CAB129-52 — Page 90

CONFIDENTIAL

C. (52) 174

23RD MAY, 1952

CABINET OFFICE RECORD COPY

Page 90

COPY NO.

620

CABINET

COAL EXPORTS

Memorandum by the Secretary of State for Co-ordination of Transport, Fuel and Power and the Minister of Fuel and Power

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Our colleagues will recall that in January last we decided to increase coal exports from 61⁄2 million tons, the amount exported in 1951, to 10 million tons in 1952, notwithstanding that the provisional coal budget for 1952 then showed an appreciable deficit. In the event that decision was justified. Owing to warmer weather, the severity of coal restrictions on householders, and a reduction in industrial activity, a further review at the beginning of April showed that the budget was pretty well in balance on an export of 10 million

2.

*

tons.

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We have since agreed to an increase of this 10 million tons by 500,000 tons to provide for deals with other countries in which more coal would secure important trading advantages, and also to an increase of 175,000 tons in the declaration to O.E.E. C. for the Third Quarter of 1952.

3.

The Cabinet at their meeting on 22nd May asked whether there could be some further increase of coal exports to help in redressing our balance of payments. We should have preferred to have delayed considering this until we had had a few more weeks' experience of our coal results. Caution is particularly necessary in estimating coal prospects in May and June, before the colliery holidays begin and Saturday work is much reduced. Those are usually months of high coal output and low demand, and the emergence of temporary surpluses in the coalfields may give a spurious appearance of coal plenty.

4..

However, in view of the urgency of our balance of payments we have re-examined the coal position and we are prepared to recommend that exports should be increased by l million tons (above the 10 million tons) between now and the end of September, this figure to include the increases already authorised and specified in paragraph 2 above. The increase will entail some risks to our summer stockbuilding

but we think that they may reasonably be taken.

5.

Finally, we must add a warning that although coal supplies in general are better, the prospects for household coal are bad and that for the most part the increased exports will have to be in the poorer qualities of small coal (with some graded coal). If any more large coal has to be exported, it must not be in qualities needed for the house coal market. We should not do anything to worsen the position of the household supplies.

6.

It will be necessary to sell these unattractive qualities of coal to the countries prepared to take them, which is likely to involve some divergence from the normal pattern of exports. If so, we must stress that it will not be possible to find additional supplies of better qualities for sale to other countries that are not prepared to take these particular qualities which alone are now available.

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This 10 million tons represents 8.5 million tons of programmed exports

and 1.5 million tons of slurry, etc.

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