U.S. Reliance On Africa For Strategic Minerals CSC 1984 SUBJECT AREA Strategic Issues U.S. RELIANCE ON AFRICA FOR STRATEGIC MINERALS Submitted to Mr. Rudy Wiggins In Partial Fulfillment of Requirements for Written Communications The Marine Corps Command and Staff College Quantico, Virginia Major R.A. Hagerman United States Marine Corps April 6, 1984 U.S. RELIANCE ON AFRICA FOR STRATEGIC MINERALS Outline Thesis statement: Since World War II the United States has become increasingly dependent on imported strategic minerals. A major source for many of these minerals is Africa, a vola- tile region in which the possibility of a major disruption of U.S. mineral supplies is distinctly possible. I. Introduction II. Impact of U.S. Reliance on African Minerals III. A short analysis of four minerals A. Chromium B. Cobalt C. Manganese D. Platinum IV. Economic and political actions A. Economic B. Political V. Conclusion Introduction Since World War II, the United States has become in- creasingly dependent on foreign sources for almost all non- fuel minerals. Included among these minerals are the"stra- tegic minerals"; minerals not found or produced domestically in sufficient quantities to meet our needs in times of foreign threats to national security and/or the economy.1 Of the 24 major nonfuel minerals consumed by industrial nations, the United States is substantially dependent on imports for 21 of them.2 This places the U.S. in a vulnerable position with a direct threat to our defense production capability if the supply of strategic minerals is disrupted by foreign powers. A major source for many of these minerals is Africa. This is a volatile region in which there is a distinct possi- bility of major disruption of U.S. supplies of strategic minerals. Because of the internal political and economic problems in many of the African countries along with the ever present Soviet adventurism in the area, the issue of U.S. re- liance for vital mineral resources is extremely relevent. The purpose of this report is to examine the growing U.S. dependence on four strategic minerals for which Africa is a primary source. Also discussed is the potential for Afri- can suppliers to exert political and/or economic pressures on the United States through cartels or unilateral actions to halt or reduce supplies. Finally, a quick look is taken at the Soviet Union's ability to effect our mineral supplies by competing in the market place or by restricting our access to African resources through military or political actions. Impact of U.S. Reliance on African Minerals Since the Arab oil embargo of 1973, the American public has become aware of its dependence on foreign sources of pe- troleum. Little known to most Americans is a second depen- dency, a dependency potentially more dangerous than petroleum, that has slowly risen over the past few years. This is the U.S. dependence on imported minerals. In 1975 the United States imported $12 billion in nonfuel minerals. By 1980 the figure was up to $29 billion and is expected to reach $85 billion by the years 2000.3 The availability of these minerals have an extremely important impact on American industry and in turn, on U.S. defense capabilities. Without just a few critical minerals, such as cobalt, manganese, chromium, and platinum, it would be virtually impossible to produce many defense products such as jet engine, missle components, electronic components, iron, steel, etc.4 The severity of the problem becomes more apparent when the location of these minerals is considered. Virtually all the worlds reserves of some strategic minerals lie either in the Soviet Union or in Africa. Between them, these two areas contain over 90% of the world platinum, manganese and chromium ores.5 Since the hostility of the Soviet Union towards the United States is deep rooted and ex- pected to continue in the future, the supply of these min- erals from Africa takes on an added significance. A Short Analysis of Four Minerals This section is designed to analyze these minerals to determine the impact on the U.S. if the normal supply of any of them were disrupted. Only four will be discussed (chromium, cobalt, manganese and platinum) because the majority of the free world reserves of each is located in Africa, each has a major impact on the U.S. economy, and the U.S. imports a majority of its needs from Africa. Chromium is a white, crystalline, very hard metallic chemical with a very high resistance to corrosion. It is used in alloys required in stainless steel, tool steel, and high-temperature applications. It is also used in jet air- craft engines and aircraft structural members and areas of high skin friction. Of the total chromite consumed, the metal- lurgical industry uses 63%, the refractory industry 17%, and the chemical industry 24%.6 Since 1961, the U.S. has relied on foreign sources for 100% of its chromium needs. Major concentrations of chromium are in Africa, with the largest known reserves in the Republic of South Africa and the purest grades are in Zimbabwe. These two countries together account for 98% of the world's reserves. The only other significant sources of chromium are the Soviet Union, Turkey and Albania.7 The extent to which other minerals can be substituted for chromium is quite limited. There is no material which can adequately replace chrome in the steel industry and no substi- tutes exist for its aerospace industry and no substitutes ex- ist for its aerospace applications.8 In a crisis some consumers of chromium could continue to function by reducing their use- age of the mineral. However, most critical industries, par- ticularly defense, could not continue to operate without nor- mal supplies. Due to the lack of substitutes, the limited capability of industry to operate