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JGR/World Bank
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135839724
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JGR/World Bank
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Records of the Office of Counsel to the President (Reagan Administration)
John Roberts' Subject Files
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Ronald Reagan Presidential Library
Digital Library Collections
This is a PDF of a folder from our textual collections.
Collection: Roberts, John G.: Files
Folder Title: JGR/World Bank
Box: 58
To see more digitized collections visit:
https://reaganlibrary.gov/archives/digital-library
To see all Ronald Reagan Presidential Library inventories visit:
https://reaganlibrary.gov/document-collection
Contact a reference archivist at: [email protected]
Citation Guidelines: https://reaganlibrary.gov/citing
National Archives Catalogue: https://catalog.archives.gov/
world bank
THE WHITE HOUSE
WASHINGTON
April 18, 1983
MEMORANDUM FOR FRED F. FIELDING
FROM:
JOHN G. ROBERTS
SUBJECT:
Congressional Letter Concerning
Compania Minera de Cananea
Six Senators and eight Congressmen have signed a letter to
the President requesting a briefing on financing of the
proposed expansion of the Compania Minera de Cananea copper
smelting operations 20 miles south of the Arizona border in
Mexico. The expansion is to be financed in part by a loan
from the Export-Import Bank and another from the World Bank.
The loans had the support of the U.S. representatives on the
banks, and the signers allege that this violates § 552 of
Public Law 97-121. That section directs the Secretary of
the Treasury to oppose any loans for the production of a
commodity for export if the commodity is in world surplus
and additional foreign production will injure United States
producers. (The signers are from copper-producing states.)
The letter also asserts that pollution from the operations
will enter the U.S. atmosphere.
Ed Harper was given responsibility for a response; you were
given an information copy, presumably because of the assertion
that Public Law 97-121 had been violated. That assertion,
of course, hinges on numerous debatable points concerning
the world copper market, Mexico's domestic use of copper,
harm to U.S. producers, and so on -- Harper's response will
presumably address these factual issues. I see no need for
any action on the part of our office at this time.
ID #. 130702 CU
WHITE HOUSE
F0004-02
CORRESPONDENCE TRACKING WORKSHEET
o OUTGOING
H INTERNAL
I . INCOMING
Date Correspondence
Received (YY/MM/DD)
H
/
Name of Correspondent: Dinsis De Concern
MI Mail Report
User Codes: (A)
(B)
(C)
Subject: Comprehensive briefing by the various agences
involved in the financing of the proposed expansion
Compania Minera de Cananea in Mexico
of the coffer mining and smelting operations of the
ROUTE TO:
ACTION
DISPOSITION
Tracking
Type
Completion
Action
Date
of
Date
Office/Agency (Staff Name)
Code
YY/MM/DD
Response
Code
YY/MM/DD
Co Holland
ORIGINATOR 83,03,29
/
1
Referral Note:
WAT 18
I/A 83/03/29
5 83,04107
Referral Note:
Radule
X 83 103124 KD A 830324
Referral Note: RD letter to D Deconique
1
Referral Note:
/
/
/
Referral Note:
ACTION CODES:
DISPOSITION CODES:
A Appropriate Action
4 Info Copy Only/No Action Necessary
A Answered
c Completed
c Comment/Recommendation
R - Direct Reply w/Copy
B Non-Special Referral
S Suspended
D Draft Response
S For Signature
F Furnish Fact Sheet
X Interim Reply
to be used as Enclosure
FOR OUTGOING CORRESPONDENCE:
Type of Response = Initials of Signer
Code
If
"A"
Completion Date = Date of Outgoing
Comments:
Keep this worksheet attached to theoriginal incoming letter.
Send all routing updates to Central Reference (Room 75, DEOB).
Always return completed correspondence record to Central Files.
Refer questions about the correspondence tracking system to Central Reference, ext. 2590.
5/81
28
Robutes
March 24, 1983
Dear Senator DeConcini:
On behalf of the President, I would like to acknowledge
your recent letter urgently requesting a comprehensive
briefing by the various agencies involved in the financing
of the proposed expansion of the copper mining and smelting
operations of the Compania Minera de Cananea in Mexico.
Please know that we are expediting thorough consideration
of your request in coordination with the appropriate
Presidential advisers. I assure you that the concerns
you have underscored will receive prompt and close
attention.
With best wishes,
Sincerely,
Kenneth M. Duberstein
Assistant to the President
The Honorable Dennis DeConcini
United States Senate
Washington, D.C. 20510
KMD: CMP : sy6-KMD2
CC: w/copy of inc, Ed Harper - for DRAFT response
w/copy of inc, Fred Fielding - FYI
w/copy of inc, Dennis Thomas, Office of Legis. Affairs, Dept.
of the Treasury, Wash. DC 20220 - FYI
w/copy of inc, Stan Hulett, Office of Legis. Affairs, Dept.
of the Interior, Wash. DC 20240 - FYI
WH RECORDS MANAGEMENT WILL RETAIN ORIGINAL INCOMING
JAMES F. MCNULTY, JR.
