Dáil Éireann debate -
Tuesday, 5 Jul 1949

Vol. 117 No. 1

In Committee on Finance. - Alginate Industries (Ireland) Limited (Acquisition of Shares) Bill, 1949—Second Stage.

Mr. Blowick

I move that the Bill be now read a Second Time. In order to explain the general purpose of this Bill it is necessary to outline the circumstances which have led to its introduction. My Department has had associations for the past 12 years with a British firm named Alginate Industries Limited. This firm has been engaged in the extraction of Alginates from seaweeds since 1936, and all this time has been a buyer of Irish seaweeds, the gathering and transport being organised by Gaeltacht Services and the material being shipped in the air-dried state to Scotland for processing.

Early in 1946, the company decided to form an associate Irish company the better to ensure their supplies of these vital raw materials. It was considered essential for that purpose that the new company should have strong Irish representation. Plans were made for the Irish company to engage in the purchase, sale and shipment to the British company of air-dried sea-rods. Later in the year 1946, the English company became interested in Ascophyllum (rock-weed) as a supplementary raw material for the production of a kind of alginate which would cater for certain markets which could not be satisfied out of the limited annual production from sea-rods in Ireland and Scotland, and it was decided to set up a plant in Connemara to dry and mill the weed instead of shipping it unprocessed from this country. The Irish company was incorporated in February, 1947, with a capital of £6,000, of which 51 per cent. was subscribed by an Irish interest. A site for the drying and milling plant was acquired at Kilkerrin, near Carna, and close to the largest Ascophyllum belt in Europe. An agreement was concluded between the Irish and English companies for the sale and purchase of seaweeds whether in their air-dried or milled states and provision was made for the supply of machinery and technical assistance by the English company. The milling factory was completed in February, 1948.

While the factory was in course of erection the position developed that certain chemicals required for the processing of Ascophyllum weed were no longer available to the English company and that, therefore, milled Ascophyllum weed would not be required for the time being. The Irish company was, therefore, asked to substitute for the agreement to supply milled Ascophyllum weed one for the supply of milled sea-rods for the production of which the milling plant was also suitable. At the same time, it was found that the capital of the Irish company was insufficient and would have to be increased to £10,000, in which increase it would be necessary that the Irish partners should participate so as to keep their share up to 51 per cent. While these matters were awaiting settlement a change occurred in the ownership of the Irish interest, and in March, 1948, the Irish partners asked to be released from participation in the Irish company.

My Department suggested to the English company that a new manufacture licence under the Control of Manufactures Act should be applied for to enable the English company to get complete control of the Irish company subject to its subscribing for the majority of the shares. The English company, while being of opinion that such a course might be feasible and to some extent advantageous in the case of the milling of the Ascophyllum weed which is found in close proximity to the factory, could not agree that there would be any advantage in the case of the milling of sea-rods. Having regard to the cost of transport of sea-rods from far and near points of the coast to the factory such milling could, it asserts, be done as cheaply and more conveniently after direct transport to Scotland at its plant there. It should be remembered that the milling of sea-rods here had been proposed only to replace the milling of Ascophyllum weed until its use could be resumed.

We decided to take up the interest in this project and ask for 51 per cent. of the share capital by this Bill.

On close examination of this proposal I recommend it to the Dáil for acceptance, for the following reasons:

(a) Unless it were adopted, it seemed certain that the rod-milling industry would be lost to the Gaeltacht. Recent indications show that the Ascophyllum scheme may be revived in two or three years' time. Failing participation in the Irish company by the Department, the obvious and most economical course for the English company would be to close the Kilkerrin factory and revert to the direct shipment of sea-rods to Scotland. The factory could be reopened on the revival of the Ascophyllum scheme.

(b) The sea-rod industry is regarded as the one showing the best prospects of the Marine Products Industries. The uses to which the products of the sea-rods are put are such that it appears that the demand for these will be lasting, will steadily increase and will be a valuable source of income to the men engaged in the industry on the western seaboard. The collection of sea-rods has been increased and approximately £12,000 will have been paid to the gatherers for the past season's harvest.

(c) It is estimated that the working of the factory will mean the distribution of an additional £9,000 in respect of wages, turf, and services rendered locally.

The Bill now before the House accordingly asks for authority to expend a sum not exceeding £5,100 in the acquisition of shares of £1 each in the Irish company.

