Dáil Éireann debate -
Tuesday, 1 Feb 1977

Vol. 296 No. 4

Bula Limited (Acquisition of Shares) Bill, 1977: Second Stage.

Minister for Industry and Commerce (Mr. Keating)

I move: "That the Bill be now read a Second Time."

The purpose of the Bill, put in its briefest terms, is to enable the State to acquire an interest in a mining concern, Bula Ltd. which is an Irish registered company owned and controlled by Irish people. That is the immediate purpose of the Bill but it is necessary to say something also about the circumstances which led to the Bill. The situation which I have been trying to rectify arose out of the events which took place in relation to the Navan orebody in 1970 and 1971. The main event was perhaps the compulsory acquisition order made by the Government in respect of the Wright farm in 1971. I will say more about that later but for the moment let me put it on the record that the involvement of the State in the private minerals at Navan—as distinct from the State-owned minerals—would never have come about if that order had not been made.

Let me stress that there are two categories of minerals in this country —State-owned and private minerals. The position overall in the country is that some 40 per cent of the mineral rights of the country are clearly State-owned and it is well accepted that the State would probably be able to establish good title to a further 25 per cent; the remaining 35 per cent are privately owned. The position of the Navan orebody, to which the Bill relates, is that the minerals comprising the Bula Ltd. portion of the orebody are privately owned. The purpose of the Government order in 1971 was, in effect, to transfer the ownership of these private minerals to a company which is not only foreigncontrolled, but is not even registered in this country. In the time of my predecessor an attempt was made to establish who were the beneficial owners of the shares of that company. Clear, overwhelming evidence that it was controlled by foreign interests was available from the details of nominee shareholdings but these details gave no precise information as to the identity of the real beneficial owners.

I will be making reference to privately-owned and State-owned and also to Irish companies and foreign companies and I want to make clear that the reference to foreign companies refers not to Tara Mines, which is a wholly owned subsidiary of a Canadian company, not indeed to Tara Exploration and Development which is a Canadian company, but to large international mining companies behind these two entities. Those are the people I have in mind. I want to make clear, too, that the participation of overseas investment in Ireland is welcome and I have worked as hard as anybody to obtain it. The task is a task of balance between overseas interests and domestic interests.

The consequences of that order affected not only the entire Navan orebody, State as well as private, but have also caused serious complications in the mining business throughout the country. That was the situation with which I was confronted and that was why I was obliged to take remedial action to try to improve the position at Navan.

I should like to mention at the outset that in preparing this speech I have personally examined the relevant papers relating to the history of the Navan orebody—a number of big files, which I have tried to understand and master—and what I have to say is based on the facts as I have ascertained them, facts which are, in any case, fairly well known to many people. I would also like to make the point that although on the face of it this Bill deals with an economic or financial issue, the debate will be essentially a political one, that is a debate about the policies which have been adopted by different Governments in regard to the natural resources of the State.

To understand the reasoning and logic of this transaction it is essential to consider what it involves in terms of revenue to the State and how this compares with the position which would otherwise have obtained. This is a point which I really must stress because so many people seem to be unaware of it. In the case of Bula, since the minerals were privately owned, the former Government, under the mining policies which they had adopted, would not have been entitled to any return whatsoever. Even after the change in the tax law by the present Government, the only thing which we would have been entitled to out of the Bula operation was taxation.

The right of the Bula people to these minerals as private minerals had been clearly established by the High Court and the Supreme Court. Now what will we get out of the Bula deal in comparison with what we would have been entitled to get under my predecessor's regime? We will, as I have said, be entitled to receive tax; this would not have been charged by the previous Government. In this context let me remind the House that the abolition of the unwarranted tax holiday was strongly resisted by the Members opposite. In addition to the tax we have also secured 25 per cent of the equity for nothing and 24 per cent on a valuation, giving us in all a 75 per cent share of the profits. If the paid element is excluded the State take is 62½ per cent. The return to the previous Government would have been nil. There is a world of difference between what we have achieved in respect of the Bula property and what would have happened under earlier policies.

Mr. O'Malley

That is wrong.

Mr. Keating

The Deputy had his chance.

Mr. O'Malley

This is ridiculous.

Mr. Keating

The former Government endeavoured to acquire Mr. Wright's minerals compulsorily with the intention of transferring them to certain foreign mining interests presumably in return for royalties only. These royalties would then, again presumably, after the hearing of claims by the Mining Board, have been in effect transferred to Mr. Wright and his associates leaving the Government with nothing out of the transaction. In due course the High Court and the Supreme Court rejected the acquisition order and these minerals were not then available to the Government.

Unfortunately, the confusion and disarray caused by those proceedings was left for me to try to straighten out on taking up my ministerial duties. Whatever may have been the motives of those who made the order, the end result was to create a terrible mess. Let me remind the House that the Navan orebody was first discovered in 1970. Production will not commence until some time this year.

It is a very great pity that these events should cause the people of Ireland to have to wait all those years before getting any value whatever from such a valuable national asset. I have tried to get some sense into the situation, though admittedly less than an ideal solution. I could not have let the contending interests fight it out among themselves while we sat on the fence waiting for something to turn up. My interest exclusively was in maximising the gain to the Irish people, in getting production going at the orebody, in getting employment maximised and in creating at least some hope of orderly development in the future.

Let me remind the House that these are adjoining properties and that each side could make trouble for the other, if so minded. The River Blackwater divides these two properties and, by and large, the mid-point of the river is the dividing line as respects ownership of the underlying minerals. This constitutes the greatest potential source of strife because each side could inflict very serious wounds on the other and on the State by failure to agree on the river diversion. This was a factor very much in my mind in considering the various solutions for dealing with the consequences of the legal decisions.

I have a report from the London School of Mines recommending that the river, for safety as well as other reasons, should be diverted sooner rather than later. It points out that in the absence of diversion an inclined pillar of over 16 million tons of ore would have to be left untouched under the river bed, and puts the net value of this ore at about £200 million. Some of these immobilised minerals are State-owned and the rest private but for taxation, employment and other economic reasons, the State has a vital interest in seeing that this enormous waste does not take place in respect of any ore.

The question has been raised whether our involvement in the Bula mine represents a good bargain. Before I get down to deal with that in some detail let me reiterate what I have said earlier that until recent policy changes by the present Government, nothing would have accrued to the State in respect of these private minerals, which would simply have been transferred from one set of private owners to another. In view of the wellknown difficulties involved in valuing mining properties, it was agreed between the State and Bula that we would have the price for the 24 per cent element settled by means of independent arbitration. We agreed to entrust this task to the Institute of Arbitrators in London who appointed a board of three persons of considerable standing.

The agreement enabled the arbitrators to call for evidence on both sides, as well as calling independent experts of their own choice. It was provided in the agreement that any evidence submitted by one party would also be made available to the other. The arbitrators decided at an early stage that they would ask each side to present its case. In view of the importance of the matter at issue and the certainty that there would be a wide divergence of opinion it was inevitable that each side would employ reputable experts in order to put their best case forward.

The end result was that the estimates of the value of the private minerals in question varied from around £1 million to £106 million. This may seem to be an extraordinary situation. It should be borne in mind, however, that there are quite a number of imponderables in putting a value on a mining property since it is necessary to look into the future rather than into the past. One has to hazard a guess as to the possible future movements, over a period as long as 15 to 20 years, in such matters as metal prices, costs of production, including wages, and exchange rates.

One has to seek an appropriate discount figure in order to establish net present value and also to consider such questions as whether metal values are likely to increase more rapidly than the general price level, and whether mining output will be able to keep pace with increasing demand. There is room for widely differing views on these matters even between experts. The arbitrators listened to all the experts on all aspects of the case, including possible planning permission requirements, and in the end gave their award. The amount now determined to be payable by the State is £9.54 million.

Let me point out by the way, that this money is payable in instalments, 50 per cent within 90 days, 25 per cent within one year and the remaining 25 per cent within two years. If one applies a reasonable interest rate to this schedule of payments to express it in terms of current pounds, the sum of money payable by the State comes out at £8.37 million. Furthermore, while the tax position of private individuals is confidential as between them and the Revenue Commissioners, there is little doubt that large amounts of the sums payable by the State will come back to it in the form of various applicable taxes, such as wealth tax, capital gains tax and capital acquisitions tax, so that the net burden will be even further reduced.

