Dáil Éireann debate -
Thursday, 15 Feb 1962

Vol. 193 No. 2

Committee on Finance. - Vote 44—Industry and Commerce.

Minister for Industry and Commerce (Mr. J. Lynch)

I move:—

That a supplementary sum not exceeding £170,000 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1962, for the Salaries and Expenses of the Office of the Minister for Industry and Commerce, including certain Services administered by that Office, and for payment of Sundry Grants-in-Aid.

This business is much more down to earth, in every sense of the word, than the higher realms of Poynings' and Yelverton's Acts. The purpose of this Estimate is to provide money to assist St. Patrick's Copper Mines Limited over the coming few months when their resources will be unequal to their commitments.

In December, 1959, I came before the House with an Order amending the Schedule to the State Guarantees Act, 1954, intended to enable the Minister for Finance to guarantee additional borrowing by the Company. It was my hope at that time that further State assistance would not be necessary. It is a matter for concern that I should now have to come to the Dáil for additional assistance and it is necessary for me to explain how this position has come about.

The State Guaranteed Loan was intended to provide for the provision of equipment and the development of the Company's mine at Avoca. The expectation was that the development would open up areas where Mianraí Teoranta had located high quality ore. It was felt that, when these areas had been opened up, the prospects for commercial production would be good enough to enable the Company to obtain money from private sources to finance its continued operation. The Company did, in fact, negotiate in recent months substantial additional private investment but the making of this investment was dependent on the verification by further drilling of the Mianraí Teoranta findings. The Company's preliminary testing failed to substantiate the figures produced by Mianraí Teoranta in certain areas and, accordingly, the offer of private capital was withdrawn. The Company found itself unable to meet its commitments and was faced with the alternative of shutting down or securing further Government aid.

In these circumstances, the Company have approached me for a grant of £240,000 to enable them to meet net outgoings to the end of June. They expect that by that time the major development work which has been responsible for a large part of the drain on their resources, will be beginning to bear fruit.

I need hardly say that this request for such a large sum of money faced the Government with an unwelcome choice. On the one hand, there must be a limit to the extent to which this undertaking can be kept going by periodical shots in the arm involving actual or contingent liabilities to be met from the public purse. On the other hand, regard must be had to the importance to the whole surrounding area of the employment given by St. Patrick's and to the necessity of protecting the State-guaranteed investment already made in the Company. On balance, I feel that there is no escaping the conclusion that assistance should be given to enable the Company to surmount its immediate difficulties. With the concurrence of the Minister for Finance, therefore, I undertook to seek the Dáil's authority to make payments in the current financial year of £170,000 and in the early months of 1962/63 of £70,000.

These sums will be paid against an undertaking that ordinary shares in the Company up to the nominal value of the sums advanced will be vested in the Minister for Finance or his nominee should he at any time so demand. In this way, if this further injection of capital is successful in placing the Company on an economic footing, the State will be able to ensure a due return on its investment.

I am anxious that the House be fully informed so that Deputies may appreciate the position at Avoca, a position that is quite serious. The money which it is now proposed to make available will enable production to be continued for the time being. If further testing does not produce results nearer to the findings of Mianraí Teoranta, or if copper prices decline, or if the further development work encounters new difficulties, the whole future of the enterprise may be jeopardised. The Company have given me an assurance that every effort will be made to keep the mine in full production as long as practicable but the possibility has to be faced that if losses at the level recently experienced continue during the next few weeks, production may have to be suspended in whole or in part until development work has reached the stage where more economic production is possible. This would mean the laying off of a considerable number of workers for a time—probably a few months.

In the long term, the success of the Company's operations will depend on a number of factors such as those I have listed above, as well, of course, as on the securing of a high degree of efficiency and productivity at all levels of the Company's activities. While none of these can be guaranteed, I am satisfied that they can reasonably be expected and that the decision to put further capital, which in present circumstances can only mean public capital, into the mine is fully justified.

I accordingly recommend that the House should approve of the Supplementary Estimate.

