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Chile: Copper Camaraderie

2 minute read

Chile’s President Eduardo Frei and Zambia’s President Kenneth Kaunda have been friends ever since 1960, when they met at Oxford University for a symposium discussing the problems of underdeveloped countries. Lately the camaraderie has revolved around copper, featuring quiet exchanges of missions across the Atlantic on the possibilities of cooperating, rather than competing, in the metal. Last week Kaunda himself flew to Santiago. At the end of two days of talks, the presidential pair announced heady plans for a copper cartel designed to control the free world market!

Chile and Zambia account for about 65% of the copper traded on the free world market, and Kaunda and Frei figure that this gives them enough leverage to dictate prices. On the highly speculative London Metal Exchange, the cost of copper this year has ranged from 98¢ to 44¢ per lb. Basically, Chile and Zambia want to reduce their vulnerability to copper’s wild price fluctuations. The swings have been made especially violent by demand and supply uncertainties resulting from strikes and, not least, the tension between Zambia itself and Rhodesia, which has virtually cut off Zambia’s access to the sea. Similar price agreements have been made—and broken—before. Chile and Zambia have gone a step further, with plans for mutual trade programs and other economic ties.

Frei was quick to insist that the purpose of the deal is simply to end the “distorted exaggerations” in the market caused by speculation, and to assure “a stable and just price.” How the “just price” would compare with the London rate (currently 53¢) will probably not be known until next May, when details of the Frei-Kaunda agreement are to be worked out at another meeting—this one in Zambia. Just to make sure that the policies stick, Peru and the Congo will be invited to join the cartel, and thereby boost its control to 75% of the market.

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