EXHIBIT A.-Korea Shipping Corp., Pusan, Korea, iron scrap export to Japan since 1950 Chonkwang. Winsor.. Iljin Iljin.. 1 Total, 21,045 metric tons. NOTE. This report is complete up to and including Aug. 24, 1951. From this date up to Sept. 4 there is about 7,000 metric tons now loading or in transit to Japan. VII. TRANSPORTATION A. PORTS AND PORT FACILITIES A briefing on Republic of Korea ports by the Army Port Command in Pusan indicated that only four ports could be considered for the loading of any scrap purchased by the United States Government. These ports are listed below. Three were visited; the fourth (Yosu) was surveyed by small plane. 1. Pusan. The principal port in Korea for the movement of military supplies. It is currently handling 650,000 metric tons per month. Estimated port capacity has not been reached, but a further increase in tonnage will be possible when equipment shortages and internal distribution problems are overcome. The harbor is well protected and affords ample deep-water anchorages. There are three cargo piers ranging from 383 feet to 475 feet in width, which will berth 19 Victory ships, three quayways for LSTS, and an additional pier which has been reserved for rail-water passenger-transfer. All piers are solid fill-in down the center with stone facing. Each has adequate rail spurs. Five additional Victory ships can be worked in the stream. Scrap has been and is scheduled to be loaded by barge in this port. For instance, Korean shippers have loaded several ships for Japan, the Lipsett Co. has outloaded 7,500 long tons for the United States and the Pacific Island Scrap Co. is planning to lift approximately 8,000 long tons. This method of loading, however, is time-consuming and expensive and is used only when piers are not available. In this connection, it is pointed out that in Pusan the loading of scrap at piers, which are in a congested area, is dependent upon the volume of military and civil-assistance cargo that must be handled through the port. In the past the Army has not permitted commercial interests to outload scrap over the piers and has even directed that Army-generated and battlefied scrap be transshipped to Japan via the port of Masan; some 40 miles from Pusan. Since there appears to be little likelihood of any appreciable decrease in inbound cargo, any scrap loading would have to effected in the stream during the forseeable future. 2. Masan-An Army port with Quartermaster and Ordnance salvage units to make limited repairs on equipment returned from battle areas, or to process such equipment for shipment to Japan whenever major overhaul or us of component parts is economically feasible. In addition, brass shell cases, metal containers, and fiber shell cases are shipped to the United States and Army-generated scrap to Kobe, Japan. The port has two solid-fill-in piers capable of berthing a total of two Victory and one C-1 type ships. Each pier has a rail spur down the center connecting with a single-track railroad that joins up with the Pusan to Seoul main line at Samnangjin. There is also a quayway for LST's and barges, and five deep-draft anchorages where ships may be loaded. The port is currently handling about 110,000 metric tons per month with a relatively small increase in Army personnel and equipment. The mision considers this an excellent port to out load any Republic of Korea scrap that may be purchased by the United States Government, and believes that such shipments could be loaded dockside if properly coordinated with the Army. The port area is not congested, and a convenient location for accumulating and/or preparing scrap for shipment could be found without difficulty. 3. Yosu-Not under Army Control. Port is used primarily for unloading Civil Relief in Korea (CRIK) supplies, which consist mostly of grain, coal, lumber, and fertilizer. It has a protected harbor, unlimited anchorage for deep-draft vessels, and would be ideally suited for barge operations were suflicient barges available. Port facilities, otherwise, are good and include six deep-water berths (Victory ships), and a long quayway for LST's and barges. However, ships must be lightened to 21-foot draft to berth because of silt accumulations. Berths have adequate rail spurs, and a fair single-track railroad connects Yosu with the Pusan to Seoul main line at Taejon. The use of this port, however, is not recommended for the loading of United States-purchased scrap because (a) there would be little likelihood of Army supervision, (b) the port is within guerrillainfested territory, (c) ships would have to be topped off at other ports or barges would have to be obtained for loading in the stream, and (d) the diversion of rail equipment to carry scrap a considerable distance off the main line would naturally reduce the over-all availability of railroad cars. 4. Inchon-An Army-operated port used for the discharge of military supplies. It has a wide outer harbor with ample anchorage for deep-water vessels and a tide range of 31 feet. The