sipri
Stockholm International Peace Research Institute
SIPRI is an i n d e p e n d e n t institute for research into p r o b l e m s
of peace and conflict, especially those of arms control and
d i s a r m a m e n t . It was established in 1966 to c o m m e m o r a t e
Sweden's 150 years of u n b r o k e n peace.
T h e Institute is financed by the Swedish Parliament. T h e staff,
the G o v e r n i n g B o a r d and the Scientific Council are
international.
T h e G o v e r n i n g Board and Scientific Council are not responsible
for the views expressed in the publications of the Institute.
Global Resources and
International Conflict
Environmental Factors in
Strategic Policy and Action
Edited by
ARTHUR H. WESTING
sipri
Governing Board
Stockholm International Peace Research Institute
Ernst M i c h a n e k , C h a i r p e r s o n (Sweden)
Egon Bahr ( P R G e r m a n y )
Francesco C a l o g e r o (Italy)
Tim G r e v e ( N o r w a y )
Max J a k o b s o n (Finland)
Karlheinz Lohs ( G e r m a n D e m o c r a t i c Republic)
E m m a Rothschild ( U n i t e d K i n g d o m )
T h e Director
Director
Frank Blackaby (United K i n g d o m )
sipri
Stockholm International Peace Research Institute
Pipers Viig 2 8 . S-171 73 Solna. Sweden
C a b l e : PEACERESEARCH S T O C K H O L M
T e l e p h o n e : 46 8/55 97 00
Oxford • New York
OXFORD
1986
UNIVERSITY
PRESS
4. Minerals as a factor in strategic
policy and action
Helge Hveem
University of Oslo
I. Introduction
International conflict over natural resources is basically caused by
the concern of g o v e r n m e n t s and private firms over long-term
predictability and reliability of resource supplies. Such concern is
particularly strongly felt with respect to those natural resources
which are perceived as vitally needed for military-political or
e c o n o m i c reasons, or both. T h e present study has selected some
such resources for special scrutiny: c h r o m i u m , cobalt, and u r a n i u m .
T h e s e are a m o n g the so-called strategic minerals.
Strategic minerals are not considered strategic solely for military
r e a s o n s . T h e overall e c o n o m i c position and the industrial strength
of nations are intimately linked to military planning and to prog r a m m e s for national defence. Many in fact would conceive of the
former as pre-conditions for the latter.
T h e supply of strategic minerals is influenced by several factors:
(a) political bargaining or intervention; (b) the structure of world
industry; and (c) physical, ecological, e c o n o m i c , and technological
constraints. Conversely, d e m a n d for such minerals is influenced by
such factors as: (a) the d e g r e e of national self-sufliciency of the
main users; (b) global availability; ( r ) technological change; (d)
changes in social structure; (e) changes in consumption patterns;
and (f) the ability to adjust to perceived shortages of or barriers to
supply by domestic re-adjustment policies. Several of the
e n u m e r a t e d factors are a m o n g the chief d e t e r m i n a n t s of conflict
a m o n g nations and thus represent a considerable potential for such
conflict.
T h e present c h a p t e r builds upon previous work by the a u t h o r
( H v e e m , 1978; H v e e m & Malnes, 1980). It d o c s not cover oil or
natural gas (for which see chapters 2 and 3).
56
II.
Global
resources
and
international
conflict
Conflict o v e r natural resources
For analytical p u r p o s e s , the potential for conflict can be distinguished from the cause of conflict. Strategic minerals represent
m o r e of a potential for conflict than minerals in general. Six aspects
a p p e a r to be important clues in determining whether or not a
potential for conflict over natural resources exists:
1. T h e extent to which the military sector and industrial system
in the short to m e d i u m term are d e p e n d e n t on the natural resource,
that is, cannot do without it u n d e r prevailing technology and
applications;
2. T h e extent to which the industry concerned with the natural
resource is subject to m o n o p o l y , oligopoly, or other form of
d o m i n a n c e or selective control;
3. T h e extent to which imbalance in the supply position of
countries and firms prevails regarding the natural resource, such
imbalance being g r e a t e r the m o r e o n e country or firm is selfsufficient in supply relative to a c o m p e t i t o r ;
4. T h e extent to which there arc natural limits to the supply of
the natural resource, for e x a m p l e , imminent depiction or lengthy
t r a n s p o r t a t i o n routes;
5. T h e extent to which locations and routes of supply of the
natural resource cross the political-ideological divisions of the
international system; and
6. T h e extent to which a struggle for i n d e p e n d e n c e or a struggle
over disputed territory involves the natural resource.
E c o n o m i c factors, such as pricing behaviour on the side of
suppliers, may also represent a potential for conflict. Reactions of
s o m e major Western powers to the oil-price shock in 1973 indicate
this. N o n e of the other minerals which would fall under the term
strategic c o m e s close to oil in t e r m s of its importance in the import
b u d g e t s and the strategic planning of most developed nations (see
c h a p t e r s 2 and 3). It can therefore be assumed that the price of
strategic minerals o t h e r than oil is a less important factor to consider
than those m e n t i o n e d a b o v e . Within wide margins, the d e m a n d for
the strategic minerals is, in e c o n o m i c terminology, price-inelastic.
If supply could be assured, the buyer might be willing to pay a high
price in those cases w h e r e a total d e p e n d e n c e exists on the mineral
c o n c e r n e d for some vital application. T h e threat of an e m b a r g o is
far m o r e important than that of a price increase.
Minerals
57
Policy planners in government and industry turn to the above
aspects of the supply situation when they consider their own
position. If they are not in a position in which the threat of supply
distortion a p p e a r s to be imminent, their planning strategy would
nevertheless probably be attentive to the possibility. As shown
below, such a position is normally that of a country or firm not
particularly d e p e n d e n t on foreign supplies. Interest in this case lies
in the possibility that d e p e n d e n c e might c o m e in the future, or in
that the country or firm concerned is interested in influencing the
supply position of competitors.
If d e p e n d e n c e on foreign supplies exists, then the country or firm
will be either 'sensitive' or 'vulnerable' to interference with the
d e p e n d e n c y relationship ( K e o h a n e & N y e , 1977). It will be sensitive to the extent that it is liable to suffer costly effects from such
interference before policies can be introduced that would change
the situation. It will be vulnerable to the extent that it is liable to
suffer costs from outside interference even after policies to change
the situation have been introduced.
T h e vulnerability of a nation is a major cause of conflict over
natural resources, o n e of three to be stressed here. T h e threat or
actual imposition of an e m b a r g o on supplies of some strategic
mineral is normally seen as an act of unfriendly behaviour or
aggression by those w h o are the object of the e m b a r g o . But even the
fear, realistic or n o t , of being subjected to such act may cause the
affected party to take measures in order to pre-empt interference.
A second major resource-related cause of conflict is linked to the
issue of global distribution. If industrialized and non-industrialized
countries are c o m p a r e d , the consumption of natural resources is
seen to be highly uneven. M o r e o v e r , the consumption gap has
t e n d e d to widen in recent years. T h e explanation for this, especially
in most of the m o r e industrially advanced countries, is that the
d e m a n d for new products increases faster than their natural
resource base can provide the necessary inputs. If depiction of
natural resources is anticipated, extra weight is a d d e d to the
d o m e s t i c pressure. T h e outlet for such pressure is to seek increased
supplies from a b r o a d (Choucri & N o r t h , 1975), thus colliding with
the aspirations of o t h e r countries to increase their c o n s u m p t i o n . As
may h a p p e n in the case of vulnerability, distributive conflict may
lead the country to intervene politically or militarily in the supply
area.