without chromium, and the minerals concen- tration in South Africa and Zimbabwe, the U.S. would be forced to draw extensively from the defense stockpile in the event of a supply disruption. The stockpile could meet domestic needs for up to three years.9 Therefore, the U.S. is capable of meeting any short term disruption of its chromium supply but does not have sufficient alternate sources in the event the production of either Zimbabwe or South Africa were permanently lost. Cobalt is a hard, silver-grey metal which closely resembles both iron and nickel in hardness, strength and other properties. It is used as a high-temperature, high-strength alloy agent in stationary gas turbine and jet engines. It is also used in magnetic alloys in electronic equipment. Because domestic production cannot compete with the price of foreign sources, no cobalt has been mined in the U.S. since 1971. Increases in the price of cobalt or severe reductions in its availability would be required before domestic production could be profitable.11 Four countries in Africa possess 52% of the free world's reserves: Zaire, Zambia, Morocco, and Botswana. Loss of the output from Zambia, Morocco, or Botswana would have a critical impact on the marketplace. However, Zaire produces over 60% of the free world's cobalt of which the U.S. purchases 65% of its needs. A loss of Zaire's cobalt would have a drastic impact on the United States.12 Some substitution can be made using nickel and chrom- ium. However, 50 to 60 percent of the cobalt consumed is essential in high-temperature alloys for jet engines and steam turbines. In the event of a shortage, industry will not be able to drastically cut back on its uses of cobalt without a serious impact on U.S. defense requirements. About 70% of U.S. consumption of cobalt is used in alloys that will not tolerate substitutes.13 Because the use of cobalt plays a significant part in both industrical and military applications, and with limited substitutes available, the U.S. must ensure an adequate source in the event of supply disruptions. Other foreign sources may offset a minor shortfall, but a total loss of Zaire's cobalt would have serious consequences to the U.S. Manganese is a prime ingredient in the production of steel and is the third most consumed mineral in the U.S. More than 90% of all manganese is used in the production of steel, aluminum, and cast iron in which it imparts hardness and strength.14 The U.S. has no manganese ore deposits concentrated enough for economic production. Many countries around the world have manganese deposits but only two dominate the world market: the Soviet Union with 51% and South Africa with 37%. The Soviet Union, however, has virtually ceased exports of manganese. Consequently, South Africa has 75% of the free world reserves. The U.S. only receives 39% of its manganese ore from South Africa. However, loss of South Af- rican exports would have a devastating effect on the world economy which would indirectly affect U.S. supplies.15 There is no economical substitute for manganese in steel making. The steel industry could not operate without man- ganese and would be forced to curtail operations in the event of a loss of supplies. The key role that manganese plays in the steel indus- try and the absense of acceptable substitutes shows the critical nature of manganese. This problem is compounded by the lack of domestic reserves and the role that South Africa plays in the world marketplace. Platinum group metals are silvery or greyish metals. They are extremely corrosion-resistent, do not tarnish at high temperatures, and make excellent catalysts. The plat- inum group metals are not used in large quantities in industry but they have a large effect on the economy including num- erious military applications.16 The U.S. produces only small quantitites of the plat- inum group metals and that as a byproduct of copper mining. These metals are dominated by South Africa with 73% and the Soviet Union with 25% of the world reserves. No other country has reserves which could even begin to offset the loss of South African exports. In 1979 the U.S. imports amounted to over 1000% of the entire world production excluding the two major producers.17 Gold, silver, and tungsten are potential substitutes for the platinum group metals in specific electrical uses, but, no substitutes exist for the use of the metals as catalysts. In a crisis situation U.S. industry would be capable of cut- backs in platinum useage for some industrial uses. However, petro-chemical and electronic consumption would remain virtually unchanged. The status of the platinum group metals in the world marketplace is extremely critical. Virtually no flexibility exists in the event the South African supply is disrupted. The U.S. could only partially offset the shortages from its national stockpile but would have to rely on production cut- backs and the relaxation of laws governing the need for cata- lytic converters. Economic and Political Actions As long as the United States is dependent on the Afri- can nations for its chome, cobalt, manganese, and platinum, it will be vulnerable to the actions of these nations. As this mineral dependence grows, the U.S. will be less capable of reacting effectively to disruptions in supply. Therefore it is necessary to evaluate the liklihood of economic and political actions which could threaten our channels of supply or adversely effect the American economy. Economic leverage can be achieved by the actions of a single producer or through cartels. Cartels are collusive agreements among producers to increase their monopoly profits by such actions as fixing prices, dividing up markets, and re stricting output.18 The likelihood that the major producting countries of a particular