inner harbor has considerable bulkheaded shoreline but its use is restricted to barge and landing craft operations. Excessive tide changes, however, sometimes leave craft high and dry for approximately 15 hours a day. There is also a tidal basin with a capacity for eight Maru type vessels, or seven LST's, but it is now used only for lighterage as the locks have not been completely restored. In any event, it is believed that the width of the locks will preclude the passage of Liberty ships into the basin. With present lighterage the average tonnage handled will approximate 8,000 metric tons per day. The port has adequate rail trackage and a single track access to Seoul. In addition, a single track, narrow gage line crosses the Seoul to Pusan main line and connects with Suwon. Although a major portion of available scrap is in the Inchon-Seoul area, the mission does not recommend the use of this port for the shipment of Government-purchased scrap. Some relatively small shipments have been made by Korean dealers but it is considered inadvisable and expensive to tie up a large ship over the period that would be required to load a full cargo. It is deemed much better to ship scrap by rail, after proper preparation in the area, to Masan where dock facilities are available. B. RAIL FACILITIES The railroad system in Korea is operated by the Korean National Railroad under the supervision of the United States Army, which schedules movements and allocates space. The condition of its tracks and roadbeds is good considering that there has been little maintenance effected since 1945. While much equipment has been damaged or wrecked, a considerable number of units have been restored, or shipped in by the Army and the system is meeting present requirements. However, further extension of the fighting front might well result in a greater demand for rolling stock. The only double-track line runs northwest from Pusan through Taegu, Kumchon, Taejon, Chochiwon, and Suwon to Seoul and carries the bulk of military traffic. It has been estimated that this line can handle 2,000 cars a day if they are promptly unloaded. Other important lines are: (1) A single-track line from Pusan north to Yongchon, thence northwest to Wonju via Andong, Yongju, Tanyang, and Chechon. Originally, this line continued to Seoul but war damage has made this section inoperative. It has extensions to Pohangdong and Mukpo on the east coast, and is linked to the Pusan to Seoul double-track line by connections running from Taegu to Yongchon, and Kumchon to Andong. (2) A singletrack line connecting Chinju and Masan (near Pusan) with the double-track Pusan to Seoul line at Samnangjin. (3) A single-track line from the port of Yosu on the southern coast to Kunsan on the west coast via Chonju and Iri and thence to Chonan on the Pusan to Seoul double-track line. (4) A single-track line running from the port of Mokpo north through Iri to Taejon on the Pusan to Seoul double-track line. (5) From Seoul there are single-track lines west to Inchon, north to Susack and Munsan, north to Uijongbu, and northeast to Chunchon. In connection with the above it is pointed out that all large accumulations of scrap are in cities with rail connections. Rail rates for shipping scrap are (1) under military contract with the Korean National Railroad, 660 Wan ($0.11) per kilometer per car and (2) the commercial rate of 855 Wan ($0.1425) per 100 kilometers per ton. C. HIGHWAY FACILITIES Highways in Korea generally follow the rail lines and are comparable to the poorest country roads in the United States. They are usually a lane and a half wide with a very poor surface. The exception is the highway from Seoul to Inchon, which is hard-surfaced, wide, and in good condition. 1. Korea D. STEVEDORING RATES FOR LOADING SCRAP (a) Army contracts with commercial stevedoring companies in Masan' but does not require miscellaneous labor or equipment. Rates charged are: At dock, 900 wan or $0.15 per metric ton; in stream, 1,980 wan or $0.33 per metric ton. (b) Commercial rates at Pusan are: At dock, 4,000 wan or $0.67 per metric ton; in stream 11,000 to 12,000 wan or $2 per metric ton (includes lighterage). No scrap has been loaded by the Army in Pusan. However, it is believed that similar rates would apply. 2. Japan (a) There is no commodity rate in Army contract covering Kobe and work is done on a man-hour basis. Cost of unloading one ship with 1,595 metric tons and 4,770 measurement tons was $1.3415 per metric ton or $0.449 per measurement ton. (b) Commercial rate 250 yen, or $0.6944 per revenue ton. 3. San Francisco Commercial rate approximately $3 per revenue ton. E. WATER RATES FOR THE TRANSPORTATION OF SCRAP 1. Korea to United States 2 (a) By MSTS (FIO): Pusan to San Francisco, $23.04 per metric ton '; Masan to San Francisco, $23.22 per metric ton. (b) By commercial vessel (berth terms) on per long ton basis (Trans-Pacific Freight Conference of Japan), Pusan or Masan to San Francisco, $19.75. (c) By commercial charter (FIO): Pusan or Masan to San Francisco, $18 per long ton (at current rate of $153,000 for 8,500 long tons-more or less— which would allow 25 days loading and unloading time). 