58
Global
resources
and
international conflict
A third major resource-related cause of conflict is the play of
politics or the process of tough bargaining, the latter including
t h r e a t s and c o u n t e r - t h r e a t s . These threats may be m a d e in o r d e r to
interfere in the internal affairs of other nations or firms or otherwise
to c h a n g e the rules of international relations. T h e d e m a n d s of
developing countries for a so-called new international economic
o r d e r have meant that prices on primary commodities should be
regulated by global multilateral bodies, subject to increased
national control by the developing countries themselves; they have
further meant that primary commodities be increasingly processed
in the producing countries before export takes place. T h e s e
d e m a n d s , a m o n g o t h e r s , have led to o p e n conflict with many
developed countries and with transnational corporations. If the
d e m a n d s were i m p l e m e n t e d , the transnational corporations would
lose much of their control over the flow of global resources.
W h e n a relatively self-sufficient country seeks to control the
sources of supply in a n o t h e r country, the motive may be to hurt
s o m e third country which is supplied from these sources. More
precisely, the motive h e r e would be to take advantage of the
vulnerability of the m o r e d e p e n d e n t country. Such a motive could
explain past and present actions of the major powers in the Persian
Gulf and it may offer clues to their thinking about change in
southern Africa. T h e d e p e n d e n c e of the Western great powers on
supplies from s o u t h e r n Africa is a source of considerable concern to
those and o t h e r countries. This d e p e n d e n c e is also a possible source
of t e m p t a t i o n for the U S S R to intervene t h e r e , at least in the perception of Western military planners and analysts ( H a c k e d , 1981).
III.
Historical e x p e r i e n c e
T h r o u g h o u t history, conflicts over natural resources have often
been associated with competition over concessions or colonies. In
many cases, the interests of private firms have been the source of
expansionist policies. In many o t h e r s , national interests have
prevailed over private o n e s . W h e r e a s national and private interests
have often coincided, they have in a n u m b e r of cases clashed.
Publications of scholarly research into past cases of resource
conflict are rather scattered and of highly uneven quality. Only very
circumscribed conclusions can therefore be drawn from such
research. O n e safe observation would be that conflicts have b e e n
Minerals
59
located mostly in what is now commonly referred to as the Third
World. Disregarding the rather obvious cases of imperialist expansion and the 'colonial scramble' in the past century, past cases of
resource conflict a p p e a r to have fallen into one or a n o t h e r of three
distinct categories:
1. C o m p e t i t i o n a m o n g major powers which led them to intrude
upon each o t h e r s ' 'spheres of influence' for s o m e of the reasons
already suggested;
2. Conflict between investing or ownership interests (notably in
W e s t e r n capitalist countries) and national or local interests in
countries where the resources were located (notably in the Third
W o r l d ) ; and
3. Conflict owing to strong ideological-political differences, in
particular as these resulted from a s u d d e n change in government in
o n e of the countries c o n c e r n e d .
Most observers would agree that conflicts of the first type
e n u m e r a t e d above are no longer c o m m o n occurrences, whereas
those of the second two types are. An example of violent conflict
that involves a c o m m o d i t y of strategic i m p o r t a n c e — p h o s p h a t e s —
and that was caused by a mixture of ideological dispute, territorial
d i s p u t e , and external involvement, is the Western Sahara Revolt of
1976- (Kilgore, 1981; see also appendix 2, war 11). In fact, if the
a b o v e analysis is not restricted to war, then all three types remain
c o m m o n o c c u r r e n c e s . Such an e x t e n d e d interpretation of conflict is
necessary in o r d e r to include, on the one h a n d , post-war tensions
a m o n g the major powers a n d , on the o t h e r , so-called t r a d e wars
a m o n g major capitalist countries. E x a m p l e s of the latter have
b e c o m e quite c o m m o n during the 1970s and early 1980s.
Non-violent conflicts in the past which were caused by attempts to
control natural resources, or which in some o t h e r way involved
natural resources, dealt with control over: (a) production sites; (b)
t r a n s p o r t a t i o n r o u t e s ; or (c) some o t h e r key element of control, for
e x a m p l e , the local g o v e r n m e n t concerned or the marketing and
distribution system.
I V . N a t i o n a l vulnerability and international market
structures
During periods of crisis and war, governmental control in capitalist
countries has assumed a particularly important role in controlling
I
60
Global
resources
and
international
conflict
Minerals
61
access to natural resources. T h e declared policy of G e r m a n y during
W o r l d W a r II was to t a k e control of or else interdict the supply
r o u t e s of the Allied p o w e r s . This strategy led the Allies to organize
their supplies from both national and foreign sources into a joint
allocation s c h e m e (Leith etal., 1943).
T h e e m e r g e n c y m e a s u r e s of World W a r II dealing with natural
resources w e r e dissolved after the war as part of the general
liberalization of trade that took place in the late 1940s. H o w e v e r ,
even though g o v e r n m e n t a l control over the supply of raw materials
e n d e d in the U S A and United K i n g d o m , this did not re-introduce a
fully competitive m a r k e t . In a great n u m b e r of primary c o m m o d i t y
industries, the d e g r e e of concentration of production and exports
has remained high. National vulnerabilities therefore not only
affect the international industrial s t r u c t u r e ; they are also influenced
by it.
Looking at the p r o b l e m from the national point of view, high
import d e p e n d e n c e is a condition of sensitivity only if measures can
be t a k e n with great s p e e d and at minimum cost for the p u r p o s e of
a d a p t i n g to changes in supply. If m e a s u r e s can be taken only in the
long term or at great cost, then the country concerned is in a
situation of vulnerability. T h e r e is a considerable imbalance in the
a p p a r e n t import d e p e n d e n c e position of the major powers regarding minerals of particular i m p o r t a n c e in military and civilian
industrial applications ( H v e c m & Malnes, 1980, pages 6 7 - 7 5 ) .
W h e r e a s J a p a n is close to completely d e p e n d e n t on imports for
these minerals. W e s t e r n E u r o p e a n powers are s o m e w h a t less so
and the U S A is again a little less so. T h e U S S R is substantially less
d e p e n d e n t u p o n mineral imports than the U S A ; and the U S A , in
t u r n , less so than the United Kingdom (table 4.1).
A l t h o u g h d a t a on t r e n d s in import d e p e n d e n c e are i n c o m p l e t e ,
the general tendency a p p e a r s to be in the direction of greater r a t h e r
than lesser import d e p e n d e n c e for the U S S R and China. T h e
imbalance in the supply situation of the major powers is, however,
still quite considerable and will most probably remain so for the
next two d e c a d e s or so. This imbalance represents an i m p o r t a n t
part of the potential for international conflict.
T h e high d e g r e e of c o n c e n t r a t i o n in the global supply of minerals
is evident at the level of reserves, at that of p r o d u c t i o n , and at that
of e x p o r t s ( H v e e m & M a l n e s . 1980, pages 59-64). As to reserves,
only three countries account for HK) per cent of known global
platinum reserves, three countries for almost 100 per cent of known
c h r o m i u m reserves (table 4.2), and three countries for about 90 per
cent of known m a n g a n e s e reserves. As to p r o d u c t i o n , only three
countries account for close to HK) per cent of current platinum
Sources
and notes:
Minerals
" T a b l e p r e p a r e d by A. H. Westing.
* K n o w n - r e s e r v e values: (i) chromium for ca 1979 from M o r n i n g et al. (1980. page 171); (ii) cobalt for ca 1979 from Sibley
(1980. page 204); and (iii) uranium for 1982 from US Statistical Yearbook. New Y o r k . 33. table 104 (1982); the c o m p i l a t i o n
for u r a n i u m , h o w e v e r , does not take account of reserves in C h i n a , Czechoslovakia, Israel, the U S S R , and p e r h a p s e l s e w h e r e ,
for which the data are not made public.
