| Research Notes - "It's all kind of sad ... and strange"
U.S. DEPARTMENT OF STATE BACKGROUND NOTES: CUBA PUBLISHED BY THE BUREAU OF
PUBLIC AFFAIRS NOVEMBER 1994 Cuba was the last major Spanish colony to gain
independence. In a movement which began in 1850, Cuban planters financed
and led several expeditions against Spanish garrisons. In 1868, the 10-years'
war for independence began under the leadership of Carlos Manuel de Cespedes,
whom the Cubans consider to be the father of their country. Jose Marti, Cuba's
greatest national hero, initiated plans for a general uprising 24 years later.
In 1895, Marti announced the Grito de Baire ("Call to arms from Baire"),
heralding the beginning of Cuba's final struggle for independence. Shortly
after, he died in battle. The United States entered the conflict on the side
of the revolutionaries when the U.S.S. Maine, anchored in Havana Harbor to
provide protection for U.S. citizens, was sunk by an explosion of unknown
origin on February 15, 1898. On December 10, 1898, Spain signed the Treaty
of Paris, ending the Spanish-American War and relinquishing control of Cuba
to the United States. The United States administered the island for three
years. Independence was proclaimed on May 20, 1902, although the United States
retained the right to intervene to preserve Cuban independence and stability
under the Platt Amendment, which established conditions mandated by Congress
for the withdrawal of U.S. troops from Cuba. In 1934, the amendment was repealed
in keeping with the Roosevelt Administration's "Good Neighbor" policy. Later
the same year, the United States and Cuba reaffirmed by treaty the 1903 agreement
which leased the Guantanamo Bay naval base to the United States. This agreement
remains in force today and can only be terminated by mutual agreement or
abandonment by the United States....Traditionally, Cuba's mining sector has
accounted for a significant part of export earnings. The country's nickel
reserves are the fourth-largest in the world. The ore is processed on the
island in two formerly U.S.-owned plants at Nicaro and Moa Bay. Plants are
also located at Punta Gorda and Las Camariocas.
Memorandum by the Deputy Assistant Secretary of State for
Inter-American Affairs (Mann) to the Assistant Secretary of State for
Inter-American Affairs (Cabot) ...Freeport operated the plant
under contract with the United States Government during World War II and
until its closing in 1947 as an uneconomic enterprise. Freeport owns the
nickel-ferrous ore deposits now used by the plant and receives a generous
royalty from the present operator. Freeport itself did not compete in 1950
for the right to operate the rehabilitated plant, but American Smelting &
Refining Company, an unsuccessful bidder, had made an arrangement with Freeport
to give it a half non-controlling interest in the proposed operating company
in lieu of royalties....The General Services Administration was given the
responsibility in 1950 to rehabilitate and bring back into operation the
Nicaro nickel plant in order to meet defense needs for this critical metal.
In early 1951 it awarded the rehabilitation contract to the Frederick Snare
Corporation and the operating contract to the Dutch Billiton company, which
had in General Services' opinion submitted a better bid than the only other
bidder, the American Smelting & Refining Company.....Freeport has indicated
it now is itself interested in operating Nicaro, and would like to bid for
the privilege on an equal basis with other interested parties. It is undoubtedly
influenced by the increase in the market price of nickel, the continuing
demand for defense requirements, including stockpiling, and the development
by the United States Government of additional ore reserves in connection
with a projected expansion of Nicaro with consequent reduced dependence
upon Freeport ore.....Nicaro reached full production in July 1952 and is
producing nickel oxide at the rate of 27.5 million pounds per annum. The
operating company is committed to research in the further development of
nickel production and the reclamation of cobalt. The United States Government
invested 32 million dollars in the original plant and 12 million dollars
in the rehabilitation, and for your confidential information, has in prospect
an expansion program which would cost about 43 million dollars and would
increase plant capacity by about 75 percent.....The Batista Government like
the Prio Government wants Nicaro to continue as a permanent Cuban industry.
It is willing to grant tax exemptions and other privileges because Nicaro
is a non-profit United States Government-financed industry, contributing
to hemisphere and free world defense and to the Cuban economy. The Cuban
group which purchased participation in the operating company was sponsored
by the Prio Government, and its initial spokesman, Inocente Alvarez, was
close to Prio and does not have the confidence of the Batista Government.
