Policy of Partnership

Copper was the rallying cry for both sides in Chile's September presidential elections. The Communists and far leftists clamored to nationalize the huge U.S.-owned companies that produced 545,000 tons of ore and 80% of Chile's foreign exchange in 1963. Eduardo Frei, the tall, scholarly Christian Democrat who won by a landslide, promised to be more sensible about it, but still insisted on more control and a bigger slice of the profits. Last week, after barely seven weeks in office, President Frei announced an enlightened plan to "Chileanize" the industry and make his country the world's No. 1 copper producer by buying into a friendly partnership with the three big U.S. companies.*

A Sympathetic Ear. The cornerstone of Frei's program is a deal to buy a 51% interest in Braden Copper Co., a Kennecott subsidiary that operates the world's biggest underground mine in the Andean highlands 100 miles southeast of Santiago. The Chilean government will pay Kennecott $80 million over a 20-year period for its Braden stock and invest $20 million in the mine. Kennecott will invest another $80 million, and international lending agencies will chip in $100 million, boosting mine production from 180,000 to 280,000 tons by 1970.

In two other ventures, Chile will join Anaconda Co. and Cerro de Pasco Corp. by buying a 25% interest in each of two new companies being formed to work ore deposits in northern and central Chile. The two U.S. companies will put $216 million into the mines. All equipment imported to develop the mines will come in duty-free; what taxes the U.S. companies pay will probably remain stable. If all goes well, Chilean copper production should double by 1970 to 1,200,000 tons annually (with 58% of it refined at home), and Chile's foreign-exchange copper earnings will jump 62%, to more than $300 million annually.

Where Frei will get the money for his three deals, he did not say. But Washington will undoubtedly lend a sympathetic ear. Frei's young government has already received pledges for $125 million in new aid as a measure of U.S. faith in his regime.

Future in Hand. He may have more trouble getting past his own lame-duck Congress, where the Christian Democrats have only 33 of 192 seats. The far left and far right have already started sniping at his legislation to stem inflation, expand farm production, tighten tax laws, and thin out government bureaucracy. But new congressional elections are coming in March, and Frei, who won 55% of the vote last September, has a way of getting his message across to Chileans. "This policy of partnership," he said on TV last week, "represents a true challenge to the Chilean community. It puts our national conscience face to face with the destiny of our principal industry. In the future, what the industry means to our life and our international role will be in our hands."

-Chile now ranks third in production, behind the U.S. and U.S.S.R.

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