' P r o d u c t i o n values: (i) chromium for 1983 from P a p p (1983, page 217); (ii) cobalt for 1983 from Kirk (1983, page 261); and
(iii) u r a n i u m for 1982 from UN Statistical Yearbook. New Y o r k , 33, table 104 (1982), adjusted for the missing value for the
U S S R , assumed here to be two-thirds that of the U S A ; h o w e v e r , the missing uranium values for C h i n a . Czechoslovakia and
Israel, assumed to be substantially smaller, are not t a k e n into account.
•'Export values: (i) c h r o m i u m for 1983 from Lofty et al. (1985, page 43); (ii) cobalt for 1979 from Sibley (1980. page 208); and
(iii) u r a n i u m for 1983 derived from Neff (1984. pages 215, 217).
' I m p o r t values: (i) c h r o m i u m for 1983 from Lofty et al. (1985. pages 44-15); (ii) cobalt for 1983 from Lofty et al. (1985, p a g e s
5 7 - 5 8 ) ; and (iii) uranium for 1983 derived from Nef (1984. pages 227. 235. 241, 247).
' T h e values for South Africa include those for N a m i b i a , a de facto possession of South Africa.
63
64
Global
resources
and
international conflict
p r o d u c t i o n and t h r e e countries account for about 90 per cent of
current m o l y b d e n u m p r o d u c t i o n . As to exports, only three
countries account for s o m e 85 per cent of current m o l y b d e n u m
e x p o r t s ; and t h r e e countries account for about 80 per cent of current
cobalt exports (table 4.2).
T h e s e high concentrations of mineral supply indicate a potential
for monopolistic behaviour and producer or exporter co-ordination
in the form of cartels, m a r k e t sharing deals, and the like. T h e
probability that such co-ordination in fact occurs is a function of
several factors, a m o n g t h e m political-ideological, e c o n o m i c ,
cultural, and geographical o n e s ( H v e e m , 1978).
A distinction should be m a d e b e t w e e n critical and non-critical
supplies. Potentially critical import d e p e n d e n c e occurs when supplies c o m e from o n e or a few suppliers, over long distances, or from
a c o u n t r y of different ideology. If all of these factors arc present, the
situation must be characterized as a highly vulnerable o n e , indeed.
Diversification of mineral supply has been an important goal for
several great powers over the past d e c a d e . It is less of a possibility if
c o n c e n t r a t i o n is high. T h e significance of high geographical or
structural concentration on the supply side is reinforced when it is
c o u p l e d with a pattern of consumption that is highly concentrated as
well. T h e industrialized capitalist countries c o n s u m e a very high
p r o p o r t i o n ( m o r e than two-thirds) of the global production of the
most important minerals; by contrast, the industrialized socialist
countries c o n s u m e a low proportion (less than o n e - t h i r d ) ; and the
developing c o u n t r i e s , including C h i n a , c o n s u m e the very small
remaining proportion ( p e r h a p s o n e - t e n t h ) .
Until the present recession started in the mid-1970s industrialization m e a n t a steady decrease in the self-sufficiency of the
industrialized and the newly industrializing countries. For e x a m p l e ,
w h e r e a s the U S A in 1950 relied on imports for m o r e than 50 per
cent of its r e q u i r e m e n t s for only four important minerals, by 1976
this list had grown to 23 minerals ( H a n k c e & King, 1978). For at
least 12 of these minerals, import d e p e n d e n c e was more than 80 per
cent. A considerable part of this growth has resulted from changes
in b o t h intermediate (industrial) and final ( c o n s u m e r ) d e m a n d s .
Lven though the overall d e m a n d for minerals grew over the p e r i o d ,
within that aggregation are hidden some important declines as well
as s o m e p h e n o m e n a l increases. Iron c o n s u m p t i o n , still of huge
p r o p o r t i o n s , declined in relative t e r m s ; on the o t h e r hand, the
Minerals
65
d e m a n d for certain so-called minor minerals grew rapidly until the
beginning of the 1980s. This latter growth was the result of qualitative i m p r o v e m e n t s in p r o d u c t s , both in the civilian and military
sectors.
All of the five major capitalist c o u n t r i e s — F r a n c e , FR G e r m a n y ,
J a p a n , the U n i t e d Kingdom, and the U S A — a p p e a r to be critically
d e p e n d e n t upon foreign supplies for a n u m b e r of strategic minerals,
especially c h r o m i u m and cobalt (table 4 . 1 ; H v e e m & M a l n e s , 1980,
pages 6 7 - 7 5 ) . C h r o m i u m , the most highly critical mineral from the
point of view of these five countries, is supplied largely by South
Africa, A l b a n i a , and the USSR (table 4.2). T h e United Kingdom is
in a relatively favourable i m p o r t - d e p e n d e n c e position regarding
m o l y b d e n u m , cobalt, and some other minerals because it receives
these mainly from C a n a d a , with which it has a close relationship.
H e r e vulnerable transportation routes a p p e a r to be the major
potential p r o b l e m . I m p o r t s by the U S A from C a n a d a and Mexico
are even m o r e secure when judged by political, e c o n o m i c , and
transportation factors.
For the U S S R and C h i n a , the two major socialist countries, the
picture is quite different. T h e U S S R a p p e a r s to be d e p e n d e n t — b u t
apparently not critically so—on supplies of aluminium, b a r i u m ,
cobalt, tungsten, and p e r h a p s a few additional minerals (table 4.1).
T h e Soviet imports of cobalt from C u b a could also be vulnerable in
the case of major crisis. China a p p e a r s to be d e p e n d e n t on foreign
supplies for at least some of its aluminium, c o p p e r , and iron ( C h i n ,
1983, page 184). T h e current large Chinese industrial expansion
p r o g r a m m e s could reduce import d e p e n d e n c e for some minerals,
but possibly increase it for others.
T h e second main class of concentration factors lies partly in the
domain of national politics and partly in that of the transnational
c o r p o r a t e d o m i n a n c e of world industries. G o v e r n m e n t s have m a d e
long-term bilateral a g r e e m e n t s for a large n u m b e r of supply lines
and for a n u m b e r of minerals. Of the order of one-third of world
trade in minerals takes place u n d e r some sort of c o u n t e r t r a d e
a g r e e m e n t , such as barter, counter-purchase ('offset'), or a compensation ( ' b u y b a c k ' ) a r r a n g e m e n t (BusinessWeek, 1982; M a h c r ,
1984). Military items are often tied to such deals ( N e u m a n , 1985).
In addition, transnational corporations conduct intra-firm t r a d e .
P e r h a p s one-third of world trade in minerals might be covered by
such organized exchange. Historically, transnational c o r p o r a t i o n s
66
Global
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Minerals
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67
have been d o m i n a n t in many if not most of the mineral industries in
the world. They have integrated the product line vertically. Nationalizations have changed the bargaining situation in many instances,
but in far from the majority of cases. If in addition practices of
oligopolistic rule c o n t i n u e , with corporations operating cartels or
something similar, the corporations could potentially control access
to vital supplies. Lven if the considerable overlap between negotiated bilateral t r a d e and intra-firm trade is accounted for, the
conclusion must still be that world industries are highly organized
and highly politicized.
cause of these price increases for a n u m b e r of raw materials
( a l u m i n i u m , p h o s p h a t e s , and sisal having been notable exceptions). H o w e v e r , the perception of a substantial threat of cartel
d o m i n a n c e in the mineral industries (see, e.g., Bergsten, 1973)
proved to be largely ill-founded long before the recession in the
main industrial countries started ( H v e e m , 1978; Maull, 1984). Since
the late 1970s, raw-material prices have stagnated or declined,
causing the t e r m s of t r a d e of most developing countries to deteriorate seriously (World B a n k , 1985, pages 59, 153).
