The Carter administration yesterday lifted its nine-month-long moratorium on the large-scale government transactions in metals and minerals that determine the shape of the U.S. stockpile of strategic and critical materials.
The action marked the end of a year-long review of stockpile policy. In essence, the administration reaffirmed the policy, developed under President Ford, to store enough materials in the stockpile to meet U.S. military and industrial needs for the first three years of a major war.
The decision is expected to set off a round of government activity in the metals and minerals markets. The action there is likely to begin after the preparation of a supplemental budget request for increases in the General Services Administration budget to fund government purchases.
The stockpile consists of 93 metals, minerals and other industrial materials stored in 117 government warehouses throughout the country.
The materials enough for the stockpile are those determined by GSA's Federal Preparedness Agency to be of critical or strategic importance during a war or other emergency which would disrupt the flow of foreign materials to this country or slow domestic production.
The current value of the stockpile - which has not changed since President Carter declared a moratorium on stockpile transactions in February - is about $8.5 billion.
By adopting the long-range goals set by the Ford administration, Carter took on a policy which calls for an increase over roughly a 20-year period to a stockpile value of $11.5 billion to today's dollars.
The impact of the decision is larger than it would appear, though, since much of what is now in the stockpile would be sold to meet the long-range goals, and since prices of some commodities can be expected to rise significantly by the time final goals are attained.
The yearly steps the administration will take toward the ultimate stockpile objectives are a closely held secret, both "for national security and to avoid destabilizing the commodity market," said Ed Zabrowski, a GSA spokesman.
Hoping not to disrupt the market, GSA delayed yesterday's announcement of a new stockpile policy until an hour after the commodity markets' close. But because of early rumors of today's action, the timing is not likely to have its intended effect.
"Any time a word is uttered about the stockpile, that tends to make prices gyrate," said Walter Frankland, executive vice president of the Silver Users' Association, an organization whose members use about 30 per cent of the silver mined in this country, Canada and Mexico.
"It doesn't take an action on the stockpile - just a rumor of action has a lot of influence on the prices," Frankland said.
How much the administration wants to purchase this year will not be known until bid invitations are issued, the GSA spokesman said. What the government wants to sell from the stockpile this year will be made public when bills to authorize the sales are introduced in Congress, he said.
One industry likely to be greatly affected by yesterday's decision is the copper industry. Under President Nixon, all the copper from the stockpile was sold. The proposal Carter adopted yesterday calls for an ultimate quantity of 1.3 billion tons of copper in the stockpile.
The copper market has been very weak recently, and prices have been very low. Government purchases, therefore, probably would benefit the industry.
Sources said purchases of some quantities of copper are likely for the current fiscal year.
There are also indications that the tin and silver users will be clamoring for the government to sell some of those commodities. The new objectives for those metals are below the amounts currently in the stockpile.
"The next step is to go to Congress and get them to authorize a release" of silver, said Frankland. He said his organization will recommend that the government sell no more than 1 million ounces of silver a week in order to protect against severe price fluctuations.
One difference between the Ford policy and the one the administration announced yesterday is in how the yearly steps toward the long-range goals will be made.