mineral can establish a cartel depends on how large a share of the minerals world exports, output, and reserves they control; how small a drop in de- mand occurs as the price rises; how small the supply from other sources outside the cartel increases as the price rises; and how strong the bonds are between the cartel members.19 All four minerals mentioned earlier are potentially capable of applying economic leverage against the United States. Each is characterized by a concentration of reserves and production in Souther African countries and, for manganese and platinum, the situation is aggravated by the fact that the vast majority of the remaining reserves are located in the So- viet Union. Finally, all four minerals have applications consi- dered essential to industry for which little or no substitu- tion is possible. There are, however, a couple of factors that tend to lessen the risk of cartels being established on these minerals. First, is the dependence of several African producers, particulary Zambia, Zaire, Gabon, and Zimbabwe, on the revenues these min- erals generate and their inability to maintain financial stabil- ity if deprived of these revenues for more than a few months. The leaders of these countries are fully aware of the threat that the economic chaos would pose to their own regimes, par- ticularly if coupled with retaliation with the Western nations. A second factor is South Africans desire to maintain good re- lations with the West. The government realized the need for peaceful neutrality from the major western powers to guarantee its long-term survival. Maximizing profits is considered an acceptable form of economic activity but they realize that causing economic disruptions would quickly erode what little support they now have. Until South Africa reaches stability with the countries to her north, she will no be in a position to use her potential economic leverage to win price concessions from the west.20 Political leverage is used to achieve desired political objectives through the threat of causing economic disruption. The most common form of political leverage is the embargo which is designed to harm, discipline, or influence the behavior of foreign countries.21 The concentration of these minerals in southern Africa and the Soviet Union and the important role they play in industry make these four minerals particularly effective weapons in a minerals embargo. However, a reason must exist for one country to place an embargo of its goods on another country. In the case of southern Africa only one issue is considered important enough to prompt such a drastic step, the existence of the ruling white regime in South Africa. In particular, the black countries of the region are concerned with the South African refussal to surrender control of Namibia. The United States, which is dependent on both sides for strategic minerals, is in the middle of a serious dilemma. So far neither side has challenged the U.S. with an embargo to win support for its goals. However, in the event that a cri- sis were to develop in which the U.S. were forced to support one side, we would risk a retalitory embargo by the other side. Still, such an action must be considered unlikely since both sides recognize the implications of such an action. As with economic actions, the black states would risk losing needed revenues and South Africa would risk loss of political support from the West. Furthermore, political actions invite retaliation from the country being embargoed. Neither side seems willing to face the actions the U.S. is capable of taking. However, this could very well change, if they were assured of the eco- nomic support from the Soviet Union.22 To the Soviet Union, political control of strategic min- erals is only a means to a greater goal, dominance of the West. They have long recognized the link between economic vitality and military capability. They feel that they need only to gain control of the key mineral exporting countries of Africa to form a strategic cartel with the potential of endangering the security and economic well-being of the NATO countries and Japan.23 The Soviet strategy of mineral starvation appears to be cen- tered around three courses of action. First, they are restrict- ing the sale of their own minerals to the West. In recent years Soviet exports of several strategic minerals have been sharply curtailed or halted entirely. These actions have had the desired effect of tightening supplies and increasing the West's depen- dence on the African supplies. Secondly, the Soviets have moved into international markets competing with the west for their tra- ditional sources of supply. The result is that they are conser- ving their own resources while limiting supplies available to the western countries. Such actions could have unfortunate con- sequences for the United States. They tend to restrict supplies of strategic minerals, send prices to inflated levels, and cause short term shortages. In addition, Soviet supplies become more valuable and this gives them undue influence over western economic markets. The third course of action the Soviets have embarked upon is a program of extending its influence over southern Africa. They are attempting to obtain a foothold in the region to secure mineral sources that otherwise would be used to supply the west. This can be accomplished either by supporting friendly governments or by the overthrow of pro-wes- tern governments.24 At this time, the major mineral producing states of the region cannot be considered pro-Soviet. However, their dispute with South Africa has given the Soviets an oppor- tunity to gain presence in the region by portraying herself a friend of the black majority. In addition, the Soviets are attempting to