The Batista Government informed us in July 1952 that it viewed the Prio letter
as irregular and as having no validity, and that the United States Government
need not feel obligated by it....The Freeport representatives may attack
the General Services Administration for decisions disliked by Freeport. In
commenting upon their statement, it is recommended you emphasize General
Services' statutory authority and responsibility for Nicaro and stress the
Department's limited interest and contribution. It may be advisable to affirm
that the Department recommended that General Services consider the desirability
of Cuban participation, because the Cuban Government strongly urged it and
because the Department approved participation by Cuban nationals in principle.
In such case, you should emphasize that the Department recommended no particular
Cuban group.
Time Magazine Article 5/5/1958 "Plugged Nickel" Like
a hot-blooded Don Juan, the Government makes some extravagant promises when
it sorely wants something from industry. But once it gets what it wants,
the Government often cools rapidly. To build up its nickel supply during
World War II, the U.S. signed at least 28 long-term purchase contracts for
nickel, now is trying to wiggle out of every one of them, because there is
a nickel glut. The U.S. estimates that it has lost $31 million by paying
premium prices for nickel, stands to lose $124 million if it honors all its
contracts. Last week a House Government Operations subcommittee, investigating
some of these nickel deals, wanted to know particularly why the U.S. cannot
cut its nickel purchases and get out of the nickel business by selling its
$87 million Nicaro nickel plant in eastern Cuba (current annual production:
52 million lbs., about 11% of the free world's supply). The big obstacle
is that the U.S. has contracted to pay steep royalties to Freeport Sulphur
Co. for the ore that the plant uses, is even now battling to renegotiate
the contract and slash the royalties. Few companies are willing to bid on
the plant until peace is declared and a steady stream of ore is guaranteed
at a good price. Price Fight. When the Government built the Nicaro plant
in 1942, it badly needed ore to feed it. Freeport Sulphur Co. owned a rich
ore body just four to eight miles away, and the Government lent $1,100,000
to Freeport to develop the ore. The Government promised to buy at least one-third
of Nicaro's ore needs from Freeport through 1968, now gets all of Nicaro's
ore from Freeport, pays a royalty of $1.73 per ton, and also pays the cost
of extracting the ore. The Bureau of Mines contends that the Government,
which operates the mine, should pay only 60¢ to 90¢. Last year
Freeport offered to cut the price to $1.24 if the Government would sign an
irrevocable contract to buy at least two-thirds of its Nicaro ore needs from
Freeport through 1978. General Services Administrator Franklin Floete turned
down the offer, called on Lawyer Ira D. Beynon, 62, to clean up the Nicaro
dispute. Beynon attacked the chore with vigor. Testified Freeport Sulphur's
President Langbourne Williams: "Mr. Beynon began to call us names, to threaten
us with congressional investigations. He said, 'You reduce [the ore price]
or I'll shut this plant down. We don't need your ore. We've got all the ore
we need.' " Then Freeport's Williams did something that widely irritated
official Washington and raised many an eyebrow in business circles. He hired
an ex-FBI investigator to question Beynon's old friends and associates about
his private life as far back as 1926. Beynon testified that the inquisitor
asked his friends such questions as "I'd like to know how Mr. Beynon made
his money." Williams also checked police records on Beynon, but all he could
dig up was a traffic violation. Explained Williams: "It's normal business
practice for me to find out all I can about the man I'm dealing with." Yet
he admitted that Freeport had never before hired a private eye to track a
man. Tears & Profit. Last week Beynon wept openly as he told Congressmen
how Freeport had pried into his personal life. Said he: "The contract under
which we are buying ore from Freeport is unconscionable, and I am going to
do everything I can do to remedy this situation. These kinds of deals destroy
confidence." In rebuttal, Freeport argued that it had opened up the ore supply,
run the Nicaro plant for the U.S. in World War II, and developed many
nickel-production techniques that the Government now uses. But it also profited.
Freeport has collected $13.7 million in Nicaro royalties from the Government
since 1952, now gets about $3,500,000 per year. More than that, the Government
last year made it possible for Freeport to get financing for a huge $119
million nickel-and-cobalt operation, abuilding at Moa Bay, Cuba, near Nicaro.