Let me point out, by the way, that the Opposition were opposed to the introduction of these new taxes. Nevertheless, large amounts of money are involved, but let us look at the returns. Not only will it provide jobs in an industry using our own natural resources, but it will also provide its own direct financial return to the State— 75 per cent of the profits. If this were an ordinary industrial development project, it would be quite normal for the IDA to provide a straight cash grant of about £3 million for the amount of employment involved. There would be no strings attached relating to disposal of output or other matters, no involvement in management, no entitlement to a share in the profits and no taxation of profits.

You will have seen some statements which attribute to the Bula property a lower figure than that arrived at by the London Institute of Arbitrators. For my part, I am satisfied that the three reputable arbitrators appointed by the London institute would between them make as good an attempt at putting a fair value on the property as anybody else who might have been chosen, bearing in mind in particular the wide range of evidence which was available for consideration by them. In conducting their hearings the arbitrators took note not only of the theoretical and technical arguments advanced by the experts on each side but also of the value placed upon relevant mining shares by investors.

In this connection, let me remind the House that when the initial discovery was made at Navan and before the size of the orebody had been established, the news relating to the find resulted in an increase of about £25 million in the value of the shares of Tara Exploration and Development. At that time the company had no mine, no lease, no precise information about the size of the orebody, no precise information about the ownership of the orebody, and no planning permission.

In the beginning of 1974, long after the change of Government had taken place and the tax holiday had been abolished, offers were made by long established mining companies to the stock market of $25 per share for Tara Exploration and Development shares. This bid was resolutely contested by those who controlled the company on the ground that the shares were worth more. This was at a time when it must have been clear that the Bula end of the orebody, which because of its nearness to the surface would be the most easily worked was not going to be available to them. It was also before they had received a lease from the Government and before final planning permission had been settled.

Members can relate this share value to the Bula end of the property making due allowance for differences in output and in the grade of the minerals, the costs of production, the life of the two separate mines and other relevant matters. Taking account of these factors, the Bula valuation is in my opinion, a reasonable one. Let me also point out that during our difficult and protracted negotiations with Tara in connection with their mining lease for the State-owned minerals, I sought to acquire 24 per cent of the Tara shares for a consideration, in addition to the 25 per cent shareholding which I wished to get for nothing. The Tara representatives were not willing to part with the 24 per cent even on a basis established by the commercial bids.

I have been taken to task for the fact that planning permission has not yet been obtained for the Bula mine. I have indicated earlier that for the purposes of putting a value on the Tara shares the stock market and people in the mining industry were not deterred by the fact that Tara had no planning permission but were also without a State lease, in the absence of which the minerals could not be worked. Furthermore, Tara had spent a considerable amount of capital on mine development before these two vital documents were in their possession. I am hopeful and, indeed, the arbitrators in exercising their judgment as informed and reasonable people, must also have believed that the permission which Bula will obtain will enable them to develop the mine in an economic fashion.

There is every reason to believe that if the award of the arbitrators were to be contingent on full planning permission first being obtained the sum fixed by them would have had to take account of this fact and would have been increased accordingly. There is no practical way in which the board could have favoured a valuation which could be so automatically adjustable as to cover all the possible circumstances associated with planning permission. Bula themselves are quite optimistic that they will be able to make a good case for their plans. That is, of course, a decision to be taken by the proper authorities.

I believe, therefore, that the price which has been settled as a result of the arbitration is acceptable. Let me also point out in this connection that our agreement with Bula relates not simply to the purchase of the 24 per cent element; it also deals with the granting to the State of a 25 per cent stake for nothing. In effect, what we are talking about is an arrangement under which the State acquires a 49 per cent interest in the equity of the company and also acquires rights relating to the appointment of directors and related matters. The point has been made that we should not have agreed to an arrangement under which the award of the arbitrators was binding on both parties. Let me say in this connection that such a formula is common in commercial circles, and furthermore, the award was as binding upon Bula as it was upon the State. In any event, bearing in mind the origin of our decision to have the matter settled by arbitration, I do not see what object could have been achieved by an award which was not binding—that would certainly not have brought the debate to an end. Moreover, bearing in mind the fact that the 25 per cent free element and the 24 per cent paid element are both covered by a single agreement, an option arrangement would have created an even greater dilemma since any decision not to accept the findings of the arbitrators would, in effect, mean the collapse of the whole agreement, in other words the loss of the 25 per cent free element as well as the 24 per cent element which was to be paid for on a valuation, and a return to the stalemate possibilities which I mentioned earlier.

There has been some Press comment on the fact that estimates prepared, including those submitted on behalf of the State during the arbitration proceedings, were in varying degrees less than the valuation arrived at by the arbitrators. Neither party to proceedings of this kind would be so imprudent as to go on record in advance with the valuation which they would privately regard as an acceptable settlement. What each of the parties will always do is to make sure that the arbitrators are fully aware of the financial, economic and other factors which argue most strongly in favour of their position. In view of the multitude of variables and contingencies about which judgments could widely differ, it would have been quite incredible if there had not been a very wide gap between the two sides. It would also have been exceptional, to say the least, if the arbitrators who were charged with arriving at an equitable settlement of the issue had concluded that one party or the other had come up with a full set of incontestable arguments and that all their judgments were infallible.

Before I leave the question of the valuation of the mine, let me make a brief comment, if only a sidelong one, on the question of discounted cash flow. Although I do not profess to speak of this from the point of view of pure accountancy or economics, I must express—and I am not the first person to do so—certain reservations about the applicability of this system of measurement in the case of rights accruing to the State. It is obvious that in the business world money or goods available today are more important than money or goods available in years to come and it is necessary to apply a discount factor to establish the net present value. The State, however, is a continuing entity, and its existence, together with the rights of its then existing citizens will have no less validity 10 years from now than they have today. A ton of zinc or a barrel of oil is probably as relevant to the State as a political unit at some future time as it is today—otherwise, conservationist policies would have little meaning. I think one gets particularly uneasy about discount cash flow when applied to the exploitation of natural resources. For example, I have seen calculations relating to petroleum fields which put a value of hundreds of millions of dollars on the output of the field in year 1 and a value of practically nil in year 10 although there has been no significant diminution in the production of oil. If one were to take the value of the projected Bula net income over the years without applying a discount factor, then the sum which one arrives at as the value of the mine is some hundred millions in today's pounds, stripped of all inflation. I am not suggesting for a moment that this is the only way in which a mine should be valued and I do not wish to suggest that DCF should be disregarded entirely in transactions which involve the State, but it certainly is not irrelevant to look at the aggregation of net income flows over the period involved, after making due allowances for inflation.

This is a business transaction and like all such transactions there is an element of risk in it. If there were no such element of risk, then the bidding for involvement in Bula would push the value of the mine to much higher levels. We cannot be certain of the future but we must, nevertheless, use our judgment. I am convinced that this transaction will be to the advantage of the State. For that reason I would ask the Members of this House and people outside it to think carefully about all of these matters and to ask themselves where the interests of the people of this country lie. If we do not take appropriate action to protect our national interest, others will be only too pleased to make the most of our disunity.

I have stated publicly on more than one occasion that I do not regard the situation which prevails in regard to the Navan orebody as being an ideal one. My difficulty was that I had to deal with the thing as it was left to me. Since certain decisions had been taken by the High Court and Supreme Court there was nothing more that could be done other than to make the best of a bad situation. I believe that the arrangements which I have made with Tara and with Bula will separately go a long way towards bringing this situation to a reasonably satisfactory conclusion and that hopefully we can look forward to the end of the blood-letting in that area and a peaceful development of the minerals for the benefit of the people as a whole.

It has been pointed out that it is not an ideal arrangement to have two mining companies working the same orebody. This may well be the case and it is practically certain that if the entire orebody had been owned by the State a single lease only would have been issued and the ore would have been worked from one end only. However, as the courts have established, some of the orebody is privately owned, and businessmen cannot be expected to take the same long term view as the State. They may, therefore, conclude in their own business interests that it is desirable that each should develop his own part of the property. We are not in a position to force them to come together or to carry out their operations in any particular way. There is nothing unusual about this—we cannot force any other businesses to merge either, nor can we compel farmers to combine their holdings or professional people to pool their practices. There is nothing about mining which places it in a special category in this regard. I would, however, like to point out that in negotiating the agreements with Tara and Bula I endeavoured to have a clause accepted which would, in effect, enable me to have co-operation arrangements determined by an expert and imposed on the parties. This was rejected by both sides. It could well have been difficult to get agreement on such a clause if mutual relations between the two companies were good. In the circumstances which existed it proved impossible. The best that I could get out of the parties was an agreement to co-operate with each other to ensure that the most is got out of the private minerals and the State minerals to the benefit of all concerned.

