Statement by

Dr. Robert A. Kilmarx

Director of Business and Defense Research Center for Strategic and International Studies Georgetown University

AN INTERNATIONAL PERSPECTIVE TO

UNITED STATES ACCESS TO DEEP SEABED MINERALS

Testimony

before the

House Committee on Merchant Marine and Fisheries

United States House of Representatives

Subcommittee on Oceanography

February 28, 1974

Gentlemen:

It is a privilege to have the opportunity to testify this morning in reference to legislation bearing on deep seabed hard minerals. For some year I have directed studies at the Center for Strategic and International Studies, Georgetown University, on the environment for investment in mineral resources in many countries and have conducted seminars on specific minerals, for example, copper. I hope this background, plus recent experience as a technical advisor to a United Nations Workshop for leaders of developing nations on negotiating mining agreements will qualify me to contribute some meaningful facts, analyses and conclusions on the international perspectives relevant to decisions concerning the establishment of a regime to facilitate the early exploitation of deep seabed hard minerals by United States corporations, notably copper, nickel, manganese and cobalt.

In our increasingly complex world it has become more important than ever before to coordinate major policies and programs in specific economic sectors like mining, to ensure to

the extent we can that they are responsive to international realities and to the long term interests of the United States.

Of course, in our pluralistic society and mixed economy, this is very difficult to do. Perhaps it is more difficult today since we may have lost some of our past national consensus in regard not only to goals but also values. A quick review of legislation relevant to the mining industry over the last few years would demonstrate

that we have occasionally tended to respond to a particular transitory constellation of internal political forces and

vaguely perceived shifts in priorities rather than to overarching objectives and interests that are supportive of the future place of the United States in the world order and that take adequate account of political and economic risks.

With our present national preoccupation with internal concerns and our national propensity to prematurely translate high aspirations for peace and prosperity into an assumed reality, we can readily lose sight of the great challenges we face as a global power. Sound mining policies can help us to meet these challenges.

The decade ahead may, in fact, be the most momentous in our history. It will be a period dominated by scarcities, increasing political multipolarity and competitiveness, unprecedented inflation and threats of recession, monetary crises, shifts in power balances and fragility, even disintegration of alliance structures that have provided security and stability, and have fostered our economic development since World War II. Already

we are witnessing the limits of detente, major fissures in the cohesion of NATO, disruption in previously established international monetary and trade relationships, and the prospect that the United States will lose its preeminence as a military power.

Then came the energy crisis which threw into disarray all prior calculations and estimates about the economic growth and even the viability of many nations, large and small. This long

term problem enhances the prospect of future instability and insecurity in global relations. All mining policies should take account of these developments.

We have also witnessed an unanticipated increase in the influence and political leverage of underdeveloped states which have been endowed by nature with rich stores of essential mineral resources. Perhaps there is even wisdom in the world view of Chou-En-lai who says that great opportunities for the Third World lie ahead because of the problems within and the competition between the great powers.

The increasing leverage of small nations is not limited to oil producing nations in OPEC. It is already being demonstrated by nations that are producers of non-fuel minerals. Secretary Kissinger experienced this when he met recently with the Foreign Ministers of 24 Latin American countries to encourage the formation of a new hemispheric community. He found that it was mainly the producers of minerals, for example, Peru, Argentina, Guyana and Venezuela which were the most skeptical and most disposed to pursue independent policies without reference to Washington. The influence of mineral producing nations of the Third World will probably grow further in significance because of their improving prospects for concerted action on price and on the availability and allocation of supply. Much has been written in

recent times about the danger that the effective use of the "oil weapon" by OPEC will soon be emulated by the producers of copper, already weakly organized in CIPEC, by the bauxite producers, who

may form their own organization, and by the producers of other so-called strategic minerals. Although the scare factor has typically been overdone by even the respectable press, the fact remains that there exists reasons for considerable concern. CIPEC, for example, could expand its membership to the point that it could have some influence over world price, once the price of copper declines. CIPEC's goal is to put a floor price under copper of about $1.25 a pound. Coordinated action between

the oil producers of OPEC and loosely structured non-fuel mineral producer organizations could have a multiplier effect.

The story of increasing U. S. dependence on foreign sources of non-fuel minerals, especially from developing nations, has frequently been stated by such authorities as Secretary Morton but only recently has it gained some measure of public attention. Even today the United States imports 18 percent of its copper, 74 percent of its nickel, 95 percent of its manganese and 98 percent of its cobalt. As early as 1971, the U. S. Bureau of Mines reported that by the year 2000, projected U. S. primary demand for manganese was estimated at 2,357 thousand short tons, with no U. S. primary production-based on the past 20-year trend. The demand for copper in the year 2000 was put at 6,100 thousand short tons with U. S. primary production only 2,132 thousand short tons. The figures for nickel were 770,000 vs. 85,000 short tons and for cobalt 24,700 thousand short tons vs. no primary U. S. production.