The U.S. did so by signing a contract, which the committee is also investigating,
to buy up to 271 million Ibs. of Freeport's Moa Bay nickel at 74¢ per
Ib. and 23,835,000 lbs. of cobalt at $2 per Ib. Since then, the nickel
market has suddenly softened. As for the Nicaro deal with Freeport, the
Government next month will complete a 15-mile railroad from the Nicaro plant
to a Government-owned mine that holds 43 million tons of nickel ore, enough
to supply the nickel plant for 17 years. The Government can then cancel its
royalty contract with Freeport on six months' notice, and it probably will
do so unless Freeport slices the price. In any case, the U.S. will be able
to supply Nicaro from its own sources, or sell the Nicaro plant. At least
two companies are interested: National Lead and Freeport itself. Copyright
© 2006 Time Inc. All rights reserved.
Time Magazine Less Than Total War Apr. 14, 1958 n
the week that was supposed to open Fidel Castro's battle for Cuba, his ragged
rebel army showed clearly enough what it could and could not do against the
well-armed troops of Dictator Fulgencio Batista....For most of the week,
the army holed up in its fortified bases—Manzanillo, Bayamo and
Santiago—and the rebels took over the countryside, cutting off Oriente
from the rest of Cuba. Fidel's brother, Raul, led his 150 men out of the
Sierra del Cristal, 100 miles northeast of the main rebel strongholds. One
night at Moa Bay they held the Freeport Sulphur Co.'s $75 million nickel
mining project for twelve hours before pulling out. With no traffic moving
in or out of Santiago, residents began dipping into hoarded food supplies.
The rebels admitted that they were not yet ready to take Santiago by armed
assault, and the army seemed in no mood to leave the cities and go hunting
in rebel country. Death to Strikers. Castro hopes to turn this stalemate
into victory by a general strike. Last week Batista served notice of just
how bloody a strike would be. Using his emergency powers to govern by decree,
he ruled that strikers would be fired, that employers who close shop would
be jailed, and that loyal workers could carry arms. There would be no punishment,
he decreed, for wounding or killing strikers. To make certain he has enough
arms to pass around, Batista flew in 3,500 rifles from fellow Dictator Rafael
Trujillo's Dominican Republic. The "Cristobal" rifles, manufactured in
Trujilloland by refugee Hungarian gunsmiths, more than made up for a shipment
of 1,950 Garands, bound from the U.S. last month under a mutual defense pact
but embargoed at the last minute by the U.S. for the duration of
hostilities.
Speech by Fidel Castro to United Nations 9/26/1960 "But in our country
the land was not the only thing in the hands of the U.S. monopolies. The
principal mines were also in the hands of the monopolies. For example, Cuba
produces large amounts of nickel, and all the nickel was controlled by U.S.
interests. Under the Batista dictatorship, a U.S. company called Moa Bay
had obtained such a juicy concession that in a mere five years - mark my
words, in a mere five years - it sought to amortize an investment of $120
million. A $120 million investment amortized in five years!. So the revolutionary
government passed a mining law that obliged these monopolies to pay a 25
percent tax on the export of minerals."
Castro
on Meet the Press - Havana, CMP Television Network, Sept. 30, 1960
- (Castro refers to UPI item saying that the U.S. Government will close the
Nicaro Nickel Plant in Cuba because of the confiscatory taxes imposed on
it.) The U.S. Government sent a note to our Labor Ministry informing him
that it was thinking of closing down the nickel plant within 30 days of the
communications. They have been exporting nickel without paying any taxes
on it. In order not to paralyze the plant, we told them that we were
disposed either to discuss the purchase of the plant, or to find some formula
to solve the problem. We were discussing the matter with them. If the
material is so strategic and if they need it so badly, let them pay the tax,
which is a matter of 25 percent of the value of the export. They spend more
than a million dollars in espionage; they spend more than 40 billion dollars
in arms. Yet here they are exploiting our nickel mine and they will not pay
anything for it. They say that a 25-percent tax is confiscatory. If they
do not want to discuss the matter, if they do not want to pay the tax; if
they wish to shut down the plant, well, let them do so. We wish to say
to the Nicaro workers not to worry. We also wish to tell them to careful.
We want no sabotage; we want no damage to the machinery; we want no stealing
of equipment. the workers must be careful that nothing happens to the plant.