Section 1 of this Bill is self-explanatory. With regard to Section 2, the capital of the company, at present £6,000, is to be increased to £10,000 as already stated, and this section provides for the acquisition of 51 per cent. of the increased capital of £10,000, so that the majority holding will be in the name of the Minister for Lands. Section 3 deals with the powers of the Minister in respect of his shares. With regard to Section 4, it will be necessary that the Minister should be represented on the board of the company, and this section accordingly provides for the nomination of nominees and their powers and functions. Section 5 is required because a Minister of State as a corporation sole is not a qualified person under the Control of Manufactures Act, 1934. Sections 6, 7 and 8 are self-explanatory.

Mr. Derrig

I have had no previous information in regard to the circumstances which have given rise to this proposal. The Minister has referred to the Control of Manufactures Act. As the Minister knows, the object of that Act was to preserve the majority ownership of concerns in which foreign capital participated in the possession and under the control of Irish nationals. In the alternative situation of a monopoly being created which it was impossible to arrange for except by special arrangements with a foreign company the general procedure was to arrange for the setting up of the industry in question by means of the usual negotiations and the exchange of correspondence—and the agreement generally arose out of this correspondence.

One of the issues that arose was, generally, whether the industry should remain permanently in the control of the originating syndicate or company or whether provision should not be made that it would ultimately pass into the hands of the Government here, if they considered it necessary to acquire it—either to run it directly by the State, which was not generally the object sought after but, if necessary, if it was considered desirable in the national interest that it should be acquired, to set up perhaps a semi-State company to take it over. In this case the original Irish subscribers have dropped out, leaving the Minister in the position in which he thinks the only solution is that he should come in directly and replace them to the extent of 51 per cent, of the capital. If that is the best arrangement that can be made the Minister should perhaps take steps to ensure that since the fact that he is now to participate in the business must necessarily mean, if the circumstances are as propitious as he states, that it is going to have a prosperous future and, with the State behind it—unless the market for these materials collapses in some way or unless there is some extraordinary change in the position—it stands to reason that the industry should be fairly prosperous. I see no reason why the State should not take it over altogether, if necessary. The Minister should at least have it within his discretion to say to the English company that at the end of a certain period— let it be five years or ten years—he should have the option, should he consider it fit, to take over the industry. That is the broad general line, I think, in which the Opposition would approach the matter, though we have not had an opportunity of discussing it as it was only circularised last Thursday, I think. Nevertheless I think that that is the general line in which we would approach this question.

This is rather a new position. We have heard a great deal about State and semi-State Companies. Whatever the case might be for the Gaeltacht industries branch taking over this industry altogether or setting up a company—such as, apparently, is being done under the Newagency Bill—for the specific purpose of taking it over, for a Minister to go into a company which has hitherto been run as a private concern, and to act as partner with a company from outside, is rather a new departure. The moneys to be raised shall be advanced out of the Central Fund. I take it that the control which the Minister will exercise under this company, through his nominees on the board, will mean that the operations of the company will come up here on the annual Estimate for discussion. Will they come up?

Mr. Blowick

No, that is not intended.

Mr. Derrig

Then, if the operations of the company do not come up, it means that once this legislation is passed the House has really very little control. I can understand the position in the case of the Electricity Supply Board where the Oireachtas, having given the Minister certain powers and having given the corporation which it has set up power to raise capital, does not propose to interfere in any way or, in the case of the Minister who has been responsible for a certain overall supervision, to have the work of the corporation brought in here under review. That was the object in keeping these semi-State corporations in the particular category in which they are. However, this is not quite in that category, because it is not being run by an independent board outside. The Minister is definitely appointing nominees on this board. Presumably these nominees will represent the Minister and the Minister's point of view on the board and in the company. If they do not do that, of course, this has no meaning. To that extent I think it is legitimate criticism of the proposal if the intention is that the operations of the company or the actions of the Minister in regard to it should not come before the House for review, to say that that seems to be not in line with the policy of having a direct nominee of the Minister on the board, the Minister being directly responsible really for the majority control and management of it. Apart from the fact that that is so, it is an industry, apparently, of importance. I do not know whether it is going to be of benefit to other areas as well as Connemara. I presume that all maritime areas where these algæ are available may benefit. According to the figures the Minister has given, the industry must be of very considerable value at present—the sea-rods part of it, at any rate—to the district where it is established. If these figures are any indication, and if it can expand from the present figures, it should be a very important matter for the Gaeltacht and the Western seaboard areas generally. The only possible control the House will have if it is not entitled to discuss the operation of the company or the actions of the Minister regarding it on his annual Estimate would be under sections 6, where the Minister undertakes to lay the balance sheet and profit and loss account before each House of the Oireachtas. These documents mean very little sometimes as a balance sheet and a profit and loss account give only the bare figures and the House would be entitled to more information by way of a report, say, of the operation of the company during the year in question.

