Lead And Zinc--The Informal Producer's Cartel

To many people, the word cartel implies illegality. However, although it is illegal in the US, cartels are an effective and legal way to conduct business elsewhere in the world. But be-fore we continue, what is a cartel? The American Heritage Dictionary defines a cartel as "a combination of independent business organizations formed to regulate production, pricing, and marketing of goods by the members." However, that definition does not fit many of the "cartels" we are examining today. The International Tin Council is an organization of both consumer and producer nations--no individual companies are represented. The buffer stock is used by the ITC to provide protection for both producers and consumers, and has only been in effect since 1955. (Earlier tin producers groups date back to 1921 when the Federated Malaysia States and the Netherlands East Indies formed the first intergovernmental tin agreement, known as the Bandoeng Pool, which only lasted three years.) The International Bauxite Association only dates back to 1974 when seven nations--Australia, the Dominican Republic, Ghana, Guinea, Guyana, Haiti and Jamaica--agreed to three main objectives: 1) to promote the orderly and rational development of the bauxite industry; 2) to secure a fair and reasonable return on the raw material for the benefit of the nations' citizens; and 3) to safeguard the interests of member countries in relation to the international bauxite industry. 1 Again this organization is composed of nations, not separate firms. This generally follows the pattern that the oil producing countries (OPEC) chose since the nations' mineral product-ion is controlled and often owned by the state. However, the group I am going to discuss fits the more classic mode of a cartel. The informal lead-zinc producers' cartel can be dated as far back as to Roman times when Romans are said to have imposed a quota system on British lead production to safeguard their Spanish lead mines. Also, the lead-zinc producers group is composed only of individual companies, not do not include any lead-zinc consumers. Finally, the activities of the group are not open to public scrutiny, and details are only now available due to a leak in the Australian government. At this point, it is necessary to split the two metals since while many of the members of the cartels produce both lead and zinc they do have different histories and marketing arrangements.