At any rate, today's note (from the U.S. Government?) said they were disposed
to continue the discussions. Well, if they are, we are, too. Nickel is very
important to the world. The Canadians also have nickel mines and now the
Canadians are going to control the nickel market. We have good relations
with the Canadians. We are ready to discuss the Nicaro matter with the United
States--we are also a nickel power (words indistinct). (estainlesssteel
note - in a letter from Marvin Nichols to Secretary of Interior Douglas McKay,
the Nicaro plant was "capable of producing 10% of the free world's
nickel")
Luxner News
Cubaniquel
seeks financing to expand nickel production CubaNews / February 2003
- "That’s the word from Angel Roberto Hernández, director of
state nickel monopoly Cubaniquel, in a Jan. 27 interview with the official
business weekly Opciones. “We are not only going to modernize the industry
to significantly reduce costs, but also expand production,” said
Hernández, whose entity operates two of three processing plants in
Holguín province, 800 kms east of Havana. The two, both in Moa, are
Pedro Soto Alba (formerly Moa Nickel Co.), which began production in 1960,
and Che Guevara, finished in 1986 with Soviet technology. Cubaniquel also
owns 50%, along with Toronto-based Sherritt International Corp., of the
René Ramos Latour plant, which began production in 1943 and was formerly
known as Nicaro Nickel Co."
Cuba's
potential eclipsed by U.S.-Castro feud - Nickel American Metal
Market, August 6, 1996 by Martin Chase "For nearly 40 years, nickel mining
activity in Cuba has taken a back seat to international intrigue, Cold War
politics and the state monopoly and control of big business by Communist
dictator Fidel Castro. Today the climate is beginning to warm in these post-Cold
War days. Castro has opened the door to meaningful foreign investment in
mining for the first time and a number of major Canadian, Australian, European
and South African companies are poking around the hills of eastern Cuba looking
for potential nickel and gold deposits. But Cuba remains off limits to U.S.
investors, and the prospects for an end to the 36-year deep freeze in U.S.-Cuba
relations appear dimmer than ever. Thanks to passage of the Helms-Burton
amendment... "The U.S. really is becoming something of a laughing stock with
this policy," said one Toronto-based mining executive. "Here are the world's
largest nickel deposits sitting right on your doorstep and you're not allowed
to have it. It's all kind of sad ... and strange."...Cuba's nickel resources
are among the world's largest, representing roughly 37 percent of the world's
proven reserves....Mining analysts in the United States and Canada estimate
that production at Moa Bay rose by more than 50 percent last year to about
20,000 tons, representing nearly half of Cuba's total nickel output....."
David Atlee Phillips, Clay Shaw and Freeport Sulphur
by Lisa Pease (This article first appeared in Probe magazine (Vol. 3,
No. 3, March-April, 1996) and can now be found in The Assassination) "Nickel
Mining in Cuba, Processing in New Orleans According to Cuban lawyer Mario
Lazo, whose firm represented Freeport Sulphur in Cuba, the Nicaro project
was conceived just two months after Pearl Harbor. The strange Cuban nickel-cobalt
ore required a special extraction process. Freeport had developed a new chemical
process-and Washington approved the financing-to aid the development of nickel
(used in the manufacturing of steel) for the war effort. The Nicaro nickel
plant cost American taxpayers $100,000,000. At one point, the plant produced
nearly 10% of all the nickel in the free world. New Orleans became home to
a special plant Freeport set up just outside the city to process the
nickel-cobalt ore. When the Moa Bay Mining project was conceived, Freeport
Nickel, a wholly owned Freeport Sulphur subsidiary, put up $19,000,000 of
$119,000,000 to develop the Cuban nickel ore. The rest of the money came
from a group of American steel companies and major automobile makers. (Freeport's
pattern of putting in a small portion of total cost is a recurrent one.)