Mr. Cosgrave

This Supplementary Estimate will have the support of the House because I think it is generally realised that mineral development is a very speculative business. Nevertheless, as the Minister has said, the information which has been secured from the work already carried out is of a somewhat grave character in so far as the borings that have been undertaken apparently do not confirm some of the earlier borings which were made by Mianraí Teoranta.

However, I should like, if possible, before dealing with that aspect of the matter, to get some information from the Minister to indicate what the actual expenditure has been up to the present on this work. As I understand the position, the original arrangement was that the mine was being leased for a period of, I think, 21 years to St. Patrick's Copper Mines, on the basis that a sum of, in the first instance, £180,000 would be expended and that within a year after the work started, in September or October, 1955, a further sum of £450,000 would be expended, that subsequently it was intended to spend a further £1,500,000 or £1,750,000—I am not sure which— so that there would be a total expendditure of something in the region of £2,000,000 more or less, depending on the actual sum expended in the first couple of years, and that at that stage something like 500 men would be employed.

We are familiar with the fact that a great deal of that work has been carried out and that very large numbers have been employed there. What I am anxious to find out now is if the sum which was originally stated to be invested and spent in this work has actually been invested and expended as anticipated originally. If so, have the borings and work carried out there proved unsatisfactory because the borings made by St. Patrick's Copper Mines do not confirm the earlier work carried out by Mianraí Teoranta, or is it possible from what has been done to differentiate between the work carried out by St. Patrick's Copper Mines and that carried out by Mianraí Teoranta?

One of the problems which I think Mianraí Teoranta experienced there many years ago was that not merely were there deposits of minerals at Avoca but that these deposits contained not one mineral but a number; that there was a little zinc, pyrites and copper and that the difficulty was to segregate these minerals when they were proved, that that involved a special process which was expensive, that not only had the minerals to be located and proved but that subsequently the process of segregating some minerals from another involved extra expense and extra work in the application of the necessary technique through whatever technical or other equipment was required to carry it out. I do not know whether that is still the position and I think the House would be interested to know if it is possible to estimate from the borings carried out whether there are sufficient quantities of these minerals to justify commercial operations and, if so, did the work which has been carried out by St. Patrick's Copper Mines entail new borings or was it a continuation of the borings originally made by Mianraí Teoranta?

Just before the recess, the House passed a Supplementary Estimate to facilitate the development of the project at Arklow for the manufacture of fertilisers and I have no doubt that everyone is most anxious to see that project successful. As I understood the proposal then brought forward, the success of that project depends on the availability of supplies of pyrites from Avoca. I have no doubt we would be glad of an assurance that the project which was envisaged for Arklow will not be jeopardised by any doubts which exist about the future prospects at Avoca.

This whole mineral development has undoubtedly caused anxiety over many years because of its very nature. It is universal experience that mineral development is always speculative and uncertain. Very often, chance happenings result in success, while extensive effort does not fulfil expectations or justify expenditure. It is generally agreed that so far as this country is concerned we have very limited mineral resources. So limited are they that they are in fact of no great consequence. It is important, therefore, that whatever resources we have should be exploited to the full and the maximum effort made to develop them.

Because so much has already been expended on the development of the Avoca mineral deposits, there is sound reason for continuing the work there in order to ensure that no effort is spared in exploiting and developing whatever resources are there to the fullest extent possible. In addition to that, there are now a great many people dependent upon the Avoca enterprise for employment. The development work has revolutionised the whole area by providing a livelihood not merely for those directly concerned but also for their families and dependants. That is a valid reason for ensuring every effort is made to exploit the project to the full. It is disappointing to learn that the borings that have been made have not proved as satisfactory as it was originally thought they would. We all share the Minister's view, I am sure, that these further borings and further exploration work, which it is expected will be concluded next June, will prove satisfactory and justify continued development.

Mineral exploration and exploitation is a very technical matter. It is a matter for experts. It may be that the experts have some doubts but, so far as the Dáil and public opinion are concerned, I have no doubt they will support the maximum effort possible to exploit and develop whatever minerals are there. It is difficult to discover if the work carried out is satisfactory. I can only hope that the Minister and his advisers are satisfied that the highest possible skills are being used. It may not be possible to secure value for money in the ultimate sense that adequate supplies of ore will be located and these supplies developed on a commercial basis. Only time and the expert work done there will prove whether or not that is possible; but the House is entitled to expect that the highest possible skill and technical know-how are used in the exploratory work and that all the necessary equipment is available, so that there will be no limit to the efficiency of the investigations undertaken.

