on the production problems at Nicaro. The results already are improving the operation.

In its major aspects, the program is being carried out by the contractor, Nickel Processing Corp., in direct association with is operation of the mines and plant. The project also has had research assistance and support from the Bureau of Mines and industrial consultants in the United States and Canada.

The broad objectives are increased production, lower operating costs, recovery of useful byproducts, and the improvement and diversification of the present end product. The operator's research efforts are going forward simultaneously at Nicaro and Niagara Falls, N. Y., with some tests being undertaken at Fredericktown, Mo. At Nicaro the process development plant is currently being used to test the Caron process of nickel-cobalt extraction and separation. It will serve also as a testing unit for plant and product improvements initially explored in a metallurgical research laboratory at Niagara Falls.

In the search for product improvements, the program already has yielded tangible results of high value. By perfection of a process for sintering nickel oxide powder, a foundation has been laid for converting Nicaro's outgoing product to the long-desired solid form on a commercial basis. Laboratory production of nickel ingots meeting commercial standards points to the eventual marketing of metallic nickel as well.

Nickel oxide sinter.-As a result of the development of a satisfactory process for producing sintered oxide, equipment is on order, ground has been broken, and a sintering plant is expected to be in operation at Nicaro by January 1954. A sintered product will have much greater acceptance and utilization than the power. This research achievement constitutes a major forward step in product improvement.

Nickel metal.-Production of nickel in metallic form will further broaden the market for the Nicaro output. Metal ingots also are particularly convenient for handling, shipping, and storing nickel.

The first phase of the metallic research program has been satisfactorily concluded. A series of melts has produced ingots containing 98.5 percent nickel plus cobalt, 0.90 percent iron, 0.05 percent carbon, and 0.02 percent sulphur. This analysis is well within the stockpiling specifications and except for the iron would be equal to or better than that guaranteed for electrolytic nickel. Work is now in progress to obtain factual economic data by which to estimate the capital and operating costs in full scale production.

Nicaro nickel also has been smelted into sample ingots of satisfactory grade by the Pittsburgh metallurgical laboratory of the Bureau of Mines and by the Quebec Metallurgical Laboratory. The Bureau research is aimed at the produc tion of the metal from nickel carbonate which, in the Nicaro process, precedes by one step the outturn of nickel oxide.

Electrolytic nickel.-Electro-refining of Nicaro nickel has been studied with considerable success. The research has employed carbon anodes and various purified electrolytic baths derived from both the oxide and carbonate. This program is to be expanded by using cast nickel anodes and a continuous electrolyte refining system which should assure a uniform produce of high purity. The costs of the various feasible methods will then be compared.

Process development plant.-The Caron process study is aimed at the improved extraction of nickel and cobalt and the separation of these metals through special handling of the ammonia-carbon dioxide leach solutions. Separate cobalt recovery, however, still presents numerous difficulties.

Considerable progress has been made in testing the use of a pilot rotary kiln to reduce the metal in the ores. Preliminary results indicate that a high percentage of the metal in the ore is converted to extractable form-the first step toward improved recoveries, increased production, and lower operating costs. Another interesting outgrowth of the rotary kiln experiments is the possible use of Cuban asphalt as a fuel for reducing the nickel in the ore to soluble form. However, further research will be required for a firm determination in this field. Another important result under engineering evaluation is the determination that higher recoveries of nickel can be obtained if the ore is first divided into its separate types, known geologically as serpentine and limonite fractions, with the separate reduction of each fraction. This would incrase the grinding capacity of the plant as the limonite fraction requires much less pulverzing. Any increase in grinding capacity or recoveries would materially improve production.

In addition to continuing the studies described above, future plans include an expansion of laboratory research at Niagara Falls and the greater use of the process development plant at Nicaro as a testing unit for plant improvements.

The laboratory and the test unit are being brought into close liaison to assure maximum effective small-scale pretesting of research discoveries.

Production program.-A further reduction in operating costs is being sought by a comprehensive research plan which is being developed and gradually put in operation. It is concerned primarily with increasing throughput, effecting processing economies, and production of a purer end product. Long-range plans call for improved nickel and cobalt recovery and further work on plant tailings as a source of iron.

Some of the immediate results of process improvement research, which have reached the engineering evaluation stage, relate to ore separation, ore grinding, and reduction roasting of separate ores.

Laboratory research program.-Small-scale research on process and product improvement as well as product diversification is now being centered at Niagara Falls. This location enhances accessibility to technical literature, laboratory supplies, special research and analytical services, consulting aid from specialists, and cooperative help from other research laboratories, particularly those concerned with the utilization of nickel.