undermine pro-western governments by a strategy of encirclement by which the region is surrounded by Marxist states which provide havens for anti-government activities.25 Neither South Africa or the black nations to her north are likely to use their minerals as a political lever against the U.S. or the countries of western Europe. Both sides have close economic, political, and military ties to the west and have far too much to lose from such actions. The soviet Union, on the other hand, appears determined to use the strategic min- erals of Africa as another weapon against the west. She has correctly assessed the west's vulnerability in these minerals and has focused her attention on the area of the world where this vulnerability can be best exploited. As a result of this strategy, coupled with recent Soviet successes throughout Africa, the Soviet Union is certain to expand its support of pro-leftist movements in southern Africa. Conclusion In conclusion, it can be seen that the American defense industry is highly dependent on a number of strategic minerals whose source is largely from Africa. Among these strategic minerals whose source is largely from Africa. Among these stra- tegic minerals the four most critical are chromium, cobalt, manganese and platinum. Each is considered critical because of the major role it plays in American defense, the lack of do- mestic supplies, the lack of adequate substitutes, and the lack of alternate foreign sources. This dependency has given the African states which supply these minerals a substantial po- tential for exerting economic and political leverage against the United States. However, this potential is unlikely to be exercised to any significant degree. Almost all of the major mineral producing nations of southern Africa have economies that are highly dependent on the revenues generated from these mineral sales. Although cartel actions to raise profits are pos- sible, actions to disrupt the market and lead to lower overall sales would not be in their best interest. South Africa may be able to withstand economic repercussions but is constrained due to a need for political support from the West. A major obstacle in the entire issue is the Soviet Union which as attempted to exploit the West's dependence on these critical minerals. The Soviets have the only major deposits of platinum and manganese outside southern Africa and possess large reserves of chromium and cobalt. They have been using their position as the only major alternate supplier to manipu- late the mineral markets, creating high prices and tight supplies. In addition, their actions into several African countries have endangered the stability of the entire region. Overall, the situation regarding U.S. supplies of these four strategic min- erals can be expected to deteriorate as world supplies dwindle unless steps are taken to counterbalance the expected shortages. FOOTNOTES 1Hankee, William B., and King, A.H. The Role of Security Assistance in Maintaining Access to Strategic Resources, Carlisle PA: USAWC, September, 1981, pp. 1. 2Jordan, Amos A., and Kilmarx, Robert A. Strategic Mineral Dependence: The Stockpile Dilemma. Beverly Hills, Calif.: Sage Publications, 1979, pp. 15. 3U.S. Bureau of Mines. Minerals Yearbook 1976. Vol II: Area Reports: Domestic. Washington D.C.: U.S. Government Print- ing Office, 1979. pp. 40-41. 4Jordan, Amos A., and Kilmarx, Robert A. Strategic Mineral Dependence. pp. 16 5Meyer, Herbert E. "Russias Sudden Reach for Raw Materials". Fortune, July 28, 1980, pp. 43 6U.S. Bureau of Mines. Minerals Yearbook 1978-79. Vol. I: Metals and Minerals. Washington, D.C.: U.S. Government Printing office, 1980. pp. 195. 7Toohey, John A., Major, USAF and McWilliams, Howard H., Major, USAF. "Assessment of Potential Mineral Shortages: Chro- mium, Cobalt, and Platinum." Research study prepared at the Air Command and Staff College, Air University, Maxwell, AFB, Ala- bama, May, 1976, pp. 37. 8U.S. Office of Emergency Planning, Strategic and Critical Materials Descriptive Data. Washington, D.C.: Government Print- ing Office, March 31, 1963, pp. 12. 9U.S. Bureau of Mines, Minerals Yearbook 1980. Vol. I: Metals and Minerals. Washington, D.C.: U.S. Government Printing Office, 1981, pp. 189. 10U.S. Office of Emergency Planning. Strategic and Critical Materials Descriptive Data. pp. 16. 11Toohey, John A., Major, USAF and McWilliams, Howard H., Major, USAF. "Assessment of Potential Mineral Shortages." pp. 78 12Ibid., pp. 79. 13U.S. Department of State. Bureau of Intelligence and Re- search. Cobalt Prospects: Trouble Ahead., Washington, D.C.: U.S. Government Printing Office, May 12, 1980, pp. i. 14U.S. Office of Emergency Planning, Strategic and Critical Materials Descriptive Data. pp. 14. 15Toohey, John A., Major, USAF and McWilliams, Howard H., Major, USAF. " Assessment of Potential Mineral Shortages." pp. 83. 16Ibid., pp. 85. 17U.S. Bureau of Mines, Minerals Yearbook 1976. pp. 163 18Tilton, John E. The Future of Nonfuel Minerals. Washing- ton, D.C.: The Brookings Institution, 1977, pp. 80. 19Ibid., pp. 82. 20Ibid., pp. 83. 21Ibid., pp. 89. 22Ibid., pp. 91-94. 23Ibid., pp. 93. 24Kroft, D.J. "The Geopolitics of Non-Energy Minerals." Air Force Magazine, June 1979, pp. 76-80. 25Meyer, Herbert E. "Russias Sudden Reach for Raw Materials.," pp. 47. THERE IS A PAGE MISSING FROM THIS FILE 13. U.S. Office of Emergency Planning. Strategic and Criti- cal Materials Descriptive Data. Washington, D.C.: Government Printing Office, March 31, 1963, pp. 12. 14. Williford, Richard L. Major, USAF. "Economic Disparity and U.S. Policy in SouthernAfrica." Research study prepared at the Air Command and Staff College, Air University, Maxwell, AFB, Alabama, May, 1982.
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