Subject to these observations, we all, I believe, look forward to successful exploration and exploitation of the Avoca deposits. It would be interesting to know whether the borings have revealed any new deposits or revealed any different findings from those earlier available. I mentioned the problem of ores located together and the difficulty of segregation. Subject to that, we would be most anxious to know whether the work undertaken will justify not merely the expenditure, which is considerable, but also, and this is more important still, the high hopes and ambitions of those engaged in this work, plus the employment potential which would guarantee for so many a livelihood for themselves and their dependants.

Mr. Norton

I think there will be quite considerable public concern because the Minister finds it necessary now to ask the Dáil for a sum of £240,000 for the purpose of giving another capital injection to St. Patrick's Copper Mines. If that money were necessary to expand and merchant an assured merchantable deposit, I could understand it and the House would, I am sure, acclaim it because we would then know we were emerging into the main stream and there was a prosperous vista ahead. In introducing this Supplementary Estimate, the Minister has used language which can only cause disquiet. It seems the company is now in a very precarious position. The Minister said: "The company have given me an assurance that every effort will be made to keep the mine in full production as long as practicable". Naturally, when one hears that, one can only assume that the company has reached a pretty critical position. One has to face the possibility that, if losses at the present level continue during the next few weeks, "production may have to be suspended, in whole or in part, until development reaches a stage where economic production is possible". The question as to whether this mine will close, in whole or in part, for a long or a short period will depend upon the losses that have to be faced during the next few weeks.

I do not think anyone will gainsay that this is the first time that warning language has been used and I do not think the Minister will try to conceal that that language is intended to convey that things are pretty critical so far as the heavy expenditure of the company in its efforts to win an economically rewarding type of ore is concerned. I do not blame the Minister for that situation. It is one of the hazards which accompany mining in every part of the world. Mining is a highly speculative business. Many people who have engaged in mining in different parts of the world have often given up hope until accidentally they found a good strike. The "bleak house" of today became the "great expectations" of tomorrow and they lived to pay very substantial dividends to the pioneers, those who were associated with the development of the projects. Of course, not all mines are successful and one may well spend a considerable sum of money in endeavouring to exploit a mineral deposit and find that instead of extracting profitable ore from the ground all one has done is to bury one's own good money there.

I sincerely hope that will not be the position in regard to St. Patrick's Copper Mines. The mineral deposits such as we have involve a substantial sum of money in exploring and exploiting them. The difficulty of exploration and exploitation might be got over if it could be shown that where it was attempted on a substantial scale as at Avoca it had turned out to be a magnificent success. I would therefore regard Avoca as something in the nature of a beacon light which will encourage further exploitation of our mineral deposits in the belief that there were prospects of success which would yield returns as satisfactory as the successful Avoca exploitation could do. If, however, Avoca were to come to the wall and it were necessary to close it down it would probably close for all times any hope of large-scale mineral exploration or attempted exploitation in this country. For that reason, we should help to ward off the possibility of a close down so long as there is a reasonable prospect that ultimately a success can be made of the mine.

We should get this undertaking in something like perspective. My understanding is—I am speaking from recollection—that the company put up about six million Canadian dollars as their portion of the investment. I do not know whether they borrowed privately in addition to that; perhaps they did but I understood their investment was to be something like six million dollars. In February, 1958, the State gave them a guarantee, so far as I can recollect, of £1.3 million. Then there was a second loan of £550,000 in December, 1959, a total investment at that stage of £1,850,000. When the £550,000 loan was made the Minister stated, at column 1103, Volume 178, of the Official Report of the 10th December, 1959:

The Company have expressed the opinion that assuming the price of copper does not fall below £232 per ton (the price ruling at the date of the application for a State guarantee of the additional loan) the carrying out of the new development work envisaged would enable the Company in due time to discharge its liabilities in respect of State-guaranteed loans.