On this question of joint operation it has been suggested that a satisfactory solution would be to work the Bula minerals from the underground Tara operation. This may be so but, obviously, it might take some time under such an arrangement before the Bula minerals could be got at. Perhaps, however, the parties may be able to agree on a solution of this kind— this cannot be ruled out, although one must take account of the relationships which existed in the past between them. Furthermore, one cannot brush aside the basic constitutional rights of the Bula people nor, indeed, can we ignore their desire to develop their property in accordance with their own ideas. Let me say that it has also been indicated to me that the ideal way to work the Navan orebody would have been to start at the Bula end first where the minerals come to the surface and can be most easily worked and then to proceed from there to develop the deeper workings required for the extraction of the minerals at the Tara end. However, Tara went ahead and drilled a very expensive shaft for the development of the State-owned minerals even before they had received a lease.

It has been claimed that a further order could have been made to dispossess the Bula interests of their rights. This argument is, I think, based on the suggestion that the High Court and Supreme Court found only technical defects in the order and that it would have been possible to make a new order which would meet the criticisms made by the relevant judges. I have legal advice on this subject from three senior counsel. It was made quite clear to me that the chances of a second order succeeding were practically nil. The point has been made that one could have gone ahead and made a second order in any event and if that were thrown out one could go on to make a third order and so on, thus causing problems for the people concerned.

The first thing I should like to say on this is that the nature of the legal position established by the two court cases was such that in all probability the compensation payable under a successful order, if that could be made, would be the full commercial market value. We would therefore, in effect, have to buy all the private minerals—not just 24 per cent of them —from their private owners at full commercial value for the purpose of handing them over to the interests which were mining the State-owned part of the orebody. The State would then have been placed in the awkward position of trying to recover this large sum from the other interests to whom the minerals were to be leased—unless it was prepared to carry the burden itself.

I have ample evidence that this would have been resisted by the prospective lessees and further trouble and delay would have ensued. In any event, I do not accept that that is the proper way to carry on the business of Government. No Minister would seek to exercise powers if the evidence suggested that it would be illegal to do so. Finally, I am not in the business of bankrupting Irish commercial interests, least of all when their opponents are owned and controlled by foreign interests. On the contrary, my duty is to help them where I can; and the present Government have given proof on many occasions of their determination to do this when the need arises.

I should like to add at this stage that I am pleased that the State is associated in the Bula company with people who in their other occupations have already made such a significant contribution to the development of the Irish economy, who have shown entrepreneurial flair and vigour and who have done so much for employment in this country.

Mr. Crowley

Where is the socialist gone now?

Mr. Keating

Another accusation that has been made is that the agreement should never have provided for the payment of money to the individual shareholders but should have been made available only for investment in the funds of the company. I am quite sure that many Deputies opposite have had occasion to advise people who wished to sell land or property of some kind. I am equally sure that their advice to such people would be that on parting with anything that belongs to them they should insist on getting the relevant value and not be greatly interested in offers to pay the value to somebody other than themselves. The object of the arbitration proceedings was to establish the value of the thing which each shareholder was parting with and in respect of which he would have to be compensated. The minerals were privately owned by the shareholders and their right to them had been established by the highest court of the land. They were free to dispose of them in whatever way they wished and clearly if they were going to part with them they would expect to receive the value of them.

There is no point in talking about arrangements under which the funds might have been invested in the company; if one were to think of a scheme of that kind it could only be on the basis that the net result was to compensate the shareholders for the dilution of their interest in the enterprise in much the same way as the arbitrators had done.

There are a number of lessons to be learned from all this very sad and messy business, and some of them I have already indicated. Something obviously must be done about the question of the ownership of minerals in Ireland which, because of the abortive order and the inconsistent nature of earlier enactments is also in a state of confusion. The 1940 Minerals Act is also obviously defective in some respects. The mining companies have indicated to me that the ownership question is a substantial stumbling block to them in carrying out their operations and there is no doubt that there is substance in this statement. What we now have is a jungle and it can give rise to very unpleasant situations and very serious conflicts which are to the detriment of the people as a whole. I have promised the mining industry that I will endeavour to deal with this matter by appropriate legislation but, because of certain constitutional constraints, it has not been possible up to now to produce a legislative design which would meet all requirements. I have been looking in particular at the legislation enacted in 1969 in Northern Ireland, under which all minerals were taken into public ownership, with proper compensation to those persons able to establish an interest in private minerals. By all accounts this legislation has worked well and it may be a useful headline for us to follow. I am, at any rate, reasonably hopeful that we will be able to present to the Oireachtas some legislation which will lead to an improvement in the present situation and which will be primarily designed to bring about a more businesslike and civilised atmosphere.

All these events have also confirmed me in the view which I have long held, that the sooner we can get some competent mining enterprise established within the public sector the better it will be for this country. The Government have already announced in the Green Paper our intention to resuscitate Mianraí Teoranta. If it had been in active existence and competently staffed in the early 1970s it is possible that the Navan situation would never have occurred.

There have been some criticisms of my reticence in providing information on this matter up to now. While I recognise the anxiety of newspaper and other interests to procure as much material as they can in relation to matters of public interest, I think it must be realised that Ministers of the Government also have a duty to this House. I had concluded that special legislation would be desirable in connection with the implementation of this agreement and it was my intention to give the Houses of the Oireachtas a fairly full explanation of what was involved. Many Deputies complain, and I have probably done so in the past myself, about situations in which relevant information is released in places other than this House and Members of the Oireachtas then get the story when it is pretty stale news. I recognise that it is impossible at all times to meet the wishes of the Oireachtas in this area but I believe that an attempt should be made to do so. It had not been my intention, therefore, to make any public announcement in regard to this matter until I had brought the necessary legislation into the Dáil.

It had been argued that the agreement for the acquisition of the Bula shares, about which I may say there is nothing unusual, should be published. Prior to preparation of the Bill I gave careful consideration to the question of circulation of the agreement with the Bill and I came to the conclusion that it would not be appropriate to do so. The reason for this is that it is accepted practice in the case of agreements involving the purchase by the State of minority interests in commercial companies not to reveal the contents of those agreements. It has always been accepted that the publication of agreements of this kind, whether in respect of industrial projects, service projects, natural resources projects or otherwise could constitute an impediment to our economic development programme, an essential feature of which has been the preservation of confidential material supplied by the private interests involved. I cannot accept that the treatment of this particular case should differ from that which has traditionally been afforded to other companies. I like to refer in this connection not only to companies involved in minerals and petroleum activities but also to the general run of companies who receive straight grants and loans from the Industrial Development Authority and other agencies and whose shares have, in many cases, been taken up by those agencies.

In order to demonstrate with a little more precision what is the established practice in these matters I would like to provide the House with more background data than it was possible to mention on the introduction of the Bill. There were, of course, no participation provisions in the Marathon agreement. Participation rights for the State are included in the 11 recent offshore exploration licences as separate documents apart from the general licensing provisions. On several occasions we consulted other Governments about the confidential nature of participation agreements of this kind and they intimated to us that they are regarded as confidential between the State and the licensee and could not be revealed to other parties. The 11 consortia with whom the recent licences were signed made it clear to us that they regarded our participation agreements as being in this category. Accordingly our petroleum participation agreements are regarded as confidential and have not been published. It should be noted that it is a provision of these agreements that the State may exercise its participation rights either by the payment of cash towards its share of the cost of development or by paying its share of those costs out of its share of production. The amounts of money which can be involved in the development of a petroleum field could be in the region of billions of pounds but despite that they come within the category of agreetimate ments which by established tradition and practice are not published.

It is also of interest to note that under the Minerals Exploration Development Company Act of 1941, the Minister for Industry and Commerce was authorised to purchase mining concerns. There is no provision in that legislation for the publication of any of the relevant agreements. Furthermore under the Minerals Development Act of 1940 provision was made for the issue of leases in respect of Stateowned minerals on terms to be agreed with the Minister for Finance. There is no provision in that Act for publication of these leases, the only requirement being the inclusion of relevant details in the annual report submitted to the Oireachtas under that Act. Accordingly, there has never been any question of the publication of the Tara lease or the associated agreements relating to the acquisition of shares by the Minister, payment of dividends, transfer of loan obligations and so on. Similarly, the leases in respect of Tynagh, Silvermines, Gortdrum and Avoca have never, so far as I can ascertain, been published. There is no point in saying that in the case of these agreements there was no provision for the purchase of shares for a consideration. These documents alienated State property which was valuable in money terms.

