210 Duncan to Department of External Affairs

Cablegram 7808 LONDON, 2 July 1944, 12.56 p.m.

MOST SECRET

Uranium Production.

On receipt of your telegram 6051 of 21st June [1] I took up the matter with the Chancellor of Exchequer from whom I have now received reply stating that a fortnight ago he cabled [2] to Mr.

Curtin enquiring what progress had been made and whether any assistance was desired from here, also maintaining that there was little doubt but that the United Kingdom Government would wish to arrange for the purchase of all uranium concentrates produced in Australia.

The Chancellor's letter continues 'I confirm that this project is absolutely essential and therefore one which in spite of the manpower position in Australia we should wish to press the Commonwealth Government to undertake immediately.

The United Kingdom will be prepared to reimburse costs incurred by the Commonwealth Government in development work, it being understood, of course, that any ore produced in the course of this development work would accrue to the United Kingdom Government and that United Kingdom Government would have an option on subsequent production.

I notice that the estimate of A45,000 is provisional only and is subject to considerable increase. Should be glad if the Commonwealth Government would keep the work under very close supervision and advise me of any significant increase in proposed expenditure.

Your Government will no doubt consider it desirable that any commercial firm employed in work should be employed on an agency basis.

While the basis of cost reimbursement is undoubtedly the most reasonable arrangement for this preparatory stage, I prefer to leave open for subsequent discussion the financial arrangements which would govern larger scale operations which this exploratory work may, I hope, show to be practicable. Any such arrangements would naturally have to take account of the initial expense borne by the United Kingdom Government.

I should be glad to be kept fully informed of the progress of the work in view of our great interest. I note that you will also be advising me on the examination of Radium Hill which is to be undertaken shortly.

In communicating this to your Government perhaps you would be good enough to express my appreciation of the promptitude with which action has been taken.'

DUNCAN

FROM SECDOMIN AND BRUCE, 1.24604/03]

1 Document 200.

2 Document 201.

[AA:A3195, 1944, FOLDER, INWARDS MOST SECRET MASTER SHEETS, EXCEPT