A l t h o u g h there are several possible motives behind the trends
that are suggested a b o v e , two implications become quite clear: (a)
access to supplies can be secured only following the completion of
bargaining over n o n - e c o n o m i c factors; and (/>) c o r p o r a t e dominance constitutes a gateway to supplies that has to be negotiated as
well. To the extent that such factors o p e r a t e , countries with greater
bargaining p o w e r and transnational corporations having a special
relationship with their h o m e governments will enjoy privileged
positions.
D e m a n d s by developing countries for a new international
e c o n o m i c o r d e r have led to negotiations at the United Nations
C o n f e r e n c e on T r a d e and D e v e l o p m e n t (first held at G e n e v a in
1964 and subsequently in various cities at three- or four-year
intervals) over proposals to regulate trade in a n u m b e r of minerals
and o t h e r primary c o m m o d i t i e s . Various industrialized nations
have o p p o s e d the idea of regulating raw-material industries in an
efficient m a n n e r a n d this has led to considerable N o r t h - S o u t h
conflict. A t t e m p t s to put the developing countries into a stronger
bargaining position have foundered for several reasons, a m o n g
t h e m the high i n d e b t e d n e s s of the developing countries and resulting lack of e c o n o m i c resilience, and their political disunity. This
failure has been a major cause of the worsening economic and social
p r o b l e m s being experienced today by many of the developing
countries.
Raw-material prices went up in 1974-75 owing to a n u m b e r of
factors, a m o n g t h e m ( H v e e m , 1978): (a) inflationary pressures
which began in 1971; (b) a spurt of industrial growth that led to an
increased d e m a n d for raw materials; and (c) anxiety over access to
minerals triggered by the O P E C actions in 1973 (see chapters 2 and
3). Producer-country collaboration was the result rather than the
V.
T h e strategic imperative and the potential for
adaptation
In trying to cope with a situation of potential or actual vulnerability,
several possible options could be considered by a country which is
powerful e n o u g h to influence its e n v i r o n m e n t . Short of war or
threat of o t h e r violent form of action aimed at influencing the
source of t r a d e disruption, the b u r d e n of adjustment may be passed
on to o t h e r s , w h e t h e r the disruption had been intended or not.
During the Second Indochina W a r , the U S A successfully pressured
its suppliers of nickel into allocating a larger share of available
supplies to US defence industries, forcing E u r o p e a n and J a p a n e s e
purchasers to turn to the U S S R and suffer a fivefold price increase
(Interfutures. 1979, page 53).
A country that p r o d u c e s and exports minerals can be considered
vulnerable when it cannot cope with a loss of income from e x p o r t s
without having to u n d e r g o major economic and social a d a p t a t i o n s .
This is the situation which characterizes a great n u m b e r of ThirdW o r l d countries. T h e e c o n o m i c resilience of these countries to
falling d e m a n d or to political pressures from importing countries is
very m o d e s t , a condition that was reinforced by the stagnant world
e c o n o m y at the e n d of the 1970s which had led to high interest rates,
balance-of-payment p r o b l e m s , huge foreign d e b t s , and so forth.
Most importing countries have been able to continue to maintain
secure sources for their desired raw-material imports. They have
accomplished this through their foreign policies or by means of their
transnational corporations. If options of this sort are either barred
to a country or insufficient for the p u r p o s e , then domestic readjustment b e c o m e s necessary. Such adjustment involves a consideration
of e c o n o m i c , social, and political costs. It is possible to assess where
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a country is positioned on the sensitivity-vulnerability c o n t i n u u m
with respect to minerals. For e x a m p l e , it has been shown that a
modest (5-10 per cent) disruption of energy supply would have
substantial effects on the US e c o n o m y , as reflected in a 3-5 per cent
d r o p in gross national product (Levine & Yabroff, 1975). Energy is
the most critical resource category in this respect, oil and coal m o r e
so than u r a n i u m . T h e impact in t e r m s of gross national product of
material shortages in the non-energy categories a p p e a r s in general
to be less d r a m a t i c than for the energy raw materials. A 15-30 per
cent shortage of supply for only about a dozen minerals could have
serious effects on the e c o n o m y . Some of these a r e , in decreasing
o r d e r of impact: titanium, platinum, cobalt, tin, c h r o m i u m ,
a l u m i n i u m , c o p p e r , silver, nickel, and tungsten (Levine & Yabroff,
1975). By way of e x a m p l e , for the U S A a 20 per cent cut in
aluminium supply would mean about a 3 per cent reduction in its
gross national p r o d u c t . For FR G e r m a n y , a 30 per cent cut in the
supply of several minerals could have a profound effect on the
e c o n o m y even though they account for only a small proportion of
the m o n e t a r y value of the nation's total trade (Economist, 1979).
M a n g a n e s e is estimated to be of equal importance to the e c o n o m y
of FR G e r m a n y as c o p p e r even though the m o n e t a r y import value
of the latter is p e r h a p s 30 times that of the former.
T h e scope for adjustments to o v e r c o m e supply disruptions is
large. Even if military r e q u i r e m e n t s for a n u m b e r of strategic
minerals are e s t i m a t e d to treble in the case of war or o t h e r major
crisis, policies of diverting consumption from civilian to military use
are believed to be able to k e e p the e c o n o m y as a whole of a
d e v e l o p e d nation running for at least a year (Little, 1974, page 60).
Lateral pressure for civilian consumption would ease under such
circumstances. If such circumstances did not apply, then the social
costs could be considerable in terms of an increased burden on
c o n s u m e r s or in e m p l o y e d people being laid off.
In o r d e r to protect themselves against having to face the option of
costly a d j u s t m e n t , g o v e r n m e n t s (as well as firms) have a d o p t e d a
series of m e a s u r e s of national p r e p a r e d n e s s against supply disruptions. T h e best known is stockpiling. Stockpiling used to be practised chiefly by the U S A . but during the late 1970s and early 1980s
several other countries also initiated such p r o g r a m m e s ( H a r g r e a v e s
& F r o m s o n . 1983; W a r n e c k e . 1980). These p r o g r a m m e s have m a d e
countries practically invulnerable in some of the most critical
Minerals
69
minerals, especially in the short term. G o v e r n m e n t s and firms are
able to defuse a threat of price increase or e m b a r g o by resorting to
their stockpiles.
Conservation is a n o t h e r measure which can strengthen the position of heavily i m p o r t - d e p e n d e n t c o n s u m e r s . If the efficiency of
recovering used material (scrap) is increased and the level of
c o n s u m p t i o n r e d u c e d , the life of the resource base (the reserve and
the stockpile) could be radically e x t e n d e d . More efficient processing techniques or material-saving designs are a m o n g the options.
Up to one-third or so of total domestic consumption of some
i m p o r t a n t industrial minerals was derived from recycling in the
major industrialized countries in the early 1970s. H o w e v e r , an
expansion of recycling is limited by technical and economic factors.
T h e degree of g o v e r n m e n t a l intervention may be a decisive factor in
this respect. T h u s recycling is more effective in FR G e r m a n y and
J a p a n than in the U S A , the main reason for the difference appearing to be that the former have instituted tax incentives and o t h e r
regulatory m e a s u r e s .
