198 Mr J. A. Lyons, Prime Minister, to Mr S. M. Bruce, High Commissioner in London

Cablegram unnumbered 17 May 1938,

Referring to Sir Earle Page's telegram 1st May, Yampi Sound [1], the following statement will be made by me in Parliament on Wednesday 18th May [2]:-

'After exhaustive consideration of the question, the Government has decided completely to prohibit the export of iron ore from Australia as from 1st July next, and a proclamation to this effect will be issued forthwith.

During the year 1936 the question arose as to the extent of iron ore deposits in Australia suitable for utilisation by the iron and steel industries. Up to this date there was a general impression that Australia was so well endowed with iron ore that there was no cause for anxiety as to the adequacy of future supplies. When the matter came before it, the Government came to the conclusion that on the available evidence it would not be justified in taking action to curtail exports. But, since there appeared to be some ground for doubt, it decided to have the whole matter investigated in order that it might possess the fullest possible data before coming to a final decision.

To clarify the position the Government instructed the Commonwealth Geological Adviser to go thoroughly into the matter and to make a report. In the light of the report which Dr Woolnough has now made-copy of which is appended-the Government is satisfied that the accessible iron ore deposits which are capable of economical development are so limited as to compel their conservation for Australian industrial requirements.

Careful consideration has been given to the proposal that licences should be granted to export limited quantities of iron ore, but the Commonwealth Government has come to the conclusion that such action would be inconsistent with the necessity to conserve Australia's limited iron ore resources.

Although the Government has accepted the advice contained in the report of the Geological Adviser, it is its intention to proceed, in collaboration with the technical officers of the States, with a complete detailed survey of Australia's iron ore resources.

Preliminary steps with this end in view have already been taken, and will be followed up with the utmost expedition. It is estimated that this survey will occupy a period of about two years. It is the sincere hope of the Government that this survey will result in the appearance of some reassuring features. If so, the Government would be prepared to reconsider the decision which has been reached. The advice to the Government at present, however, is of such a definite character that it is felt that there is no option but to impose an immediate embargo.

In reaching its decision full cognisance was taken of recent developments in Australia.

During the early stages of activity at Yampi, no doubt existed as to the adequacy of our iron ore resources and the Commonwealth Government made no demur to the proposed enterprises. It has been only as a result of investigations which have taken place since the beginning of 1937 and which were initiated owing to apprehension expressed by experts, that doubt increasing into anxiety has arisen which has resulted in the decision to prohibit exports.

The Government will be prepared to consider the provision of a reasonable sum to meet equitable claims for reimbursement of any expenditure which has up to this date actually taken place in connection with development operations of the Yampi leases.'

The substance of this statement has been conveyed to the Consul- General for Japan to reach him morning of Wednesday 18th May. [3] Please advise Ministers in London [4], and have action taken in accordance with Sir Earle Page's telegram under reference.

Report of Geological Adviser [5] in my immediately following telegram. [6]

1 Document 195.

2 A revised version of this statement was made in the House of Representatives on 19 May 1938 (see Document 202).

3 See Document 197.

4 Sir Earle Page (Minister for Commerce), R. G. Menzies (Attorney- General) and T. W. White (Minister for Trade and Customs).

5 See Document 197, note 5 and attachment to Document 203.

6 Not printed.

[AA : A981, AUSTRALIA 90]