One of the first projects will be the systematic study of optimum leaching techniques in conjunction with metal purification and separation. The program ultimately will include orderly experimentation in every approach to the economical processing of Cuban laterites as well as a complete study of product improvement and diversification in relation to industrial use and requirements. Iron ore: Nicaro byproduct.-By an interesting metallurgical twist, Nicaro ores are being processed for the nickel and cobalt content. Yet iron is the principal metal they contain. Not far from Nicaro, for instance, the Bethlehem Steel Co. owns and intermittently mines iron ore from its own large reserves.

In fact, the overburden which blankets the most desirable ores now being fed into Nicaro is particularly heavy with iron, and it is bulldozed aside and saved for possible future use. The nickel content is extremely low.

Below the overburden, however, are the Nicaro ores in layers of limonite (generally, 1.25 percent nickel, 50 percent iron, with a trace of chromium) and altered serpentine (1.8 percent nickel, 12 percent iron). Obviously, the Nicaro plant handles, by weight, far more iron than nickel. The tailings which are spilled from the plant are rich in iron content and could be readily used in making iron but for the remnants of unrecovered nickel and other metals, particularly chromium. Economically classed as impurities, their presence prevents economic use of the tailings.

Considerable preliminary work has already been carried out on the benefication of Nicaro tailings. In spite of the special problem presented by metallic impurities, one of the most promising approaches to the use of the tailings as a source of iron is as a blending agent with low-grade iron ore. Economic utilization will be simplified as nickel and cobalt extraction is improved and if a practical method for leaching out the chromium can be developed. Long-range plans include a sustained study of this problem.

The research program, in all its aspects, is expected to have continuing value. Its primary usefulness, of course, will come from the anticipated development of the improvements necessary to assure commercial operation at Nicaro. The research targets, in reality however, are broader than Nicaro.

Successful solution of the many problems connected with the Government installation in Oriente Province should prove rewarding in the profitable utilization of iron, nickel, and cobalt ores elsewhere in Cuba. At still longer range, the results will bring nearer to commercial usefulness the known large reserves of similar lateritic ores in other parts of the world-Brazil, Venezuela, Indonesia, and the Philippines.

Expansion

The Preparedness Subcommittee set the expansion of Nicaro as a secondary, long-range goal for consideration after reactivated operation was assured. In consequence, the decision to expand came late in 1952. Its execution, however, is subject in part to the availability of ore and the suitability of the process. The Defense Materials Procurement Agency had the responsibility for the determination of these particular contingent factors, and they are now being resolved. Ore explorations have enlarged the total reserves at Nicaro to approximately 34 million tons, including the remaining Nicaro Nickel Co. deposits at an estimated 19 million tons. Originally, the expansion target was about 26 million tons. The survey has proved upwards of 15 million tons with a reasonable likelihood that 3 million tons will be added to the overall supply from which an expanded plant can be fed.

Meanwhile, three alternative processes of known or potential value in treating Cuban ores are being examined in a comparative study for DMPA. The Battelle Memorial Institute of Columbus, Ohio, was retained for the task. Its survey embraces processes which utilize nitric and sulfuric acids as well as the ammonia leaching process. The latter, of course, is in use at Nicaro and is the only one which has had full scale use with the Cuban ores. The Institute report is expected soon.

Future of Nicaro

The plant is now in full operation; its efficiency is being steadily improved.

In spite of manifold difficulties in obtaining materials and equipment, the plant was started on its second run on January 31, 1952 in the month originally scheduled for the reopening. Full mechanical operation was achieved in midJuly 1952 with the completion of the stage-by-stage firing of the dozen huge Herreshoffs which form the plant's battery of reduction furnaces.

With the plant again in operation and under constant survey and experimentation aimed at higher productivity, the most pressing elements in the recommendations of the Preparedness Subcommittee have been executed.

The overall objective, of necessity, is still in the future. It is the permanent, profitable operation of Nicaro as a surefooted commercial venture.

With reactivation a solid fact, efficiency on the rise, research in progress, and expansion under positive consideration, the subcommittee's specific goals have been knit together into a comprehensive program for the development of the Nicaro nickel resources. In the ultimate, commercial operation will hinge largely on success with each of the several aspects of the broad program. By its design, it is intended to contribute to the utmost to the successful establishment of Nicaro as a sound private enterprise. This is where the program for Nicaro stands today.

With the achievement of the ultimate goal, the United States and Cuba would have an asset of great, continuing value not only in the utilization of the ores appurtenant to Nicaro, but also in the development of the island republic's latent resources of other valuable ores.

In those circumstances, Nicaro would be serving the best interests of both nations in peace as well as in the stress of war, defense mobilization, and international emergency. This is the place which Nicaro should occupy in the economy of the Western Hemisphere, and the program now in its career at Nicaro is directed toward that goal.

APPENDIX D

HARRY DEXTER WHITE PAPERS RELATING TO STRATEGIC AND CRITICAL MATERIALS The SECRETARY OF THE TREASURY, Washington (undated).

The PRESIDENT,

The White House.