A third option is substitution. T h e range of possibilities for
substitution is very great for non-fuel minerals. H o w e v e r , substitution is not easily attained for political, e c o n o m i c , and technical
reasons. Long lead times or high investment r e q u i r e m e n t s may
reduce the feasibility of substitution. T h e use of composite
materials ( i . e . , synthetic materials reinforced with e m b e d d e d fibres
or particles) and plastics as substitutes for metals is on the increase.
In the long run, these materials could reduce a nation's d e p e n d e n c e
on mineral imports for a wide range of civilian and military
products.
Increased production from domestic deposits and exploitation of
the extra-territorial ocean floor and Antarctica are possibilities for
d e v e l o p e d countries in the medium- to long-term perspective,
although increased domestic extraction is not so much of an option
for Western E u r o p e or Japan as it is for the U S A or C a n a d a . Most
major p o w e r s did stress this latter option during the raw-material
crisis of the 1970s, but reductions in d e m a n d , increasing costs, and
e n v i r o n m e n t a l considerations have thus far precluded such action
to a great extent.
T h e technical feasibility of extracting minerals from the sea-bed
has been essentially p r o v e d , but when large-scale exploitation will
begin is largely an e c o n o m i c question. T h e nebulous future for the
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1982 Law of the Sea C o n v e n t i o n (see appendix 6)—not yet in force
primarily because of the unresolved issue of control over high-seas
mining—leaves a potential for future conflict. Third-World
countries have expressed great concern that such mining could
w e a k e n their position as mineral producers and suppliers. T h e y
have striven for international control of sea-bed mining u n d e r the
auspices of the United Nations that would serve the interests of all
countries. To this must be a d d e d the potential for international
conflict that arises from the growing interest in mineral exploitation
in the two polar regions. T h e Falkland/Malvinas Conflict of 1982
can be attributed in part to an interest in the natural resources of
Antarctica (see appendix 2, war 12).
VI.
S o u t h e r n Africa
T h e southern African region—primarily the area south of the
E q u a t o r — o c c u p i e s a p r o m i n e n t position in the strategic thinking of
several, if not all, of the major powers. O n e reason is the importance of the region for sea transportation routes vital to international
t r a d e . A n o t h e r is the role of the region as a supplier of several
strategic minerals. T h e increased political tension and the possibility of large-scale violent interracial conflict within South Africa
have m a d e the region the potentially most volatile o n e in the
coming years.
V a r i o u s parts of the region were the scene of violent conflict
during the 1960s and 1970s, and the cause is believed to have been in
part the interaction between political and racial tensions on the o n e
hand and natural resources on the other. For e x a m p l e , the present
Z a i r e was dragged into a resource-related conflict on a n u m b e r of
notable occasions: the abortive C o n g o Civil War of 1960-64 and its
two follow-up actions, in 1977 and 1978 (see appendix 2, war 5).
A p a r t from the political, e c o n o m i c , and logistical importance of
s o u t h e r n Africa in global strategic thinking, there are three aspects
of the regional situation that must be pointed out: (a) that a major
political and racial conflict in South Africa could poison NorthSouth relations and influence the relative positions of the major
p o w e r s in Africa and elsewhere in the Third World; (b) that the
region supplies Western powers and Japan with several of the most
critical minerals; (r) that the largest alternative present and future
supplier of s o m e of these minerals is the U S S R .
Minerals
71
A b o v e it is pointed out that c h r o m i u m and cobalt are at the top of
the list of strategic minerals which are particularly critical to the
vulnerability of the U S A , J a p a n , and Western E u r o p e . M a n g a n e s e
should be classed with these also, because of its importance in the
ferro-alloy industry, as should platinum and vanadium. Southern
Africa is the largest source of supply for these minerals. If to this
brief list are a d d e d gold (for its special role in financial reserve
systems) and uranium (for its role in nuclear energy and in the
m a n u f a c t u r e of nuclear w e a p o n s ) then the strategic importance of
southern Africa b e c o m e s even m o r e evident.
It has b e e n suggested that the worst-case scenario from the point
of view of strategic planners in the Western military alliance would
be o n e in which South Africa changed to black rule with a Marxist
philosophy that would m a k e it a logical ally for the USSR
( D u c h e n e , 1979). In that scenario, an e m b a r g o on supplies of
minerals to the Western countries has been suggested to be a
possible event. In a variant of this scenario, some kind of cartel
behaviour would occur whereby the governments of southern
Africa colluded with Moscow in order to dictate the conditions for
supplying Western countries.
Less d r a m a t i c scenarios would probably be more realistic.
R e p o r t s of Soviet involvement in the 1978 Shaba revolt (see
appendix 2, war 5) have not been substantiated, neither have
prophecies that Angola or Z i m b a b w e would turn against Western
interests after decolonization or after changing to leftist governm e n t s . I n d e e d , e m p l o y m e n t and national economic reasons as well
as normal political and diplomatic considerations seem to favour a
continuation of existing supply a r r a n g e m e n t s even if domestic
political systems change fundamentally. M o r e o v e r , there a p p e a r
already to exist secret collaborations between the USSR and South
Africa on the m a r k e t i n g of gold and of platinum that came to pass
irrespective of differences in political philosophy ( H a r g r e a v e s &
F r o m s o n , 1983, pages 12-13). Lastly, if an e m b a r g o is to be considered as a serious possibility, then it could be put into effect by the
present G o v e r n m e n t of South Africa as well as by a new governm e n t . I n d e e d , South Africa recently a n n o u n c e d the possibility of a
cut-off of c h r o m i u m to the U S A and Western E u r o p e ( A P , 1985).
C o n t i n u e d violent conflict within South Africa and between it
and some of its neighbouring countries, mounting pressure from
Western p o w e r s , and a growing socio-economic crisis in large parts
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Minerals
73
of southern Africa all emphasize the volatile character of the
regional situation. This, coupled with the fact that most of the major
p o w e r s are particularly vulnerable with regard to some of the
minerals for which the region is a prime supplier, warrants special
attention to these minerals. An additional reason is what a p p e a r s to
be a growing need by the U S S R to import some of these minerals,
notably c h r o m i u m and cobalt (Little, 1977). Such need could lead
even the U S S R to turn to southern Africa for imports. If this is
indeed the case, a potential for E a s t - W e s t conflict over natural
resources in the region could, of c o u r s e , develop.
increasing share of world p r o d u c t i o n . T h e rapid expansion of
production in Albania during the past d e c a d e has m a d e it o n e of the
largest e x p o r t e r s . A decrease in Soviet exports of c h r o m i u m
a p p e a r s to reflect both a real decline in self-sufficiency and a policy
of protecting its own reserves from being depleted too rapidly. It is
even possible that the USSR will b e c o m e an important importer
before the e n d of the d e c a d e . A similar, if not quite as explicit,
tendency to reduce exports can also be discerned in several other
producing countries. Such a trend can only lead to an even m o r e
c o n c e n t r a t e d international supply situation.
U r a n i u m is extracted domestically by several of the nuclear
p o w e r s , but is still the object of considerable international t r a d e .
T h e very special role of uranium as both a source of energy and a
base for nuclear w e a p o n s also m a k e s it a potential source of
international conflict. This further e n h a n c e s the importance of
s o u t h e r n Africa, for the region is also a substantial source of that
mineral.
T h r e e of the strategically most crucial minerals associated with
s o u t h e r n Africa—chromium, cobalt, and u r a n i u m — a r e singled out
below for m o r e detailed examination.
A n o t h e r general tendency is for producing and exporting
countries to turn into processors (mainly of ferro-chromium) in
o r d e r to r e a p a higher share of value-added profit, or for reasons of
e c o n o m i c nationalism. This logically challenges the market shares
of established metallurgical, refractory, or chemical p r o d u c e r s and
the mineral policies of major powers that wish to preserve a
strategically important processing industry. This represents yet
a n o t h e r potential source of conflict.