A balance sheet and profit and loss account does not give any information beyond what actually happened during the year, the receipts, expenditure, profits, the amount paid in wages and so on, but no information, for example, as to the future prospects of the company or any plans the Minister might have in mind for its expansion. In fact, we get very little information through this device—we may call it a device—for advancing money for the shares of the company out of the Central Fund. It means that the House will have no control if what the Minister said is correct that it will not be in the position to ask questions on the annual Estimate. I agree that it is not necessary to go into details. I do not think that anybody on this side of the House—although again I want to say that we have not discussed the matter—would think it desirable that we should go into details of administration, but there is a principle involved. As the Minister is governing it as being the major shareholder in the company and as we are asked to pass legislation to devote money to the purpose, I think we should be entitled on some occasion or other to information. If the Estimate is not considered appropriate because of an entirely new departure, I think that an opportunity for discussion should be given on some other understanding. I wonder could the Minister state definitely whether the seaweed meal has anything to do with this project or whether it is simply confined to the two species to which he has referred, the sea-rods and the other.

Mr. Blowick

I will admit, perhaps, that my opening statement was not as explanatory or did not convey as much information to the House as Deputy Derrig and I am sure other Deputies as well would like. The whole thing goes back to an accidental discovery, I think about seven or eight years ago, when a perfectly new series of by-products was discovered—and it is still a closely guarded secret—by one or two persons in England who were fortunate enough to make the discovery. In order to find the most suitable raw material for this substance alginic acid, they tried several raw materials and after long and careful searching, they found that sea-rods were in most plentiful supply and gave the best quality finished product. It is right also, I think, to inform the House that, as far as our information goes, the greatest field for sea-rods exists off the west coast of Ireland. Next to it, there are only two other fields in Europe, one off the coast of Norway and one, which is not as good as the one on the Irish coast, off the west coast of Scotland. These sea-rods as distinct from the Ascophyllum or ordinary bladder weed, with which anybody who has ever gone along the seashore is quite familiar, have promised to provide the best raw material for the industry. These people came over here and formed a little company about two or three years ago. They set up a little factory in Kilkerrin in Connemara, for the kiln drying of the rods.

The sea-rods, I might explain, come up from the sea after a period of storm. They grow at a depth of about six fathoms out from the shore. They are torn loose by the storm and they are heaped up along the whole coast from Kerry to Donegal, but particularly in Connemara, where the nature of the seabed, apparently, is particularly favourable for their growth. They are pitched up by the waves and lie in piles on the beach. They went to loss since the kelp industry faded out. The people along the seashore gather them and place them out on walls or other suitable drying-places. They are purchased by Gaeltacht Services in an air-dried state, that is, when they are fairly dry and have lost a great deal of weight but are still flexible and cannot be used for meal in the factory to produce alginic acid in England. The searod industry has taken the place of the general seaweed industry, but one should not lose sight of the fact that experiments are being carried out as to how to utilise the bladder weed or Ascophyllum, which is more plentiful along the coast as the sea-rods can only grow in certain depths, 18 feet, while the bladder weed, Ascophyllum, grows every place along the coast where the tide rises and falls and could be gathered in enormous quantities. So far the experiments have not been very successful in finding a good raw material to replace the sea-rods, but it is hoped that some method will be found of utilising the bladder weed.

