personally seemed foolish to me for our nation to export these two precious metals to others inasmuch as we have none or insignificant amounts of these metals to mine in this nation.

Since the cartel action by the OPEC nations came into play on oil, numerous governmental and independent industry studies have come forth indicating the possibility of similar cartel-like action by other nations which could cause astronomical demands upon our country for other minerals and metals. This crisis would be more apparent should we decide to get involved again in political policies in foreign countries, such as Rhodesia, leaving USSR as our only major source of Chromium.

H. C. Macaulay Foundry Company, a victim for the past few years of this political chromium football, chose to investigate the possibility of direct purchases of Chromium Alloys from the largest mining nation in the world, the USSR. Verbal discussions on this subject have led to a more direct contract through the Foreign Banking Representatives of the Bank of America and NT&SA. A request this year, March 20th, sought response from Russia on two scarce commodities Pig Iron and Ferro Chrome Alloys, (letters attached).

In response to this inquiry from Promsyrioimport, exporters-importers of iron and steel products, Moscow, they noted that they were not in a position to supply either of these classes of materials.

Attached also is a letter from the USSR representative's office of the Bank of America noting exclusive representation by Satra Corp. in New York regarding Chromium imports from Russia, coupled with the "that over the past few years Soviet Chromium exports have been reduced considerably principally due to the Soviet's increased demand for Stainless Steel."

In a brief analysis, our Cast Alloy Industry will be destined for continued spiraling price increases and shortages should we permit our major supplier of Chromium to be the USSR. This nation is currently investing in cast metal facilities, foundries and steel mills which will demand their full alloy production.

USSR, from my understanding, now out produces the U.S. in ferrous casting production and will continue to be a world leader with total control of metallurgical resources.

The real issue at hand is what future harm to our nation will be caused by a temporary appeasement of political strife in Rhodesia and do we wish to be restricted by USSR as to our production of Iron, Steel and other materials requiring metallurgical and other grades of Chromium.

Very truly yours,

LANE M. CURRIE, President and General Manager.

Mr. DONALD C. MCCOY,

H. C. MACAULAY FOUNDRY CO., INC.,
Berkeley, Calif., March 20, 1975.

Vice President, Bank of America, Bank of America Center, San Francisco, Calif.

DEAR DON: I sincerely appreciate your personal assistance in attempting to help acquire pig iron and ferro chromium alloys. These commodities are in short supply not only here in the United States, but in the general world market.

As a producer of Iron, Ductile Iron and High Alloy Iron Castings, our foundry as well as many others on the West Coast require these basic commodities and are in continual need of additional sources.

Ferro Chromium Alloys required are as follows:

Charge Chrome-63-70% chromium, 4.5 to 6.00 carbon, 2.0 to 3.0 silicon, 0.04 max sulphur, and balance iron. Sizing 4"X12" and 3"X1".

Low Carbon Ferro Chromium-68-72" Chromium, .010-.020 carbon max, silicon 2.00 max, and balance iron. Sizing either bricks 2×4" or pellets 2X11⁄4".

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