$44,000,000 of the original funds went into Louisiana for the development
of the New Orleans nickel processing facility at Port Nickel. Batista, Castro
and the Moa Bay Mining Company In 1957, two things happened that allowed
Freeport to develop nickel not just through the government-owned Nicaro nickel
plant, but for itself. The first was a break on taxes, won through negotiations
with Batista, for the proposed Moa Bay Mining Company. The second was a
government contract in 1957 in which the U.S. Government committed itself
to buying up to $248,000,000 worth of nickel. Both of these would lead to
public criticism of Freeport in the years to come. The tax break led to charges
that the U.S. Ambassador to Cuba and Langbourne Williams of Freeport Sulphur
made a special deal with Batista. The contract would eventually lead Freeport
into a Senate investigation and a confrontation with President Kennedy over
the issue of stockpiling...... (Whitney, the Ambassador, and Batista's
Tax Break for Freeport Sulphur In the September 12, 1960 issue of The New
Republic, Professor Samuel Shapiro wrote an article about Cuba, Castro, and
American business involvement. Shapiro wrote that the former U.S. Ambassador
to Cuba, Earl E. T. Smith, owing his apppointment largely to the support
of John Hay Whitney (by that time former Chairman of Freeport but still a
large stockholder), negotiated a substantial tax reduction for the Moa Bay
Mining Company with Cuban President Fulgencio Batista. Smith wrote a belligerent
letter back, published in the October 3, 1960 issue, stating: This is a clear
and grave charge that I employed my official position and influence as US
Ambassador to Cuba for the private profit of the Moa Bay Mining Company.
This is utterly untrue. Smith then went on to cite a State Department release
from 1959 that had stated that: neither the State Department nor the American
Embassy ever intervened during the negotiations of the new industry concessions
granted by the Cuban Government to Moa Bay Mining Company in August 1957.
Negotiations were completed in July 1957, before Ambassador Smith's arrival
in Cuba, and the subsequent decree granting the concessions was published
in August, 1957. One of Freeport's vice presidents, John C. Carrington, added:
This tax treatment . . . came under a principle of law predating Batista
and honored by Castro. . . . Ambassador Smith had nothing whatever to do
with the matter and in fact did not even come to Cuba until July 1957. In
his rebuttal also published in the October 3, 1960 issue, Shapiro responded:
Sirs: Neither the Batista Government nor Moa Bay officials ever made public
the details of the special tax treatment granted the company. In view of
the extremely cordial relations that existed between Ambassadors Gardner
and Smith and the dictatorship, documented at great length in such books
as Jules Dubois' Fidel Castro, it is most difficult to believe that the subject
was never brought up. As Mr. Carrington himself indicates, the tax reduction
was held up for over a year, and though approved "in substance" in July,
1957, the month of Ambassador Smith's arrival in Havana, did not actually
go into effect until some time later; furthermore, the tax cut could have
been withdrawn at any time. The specific charge that Ambassador Smith used
his influence on behalf of Moa Bay was made in a special number of Bohemia,
something of a Cuban equivalent of Life, in January, 1959. Ambassador Smith
resigned on January 10 after seeing an advance copy but before the issue
went on sale. The statement Ambassador Smith and Mr. Carrington quote was
thus made after Ambassador Smith's departure from Cuba. In my article I did
not intend to single out the Freeport Sulphur Company as particularly
reprehensible in its dealings with the dictatorship. Every businessman in
Cuba had to get along by the use of influence and bribes. If Moa Bay really
got its tax reduction without political or diplomatic pressure, and without
the distribution of money in the right places (and Carrington does not say
that it did), this was an example of generosity almost without parallel in
the history of Cuba. In his response to Shapiro's parenthetical comment,
published a month later, Carrington wrote: I now state, for Mr. Shapiro's
future reference, that Moa Bay obtained its new industry tax exemption without
the distribution of money, and I repeat that it did so without political
or diplomatic pressure. . . In sum, there is no ground for Mr. Shapiro's
accusation-by-innuendo against our company. . . and I request that a proper
retraction be made. Shapiro had the last word in his final response to Carrinton:
I am happy to accept Mr. Carrington's assurance, but as both he and Ambassador
Smith have denied that the Ambassador used political or diplomatic pressure
to secure the grant of new-industry tax status to the Moa Bay operation,
it may be pertinent to quote the notice that appeared in The New York Times
on August 17, 1957: "Work on a project for mining and refining nickel and
cobalt at Moa Bay in Oriente Province will start immediately, the Presidential
Palace said today. The announcement was made following talks by Earl E. T.
Smith, United States Ambassador, L.M. Williams, President of Freeport Sulphur
Company and other officials of the enterprise with President Fulgencio Batista.