Therefore, when the Minister was asking the House to approve the guarantee of £550,000 he was then satisfied that, provided copper did not fall below £232 per ton, the company could go ahead with the work then envisaged and would in due course be able to repay the loan. I do not know whether copper has held always above £232 since then. I know it has been above it for quite a period but I have not checked it to see whether it fell below that price or not. At all events, the high hopes held out in December, 1959, just over two years ago, that the company could go ahead with the development then envisaged and pay its way do not seem to have been borne out by results because not only is the £550,000 then voted gone but the Minister is back to the Dáil to-day asking for another £240,000. If you take the three injections of £1.3 million, £550,000 and £240,000 now, you will find the State is responsible for £2,090,000 as its share of the investment in St. Patrick's Copper Mines. I quite realise the State has got a mortgage on the assets there that could be valuable and, of course, could be quite useless, because a copper mine that will not pay dividends is a white elephant and is not the kind of commodity that you can dispose of in such a way as to get an adequate return for the assets.

I come back to my point again. All this may be necessary and worth while but we all ought to know what we are doing and we all ought to realise that this whole business in the long run might not justify the high hopes that were first envisaged for it. For instance, I do not understand a phrase used by the Minister in his speech here, that the company's testing failed to substantiate the figures produced by Mianraí Teoranta. If that is so then I take it that Mianraí Teoranta's figures are not capable of substantiation and Mianraí Teoranta's figures are unreliable. If Mianraí Teoranta made a calculation as to the length and mineral content of the ore presumably that was based on a physical examination of the ore and of course, not only a physical examination of the mined ore but a reliable estimate of the extent of the mineralised ore. If St. Patrick's Copper Mines, following on Mianraí Teoranta, do not find the ore to contain the mineral content believed by Mianraí Teoranta to be there then it only proves one thing that an assay of the content of the ore did not justify the reports which Mianraí Teoranta made in connection with the deposits there.

It is hardly possible for people to mistake the mineral content of ore. The specialist can always tell what is the percentage but if one mining company says a certain percentage and the other says: "We cannot find it" then something is wrong; either those looking for it cannot see it or those who said it was there simply overestimated the lead content of the ore. It seems to be an extraordinary situation that Mianraí Teoranta clear out leaving a report as to what the figures of the mineral content are and their successors come in and say: "We cannot find the mineral content you say was there."

I think that needs explanation from somebody. Mianraí Teoranta has since been dispersed. It may not be possible to get any information from it as a body corporate but somebody ought to throw some light on the Minister's speech: "The Company's preliminary testing failed to substantiate the figures produced by Mianraí Teoranta in certain areas and, accordingly the offer of private capital was withdrawn."

I understand the position to be that when St. Patrick's Copper Mines got the £550,000 loan on the last occasion, the intention was to go down underneath the area in which they were mining, to cut under the Avoca River and to mine on the east side of the Avoca River in the hope of finding there ore of higher content than the ore which up to then they had been mining and which had previously been worked upon for exploration purposes by Mianraí Teoranta. I understand they intended to mix the new ore with the old ore so as to raise the percentage of minerals and that they hoped thereby to be able to produce minerals of a kind which would make them economically self-supporting.

If I make anything out of the Minister's speech, it is that they have been disappointed in the mineral content of the new ore which they have been working and on which they have spent a substantial sum of money. Is the frustration due entirely to the fact that the new ore is not better than the old ore and possibly less good or is it due to any subsidence of the old mineral crops on the new area in which the company are now operating or endeavouring to operate? We ought to get a more detailed explanation of what happened between the time they got £550,000 two years ago and the situation in which they come here to-day saying: "If losses are as bad in the next few weeks as they have been in recent weeks, we shall have to close down." We ought to get a more detailed explanation of what brought about that situation. These are mining experts and they ought to know the situation.

What has been the price of copper over the past two years, on average? What has been the value of the production since this company went into operation? Its production date, I think, was fixed in October, 1948. What is the value of the ore produced and exported since then? Could we have, as well, some information as to the value of the pyrites exported, what stock of pyrites is on hands and what is its estimated value? Is there any possibility of realising on that as a means of getting money for the primary task of developing the mines properly?

