OFR-54-88 Estimated Impacts On U.S. Gross National Product (GNP) And Employment Resulting From A U.S. Embargo On South African Platinum-Group Metal Supplies ? Executive Summary

This analysis was conducted in response to concerns raised by the Chairman of the Energy and Commerce Committee of the House of Representatives regarding the potential impacts on automobile production, GNP and employment resulting from embargoing south African supplies of the platinum-group metals, platinum and rhodium. This analysis should be considered an addendum to the recently released study in which the direct economic costs I of a U.S. embargo on selected South African strategic and critical materials are estimated. The estimated GNP and employment impacts result when a mineral shortage reduces domestic industrial production and are in addition to the direct costs estimated in the earlier study. The direct cost to this nation resulting from a decision to embargo six south African strategic and critical minerals was estimated at $1.85 billion per year during the 1988-1992 time frame of the study. The estimated direct costs include the costs to U.S. consumers resulting from higher strategic mineral prices, lower mineral consumption, and the cost of developing higher cost domestic mineral resources. A large proportion of the costs result from the shortage of the two metals: platinum and rhodium. The average direct annual cost of embargoing is estimated at about $1.4 billion for platinum and $384 million for rhodium.2