If the c h r o m i u m industry is highly c o n c e n t r a t e d at the country
level, then the d e g r e e of concentration at the c o r p o r a t e level is even
m o r e p r o n o u n c e d . C h r o m i u m in the capitalist world is involved in a
complex and apparently stable c o b w e b of conglomerate corporations with o w n e r s h i p , p a r t n e r s h i p , or o t h e r linkages a m o n g t h e m selves. T h e A n g l o A m e r i c a n C o r p o r a t i o n of South Africa is
apparently the centrepiece of this oligopolistic system through its
d o m i n a n t position as a controlling agent in G E N C O R and some of
the o t h e r principal South African and Z i m b a b w e a n producing
c o m p a n i e s . T h r o u g h joint ventures with other corporations such as
the Rio T i n t o Zinc C o r p o r a t i o n in the United Kingdom, and by
integrating ' d o w n s t r e a m ' into the processing and refining of
c h r o m i u m and steel, the Anglo American C o r p o r a t i o n of South
Africa a p p e a r s to have secured for itself a key decision-making
position in the global c h r o m i u m industry.
T h e r e is relatively little a p p a r e n t ' u p s t r e a m ' integration by the
big steel and ferro-alloy producers in the U S A , C a n a d a , or Western
E u r o p e . T h e r e may, however, be an element of control by such
agents in the form of long-term contracts and special relations of a
m o r e informal character. Prices are not d e t e r m i n e d in a free
m a r k e t , but in negotiations by the corporations. T h e r e is also an
important element of price differentiation in specific market seg-
Chromium
By far the largest use of c h r o m i u m — p e r h a p s t h r e e - q u a r t e r s of it—
is for metallurgical p u r p o s e s . T h e bulk of the metallurgical applications is in the steel industry, where c h r o m i u m is a d d e d to steel in
o r d e r to m a k e it h a r d e r , less subject to corrosion, and m o r e heatresistant. It a p p e a r s to be an indispcnsible additive, at least in the
m e d i u m - t e r m perspective.
Reserves, p r o d u c t i o n , and exports are all highly concentrated at
the country level (table 4.2). South Africa a n d , to a lesser extent,
Z i m b a b w e together account for most known global reserves. T h e
USSR and South Africa are the current main p r o d u c e r s , whereas
South Africa. A l b a n i a , and the U S S R are the current main exp o r t e r s . Japan has been the main importer for a n u m b e r of years.
C o u n t r i e s currently producing m o d e r a t e a m o u n t s of c h r o m i u m
are: T u r k e y and the Philippines, both allied to the West and both
experiencing declining shares of world production; Finland and
Z i m b a b w e , both non-aligned and both with stable shares of world
p r o d u c t i o n ; and A l b a n i a , non-aligned and experiencing a rapidly
|
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menls, assisted also by tariff and other barriers. Such features
could, in a light supply situation, lead to the less privileged buyers
being left out of normal supply.
T h e s e structural and political factors create a level of uncertainty
that has led to considerable efforts to diversify supplies and to
intensify m e a s u r e s of domestic adjustment. Diversification into
new territories or old mining sites with lower grade ores is,
h o w e v e r , always u n d e r the threat of South African p r o d u c e r s who
are in a position to cut prices and flood the market with cheap
c h r o m i u m , ferro-chromium, and even stainless steel. Domestic
adjustment therefore a p p e a r s to be a more feasible choice. T h e r e
a r c stockpiling p r o g r a m m e s in all of the major industrialized
c o u n t r i e s , both in the g o v e r n m e n t a l and private sectors. Recycling
is now providing of the o r d e r of o n e - q u a r t e r of all c h r o m i u m needs.
P e r h a p s one-third of the c h r o m i u m used today could theoretically
be substituted for; but for a range of important applications, as in
stainless steel, there is simply no substitute. C h r o m i u m could be
replaced for some purposes by materials such as titanium, nickel, or
composite materials based on boron or silicon. H o w e v e r , these
substitute materials suffer from either deficient performance or
higher cost, or b o t h . Technical innovations have so far not come far
in overcoming these p r o b l e m s . T h e r e f o r e , it a p p e a r s as if c h r o m i u m
is o n e mineral that will continue to occupy a highly strategic position
in the world a r e n a . T h e limits of domestic adjustment measures and
the uncertainty facing diversification strategies add to the e x t r e m e
concentration of control over the first links in the production chain,
to the unbalanced vulnerability of the major powers, and to the
location of reserves, p r o d u c t i o n , and c o r p o r a t e decision-making in
an increasingly unstable a r e a . T h e s e factors clearly combine to
m a k e control over c h r o m i u m a potential for international conflict.
Cobalt
C o b a l t , like c h r o m i u m , is a strategic mineral that is likely to become
involved in conflict. In 197b, transportation of cobalt from two of
the three main exporting countries—Zaire and Z a m b i a (table
4.2)—was interrupted for some time by the civil war that had just
then started in A n g o l a . In 197K, military forces o p p o s e d to the
Ciovernment of Z a i r e attacked mining installations in Shaba Province (see appendix 2, war 5), leading to an interruption of produc-
Mtnerals
75
tion ( C o m m e r c e , 1981). Belgium r e s p o n d e d , backed by some o t h e r
N A T O g o v e r n m e n t s , by deploying a military force in Shaba. T h e
resulting supply disruptions caused the U S A to declare cobalt a socalled priority metal in its national stockpile (bringing the list of
those to 11) ( G u t t m a n etal., 1983).
Cobalt is a vital alloying element in metals for the aerospace
industry. In fact, an estimated 17 per cent of US consumption goes
into the manufacture of jet aircraft (Maull, 1984, page 215). T h e
crucial p r o p e r t y of cobalt alloys is their resistance to high
t e m p e r a t u r e s . T h e second main application for cobalt is in p e r m a nent m a g n e t s and thus in electric m o t o r s ; and the third is for a
variety of uses in the chemical industry.
T h e availability of cobalt is highly d e p e n d e n t on the production
of c o p p e r and nickel as some 95 per cent of all cobalt is mined in
association with these two metals. As cobalt is also usually less than
3 per cent of the metal content of the ores m i n e d , the linkage of
cobalt to c o p p e r and nickel is an important structural d e t e r m i n a n t
for the world cobalt regime Only exceptional circumstances could
lead to a decision to mine cobalt without first considering the c o p p e r
or nickel situation. Since the mid-1970s, cobalt production has
stagnated owing to reduced d e m a n d s for copper and, to a lesser
e x t e n t , nickel.
World resources of cobalt are a b u n d a n t , especially so if the cobalt
content of sea-bed nodules is considered; the quantity of these seabed deposits is estimated to be huge ( G u t t m a n et al., 1983; Waldh e i m , 1975). H o w e v e r , in the short- to m e d i u m - t e r m perspective
the reserve situation is centered around access to deposits in Z a i r e ,
in Z a m b i a , and in the USSR (table 4 2). If low-grade currently noncommercial deposits of cobalt are considered, then C u b a . New
Caledonia (an overseas territory of F r a n c e ) , the Philippines, and
the U S A b e c o m e potentially important producers and. to a lesser
e x t e n t , also Finland and M o r o c c o . H o w e v e r , the U S A at present
r e m a i n s the major importer (table 4.2).