Would the Minister also indicate the price of the shares of the parent company on the Canadian market—say, quarterly—for each of the past two years? People were induced to buy shares by the higher prospects originally held out in this case. I should like to see what the movement of shares is like in the undertaking as it stands to-day. I should like to hear the Minister's views on some of the points I have raised before this debate finishes. I hope we can get an opportunity of commenting on the Minister's reply, seeing that we are in Committee, because not only is the sum of money very large but the issues involved are critical.

I sympathise with the Minister in having to face the frustration presented to him and to make a case for another £240,000 for this company. We may well have to invest this in order to safeguard what we have already invested. We may have to invest it in order to safeguard the all-over national position of seeing that we can produce minerals here at a rewarding price. At the same time, one must be alert. One must make sure one does not finance a mine emotionally and merely for the purpose of producing an ore here which cannot be sold because nobody in the world wants it. We have to blend our patriotism with a sense of reality. We must make sure that when we put more money into the mine, there seems to be a fairly reasonable prospect that we shall get it back at some time in the future.

Sir Anthony Esmonde

Coming as I do from the side of the country in which the mine is located, although it is not in my constituency, naturally I am very anxious to see the mine kept in existence. I would also draw the parallel that as considerable sums of money are being devoted by the Minister's Department or by industry generally to the Shannon area, it is only fitting that the eastern side of Ireland should get its share for development.

I feel that the Minister has been singularly uninformative. It may be that he has not been able to obtain the necessary details from the St. Patrick's Copper Mines Company. The statement to-day means that this is an insolvent mine which must continue in order to try to reach a degree of solvency. In other words, the State has invested quite a considerable sum of money in this mine. I understand that when this sum is voted by the House, it will be a matter of over £3,000,000. Although it may be desirable that the money already invested by the State should be safeguarded by a further infusion of money, I think this House is entitled, particularly when dealing with a non-national company, to some definite information as to the outlook for the future.

Mr. J. Lynch

How does the Deputy think I can give that kind of information? That is what I am trying to find out.

Sir Anthony Esmonde

The Minister has advisers I have not. I am trying to ascertain the facts. In effect, the Minister has told us that the prospecting already carried out has not come up to expectations. Are they mining at present where they presumed minerals to exist which are non-existent and do they want this money to prospect elsewhere to see if they can get the material to carry on and to export? This House could have been told what they are exporting. Are there regular exports from this country from the mine? Are those exports increasing or decreasing as time goes on?

I am the last person in the world who would like to see this mine closing down. The Minister should definitely give the House some indication of the productive capacity of the mine. Surely, when a company apply to the Department of Industry and Commerce for a sum of money approaching the £250,000 mark the Department is entitled to get some definite details of what the over-all position is? I appreciate the Minister's difficulties. I appreciate the fact that had he not acceded to the wishes of the company in supplying this money they would very likely have to close down. The Minister's expert advisers could have got from them the over-all picture as to what they are exporting and what they are likely to export in the coming months. Are they likely to carry on with the same personnel? Can they say that complete solvency lies ahead of them in the future? I am not criticising the Minister. I am suggesting that whatever information he got from the company seems to have been totally inadequate.

One regards the matter more seriously because of the fact that this is not a national company. This is a foreign company. It may be registered in this country. It was originally started by non-nationals. I understand that the parent firm had considerable financial backing. Has the Minister suggested to the firm that in view of the liberality and generosity of the State they might themselves put money into the firm? These are perfectly reasonable questions for anybody to ask and I hope that the Minister is in a position to give the House that information. If he is not, perhaps, at some future date he might be able to do so by means of replies to Parliamentary Questions.

I support this Supplementary Estimate and will not vote against it but I do not think the House has sufficient information.

Mr. M.J. O'Higgins

I hope that there will not be any question of these mines closing down. The Minister has done the right thing in coming to the House and asking for this money to ensure that for the present at any rate the operations will continue; that the undoubted good employment which is being given in the area by the mines will continue and that there will be a reasonable opportunity afforded of saving, so to speak, the investment made by the State in these mines.