It should be noted that the Industrial Development Act of 1969 is drafted in such wide terms that it extends to all kinds of industrial undertakings including mining and furthermore it specifically provides for the purchase of shares. I could, therefore, have carried the Bula agreement through using the IDA as an instrument and without further reference to the Oireachtas. I chose not to do so but to proceed rather by special legislation because whatever might be said about the technicalities of the situation, I considered it preferable to bring the case specifically before the House.

The main purpose of the IDA Act was to give power for the provision of grants. It is hardly necessary to point out that the giving of grants is a far more generous act than the purchase of shares since one does not get a right to participate in return for a grant. If a case could be made for the publication of agreements to purchase shares then a far better case could be made for the publication of agreements to provide grants. The money provided by the IDA this year will be in the region of £60 million. Most of this will be handed out in the form of grants but some of it may also be used for the purchase of shares. It is noteworthy that there is no provision in the IDA legislation for the publication of agreements relating to grants or shares. In fact, parliamentary questions are not answered in respect of such matters and the accepted convention is that the inquirer must wait until the next annual report is published and accept the date which is set out therein. The situation is basically the same for other State agencies such as Fóir Teoranta, the Industrial Credit Company, SFADCo and so on.

The reason for this pattern has already been stated, that is the preservation of confidentiality is a feature of our administration which has been closely guarded over the years in the knowledge that this is considered to be a matter of very great importance by industrial promoters. This rule must be regarded as inviolable especially in the case of the acquisition of minority interests. A different argument might perhaps be advanced where the State is taking over an enterprise and converting it into a State-sponsored body. So far as Bula is concerned we are minority participants in a venture which will be controlled by private enterprise interests.

If the argument which is being advanced is that the category of agreement here under discussion should be published, then it should be put in that form and the matter could presumably be debated at an appropriate time. This would involve the publication of all agreements relating to property or shares, and even contracts for goods or services, entered into between the State or public agencies on the one hand and private interests on the other. There is no doubt that everyone concerned with the promotion of our economic development would be horrified at such a proposition and it would involve such a breach of established principle that I cannot imagine it being adopted. If the argument is not couched in those terms then it must take either of two forms: that the principle be retained in its entirety which is what I would strongly hold; or that the general rule be retained but that an exception should be made, for some unknown reason, in the case of the Bula acquisition.

There is, in my view, the gravest danger in thinking about exceptions at all, since all other parties to present or prospective agreements with the State would have to ask themselves whether there was a danger that an exception would be made in respect of them also, with subsequent damage to their interests and to our industrial development programme.

I am doing my best to deal with the situation which has been handed to me. The solutions which I have been able to find to deal with the Navan situation are not, as I have often said before, ideal and there is no certainty that we will achieve all the objects which we had in mind. I am satisfied, however, that it was the best that we could do. If everything goes well, the rewards to the State will be very great indeed. The nature of the mining business seems to be such that trouble and strife of one kind or another must always be reckoned with but even if some things go wrong I believe we will still have a substantial credit balance. At the very worst, I do not think that we can lose, because even if the minerals are left unworked in the ground our participating interest will remain to bear fruit at some later date in the future.

The bringing of this legislation before the Dáil does, I think, represent a watershed in this affair. Over the past few years there has been considerable controversy associated with it. Charges and counter charges have been made; I have received some stick and, I am glad to say, a great deal of support and encouragement, in relation to the part which I have had to play. It is my sincere hope that all concerned will now turn their attention to the future where a great deal lies to be done, not only to the advantage of the commercial interests involved, but to the advantage of the country at large.

We must bear in mind that the Navan orebody is a very great national asset. The gross value of the metal which lies underneath the land there can be put at around £4,000 million. I am not suggesting this figure as a commercial valuation but merely to express the extent of this asset in a concrete way. The arrangements I have concluded with the two companies concerned means that out of every £1 profit which will be made from the overall development of this asset, the State, and through it the people of this country, will receive an economic rent in the region of 70p. This will still leave the developers a handsome reward for their investment and effort. The full potential of this asset can only be realised if everybody who has anything to do with its development resolves to put past problems behind him and to take up the business which has to be done. The State, through me and my Department, has an interest not only in the business of the two companies concerned but in the wider content of the common good. I can assure the House and the two companies concerned that I will be prepared to afford every facility and assistance which I can to secure the success of this important undertaking. I look to them to co-operate with each other and with me to this end.

I have already stated my objectives in this affair. I will repeat them. I wanted to get for the people the maximum benefit from the development of the Navan orebody. I wanted to achieve this quickly. Neither of these objectives was or could be achieved under the policies and strategies pursued by my predecessor. Indeed, the problems were all of their making. I am not claiming that the solution I have been able to find is ideal but I sincerely believe that it at least, holds out the prospect of remedying these old ills and achieving the objects which I have in mind.

Mr. O'Malley

I apologise for the fact that I sound even less pleasant than I usually do as I have a sore throat.

Having heard the long and painstaking speech from the Minister for Industry and Commerce, I now know why Bula Ltd. were able to cod him up to his eyeballs and why a tragic situation exists today in that orebody, the whole of which is valuable, the Bula part of which is a section of the whole.

In spite of the accusations and insinuations made during the past few weeks I hold no brief for anybody in my opposition to this Bill. Last week the Minister suggested that I was speaking on behalf of a shadowy multi-national in order to do a small Irish private company with which he is associated. Let us be clear about this. The shadowy multi-national that is being referred to is Tara Mines, or the Northgate Group generally. The Minister tried to tell us that he was really not thinking of Tara Mines, Tara Exploration, Northgate, or Irish Base Metals but that he was thinking of people like Cominco, Noranda and others, who have 2 per cent, 5 per cent and 10 per cent shareholdings in some of these companies. It is the practice of all mining companies to have these interlocking small shareholdings in one another, even a small company such as Northgate or Tara.

I have no beneficial interest in Tara or its associated companies. I once owned 100 ordinary shares in Tara. I bought them towards the end of 1972 and lost them on 19th November, 1973, when my stockbrokers went bankrupt and were hammered by the Stock Exchange in London. I was subsequently compensated on what I can truthfully call a modest scale. I have a brother-in-law who is employed by Irish Base Metals, a company within the Northgate Group. All these companies are associated to one degree or another. No pressure has been brought on me by that or any other company or by my brother-in-law about whom snide references are constantly being made. He is the closest relative that I have in Northgate or Tara. Other Members of the House have closer relatives involved with these companies but I am not making any allegations notwithstanding the fact that allegations are constantly being made in relation to me. I have two brothers working on two newspapers in the city but that fact has not led either of those newspapers to bring improper pressures upon me or led me to bring any improper pressures on those newspapers.

Today the Minister referred to bloodletting between Bula and Tara, the two companies concerned with this particular orebody. Undoubtedly, there has been an attitude of aggression between the two of them for reasons which anybody will readily understand. It is not correct to suggest that these two companies are competitors and that any information given in relation to one would be of assistance to the other. As the Minister is no doubt aware, there is a world cartel in relation to zinc; the price is fixed in advance. The Minister is no doubt aware that in order to finance the operation of a mine it is necessary to sell the production of zinc and lead well in advance of production. It is necessary to have contracts signed in respect of a lengthy period in order to get advances from the international banks. That has been done in relation to Tara. They have sold all their zinc and lead at predetermined prices. Therefore, there is no question of competition between them. However, there is an historic conflict of interest between them. Tara has, as part of the Northgate group, spent a large amount of money looking for minerals during the past 15 years. They are far and away our most successful mineral company ever and a tribute should be paid to them in that regard. They found a mine near Loughrea, at Gortdrum near Tipperary town, and they found minerals elsewhere, but it was not sufficient to warrant commercial production at present prices.

Above all, Navan would not have been found without them. They had an exploration licence from the Minister for Industry and Commerce for that area. After they had made the discovery certain people bought land beside them because that land had minerals which were privately owned. The State owned all the other minerals in the area of the exploration licence. Therefore, it is not surprising that there is annoyance and bloodletting between the two companies. If the Minister had done what Tara had done, and if somebody had come in under his nose and taken part of that orebody, would there not be a feeling of extreme annoyance and would there not be a certain conflict of interests? Despite what has been said about me, I do not suffer from any conflict of interest in regard to Bula and Tara because I have no interest in either of them. My interest is to try to promote maximum benefit for the people in relation to mining generally. The Minister is a 49 per cent shareholder in one company and a 25 per cent shareholder in the other company, which is a bigger company. On the face of it, is there not a very considerable conflict of interest there? I have described the Minister as wearing two hats, one as a Bula 49 per cent shareholder and the other as a Tara 25 per cent shareholder. He wears a third hat which only accentuates his conflicting interests, wittingly or unwittingly, as the case may be.