"About $75,000,000 will be invested in the Moa Bay project, officials said.
The way was cleared for the start of construction when President Batista
granted the project a classification as a new industry with tax exemption.
Production is scheduled to begin within two years." [. . . ] I believe it
should be said that Mr. Smith showed poor judgement in interceding with the
dictator on behalf of an American company seeking a tax concession. But then,
Mr. Smith was a political appointee with no previous diplomatic experience.
He had contributed $3,800 to the Republican campaign chest in 1956. . . .
In 1956, John Hay Whitney, Freeport's then Chairman and significant investor
as well as Ambassador Smith's promoter, was Chairman of the United Republican
Finance Committee.) .....The Seizing of the Moa Bay Mining Company by
Castro Unfortunately for Freeport's board, the Moa Bay Mining company was
short-lived in Cuba. With $75,000,000 invested in that operation, one can
see how vital the special tax exemption leftover from Batista's reign was
to Freeport's Moa Bay operation. And since the deal was negotiated under
Batista's regime, one can also see how this must have stuck like a craw in
the throat of Castro's revolutionaries as they took control of Cuba in 1959.
The Castro government wanted to end the special tax exemption. Freeport wanted
to keep it. By March of 1960, Freeport Nickel (parent of Moa Bay Mining,
subsidiary of Freeport Sulphur) threatened the Cuban government with an
ultimatum: If their special tax status was revoked, the Moa Bay and Nicaro
nickel facilities would be shut down. Freeport knew that Cuba needed the
jobs and even partial income that Freeport's nickel operations provided.
Freeport must have thought it could bluff this one through, largely due to
the particular quality of the Moa Bay ore. The ore was an unusual combination
of cobalt and nickel, elements which needed to be separated through a highly
complex chemical process, handled at that time by Freeport's New Orleans
processing plant. Industry observers were quoted as saying the best thing
Cuba could do was to negotiate a compromise, because Cuba could not afford
to build the kind of plant Freeport owned. Even the instructions for the
process were not kept in Cuba. Deliberations with the new Cuban government
fell apart in August of 1960. According to an "unimpeachable source" in the
New York Times, the Cuban government felt negotiations should be suspended
because of the tense situation between Cuba and the United States. Cuba performed
what they characterized as an "intervention," a temporary measure of stepping
in and taking control of the mining facility, rather than outright
nationalization. This was reported as Cuba trying to leave the door slightly
open for some sort of negotiated settlement. But Freeport considered the
takeover a battle cry and wanted to invoke international law to protect its
rights to the plant. Cuba ended up retaining the plant, and the United States
ending up attempting to invade Cuba under the ill-fated Bay of Pigs operation.
One of the planners of the Bay of Pigs, as well as an advocate for assassinating
Castro, was Admiral Arleigh Burke. Burke later become a director of Freeport
Sulphur. Freeport versus Kennedy: The Stockpiling Investigation Already reeling
from its losses over Castro's appropriation of the Moa Bay plant, Freeport
found itself under attack from a new quarter: a Senate investigation into
stockpiling surpluses, requested by President Kennedy himself. In 1962, President
Kennedy asked Congress to look into the war-emergency stockpiling program,
stating it was "a potential source of excessive and unconscionable profits."
He said he was "astonished" to discover that the program had accumulated
$7.7 billion worth of stockpiled material, exceeding projected needs by $3.4
billion. Kennedy also pledged full executive cooperation with the investigation,
mentioning specifically $103 million in surplus nickel. The Senate pursued
an investigation into stockpiling surpluses. Special attention was paid to
three companies in which the Rockefeller brothers had substantial holdings:
Hannah Mining, International Nickel, and Freeport Sulphur. A December 18,
1962 headline in the New York Times read "U.S. Was Pushed into Buying Nickel,
Senators Are Told." The article opened with this: A federal official told
Senate stockpile investigators today that the U.S. Government got a bad deal
in a 1957 nickel purchase contract with a potential $248,000,000 obligation.
John Croston, a division director in the General Services Administration,
testified that he had strongly opposed the contract with the Freeport Sulphur
Company. But, he said, officials in the agency "knew that the contract was
in the bag from the beginning." Pressure for it, he said, came from the Office
of Defense Mobilization, then headed by Arthur S. Flemming. Dr. Arthur S.