In the short- to m e d i u m - t e r m perspective, the two main African
p r o d u c e r s — Z a i r e and Z a m b i a (table 4.2)—occupy a strategic position, w h e r e a s in the longer t e r m , the Pacific producers may become
m o r e i m p o r t a n t . Reactions to the 1976 and 1978 Shaba events (see
appendix 2. war 5) suggest that the short-term perspective cannot
be o v e r l o o k e d . For e x a m p l e , the U S A started buying cobalt in 1976
in o r d e r to d o u b l e the size of its strategic stockpile ( G u t t m a n etal..
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1983). This action and subsequent destruction of production facilities in Shaba led to soaring prices. T h e effect was all the more
d r a m a t i c as the Shaba incidents coincided with an increasing
d e m a n d for cobalt during a period of depressed d e m a n d for c o p p e r
and nickel. T h e price increases led to a sudden increase in purchases
from Z a m b i a and a r e n e w e d interest in producing cobalt domestically in the U S A , w h e r e production had ceased in 1971. T h e
response of Z a i r e was to reduce its selling price to well below the
cost of production and to far below what was considered a breakeven price for resumed production in the U S A or elsewhere. T h u s ,
instead of s o m e form of collusion between Zaire and Z a m b i a , there
d e v e l o p e d intense competition.
A knowledge of the c o r p o r a t e structure in cobalt is—as is also the
case with chromium—crucial to an understanding of the world
cobalt regime. T h e m a r k e t is highly organized. T h e Belgian
financial-industrial c o n g l o m e r a t e , Socicte" G £ n 6 r a l e , has a part in
the m a n a g e m e n t of G E C A M I N E S in Z a i r e and its trading arm
S O Z A C O M a n d . through its processing arm in Belgium, is one of
the main buyers of cobalt from Z a i r e , in association with copper.
I N C O of C a n a d a and Falconbridge Nickel Mines of C a n a d a are
important p r o d u c e r s of cobalt. A n o t h e r is the A n g l o American
C o r p o r a t i o n of South Africa, which holds an important share in the
Z a m b i a n p r o d u c e r , Z a m b i a Consolidated C o p p e r Mines. A s
d o m i n a n t p r o d u c e r s and as vertically integrated entities, these
c o r p o r a t i o n s logically have a c o m m o n interest in preventing diversification away from areas which they control and in keeping prices
low on the raw materials which they process. At the same time, they
may feel inclined to c o m p e t e for market shares when the m a r k e t is
unstable and when d e m a n d is d o w n .
As with c h r o m i u m , t h e r e is no world price for cobalt. Prices arc
set by p r o d u c e r s or negotiated in contractual a r r a n g e m e n t s , or are
simply a matter of infra-firm trading and hence a c o r p o r a t e decision. If the Belgian-Zairian sub-system may be considered a price
leader in the capitalist world, there arc several 'special relationships' where factors o t h e r than price count. Additionally, there
exist Cuban-Soviet and Japanese-Australian sub-systems. Imports
to the U S A are also highly concentrated (Kirk, 1983).
If diversificrtion has been inhibited so far by volatile prices,
adjustment m e a s u r e s seem to have had some success. Total cons u m p t i o n is being reduced by cutting down on the a m o u n t of cobalt
11
being used in specific applications. Cobalt can be applied in smaller
quantities and still offer its unique heat resistance, but it cannot be
completely substituted for. Besides, s o m e of the substitutes, such as
m o l y b d e n u m , are also critical materials. New techniques to apply a
c h a n g e d material composition already exist; the lead time is therefore not as long as is usually the case when substitution is considered. Recycling, on the o t h e r h a n d , seems to offer few adjustm e n t o p p o r t u n i t i e s because scrap is mostly spread in a large variety
a n d n u m b e r of p r o d u c t s , often in very small quantities.
T h e m e d i u m - t e r m availability of cobalt will be influenced largely
by d e v e l o p m e n t s in southern Africa. Political instability and fragility of t r a n s p o r t a t i o n n e t w o r k s are factors that must be t a k e n into
account. A g a i n , the highly unbalanced supply situation between the
m a j o r p o w e r s of East and West could provide a potential for
conflict. This is partly why the major Western powers, probably
even J a p a n , maintain stockpiles of cobalt. US stockpiles a p p e a r to
be sufficient for about six years of domestic consumption (Sibley,
1980, pages 206. 209-10).
Uranium
U r a n i u m is used in the manufacture of nuclear w e a p o n s and this
aspect alone m a k e s it a strategic mineral. Practically all nonmilitary uses are for the production of energy. In the immediate
aftermath of the 1973 oil crisis, access to uranium was considered by
m a n y countries to be important because of its use in producing
e n e r g y . For countries with nuclear-energy p r o g r a m m e s , it b e c a m e a
special m a t t e r of national security in the 1970s to obtain satisfactory
control over all relevant links in the extraction and manufacture of
uranium.
A l t h o u g h the perceived urgency of ensuring access to uranium
has eased s o m e w h a t owing to a radical d o w n w a r d revision of many
nuclear-energy p r o g r a m m e s , this is still considered highly importa n t . T h e military aspect of access to uranium has become ever more
important owing to continued proliferation of the capacity to
p r o d u c e nuclear w e a p o n s . In addition, environmental concerns
have b e c o m e far m o r e important to populations all over the world.
T h e e x p a n d e d p r o g r a m m e s of uranium production in the 1970s
led to a perception of impending depletion. A rush developed on
those uranium deposits that could still be considered not closely
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controlled by the nuclear p o w e r s , such as those in Australia.
A l t h o u g h this rush has now slackened, t h e r e remains considerable
uncertainty as to the future d e v e l o p m e n t of the uranium industry.
Inasmuch as fuel being used to m a k e nuclear explosives accounts
for only a marginal s h a r e of total uranium d e m a n d , neither escalation of the nuclear arms race nor nuclear d i s a r m a m e n t would exert a
big effect on total d e m a n d .
A very considerable level of secrecy pervades the uranium
industry. T h e only national system which is relatively transparent is
the US o n e ; the Soviet system is especially o p a q u e , as is also that of
C h i n a . Major reserves are k n o w n to exist in Australia, South
Africa, and C a n a d a (table 4.2), although the USSR and China are
also thought to have large reserves. As regards current p r o d u c t i o n ,
the U S A heads the list, with South Africa and C a n a d a not far
behind (table 4.2). H o w e v e r . US production is at present declining
owing to a c o m b i n a t i o n of reduced d e m a n d and environmental
c o n c e r n s , so that C a n a d a will probably soon become the largest
producing country in the capitalist world. As there is a long lead
time from initiating uranium production to achieving an o u t p u t in
the form of fuel, changes do not take place rapidly. It is expected
that in the 1990s and 2000s the US nuclear industry will be importing
up to 35 per cent of its total uranium c o n s u m p t i o n , largely from
C a n a d a , as c o m p a r e d with an import level of less than 10 per cent in
the 1970s and early 1980s ( R e a g a n , 1984). J a p a n , F r a n c e , and FR
G e r m a n y are the current major importers (table 4.2).
U r a n i u m extraction and manufacture are tightly regulated. S o m e
90 per cent of all sales are covered by long-term (at least 10-year)
contracts, often containing restrictive clauses. Only a small proportion of these contracts are m a d e without g o v e r n m e n t a l participation. T h e structure of the m a r k e t and the high strategic importance
of the products imply that there is no world price. This only goes to
e m p h a s i z e that availability and security of supply are considered by
most users as being much more important than price. Price competitiveness m a y , h o w e v e r , be important for small utilities and for
those w h o c o m p e t e directly with o t h e r energy p r o d u c e r s .