The third hat he wears is as Minister for Industry and Commerce. He is the ultimate regulating authority in respect of mining and the recovery of natural resources in the country. He is the ultimate authority who fixes the terms of licences, leases, recovery rates, royalties and all the various other factors involved in the recovery of minerals.

There is the Minister in relation to this particular orebody wearing three hats, each of which inevitably must, I suggest, be in conflict with one another. I am not suggesting that the Minister has acted improperly in relation to any one of these three activities but in view of the understandable bitterness of the situation, which the Minister described as bloodletting, is there not great danger that one or other of these companies will be favoured as against the other or that one or the other or both of them will be favoured as against the general national interest?

Mr. Keating

It that an argument against all State participation?

Mr. O'Malley

Not necessarily but I think it is one against the particular type of participation in which the Minister has landed himself in this situation. This party support the principle of obtaining the maximum benefit for the people of Ireland from all our natural resources, whether they are minerals or hydrocarbons, onshore or offshore. I extend this principle to state that providing equity and credibility are maintained it is our responsibility to ensure that the maximum benefit is derived for all our people from all our national assets under, on or above the ground, under, in or on our seas and in the air.

I oppose the method and approach of the Minister in this particular instance. I do so because what he is doing does not achieve the foregoing objectives. My opposition is for no other reason than that. I condemn the lack of foresight of the Cabinet, which must have endorsed the Minister's approach. I propose to demonstrate the effects of the Minister's approach. When I have finished I hope the Minister will have another look at his position so that we do not embark along the road of resources development in a divided manner. I believe we all have the same aspirations and the same objectives. I believe we see risks and implications in this proposal that in charity must not have been realised by the Minister. I hope he will have another look at the situation and agree to withdraw the Bill.

Did the Minister intend that the present shareholders of Bula Ltd. would be given a benefit by this proposed payment, under an agreement which we are not allowed to see, equal to minimum earnings from this as yet non-existent mine of £298.1 million in the first year of operation? I am not critical of the shareholders of Bula Ltd. for having achieved for themselves an extraordinarily generous payment. I cannot help mentioning that they are the recipients of incredible generosity on the part of the Minister. As a result of his failure to assess this matter properly they have got a large amount of money. More luck to them, is my attitude. I am not critical of them for having got it but I am critical of the Minister for having paid it.

I do not really expect that the Minister intended such a reward for the shareholders of Bula Ltd. yet that is the effect of this Bill and this agreement. It provides for the payment of £9.54 million, which I am advised will be tax free in the hands of the people to whom the Minister pays it, for 24 per cent of the shares of Bula Ltd. Those shareholders will continue to hold 51 per cent of the shares, the remaining 25 per cent being vested in the Minister as a gift. As a result of the Minister's payment of £9.54 million the remaining 51 per cent has a market value of £20.27 million on a pro rata basis. In fact, it would in practice be more as the 51 per cent shares are a majority holding in a private company. If they were to sell these shares for £20.27 million, for which the Minister has valued them, that money would also, apparently in the circumstances, be tax free.

The existing shareholders, therefore, will obtain in cash or in kind or in both a total value of £9.54 million in respect of their 24 per cent and £20.27 million in respect of their 51 per cent, making a total of £29.81 million tax free. We should not forget, when we are talking about these figures, that the mine has not yet obtained planning permission to open. It is not a question, as it was with the Tara Mine, where they are digging the ore from 1,000, 2,000 or 3,000 feet under the ground and interfering with nobody. This is supposed to be an open cast pit within a few hundred yards of many recently built houses and within half a mile of the largest town in County Meath.

I want to explain how those figures are arrived at. For shareholders to receive as a dividend an amount of £29.81 million after all taxes had been paid the company paying such a dividend would have had to have available in profits, before tax, £298.1 million, which would then be utilised as I will show. I had this prepared on an actuarial basis for me about a week ago on the tax rates that were then in force, that are now in force and I suggest that will still be the relevant tax rates because the two dates that would be relevant are the date of the agreement, 12th December, 1975, and the date of payment, 9th February, 1977, on which date the same tax rates will apply.

We have then a figure which breaks down as follows: profit £298.1 million, company taxation at 50 per cent, £149.05 million, leaving a profit after corporation tax of £149.05 million, payable as dividend to shareholders owning 75 per cent of the shares, that is 24 per cent plus 51 per cent. A dividend of £149.05 million would be expected, as I stated, at 12th December, 1975, the date of the agreement, to attract a total tax liability of 80 per cent of the amount paid to the shareholders. That would constitute 77 per cent in income tax plus a figure that one would have to allow in respect of wealth tax which would, of course, not be payable on income as such but would be payable on the accured income in the form of capital.

The present tax rates are the same and will be the same on 9th February, 1977. Therefore, deducting tax at 80 per cent of that £149.05 million we are left with the remaining 20 per cent of the post corporation tax profits which comes to £29.81 million. That would be the tax paid money that is then finally available to the shareholders, all tax having been paid off.

This, as I have demonstrated, is the first consequence of the Minister's budget, and it is a quite extraordinary consequence which I do not think he realised and I do not think that any of the few people who may support his approach to this matter, if there are any of those left, realised either. Existing shareholders in Bula Ltd., obtain in cash and kind an amount of £29.81 million tax free which would have required earnings liable to tax of £298.81 million if they had to wait until the mine went into operation and generated profits. The magnitude of such figures makes the mind boggle. Most of us do not comprehend what such figures mean in day to day terms, so let me try to turn it into easier terms.

Mr. B. Desmond

The Deputy carefully refrains from doing a similar exercise for Tara.

Mr. O'Malley

Tara did not get any money from the State.

Mr. B. Desmond

Let the Deputy do the same exercise for Tara.

Mr. O'Malley

I cannot do it. They got no money.

Acting Chairman (Mr. Moore)

Deputy O'Malley without interruption, please.

Mr. O'Malley

£298.1 million, which is the amount of pre-tax profit involved for the 75 per cent shareholders in Bula—and I want to reiterate that I am not criticising them; more luck to them if they were able to con the Minister into giving it to them—would enable between £50 and £60 per week to be paid to every registered unemployed person in this country for one year. May I ask, even though we have no representatives of them here, is this an example of the "Just Society"? Or, to put it in another way, in relation to income tax— because we are talking about profits and dividends—this figure of £298.1 million pre-tax profits distributed by way of dividends to these four shareholders by virtue of the Minister's mistakes is the equivalent of between 70 per cent and 75 per cent of all the PAYE tax that was paid in this country during 1976. Is this, might we ask, an example of "Socialism in the Seventies"?

What has happened here is quite clear. The Minister, hell bent upon an ideological grab, lacks the overall entrepreneurial knowledge so essential to those who poke about in the jungle of commerce. It is a classic example of a little knowledge being very dangerous and, unfortunately for the taxpayers, ending up very costly.

When one examines this situation from the point of view of the investment analysis which must be made on what the Minister has done or proposes to do, it is necessary to go back somewhat and look at the history of equity involvement by prospective shareholders over the last number of decades. The cult of equity involvement grew during the 1950s with fluctuating benefits, swinging from highs to lows, determined by many and varied factors. Some of these factors were of real economic consequence; others, in so far as they would affect the real business of the underlying industrial activity, were ridiculous. The occasion for example of President Eisenhower's heart attack in the 1950s knocked thousands of millions of dollars off the quoted prices of shares on every stock exchange in the world. Fortunately President Eisenhower recovered, but the equity share prices did not with anything like the same speed. It took nearly two years for Wall Street to recover to the same index level as that prevailing on the day that the then United States President's heart missed a beat.

Through the 1960s until the autumn of 1973 equity share prices continued their swings, influenced by short-term economic and particular sectional influences. The Rolls Royce failure is an example of a particular sectional occurrence. A household name synonymous with quality and wealth—in fact, the very hallmark of quality—was destroyed with the loss of thousands of jobs because of the losses incurred under one contract for aircraft engines which, despite its technological and basic engineering experience of the economy, ran into trouble. So died a company which for years before earned up to £20 million per year in profits most of which were retained in the business, ploughed into research and development and into investment in new production capacity. Not even such a company could survive. The equity shareholders got virtually nothing from the ruins.