5TH DISTRICT, ARIZONA
DISTRICT OFFICE
PUBLIC WORKS AND
Congress of the United States
1605 NORTH WILMOT ROAD
TRANSPORTATION COMMITTEE
SUITE 108
TUCSON. ARIZONA 85712
House of Representatives
602/629-6030
INTERIOR AND INSULAR
AFFAIRS COMMITTEE
Mashington, D.C. 20515
March 17, 1983
130702
The President
The White House
Washington, D.C. 20500
Dear Mr. President:
We urgently request a comprehensive briefing by the various
agencies involved in the financing of the proposed expansion of the
copper mining and smelting operations of the Compania Minera de
Cananea in Mexico, 20 miles south of the Arizona border. We had
been led to believe that such financing was not imminent, but recent
published reports indicate otherwise. We further urge you to take
immediate action to suspend U.S. participation in the financing of
this project until the requested briefing and subsequent review
can be completed. The proposed expansion would have serious adverse
effects on the American economy and environment, and we believe U.S.
support for the project, in the form of bilateral and multilateral
assistance, is outrageous and unconscionable, and possibly contrary
to U.S. law.
The estimated $1 billion expansion is to be financed in part by
a $75.7 million capital equipment loan from the U.S. Export-Import
Bank, and a $50 million loan from the World Bank's International
Finance Corporation. The IFC has agreed to syndicate an additional
$400 million for the project. The remaining financing reportedly
has been assembled by Compania Minera de Cananea, according to the
publication American Metal Market, March 7, 1983. Thus, the IFC
loan, which has been delayed pending the company's ability to assemble
the private financing, is now scheduled for disbursement, pursuant to
the IFC Board's approval of the loan on July 12, 1982.
On separate occasions, your Administration has asserted that its
support for the Cananea project is based on a belief that the
increased copper production capacity will assist Mexico in achieving
self-sufficiency in copper.
However, according to figures compiled by the German metal
research center Metallgesellschaft, Mexico in 1980 was a copper
exporter, producing 175,400 metric tons and consuming only 123,200
metric tons. Thus, Mexican copper already has contributed to the
well-recognized international surplus of that commodity, and therefore
has added downward pressure to the world price, further impeding
recovery in the depressed American copper industry.
Letter to the President
Page Two
The improvements proposed for Cananea would increase Mexico's
overall copper production capacity by 100, metric tons per year.
In light of these figures, U.S. support for the IFC loan appears to
be in violation of Section 522 of Public Law 97-121, which instructs
the Secretary of the Treasury to oppose multilateral loans "for the
production of any commodity for export, if it is in surplus on world
markets and if the assistance will cause substantial injury to United
States producers of the same, similar or competing commodity."
Moreover, you should be aware that the smelter at Cananea will
be subject only to the pollution controls required by the World Bank,
which are substantially less stringent than those of our Environmental
Protection Agency. After expansion, the Cananea facility will emit
more sulfur dioxide than all seven Arizona smelters combined will be
allowed to emit under pending Clean Air Act standards. Further, most
of the sulfur dioxide emitted from the Cananea smelter will find its
way into the U.S. atmosphere, as prevailing winds in northern Sonora
are from the southwest. In light of the fact that compliance with
our own environmental laws has cost billions of dollars, we find it
appalling that our government can support such an environmentally
unsound project so close to our border.
We are concerned that the formulation of Administration policy
on the Cananea project appears to have lacked any serious inter-
agency coordination. Interior Secretary Watt has registered his
Department's opposition to the IFC loan in the form of a letter to
the executive director of the World Bank. However, Interior's position,
which reflects the interests of the American mining industry and, thus,
the American economy, was neither sought by nor made available to the
U.S. representative to the IFC Board. The U.S. representative joined
the rest of the board in its unanimous approval of the loan.
We further believe the Administration has displayed a lack of
candor in its official communications with Congress by failing to make
note of the Export-Import Bank loan. This agreement was not mentioned
either in a letter of explanation from Treasury Secretary Regan to
Senator DeConcini, or in testimony from Deputy Assistant Treasury
Secretary Dawson before the House Interior Subcommittee on Mining,
Forest Management and Bonneville Power Administration.
The arguments against U.S. participation in the Cananea expansion
are, in our estimation, forceful and numerous. We will appreciate a
prompt and positive response to our request.
Thank you for your consideration.
Dennis Dennis DeConcini De Concinn James Sincerely, F. McNulty, Jr.
United States Senator
Member of Congress
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Denator
Letter to the President
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