MY DEAR MR. PRESIDENT: During the last year I have discussed several times with Mr. Harriman a plan which we in the Treasury have been formulating for comprehensive aid to Russia during her reconstruction period. We are not thinking of more lend-lease or any form of relief but rather of an arrangement that will have definite and long-range benefits to the United States.

Ambassador Harriman has expressed great interest and would like to see the plan advanced. I understand from him that the Russians are reluctant to take the initiative, but would welcome our presenting a constructive program.

You will recall at Quebec Mr. Churchill showed every evidence that his greatest worry was the period immediately following V-E Day. We have now worked out the phase two lend-lease program with the British after 2 months very hard work.

I am convinced that if we came forward now and presented to the Russians a concrete plan to aid them in the reconstruction period, it would contribute a great deal toward ironing out many of the difficulties we have been having with respect to their problems and policies.

I hope that you will give me an opportunity to present to you the work which we have been doing here in the Treasury over a period of a year on this subject. I am furnishing Mr. Stettinius with a copy of this letter for his consideration. Sincerely,

(A letter from Secretary of Treasury to the President undated and unsigned, on Secretary of the Treasury letterhead.)

JANUARY 10, 1945.

MEMORANDUM FOR THE PRESIDENT

A $10 BILLION RECONSTRUCTION CREDIT FOR THE U. S. 8. R.

I suggest consideration be given to a financial arrangement with the U. S. S. R. to provide her with $10 billion credits for the purchase of reconstruction goods in the United States, with provision for repayment to us chiefly in strategic raw materials in short supply in the United States.

1. The interest rate could be 2 percent, amortized over a period of 35 years. A schedule of repayments is attached.

2. The Russians have more than adequate means to assure full repayment. There are three principal sources from which she can obtain the necessary amount of dollars.

(a) Selling to us strategic raw materials which are in short supply in the United States because of our depleted natural resources. (See attached memorandum.)

(b) Russia will be able to develop substantial dollar assets from tourist-trade, exports of nonstrategic items to the United States, and from a favorable balance of trade with the rest of the world.

(c) Russia has a stock of gold estimated at $2 billion now and is reported to be able to produce from $150 to $250 million per year. These gold resources can be used to pay her obligations to the United States to the extent that her other dollar sources are not adequate.

3. An important feature of this proposal is that we will be conserving our depleted natural resources by drawing on Russia's huge reserves for current needs of industrial raw materials in short supply here. We would be able to obtain a provision in the financial agreement whereby we could call upon Russia for whatever raw materials we need without giving a commitment on our part to buy.

4. This credit to Russia would be a major step in your program to provide G million jobs in the postwar period.

CONSERVATION OF UNITED STATES NATURAL RESOURCES AND IMPORTS FROM THE U. S. S. R.

The United States has had to draw heavily on domestic raw material reserves during the war to meet peak production requirements. The following table prepared from some recent confidential reports for the Secretary of the Interior discloses the depleted natural resources of the United States, and emphasizes the need for conservation measures.

We could safeguard and conserve our strategic material reserve in postwar years which are now at a minimum level, by importing from abroad to meet ordinary annual production requirements. The U. S. S. R. has tremendous reserves of many materials which the United States will urgently require after the war. A reconstruction loan to the U. S. S. R. will give the means whereby we can conserve our natural resources for the next two generations, by utilizing Russian reserves. The U. S. S. R. could provide substantial quantities of stra

tegic raw materials for an annual basis within 5 years after the close of the war as indicated in the following table:

Metals and metallic ores

Manganese, tungsten, graphite mica, chrome, mercury, iron

ore, platinum, copper.

Timber and wood products

Petroleum---

Oils and oilcake..

$80, 000, 000

45, 000, 000

50, 000, 000

10, 000, 000

15, 000, 000

Other industrial raw materials__.

Total.

200, 000, 000

Repayment schedule for advance of $10 billion credit for 35 years at 2 percent1

January 10, 1945: Two originals and three copies to Secretary's Office; copies to Luxford and DuBois.

HDW: HG: AFL: JEF: SG: rl January 10, 1945.

MARCH 7, 1944.

To: Secretary Morgenthau.

From: Mr. White.

Subject: Proposed United States loan to the U. S. S. R.

The following memorandum is in reference to your request that the feasibility of the etxension of a large credit to the U. S. S. R. in exchange for needed strategic raw materials be explored. Your opinion that such arrangement might well be feasible appears to us to be supported by our study of the possibilities. 1. Recent confidential reports on our raw material resources prepared for the Under Secretary of the Interior disclose an increasing dependence of the United States on foreign sources of supply for strategic raw materials because domestic reserves have been seriously diminished or virtually depleted.

2. The following table indicates the extent of United States current reserve supplies for some important strategic materials which can be produced in quantity in the U. S. S. R., in terms of prewar and current war, domestic requirements: