New Co-Prosperity Sphere

From Soviet Russia to Sumatra and across the broad Pacific to South America, Japanese businessmen smilingly signed agreements last week that will guarantee them industrial raw materials for years to come. To the Russians, the Japanese pledged $200 million in pipe and liquefication equipment with which to develop the Okha natural-gas fields of Soviet-held Sakhalin island: in return, 7,000,000 cu. ft. per year of Sakhalin gas will be shipped to Japan. In Sumatra, Japanese oilmen promised to invest $15 million to carry on offshore oilfield drilling; Indonesia will keep 39% of the oil produced, and the Japanese will get the rest. And the Mitsui Mining & Smelting Co. paid $8,000,000 for copper and zinc mines in Peru; next year the mines will begin shipping concentrated ores to Japan.

The entire Japanese economy is at stake in such far-flung horse trades. Despite its industrial strength, Japan is virtually barren of natural resources, depends on imports for 99% of its petroleum, 96% of its iron ore, 85% of its copper and 75% of its zinc. Last year the island nation imported 205 million tons of raw materials, 20% more than in 1964, at a cost of $3.2 billion.

It was mainly to overcome its raw-materials deficit that Japan, in the name of the Greater East Asia Co-Prosperity Sphere, once sent its armies on the march. After World War II, the Japanese turned from the bayonet to the bargaining table in their quest for raw materials, but until fairly recently they have relied mostly on piecemeal purchasing. Now they are moving toward longer-range development projects. Explains Saburo Tanabe, in charge of procurement for the huge Fuji Iron & Steel Co.: "The day of spot purchases is ending. The Japanese must go out and develop untapped resources, because this means stabilized supplies over long periods of time." Among current Japanese ventures:

-For wood products, a Japanese-owned pulp mill in Sitka, Alaska, uses the output of 1,500,000 nearby acres of leased forest, ships home 165,000 tons of pulp a year, presently provides 85% of Japanese imports. Additional sources are being developed in Canada and Borneo.

-For copper, the mineral in shortest supply, the Japanese have signed long-term contracts for the output of mines in Canada, the Philippines, Bolivia. Australia and the Transvaal of South Africa, are now guaranteed shipments of 122,600 tons annually.

-For ore to support Japan's steel industry, the world's third largest, Japanese companies have purchase agreements covering five fields in Australia, have put up $21 million to develop iron sources in India, will get more ore from Goa and Brazil to ensure a total 50 million tons a year. Coke to reduce it will come from Australia.

-For bauxite, Japan has signed a ten-year agreement for 1,000,000 tons a year, to be mined at Cape York Peninsula, Australia.

-For petroleum, the Japanese, besides drilling in Sumatra, are partners in a venture with Kuwait and Saudi Arabia, this year will receive 68 million bbls. from the tri-nation Arabian Oil Co., which is operating in offshore Kuwait.

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