Another well-known failure was John Bloom's washing machine empire, the man who, by selling a cheap washing machine, took the drudgery out of the kitchen for nearly every housewife in England, setting a price level for kitchen equipment which was followed here as well. It earned profits for several years but when it failed the equity shareholders got nothing from the wreck.

Therefore the first point to be clearly understood is that equity shares are a gamble. Equity capital is the risk capital. It is always vulnerable even to the point of being written off completely. But equity capital also offers opportunity for profit. During the past 20 years equity capital has been a valuable hedge against inflation for most companies and their shareholders.

In general if an investor is lucky, knowledgeable, alert and flexible, equity shares can increase capital in the long term, earning some return on an annual basis, but as Rolls Royce, and so many others, showed, always with an element of risk. Because of the known risks involved, stock exchanges have developed very exacting rules for the protection of shareholders' money Experience has shown the necessity for these regulations before a company's equity shares can be traded in on the stock exchange.

In the past there were the most blatant abuses. During the period that ended with what has become known as the South Sea Bubble there was one company floated, and the public were fooled into buying shares in it with no profit record, because it had not traded and whose future trade was according to the promoters, to be kept secret. They did not even say where the business was to be located. One may well laugh. But people motivated by greed abandoned prudence and bought the shares. The result was as might be expected. They lost the lot.

The Wall Street crash has its place in economic history. It caused heavy unemployment and brought in its wake the development of fascism and communism during the 1930s. Despite the disasters the equity cult developed, particularly through the 1950s and 1960s. Unit trusts and pension funds used their members' savings, channelling some portions of their funds into carefully selected equity shares. Investment decisions made by prudent investment institutions ensured that the financially unsophisticated saver could invest with safety. Investment analysis has become a virtual science.

The first priority in such analysis is to avoid loss. To ensure this, it is necessary to have absolutely reliable financial accounts, which reflect, in the case of a trading company, assets, profits and management ability and dependability.

Stock exchanges require established profitability for a number of years before permitting dealings in the shares of the companies listed. Laws relating to the type of investment available to trustees—State or otherwise—now permit, in England but not here, a percentage of the funds held in trust to be invested in equity subject to the companies concerned having a substantial history of profitability which should amount to more than £1 million per year.

Furthermore, the company concerned have to have a dividend paying history, that is, never to have passed a dividend during the preceding ten years. In this country we are even more strict. Our law allows trustees virtually no opportunity at all to invest in equities. The reason is caution. Is public money to be less regarded than trustee funds? Notwithstanding all these safeguards, people investing in equity shares still lose money, often very substantial amounts.

Someone described the stock exchange as being a contradiction— where one sold and another bought, and they both thought they were doing something clever. During the sixties and seventies, institutional lenders of fixed interest long term capital, which up to October, 1973 was generally absolutely secure, began to take rights over some equity in the companies obtaining the long term loans, generally by way of option. The reason for this was that inflation eroded the real value of capital lent at commercial rates for fixed long term periods and the lender wanted to obtain some part of the benefit out of profits growth due to inflation and trade expansion. This applied particularly in the property section. Then in 1973 the bubble burst. The bursting of the bubble in 1973 brought losses of thousands of millions of pounds in England and Ireland. The Bank of England had to organise massive rescue plans to prevent a recurrence of the 1929 crash.

The Crown Agents for the Colonies —custodians of loans for Commonwealth countries—had to write off over £85 million in 1974-75. It was replaced by the British Chancellor of the Exchequer, paid for by British taxpayers.

An article appeared in The Sunday Times of last Sunday, 30th January, on the manner in which the Crown Agents in Britain lost these vast sums of money which the taxpayer had to make up. I should like to quote part of that article which would be of interest to Members because of the difficulties which have arisen. It states:

Relations between the Agents and his, Judd's department (the Overseas Development Department) form one of the main aspects of the Fay Committee's investigation. Commercial agents in London for nearly 100 overseas governments, the Crown Agents are unique in having no legal entity and no formal constitution. It was only when they faced financial crisis after heavy losses in speculative banking and property ventures in 1974 that the Government realised the extent of its liability.

This was spelled out again last week by Sir Douglas Henley, the Auditor General, who told MPs that the Overseas Development Ministry "had been advised that the Crown Agents' liabilities constituted a liability of the Crown and thus fell on the Government".

An £85 million grant averted the financial crisis facing the Agents, and in a Commons statement the Government said "it stood behind" them. Their accountability to Parliament, however, remains vague, and many MPs are anxious for the Fay report to help in clearing it up.

I am afraid the exact same situation exists here. The accountability of the investor of this amount of public money to this House remains vague and indeed, in his own words, non-existent.

I have endeavoured to illustrate the history of and present approach to investment. Of necessity it has to be a thumb-nail sketch but it cannot be faulted as to fact and it establishes criteria against which any equity investment should be measured. Well publicised activities of take over merchants, asset strippers and property developers have probably made an unsophisticated public believe that it is all so easy. The failures I have listed show even the apparently impossible becomes possible when one examines the financial sector. Equity investment is a place for the knowledgeable, the prudent, the alert and the flexible. What is right today may be completely wrong tomorrow.

Quoted shares in substantial companies can be valued on the basis of established asset values, earnings record, dividend history, ascertainable yield, quantifiable prospects for growth, and marketability.

Unquoted companies shares can also be valued on the same basis—but it has to be accepted that marketability is probably non-existent particularly if things go wrong. All the shareholders remain locked in together. There is no getting out unless one defrauds a prospective buyer by not disclosing problems.

Since 1973 the economic uncertainty of the world economy has reflected itself in a world wide turndown in production and trade. Quoted equity share price indices fell by 300 per cent in the sterling area from their previous peaks. Assets are in many cases unrealiseable. Profitability has reduced or remained static and in only a few special cases have profits increased in line with inflation or in real terms.

Borrowing rates have escalated to such a level that only Governments or State owned enterprises have expanded their borrowing. We know only too well what has happened here. The policy has been, "buy peace for the Coalition whatever the cost and however it pledges the future".

Consequently, institutional lenders —the experts in other words—have in general drawn back from new equity involvement and have endeavoured to extricate themselves from existing situations— even at a substantial loss.

So from 1973 until 1975 every expert changed gear, except the Irish Minister for Industry and Commerce. It is a classic case of John's mother watching the parade and remarking: "Look the whole army is out of step except our John". There were, undoubtedly, many uncertainties in 1974 and 1975. Some companies with massive resources expanded their asset base. Only the foolhardy undertook new commitments which involved any element of risk or involved borrowing to pay for investment.

This, then, is one element of our objection to this Bill which endeavours to provide money for an investment which complies with none of the internationally recognised criteria for equity investment. The Minister's tactics of keeping his cards close to his chest makes it comparable with the company floated during the South Sea bubble, which would not say what it was going to do in case a competitor found out, except that we know the location, but that is all. Otherwise it is the same.

There is an old investment saying which is particularly attributable to a mining project. It is: "money is made in mining only from dealing in the shares of a mine before it goes into production". The natural greed of man, the same as the atmosphere in the casino, creates the opportunity for rumour and speculation in the preproduction period of a mine. This I suggest, is a good pool for a Minister in this country to wade in: it is deeply regrettable that he decided to go in; and it is even more regrettable that he cannot now get out.

Once a mining project has come into production history shows that equity investment becomes the same as fixed interest capital, with this one fundamental difference—the asset is diminishing with every ton of ore that is mined and the eventual asset is simply a hole in the ground. Even that has become a liability because public pressure and alert local authorities now ensure that the hole is dealt with so that there is not an eyesore, and so provision must be made from profits for the treatment of the hole.

Equity investment in a mine must, therefore, ensure a running yield that not alone allows a commercial return but takes into account the reduction of the asset with each ton of ore produced until the asset is extinguished and with it the equity shareholder's attributable funds. Therefore, I must now put to the Minister again, the following questions. I put them at 3.25 today and I have to put them again because I got no answer. I was told they would all be answered in the course of the Minister's opening speech in this debate. Then, at my specific request, he read out a relevant extract from his speech in which he gave no information. We got the speech two minutes later; I cannot find those extracts which were quite lengthy——

Mr. Keating

I did not want to repeat them.