2. Japan to United States (a) By MSTS (FIO): Kobe to San Francisco, $21.35 per metric ton'. (b) By commercial vessel (berth terms) on a per long ton basis (TransPacific Freight Conference of Japan: Kobe to San Francisco, $16.25 per long ton. (c) By commercial charter (FIO): Kobe to San Francisco, $14.12 per long ton (at current rate of $120,000 for 8,500 long tons-more or less-which would allow 20 days loading and unloading time). F. COMPARISON OF SHIPPING COSTS-KOREA TO UNITED STATES (In calculations, 1 long ton of prepared scrap equals 45 cubic feet, or 8,500 long tons, an average shipload, equals 9,563 metric tons). 1. If cargo is loaded under Army stevedoring contract at dock in Masan, lifted by MSTS vessel and discharged at commercial stevedoring rate in San Francisco: 2. If cargo is lifted at dock in Masan by commercial vessel on berth terms and delivered to San Francisco: 3. If cargo is loaded at dock in Masan under Army stevedoring contract, lifted by chartered commercial vessel, and discharged at commercial stevedoring rates in San Francisco: 4. If cargo is purchased f. o. b. vessel in Pusan and delivered by chartered commercial vessel to San Francisco: Stevedoring at Pusan_.. Transportation by chartered vessel__ Total Cost per long ton_-_ $153,000 28, 689 181, 689 21.38 No 5. If cargo is lifted by NSA or MSTS vessels at out of pocket expense. such cost figures were available in the area. However, it can be assumed that the transportation cost per long ton, when computed, will be substantially below the costs shown in 1, 2, 3, and 4 above. G. AVAILABILITY OF VESSELS TO LIFT SCRAP 1. Korea to United States. Commercial steamship companies probably will not want to divert their "berth" vessels to Korea to lift scrap. However, sufficient commercial vessels are said to be on the market for charter. There are also MSTS vessels returning empty or with light cargoes, or NSA vessels in ballast from India to the Pacific coast that could be utilized. 2. Japan to United States Sufficient commercial vessels are said to be on the market for charter and considerable shipping space will be available in berth vessels. As in 1 above, MSTS vessels in Japan or Korea, and NSA vessels from India, could be used. VIII. PACIFIC ISLAND CONTRACT The Republic of Korea, on the 5th day of July 1951, entered into a contract with the Pacific Island Scrap Corp. of 55 Montgomery Street, San Francisco, Calif., whereby it agreed to sell to Pacific Island 100,000 tons of prepared steel scrap at a price of $38.23 per metric ton f. o. b. Korean port, trimmed and stowed. The contract states the intent of sale as the desire of the Korean Government to assure the benefit of the final use of such scrap iron to the United States war effort. The contract further states that the countervalue of the scrap purchased will be in the form of finished steel products to the United States only for consumption. There are certain other factors in connection with this contract which should be mentioned. An agreement was made by the ROK on April 18, 1951, with the Lipsett Co., a scrap salvage concern of the United States, for the sale of 10,000 tons of steel scrap at a price of $16.67 f. o. b. Korean port, with the warranty by Lipsett that the scrap iron would be shipped to the United States. Seven thousand five hundred tons of steel scrap has thus far been shipped to the United States by the Lipsett Co. A representative of the Lipsett Co. told this mission that his company later executed a second agreement with the Korean Government for another 30,000 tons of steel scrap at the same price to be shipped to the United States, but the ROK asked that it be released from this latter contract. Attached hereto, as exhibit A, is a copy on the Pacific Island contract. Certain facts in connection with this contract were brought to the attention of the commission. On August 25, 1951, Pusan, Korea, the mission met with ROK Minister of Transportation, Kim Suk-Kwan, and his assistant. We were shown. the contract with Pacific Island and also the performance bond issued by the Firemen's Fund Insurance Co. of San Francisco, Calif. The mission was then told that our State Department had sent the ROK a wire advising that it was satisfactory that the ROK enter into such agreement. We were shown the wire purporting to come from our State Department and it is annexed hereto as exhibit B. The mission returned to Pusan after surveying scrap in Korea and interviewed Mr. Allen Loren, economic counselor of our United States Embassy, who stated that our State Department did not send a wire authorizing or confirming the Pacific Island contract. Mr. Loren arranged a meeting an hour later with the Minister of Transportation. At this meeting in September 3, 1951, with Mr. Loren present, the minister admitted that this was not a wire from our State 94756-52-8 |