Flemming was regularly a part of the National Security Council under Eisenhower.
Right after Ike's election, in November of 1952, Dr. Flemming served with
Ike's brother Milton on the three-member President's Advisory Committee on
Government Organization, headed by Nelson Rockefeller. Perhaps it was his
friendship with Nelson that caused some to accuse Dr. Flemming of some
arm-twisting on Freeport's behalf. The New York Times (12/19/62), reported:
The subcommittee was told yesterday by officials of several Government agencies
that they opposed the contract because they felt the need for nickel was
exaggerated. These officials said, however, that Dr. Arthur S. Flemming,
then head of the Office of Defense Mobilization, was determined that the
contract be signed. One witness said Mr. Flemming had indicated that competition
aginst the International Nickel Company, the giant in the field, should be
encouraged. But what Flemming apparently didn't know, or hadn't shared if
he did, was that both Freeport and International Nickel Company (INCO) shared
some of the very same investors: the Rockefellers. Croston said he had opposed
the contract with Freeport from the beginning, stating "there was no real
shortage of nickel at any time" and that cobalt "was running out of our ears."
Freeport's earlier 1954 contract with the government caused the U.S. to spend
$6,250,000 to help build that special Louisiana nickel-cobalt ore processing
plant so necessary to the Cuban mining operations. Another contract obligated
the government to buy up to 15,000,000 pounds of nickel at a premium price,
as well as 15,000,000 pounds of cobalt. The committee's head, Senator Stuart
Symington, reported that it was John Whitney who exerted his influence from
Freeport's end to get the government contract for the nickel. Freeport's
Chairman, Langbourne Williams, defended the contract, claiming the contract
had saved the Treasury money, and had not been entered into for the purposes
of stockpiling, but rather to increase nickel production capacity. He contended
that the government ended up not having to purchase any nickel under the
contract because Freeport had been able to sell to other buyers the nickel
and cobalt produced at Moa Bay before Castro took it over. But the controversy
flowed over into 1963, and Press Secretary Pierre Salinger stated that the
Kennedy administration planned to make stockpiling an issue in the 1964 campaign.
As we know, JFK didn't live long enough to fulfill that promise.......In
August, 1959, Freeport Director and top engineer Forbes Wilson met with Jan
van Gruisen, managing director of the East Borneo Company, a mining concern.
Gruisen had just stumbled upon a dusty report first made in 1936 regarding
a mountain called the "Ertsberg" ("Copper Mountain") in Dutch New Guinea,
by Jean Jacques Dozy. Hidden away for years in a Netherlands library during
Nazi attacks, the report had only recently resurfaced. Dozy reported a mountain
heavy with copper ore. If true, this could justify a new Freeport diversification
effort into copper.
more
Canada Protests Controversial Bill Maclean's March
18, 1996 - "....The once-stalled bill that Helms authored with Indiana
Representative Dan Burton passed easily in the Senate by 74 to 22 votes,
and by an even more lopsided 336 to 86 in the House the next day. The Feb.
24 downing of two civilian American airplanes by Cuban jet fighters has sparked
outrage in the United States, and politicians are wary of appearing soft
on Castro in an election year. President Bill Clinton, who had earlier threatened
to veto the bill, was to sign it into law this week.....The provision that
rankles is aimed at halting foreign joint ventures in Cuba. It allows
Cuban-Americans to use U.S. courts to pursue international firms investing
in property expropriated by the Castro regime following the 1959 revolution.
Another clause bars executives of firms that have benefited from expropriated
assets - and their families - from entering the United States. Toronto-based
Sherritt International Corp., led by outspoken CEO Ian Delaney, is the largest
Canadian target. Sherritt's nickel mine at Moa Bay was originally built by
Freeport Sulphur Co. of New Orleans in 1959. It had only just started shipping
nickel concentrate to Freeport's refinery in Louisiana when it was seized
by Castro in the summer of 1960. Freeport, now called Freeport-McMoran, will
not discuss the specifics of its claims against the property, but U.S. reports
put the Moa Bay claim at $115 million. According to Sherritt, its deal with
the Cubans indemnifies it for any damages. Still, the mere threat of litigation
could not only discourage Sherritt's lenders and suppliers, but investors
as well.....