Mr. O'Malley

I presume that your speech was prepared before 3.28 and you expected that the questions would not be reached and you were therefore going to deal with them in your speech. The speech must have been printed before 3.28 p.m. but they are not dealt with, unfortunately.

Mr. Keating

I could have dealt with the questions either at Question Time or in the speech. Because the questions were reached, I opted to give the information at Question Time and the Deputy accepted that. There is no point in putting it on the Dáil record a second time half-an-hour later.

Mr. O'Malley

I see. I can put the questions on the Dáil record a second time, one-and-a-half hours later, because when they were put at 3.28 p.m. they were not answered and until they are answered the Minister cannot justify the course on which he has now committed himself and the nation and the taxpayers. It is only when these are answered that in normal investment terms we can judge the expectation from his investment of our money.

When does production start? I asked that in Question No. 41 on today's Order Paper and I was told that there are all kinds of difficulties and variables and no one can really know. I asked at what rate production would take place and I was told many problems would have to be solved about that and that we did not really know. I asked how long would production go on at this Bula mine and we were told there were many imponderables about that and the Minister did not know. I was also entitled to ask, as I did ask today in Question No. 42 or 43: what is the expected yield on his investment on an annual basis? He told me in about one-and-a-half pages of lovely, ongoing, waffling English that he did not know. What businessman would put £9.54 million into any undertaking without knowing the answer to any of those questions? If there ever were such a businessman he has long since ended up in the bankruptcy courts.

The replies to these questions present no commercial advantage to a competitor even if there is a competitor. I am not too sure that there is in this situation where there is a world cartel. The answers to these questions in respect of other companies are ascertainable from the accounts of every mining operation in the world which enjoys a public quotation for its shares and where the project is conducted as an unquoted subsidiary of the holding company—as is the case here with Bula holdings; they were formally known by a very strange name which is worth looking at in the company office—the subsidiary's details are provided notwithstanding that it is a subsidiary and a private limited company.

Unfortunately, I cannot go through all of the Minister's opening speech. I tried to mark everything that was wrong in it but when I got to about No. 28 of the things I had marked I gave up. I shall not try to go back through it all now as I have many other things to say. He said that this poor little company should not have to publish its agreement and should not have to give all this information about how many tons of ore it has, what the rate of extraction should be and what the yield should be and so on —that would not be fair. He said that we did not ask in the House that the agreement and the leases and the details relating to Tara be published. We did not have to ask because they are published every three months in extreme detail because of the laws of the New York Stock Exchange Commission and the Toronto Stock Exchange Commission who will not allow a company to trade in shares on their stock exchanges unless an enormous amount of information is provided.

Mr. Crowley

The Minister should tell us the real story behind the agreement.

Mr. O'Malley

Not alone Tara, but every other mining company that is itself publicly quoted or where its operations are carried on by a subsidiary the shares of which are vested in the holding company, makes all that information available and in full every quarter and if the New York and Toronto Stock Exchanges thought there was any delay in making the information available or any doubt about its absolute accuracy, the company ipso facto loses its right to be traded in on those stock exchanges.

I did not expect the Minister to answer my questions at Question Time or even now but not for the reason the Minister gave for not answering them. It is not because of the famous confidentiality lark: that washes with nobody. I do not expect and did not get answers to these questions when I asked them earlier today, not because of the confidentiality involved but because the Minister did not know the answers. That is the simple truth. Although he does not know the answers to the four most fundamental questions that can be asked about this undertaking, he still put £9.54 million of our money into it—at least. I shall be coming to rights issues and things like that later on which will increase the investment.

The Minister cannot answer because neither he, Bula Limited nor Bula Holdings, its shareholders, directors, advisers nor consultants can give a precise date for the start-up of the mine. That depends on the planning authority, which at local level is Meath County Council, and which almost inevitably in this case will finally be this new planning appeals tribunal established towards the end of last year.

Without a start-up date, without knowledge of what type of mining will be permitted by the planning process, it is not possible to establish production costs. Without the start-up date it is not possible to enter into firm longterm sales contracts. The Minister therefore cannot know what the gross revenue will be with even the remotest degree of certainty. He throws our money into the air, or more appropriately in this case into the ground, and where it lands he does not care. Like the South Sea Bubble we are asked to vote money to buy shares in a zinc/lead mine at Navan. That is all the information we have.

The important elements in investment terms we are not told.

May we be permitted to wonder why we have to do this—to vote this money in these circumstances? I said in opening that Fianna Fáil were concerned to maximise the benefits of all our natural resources for the country as a whole. The priorities we set are, first, control; second, maximum benefit, taking into account the present levels of unemployment; third, job requirements, both as to numbers and type of employment with a realisation of the economic emergency that is there to be dealt with; and, fourth, further development of exploration and exploitation of our natural resources. As we can find no justification for approving the spending of this money in investment terms, I will attempt to measure the Minister's approach against other criteria.

First we will deal with control. With the 24 per cent he is buying and the 25 per cent gift, the Minister holds 49 per cent of Bula Ltd., and enjoys the right, if "enjoys" is the right word, to appoint two directors out of a maximum of, I understand, ten. Therefore, as a minority shareholder in a private limited company with rights to appoint two directors, he is in a minority position in board and shareholder meetings and he is locked into that company without any control whatever.

We come now to the general question of benefits. I have shown how the four existing shareholders have benefited, so let me examine the extent of possible benefit to anyone else—the poor unfortunate who never entered into the Minister's thinking in this matter, the taxpayer. The Minister's method of approaching this investment has endowed the few existing shareholders with an initial tax free £29.81 million. The mine would require to earn £298.1 million before those same shareholders would obtain the same benefit after tax. This immediately raises the question as to what the mine will earn in profits.

The Minister tells us he does not know; I suppose we cannot know either, but could we have a look at what the total sales values of the published reserves are? I forgot, of course, that the £9.54 million has gone to the shareholders—the company have not received that money or any money from the Minister or the taxpayer. Let us be clear about that. None of this money goes into the company, unless it may be to repay some loans that the directors have from the company.

The company, Bula Holdings, are selling 192,000 shares in Bula Ltd. to the Minister. As this represents 24 per cent of the capital, a little simple arithmetic tells us that the entire capital of the company at this time is £800,000 made up of 800,000 ordinary shares, assuming the shares are £1 each. Of course the company have to pay for the land wherein lies the ore and have to pay for other land around the land they already own. The cost of this land, which I understand amounts to several hundred acres, must come to more than £800,000. I suppose, taking it in general terms, it would come to perhaps £1 million or £2 million. Then of course there have been plans of some sort prepared—for instance the planning application and some sort of production plan, which was carried out by a Canadian firm, Bechtel. I suppose there have been surveys of some sort, because otherwise the arbitrators would have been in the same position as the Minister tries to place us in today—without any facts.

It would be reasonable to assume that the company probably have spent £3 million or £4 million, give or take a million. Therefore with £3 million or £4 million spent or committed, might one presume to ask: where does this come from? It is not from the £9.54 million. That has gone to the shareholders personally and beneficially. Will the company increase their capital by means of a rights issue or are they borrowing this front money, as it were, from the bank on overdraft? If so, on what security? Will it be by means of guarantee, and what is the Minister's liability in this respect? Maybe it has not been discussed, or perhaps this is one of the vague terms of the secret agreement which the Minister requires to be kept secret.

There are no acceptable grounds of confidentiality which can justify the non-disclosure of a company's issued capital. In fact, there is a requirement under the Company's Act for disclosure. If there is a guarantee involved, we must be told that fact and the extent of it; if there is not, how is the company going to pay for the land wherein lies the ore? This form of expenditure being long-term would not normally be financed by means of overdraft facility which by banking definition is to meet short-term requirements. What is the capital plan for the exploitation of this project?

We are not talking about pin money here. We are talking about £35 million to £45 million. We are entitled to know what part the Minister will play in the procurement of this money. If it is all, or mostly all, borrowed from external sources such as banks, we are entitled to know what guarantees will be required of the shareholders if the equity capital remains at its present levels.

Furthermore, if nothing definite is provided in the agreement or in any plan, we want to know how the taxpayer can be expected to provide an open-ended commitment for a hole in the ground.

Let me move on to the national benefit. The Minister has been hatching the resources' eggs for the past four years. So far not one chicken has pecked its way through the shell. Prolonged litigation culminating in drawn out teasing out of the problem involved has had the result of producing a lemon. Cows are still grazing at Nevinstown where men should be producing. I could condone the delay if the result was even half right.

