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

Cablegram 681 LONDON, 15 August 1940

FOR PRIME MINISTER

1. Your telegram August 13th. [1] (New Caledonia Nickel) Reference in my telegram 659 [2] to 600 tons was due error in decyphering your telegram July 30th [3] by which it read that you had contracted for fifty tons matte monthly or 600 tons in year. Now clear that contract is for 450 tons monthly.

2. I have been in touch with the Ministry of Economic Warfare who wish to offer the following observations:-

(a) They consider the action of the Australian Government in contracting to buy 5,400 tons of matte from New Caledonia in the coming year as most helpful and of considerable assistance in their policy of denying nickel to the enemy and to Japan.

(b) They understand that production of matte will now be restricted by the Company to 5,400 tons in the next twelve months.

They suggest that towards the middle of this period Mr. Vois [4] might be approached regarding a further restriction of production in the following year.

(c) They understand that this matte will be regarded by the Australian Government as a strategic reserve and will not be placed on the export market.

(d) They would not object to Japan being allowed to exports a total of 25,000 tons of low grade ore per annum, but they would prefer shipments (i) to be spread over monthly instalments; (ii) to be carried in Japanese vessels; and (iii) to be covered by guarantees of non-re-export by the Japanese.

(e) They would be glad to know details of any Japanese reaction to the Australian Government's purchase, and perhaps Mr. Ballard [6], in conjunction with H.M. Consul at Noumea [7], could keep them informed.

BRUCE

1 Document 70.

2 Dispatched 10 August. See file AA:A981, Trade 87B, i.

3 See Document 48, note 1.

4 General Manager of Le Nickel Co.

5 ?import.

6 Official Representative in New Caledonia.

7 W. A. Johnston.

[AA:M100, AUGUST 1940]