A considerable part of uranium production is controlled through
vertical integration and by c o n g l o m e r a t e s . Nuclear energy prod u c e r s ( e . g . . the Westinghouse C o r p o r a t i o n in the U S A and C o m pagnie G^ndrale d'Electricitd in France) and energy diversifies or
c o n g l o m e r a t e s ( e . g . , Exxon in the U S A ) are therefore to s o m e
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extent involved in u r a n i u m production. T h e r e are also some socalled u r a n i u m i n d e p e n d e n t s ( e . g . , A m e r i c a n Nuclear). Finally
t h e r e are the c o n g l o m e r a t e mineral p r o d u c e r s , some of which are
also vertically integrated. T h e most important ones are the Anglo
A m e r i c a n C o r p o r a t i o n of South Africa, the Rio Tinto Zinc Corporation in the U n i t e d K i n g d o m , and the N e w m o n t Mining Corp o r a t i o n in the U S A . T h e two former control practically all of the
c o m b i n e d production in South Africa (including N a m i b i a ) , A n g l o
A m e r i c a n being the leading p a r t n e r in N U F C O R , the South African m a r k e t i n g cartel. Cross-ownership or minority ownership link
several of the large c o r p o r a t i o n s , facilitating co-ordination and coo p e r a t i o n . An international cartel was organized in 1972 (with
h e a d q u a r t e r s in Paris) a m o n g uranium p r o d u c e r s in Australia,
C a n a d a , F r a n c e , FR G e r m a n y , and the U S A which is said to have
organized a market-sharing a g r e e m e n t that for several years led to
major price increases ( B e t h e l , 1977). Since Rio T i n t o Zinc is also
strong in Australia (the country which has e x p a n d e d production the
most since the 1970s), the A n g l o A m e r i c a n - R i o T i n t o Zinc link
must be considered a vital o n e in future world trade in u r a n i u m .
US u r a n i u m p r o d u c e r s have formed N U E X C O , w h e r e a s most of
the o t h e r c o r p o r a t e producers are m e m b e r s of the U r a n i u m
Institute in L o n d o n . T h e role of the U r a n i u m Institute is not well
k n o w n , but it probably serves as a co-ordinating unit and information pool, p e r h a p s even as a quasi-cartel. It can be assumed to have
s o m e influence over t h r e e of the main uranium trade routes: from
s o u t h e r n Africa to W e s t e r n E u r o p e and J a p a n ; from Australia to
J a p a n and the U n i t e d K i n g d o m ; and from C a n a d a to Western
E u r o p e . H o w e v e r , some of the producing countries are not
regulated by the 1968 T r e a t y on the Non-Proliferation of Nuclear
W e a p o n s (for which see G o l d b l a t , 1982, pages 172-74) and this may
have an important effect on the international m o v e m e n t of
u r a n i u m . T h u s the uranium regime a p p e a r s able to secure longterm supplies of uranium for enrichment facilities throughout the
capitalist world. H o w e v e r , it must be considered weak when it
c o m e s to providing security against military applications or against
leakages that t h r e a t e n the e n v i r o n m e n t during extraction and
manufacture.
T h e French sub-system could b e c o m e a n o t h e r dynamic factor in
the uranium industry (Rydell & Mullins, 1981). France itself has
e x p a n d e d p r o d u c t i o n . M o r e importantly, French interests are
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d o m i n a n t in what is a rapidly growing level of production in t h r e e
African countries with no domestic d e m a n d , but apparently with
considerable reserves: Niger, the Central African Republic, and
G a b o n . I n d e e d , m o r e than one-third of the national budget of
Niger now rests on its income from uranium (Rydcll & Mullins,
1981, page 34). Supplies to FR G e r m a n y arc provided through joint
ventures within the French s u b s y s t e m together with producers in
s o u t h e r n Africa and C a n a d a . Japan has organized its imports in
closely woven relations with producers in Australia and South
Africa.
A fear in the mid-1970s over supply shortages in the capitalist
world has led to a situation of world-wide over-supply. In 1983,
k n o w n stocks r e p r e s e n t e d more than t h r e e years of c o n s u m p t i o n .
T h e great g a p between forecasted and actual r e q u i r e m e n t s in the
recent past is a warning that future d e v e l o p m e n t s , even when
restricted to the capitalist world, can only be guessed very roughly.
F r o m a strategic point of view, the dynamic factors of i m p o r t a n c e
in relation to uranium are: (a) the evolution of the East-West
political climate and the arms race; (b) the extent to which the
policies of countries with a potential to d e v e l o p nuclear explosives
can be controlled or at least foreseen; and (c) the d e v e l o p m e n t s in
s o u t h e r n Africa. All of these factors can exert pressures on the
u r a n i u m industry and lead to conflicts over access to supplies or
over a t t e m p t s to deny such access.
VII.
Conclusion
This c h a p t e r shows the extent and importance of strategic considerations vis-d-vis those minerals which are seen as critical to
military as well as national e c o n o m i c interests. Although there are
few e x a m p l e s of direct violent intervention to control sources of
mineral supply, there is a clear potential for such conflict. T h e
volatile situation in s o u t h e r n Africa is pointed to as being especially
important in this regard. T h e military and political-ideological
competition b e t w e e n the U S A and USSR and the e c o n o m i c competition a m o n g the major powers are both additional factors of
great i m p o r t a n c e .
C h a n g e s in d e m a n d and the potential for adjustment domestically are a m o n g those factors which influence the strategic mineral
industries. H o w e v e r , all of the three minerals which are given
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special attention h e r e remain indispensible for military and civilian
p u r p o s e s , at least for the next 10 to 15 years. Technological
d e v e l o p m e n t s and m e a s u r e s of stockpiling can alleviate, but not
entirely eliminate, this d e p e n d e n c e . A n d , as most major p o w e r s are
d e p e n d e n t upon mineral imports, the crucial dimension in policym a k i n g is, and will continue to b e , foreign policy.
For mineral-producing countries in the Third W o r l d , it is of
particular importance that their exports continue in o r d e r to provide t h e m with highly necessary income. For mineral-poor
c o u n t r i e s , it is of particular i m p o r t a n c e that their imports continue
in o r d e r to maintain their industries. Multilateral a g r e e m e n t s to
m e e t both of these needs would reduce international tensions and
are thus a prerequisite for ultimate world d i s a r m a m e n t ( H v e e m &
M a l n e s . 1980).
If a t t e m p t s are m a d e to m a k e access to foreign sources of supply
m o r e difficult, c o u n t e r m e a s u r e s can be expected that could in time
lead to o p e n conflict. T h e possibility that this will h a p p e n is a
function of: (a) the E a s t - W e s t relationship; (b) policies of control
over natural resources in producing countries, (c) the extent and
form of c o r p o r a t e control o v e r p r o d u c t i o n , m a r k e t i n g , and distribution; and (d) the d e v e l o p m e n t of new sources of supply. In the
short- to m e d i u m - t e r m pespective, even the i m p o r t - d e p e n d e n l
countries a p p e a r to be in a good position to secure suppliers
because: (a) they maintain close diplomatic and e c o n o m i c relations
with many of the resource-surplus countries; (b) many of the
c o r p o r a t i o n s running the mineral industry are home-based in—and
to a considerable extent d e p e n d e n t upon the assistance of—the
countries which they mainly supply; ( r ) much of the international
t r a d e is tightly controlled in the form of long-term contracts or intrafirm t r a d e ; and (d) the probability is not great that an o p p o n e n t will
intervene in their transportation routes.
In closing, Iwo points stand out: (a) that the weak link in the
mineral supply chains is southern Africa; and (b) that the volatility
of mineral supply and d e m a n d could add to the competition a m o n g
the major powers and thus to the potential for international
conflict.
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