Mother lode awaits change in political wind American
Metal Market, Sept 1, 1998 by Martyn Chase "One-quarter of the world's nickel
supplies lie in a stretch of land along the northeastern coast of Cuba, in
a strip running 50 air miles or so along the coast from Mayan to Baracoa
and extending about 15 miles inland....Oro cited five major deposits that
are world class, by any measure: Mayan, Moa, Pinta Gorda, San Felipe and
Cajalbana. "San Felipe has reserves to sustain 50,000 tons (of production)
for 200 years," he said. "It's a monster deposit."....Moa Bay was owned and
operated by two U.S. companies--Freeport-McMoRan and NL Industries--until
Castro took over and nationalized the industry in 1960."
TAXATION
OF CUBAN CONFISCATED ASSETS AFTER PROPERTY CLAIMS SETTLEMENTS: ISSUES FOR
TAXPAYERS AND THE U.S. GOVERNMENT by Timothy Ashby and Tania Mastrapa
Cuba in Transition ASCE 2005 "....The confiscated U.S. assets included 90
percent of all electricity generated on the island (Cuban Electric Company),
the entire telephone system (ITT), most of the mining industry (Moa Bay Mining
Company and Nicaro Nickel Company), and large tracts of high quality land
(between 1.5 and 2 million acres)....A further example of the accounting
and legal complexities that will be involved in Cuban settlements is the
case of Moa Bay Mining Company, which claimed $88.3 million in confiscation
losses. The company was wholly owned by Freeport Nickel Company, a subsidiary
of Freeport Sulphur Corporation. Freeport Sulphur merged with McMoRan Oil
& Gas, LLC in 1998 but remained a wholly owned subsidiary of the successor
company McMoRan Exploration Co. (“McMoRan”). In 2002, McMoRan sold
Freeport to a 50–50 joint venture between IMC Global Inc.—the
world’s largest purchaser and user of sulphur—and Savage Industries
Inc., a major materials management and transportation systems company. The
possible compensation for Moa Bay’s Cuban assets should be of interest
to IMC and Savage, as the current value of the confiscated nickel and cobalt
mines is estimated at $5–7 billion. Since 1990, Canada’s Sherritt
International has invested over half a billion dollars in Freeport’s
former mines under a joint venture with the Cuban government, and China is
negotiating a similar joint venture. Cuban nickel is considered to be Class
II with an average 90 percent nickel plus content. Holguín Province,
where the Moa Bay mines are located, is estimated to contain 34 percent of
the world’s known reserves of nickel, or some 800 million tons of proven
nickel plus cobalt reserves, and another 2.2 billion tons of probable
reserves."
(estainlesssteel note - These provisions are now in effect and, unlike
the provisions of Title III, cannot be suspended by the U.S. President. One
of the first companies notified under Title IV of the Helms-Burton Act was
Toronto-based Sherritt International Corp. On July 10, 1996, Sherritt s officers
were informed that company principals would be banned from the U.S. unless
Sherritt pulled out of its Cuban nickel-cobalt operations within 45 days.
They refused and they, their wives, and dependant children age 18 and younger,
have been banned from entry to the US ever since)
On Feb 3, 1971, the US Foreign Claims Settlement Commission certified the
Moa Bay Mining Company a $88,349,000 claim against the government of Cuba
under Title V of the International Claims Settlement Act plus 6% interest
per annum from August 19, 1960. Also, related to nickel assets on Cuba, the
Commission awarded the Nicaro Nickel Company a claim of $22,494,708.62 on
June 30, 1971 with 6% interest beginning from October 24, 1960. It denied
a $68,071,000 claim by Cuban American Nickel Company, and likewise denied
property claims by Freeport Sulphur Company stating finding the "claimant
has failed to prove that its mining concessions had any value on the date
of loss".
(pdf
of rulings) (estainlesssteel note - Moa Bay Mining Company, who in
1960, was a subsidiary of the Cuban American Nickel Company, which in turn
was a subsidiary of the Freeport Sulphur Company of New Orleans,
Louisiana.)
01-APR-02 IMC Global Inc. announced today that it has entered into a
definitive agreement to acquire the sulphur transportation, marketing and
terminaling assets of Freeport-McMoRan Sulphur LLC, a subsidiary of McMoRan
Exploration Co. , through a 50-50 joint venture with Savage Industries Inc.
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