Sherritt - Moa Bay Nickel


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 In 1934, the amendment was repealed in keeping with the Roosevelt Administration's "Good Neighbor" policy.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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