Everyone is acutely aware of the truth of what the Minister mentioned in his opening statement, namely, that there is considerable employment arising out of these mines and that it has had its effect on the surrounding countryside. I should like to get an assurance from the Minister—I hope he is in a position to give it—that there is no question of the danger which has occurred in connection with the mines jeopardising the plans for the nitrogenous fertiliser factory in Arklow which is to be based on the by-products of the mines. I hope the Minister can give that assurance to-day.

Mr. Dillon

Was it understood that the Minister would get this Estimate to-day?

Mr. J. Lynch

I was hoping to get it because of the urgency of the employment position in the mines.

Mr. Dillon

We will give it to-day if the Minister says he requires it to-day, but there are a couple of questions which require to be asked. The information given by the Minister is very restricted. The time has come, in view of the circumstances, when he should give us the history of this whole transaction. My recollection is that the Government of the day had the advice of one or two distinguished firms of mining engineers who advised on that occasion that this was a heavily mineralised area and recommended that the project should be proceeded with. That was confirmed by other authorities. Independent advice of the highest possible quality in the world was called for and secured and recommended this as a desirable development.

The Minister ought to give us a summary of what has transpired since. He ought to tell us how he comes to the House at almost 24 hours' notice and asks us to deal with this as a matter of urgency. Surely somebody must have known about this before the House adjourned so that we would have more time to consider this Estimate than the Minister said he would give us. I should like to ask the Minister——

Mr. J. Lynch

I think it is possible that this Estimate will be adjourned until next week. I have made inquiries now. The company has got certain accommodation that might make the matter of not such urgency.

Mr. Dillon

I am much obliged to the Minister. We may carry this over until Wednesday?

Mr. J. Lynch

In the circumstances, I would not be able to deal with all the points raised by Deputy Norton and other Deputies in the time available.

Mr. Norton

If the Minister gets it on Wednesday, it is all right?

Mr. J. Lynch

I should prefer to deal with the matter more fully.

Mr. Dillon

If the Minister wants it to-day, he will get it. If it can be carried over until Wednesday next, the Minister should be given an opportunity to deal more fully with the matter.

Mr. Norton

There is good public interest to be served by a fuller explanation.

Mr. Dillon

We can with more confidence endorse the lines proposed by the Minister if we have access to all the facts. They ought to include a review of the history of the mines so that we may satisfy the House and the public that this project was founded on the best possible mining engineering advice that could be got in the world and that we went far afield to get it.

The Minister is also bound to tell the House what the implications will be. What will be the implications of the closing of these mines on the £12 million project which the Minister adumbrated for the manufacture of nitrogenous fertilisers from the pyrites in the mines? It seems astonishing to me that the Government could have contemplated the investment of £12 million of public money in the processing of pyrites from a mine the prospects for which are as problematic as the Minister's introductory statement would suggest. I am bound to say that the thing comes to me as a complete surprise.

Deputy Norton will confirm my memory that when we were in Government, we considered, with almost excessive concern, the prospects of Ballingarry coal mine and Avoca. We got the best possible advice that could be got, the burden of which, if I remember, was that Ballingarry was not a viable project but that Avoca undoubtedly was. Are we now facing a situation that, having got this extremely expensive technical advice, it will turn out that Ballingarry is the viable project and Avoca the reverse?

I find that hard to believe. I find it hard to believe that the information on which this project was initiated has proved to be illusory. If my recollection is correct, we were told at that time that the site of the operations then proceeding, four or five years ago, was by no means the most remunerative part of the whole mineralised area.

Mr. J. Lynch

That still applies.

Mr. Dillon

Is it in the exploitation of the more remunerative part that we now find ourselves in difficulty?

Mr. J. Lynch

The borings carried out therein.

Mr. Dillon

The Minister will agree that even with the best will in the world it is hard to understand the situation. Are we to understand that new borings carried out in what we believed was the more highly mineralised area have now tended to suggest that it is less highly mineralised than the area in which we are at present working?

Mr. J. Lynch

It does not mean that the Mianraí Teoranta borings were not correct. I will explain that.

Progress reported; Committee to sit again.