48 Mr S. M. Bruce, High Commissioner in London, to Mr R. G. Menzies, Prime Minister

Cablegram 626 LONDON, 2 August 1940,7.17 p.m.

FOR PRIME MINISTER MOST SECRET

Your telegram of 30th July reference nickel. [1] Ministry of Economic Warfare has given me a statement of which the following is a summary:

In December 1939 arrangements were made with the United States to prevent the shipment of molybdenum and nickel to Japan and Russia, arrangements regarding nickel chiefly through the International Nickel Company. As a result apart from deliveries of outstanding 1939 contracts Japan has received no nickel in 1940.

Japan has made both commercial and diplomatic attempt to secure nickel through political offensives chiefly directed against the United Kingdom and Canada. Since the International Nickel Company is registered in Canada with many United States shareholders close understanding regarding nickel is a matter of importance in political relations with the United States and it is of great importance that no nickel should be supplied to Japan save with the concurrence of the State Department.

SPECIALLY SECRET. Most secretly learnt that the Japanese Government has instructed Consul at Noumea [2] to obtain New Caledonian output. International Nickel Company are accordingly being urged to act on the lines indicated in my telegram of 17th July. [3]

Ministry of Economic Warfare consider it possible although unlikely owing to small amount involved that the Commonwealth Government purchase might either lead to Japanese efforts to obtain the remainder of the output or to representations by Japanese to the Commonwealth Government.

Ministry of Economic Warfare suggest advisability of keeping Australian contract secret for the present.

BRUCE

1 On file AA:A981, Trade 87B, 1. It reported that the Commonwealth Govt had contracted to buy 450 tons of nickel matte per month for one year from Le Nickel Co. of New Caledonia.

2 Tokitaro Kuroki.

3 On file AA:A981, Trade 87B, i. The relevant section read:

'Governor to be induced to take over jurisdiction interests of nickel company. Local company to then make contract with INCO regarding total output Matte.

INCO to refine x tons on toll and return local company for disposal as it sees fit perhaps to Japan and INCO to retain y tons.'

[AA:A981, TRADE 87B, i]