Deputy Derrig asked whether the industry is likely to succeed or whether there are any snags ahead. Of course, nobody can dip into the future but, as far as we can see, there is every prospect that the industry will grow and flourish. Three thousand tons were sold at £4 per ton by the people along the coast who, unfortunately, have small holdings and are not well-equipped to go to sea to fish and supplement their income in that way. I think I am not exaggerating when I say that not a third or a quarter of the total harvest of sea-rods has been gathered at the present time because the thing is only in its infancy. At least 10,000 or 12,000 tons of sea-rods are available on our west coast. I do not know about the south, but Deputies in the House can take it that everywhere on the bed of the ocean between Kerry and Donegal where there is the suitable depth of six fathoms, sea-rods are thrown up on the shore. Sometimes, however, the vagaries of the current bring as much out to sea, causing their irretrievable loss, as is cast up on the shore and which can then be dried and stacked.

A nice income, something like £12,000, was distributed last year as the price of the air-dried rods. It is not a very big sum, I admit, but seeing that the industry is only in its infancy and shows every sign of growth rather than of diminishing, it is a useful sideline for many of our people along the sea coast who have not a very good means of livelihood without it. On the question of control the Minister will appoint nominees to control the company and as usual will take a controlling interest. We are taking 51 percent. of the capital which assures us the necessary control we want under the Control of Manufactures Act.

Section 6 will ensure that the accounts and balance sheet of the company will be laid on the Table of the House each year as is usual in such cases as these. Also I cannot see any reason why any matter connected with this company or industry should be concealed by the Minister. There is not a great deal to it. The factory will be one to kiln dry sea-rods into suitably fine meal and to ship it as fine meal across to the factory in England. There will be a certain number of workers employed—we anticipate anything from 12 to 20—and a certain amount of turf will be used as the most suitable type of fuel and which has produced good results so far. The turf will run easily into 1,000 tons a year and will give a certain amount of employment to those with suitable bogs in the locality as has happened in the last year or two. I cannot visualise any Minister refusing information even if in the course of debate Deputies stray from the point. I cannot conceive any Minister refusing information about this company, but if a Minister should do that the Deputies will have the all-powerful weapon of Parliamentary Question in getting the information desired.

Mr. Corry

It will be ruled out of order.

Mr. Blowick

It may not be ruled out of order.

Mr. Corry

It will be.

Mr. Blowick

I do not think so.

Mr. Corry

Ask the Leas-Cheann Comhairle and he will tell you quickly enough.

Mr. Blowick

That is a matter for another day. The whole industry is not a very big one and I cannot imagine anything that a Minister would conceal apart from the fact that it is a bad practice for a Minister to conceal any information whether for or against it.

Mr. Corry

If the Minister would allow me for a moment I would call his attention to the fact that if any question is put down in connection with the Electricity supply Board, the sugar company or any other of these Government controlled concerns it is ruled out of order by the Chair and the Minister would not then be allowed to reply, even if the Deputy succeeds in getting that far.

Mr. Blowick

I see Deputy Corry has some experience of running foul of the Chair.

Mr. Corry

Those are the facts.

Mr. Blowick

In any case the accounts will be laid before the House and local Deputies will know exactly what is happening just as in the case of the beet industry and others. There are no snags and things will just take the shape and course of similar companies. I recommend this Bill to the House. It will provide a valuable industry for the western seaboard and if the supply of rock weed can be treated so as to yield the necessary raw material for this industry quite a big expansion is ahead. I hope it will not fall on evil days as did the kelp industry for the production of potash because of reasons outside our control. I think kelp is coming into its own and cannot be replaced for this purpose.

Question put and agreed to.

An Leas-Cheann Comhairle

Committee Stage when?

Mr. Blowick

Will the House give me all stages this evening?

Mr. Derrig

I do not think so. I have not had an opportunity of discussing this with the members of my Party. Personally my attitude is that if the House is supplying money for the company there should be some opportunity for the House to discuss the operation. I think the alternative is that the Minister should endeavour to transfer the whole thing to private enterprise. I would like, therefore, an opportunity of considering whether we might not put down an amendment to that effect. If we decide not to put down an amendment I will let the Minister know to-morrow.

Mr. Blowick

I take it that the Deputy's suggestion is that the Minister should not have the 51 per cent. interest but that the company should be purely a private affair.

Mr. Derrig

I think the Minister should be responsible to the House.

An Leas-Cheann Comhairle

Will the Minister put down the Committee Stage for another day?

Mr. Blowick

Thursday next. I want to get the measure through the House because I am very anxious to go ahead with this project.

Committee Stage ordered for Thursday, July 7th.