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 APPROVED FOR RELEASE: 2009/06/16: CIA-RDP01-00707R000200110021-0

People-owned Enterprises (VVB), such as that for potash, or are parts of combines. In the iron and steel industry, for example, the 16 major plants are grouped in 3 production combines centered at Hennigsdorf, Eisenhuettenstadt, and Riesa. These combines are directly responsible to the Ministry.

a. Ferrous metals

East Germany lacks the raw materials necessary to develop a self-sufficient iron and steel industry. Reserves of iron are of poor quality and are nearing exhaustion. There are no commercial deposits of manganese or other alloying materials needed for steel production. A small amount of ferronickel is obtained from domestic ores, and some vanadium is produced as a byproduct of copper smelting.

Raw materials for the iron and steel industry are largely imported, mostly from the U.S.S.R. During 1965-69, East Germany imported 80% of its iron ore; 96% of the imports were of Soviet origin. Dependence on imports increased even further in 1970-71, as domestic output of iron ore dropped sharply to about one-fourth the annual average of the preceding 5 years imports, nearly all from the U.S.S.R., rose to about 95% of the total supply of iron ore in 1970 and 1971. East Germany also imports practically all of its ferroalloying ores and metals. Domestic production of ferroalloys, although supplemented by imports of selected types, is adequate for most internal needs and for some exports. The main producers of ferroalloys are the Maxhuette integrated steel plant at Unterwellenborn and the alloy plant at Lippendorf.

Because of its raw material limitations, East Germany has been able to achieve only a modest rate of growth in its iron and steel industry in recent years. Production of crude steel in 1971 reached 5.3 million tons, an increase of about 1 million tons since 1965. In comparison, Poland, Czechoslovakia, and Romania each increased steel output by somewhat more than 3 million tons over the same period, and Bulgaria increased its output by 1.4 million tons. Among the Communist countries of Eastern Europe with established iron and steel industries (i.e., excluding Albania), only Hungary increased its output less than East Germany did.

Production of pig iron in 1971 (2.0 million tons) was actually 13% less than in 1965, reflecting the decreased availability of domestic iron ore. East Germany is both an importer and an exporter of pig iron. Imports, mostly from the U.S.S.R., have averaged nearly 600,000 tons annually since 1965, and exports, of which a considerable share is believed to be reexports of Soviet origin, have been maintained at an average annual rate of about 500,000 tons since 1965. The principal recipients have been Japan and Western Europe.

Production of rolled steel in 1971 (3.6 million tons) was only 0.6 million tons higher than in 1965, reflecting the modest growth (31%) in steel consumption over the period. Imports have accounted for a slowly rising share of gross rolled steel supplies since 1965 and now amount to roughly half of the total. During 1969-71 imports averaged about 3.3 million tons, of which by far the larger share was obtained from the U.S.S.R. and the remainder from other Communist countries, Japan, and Western Europe. Although still modest, annual exports of rolled steel have gradually increased and reached nearly 700,000 tons in 1971. The principal destinations have been Eastern and Western Europe

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APPROVED FOR RELEASE: 2009/06/16: CIA-RDP01-00707R000200110021-0