But the Minister has spent years turning and twisting down roads that are new to us all. We find ourselves about to pay for a seat in the most expensive vehicle in Ireland, stuck in the middle of a muddy field waiting for someone to give us the money to make the road so that we can get out of the mire that we paid good money to get into in the first place.

Here we are, buying shares for £9.54 million in a company with inadequate capital, unknown plans and no sales. The Minister has no controlling voice either as a shareholder or at director level. The Minister, as Minister of course, has regulatory powers but he does not have to pay £9.54 million of our money to exercise these powers. He has shown no urgency to indicate that he understands the importance of this project both as a job provider and as a contribution to our economic recovery.

In so far as the Bula project is concerned, it is fair to say that the issues that arose from the acquisition by Bula Ltd. of the Wright lands has made Ireland the laughing-stock of the mining world. We invited the Minister to make a new order, which we would have supported, which would have brought the minerals concerned into State ownership under State control—the landowner being compensated suitably.

One would have thought that the man who in the early seventies was the greatest socialist in this country would have made such a call scarcely necessary, that he would have answered it with alacrity but, strangely, instead of the State making an order under the 1940 Act, the Act which is designed to deal precisely with this sort of situation, the Minister refused and allowed the people who had the fortune to latch on to Mr. Wright after someone else had found minerals across the river, to benefit in this incredibly generous way.

By not availing of this procedure the Minister has retarded exploration. The explorer cannot be certain that, having spent money proving the existence of minerals in land held by an owner under a particular type of title, he will ever get a production licence or a mining lease. Therefore, confidence has been damaged seriously.

It is only right that, in passing, I should refer to the fact that a similar situation arose in a village known as Croagh in Limerick where, a couple of years ago, a company known as Arasco in which, incidentally, I have no interest, beneficial or otherwise, discovered what they hoped might be a mineralisation strike and where certain people, without the knowledge or permission of the Department, made a deal with the landowners concerned, behind the backs of the licensees, and drilled seven holes each averaging 300 feet. The company who were the exploration licensees made soil tests only and a considerable geochemical anomaly appeared in the soil but when actual drilling was carried out it was not done by this company but by some other group of people who had had nothing to do with the testing of the soil. Perhaps the coincidences do not stop there but I shall leave it at that. If the Minister wishes, he may pursue inquiries. Much to the relief of Arasco, nothing was found there.

I should now like to move into the area of the valuation of this undertaking that has been created by the Minister. I am somewhat inhibited by the lack of information but judging by Press reports it appears that the Minister who has the opportunity to obtain all the facts must have been somewhat surprised at what came out as to valuation from the arbitrators. I have to assume that the secret agreement between the Minister and the original shareholders in Bula Ltd. provided a formula for establishing a valuation and provided for the resolution of difference by means of arbitration.

That in my opinion was a serious error on the Minister's part. Investment analysis is a science when applied to ascertainable factors in any normal company structures. I have been informed that the Minister is required to make the first payment for these shares on or before 9th February, 1977. Why should such a timetable be agreed when no planning permission exists? Was the Minister under a misapprehension as to the time required for the various processes when he signed the secret agreement in December, 1975? Did he not impose counter conditions to those determining the time for payment? At this time he is paying £9.54 million of our money for 24 per cent of a few hundred acres of passable grazing land. If he did not impose conditions, he was negligent. Without knowing the conditions attributed to any planning permission, how can the method, extent and replacement costs of mining be determined?

If open-cast mining is permitted will there be any limitation as to hours of working, area mined and reserves unexploitable? Are we being asked to accept that commercial projects of this magnitude are based on guesswork? Because on what we know the different cost factors that can only be determined when the final planning permission with conditions is obtained, are unascertainable at this time.

I wish to draw a distinction between planning permission in respect of this mine and the planning permission which Tara did not have at a time when they engaged in some activity or other some years ago. It did not matter to Tara or to the owners of any other underground mine whether they had planning permission because they were bound to be able to obtain it. The explosions take place hundreds of thousands of feet under the ground. It is down there, too, that the dirt and the dust is circulating and so long as there is some kind of lid covering the shaft to prevent the emission of noise or dust, what happens in such a mine is of no concern to the planning authority. Their interest lies in the minimum building appearing on top. The situation is totally different in relation to open-cast mining. Generally speaking, the open-cast zinc or lead mines in the world are in places where they do not create problems. They are, perhaps, in the middle of the Australian desert, 100 or 200 miles from the nearest house. They can blast rock 24 hours a day and they do not interfere with anybody. They can send dust up thousands of feet into the sky and let it blow ten or 20 miles around and they do not interfere with anybody. They can work all day and all night, seven days and seven nights a week, and they do not interfere with anybody. This is not a pit in the middle of the Australian desert. It is an arable farm within half-a-mile of the town of Navan in County Meath in Ireland and there are strenuous objections from several hundred people already. It is by no means certain that any planning permission will be granted for this undertaking.

The Bechtel plan, as I understand it, envisages that at least half the recoverable ore Bula are entitled to will be taken out open-cast and, if it cannot be taken out open-cast and has to be taken out underground, as An Taisce suggested a week or two ago should be done, the costings will rise enormously and, until all these factors are decided, the Minister is in no position to place any sort of figure on what will be done. Does the Minister not know perfectly well that if Bula do not get planning permission they will appeal and, in the likelihood they will get permission subject to tremendously penal conditions, they will appeal against the permission and, if they get permission, no matter how onerous the conditions, 350 residents will appeal against the conditions anyway and, until the full facts are ascertained, no one can go within £10 million of valuing this particular project?

Mr. B. Desmond

The Deputy sounds like a Tara purchaser.

Mr. O'Malley

Whatever else is in this agreement the Minister is taking a flying leap in the dark with millions of the public's money. We have not seen the agreement because the Minister does not allow us to see it. In the circumstances, one can reasonably assume that, after taking this lunatic leap in the dark, there is no get-out and he can be sued for huge amounts of money. I believe the Minister is where he is by mistake and I regret that. I wonder what the mistake arises from? Is it the fact that he met people who had a great deal more ability in this field than he had and who have taken him personally, and indirectly all of us, for an almighty ride?

As the science of investment analysis cannot be applied here the Minister finds himself in even deeper water. Arbitration is no face-saving get out for a Minister. The buck stops on his desk and he should know that the arbitration process is no let-off for him, particularly as he subscribes to the promised open Government of the Coalition.

Experienced arbitrators give no reasons or justifications for their awards. They know that that could lead to mitigation. They learn that the award in itself cannot be appealed unless there is a special provision for this, which I understand in this case there is not. Thus an arbitration that literally fleeces the Minister provides no mantle of justification for him in his day of reckoning.

I should like now to pose some further questions: (a) if the planning process is not resolved how can costs be established, and (b) if costs cannot be accurately established how can the technique of discounted cash flow be utilised? We should all know the importance of correct timing of all costs anticipated, particularly first costs, and the importance they have on discounting cash flow exercises. Certainly fashionable, expensive and highly competent merchant bankers with addresses in places like Moorefield in the city of London would know this. If capital ratios as to equity or loan at fixed or variable rates are not agreed between shareholders how can a cash flow projection be prepared? I would remind the Minister I will be expecting answers to all these questions when he comes to reply because they are fundamentally important questions.

As there is probably a production and concentration cost difference of £4 per ton for the ore mined between open-cast and underground mining, if a detailed production programme is not available, are we able to avoid believing that, with a planned production of 1 million tons of ore per annum, there is a possible variation of £4 million in the cost of one year's production alone? That question is long and somewhat laborious. What it means in simpler terms is that to take out 1,000,000 tons of underground mining will cost £4 a ton more than to take it out open cast and that makes a difference of £4 million more in respect of one year's production. We do not know which will be done or the proportions. Yet we are told the Minister can value the thing adequately to enable him to be certain that he is getting a good bargain in what he did.

Again, we have more uncertainty, uncertainty of such proportions and so significant as to make it quite impossible to prepare a reliable cash flow. This project is in an embryonic state. It was even more so in December, 1975, when this secret agreement was signed. How then can valuations be made of the high standard of accuracy vital for the expenditure of public money? It is like trying to back the winner of the Derby before the runners are even born. No one can be committed to commit public money on such a basis and we certainly will not approve of its expenditure in such a manner.

Mr. Crowley

The mine was called Bula after a racehorse.

Mr. O'Malley

He was a champion hurdler at one time. So far I have concentrated on the principle involved in the Minister's approach and exposed the position as I think it truly is, without entering into a debate on the question of the valuation itself. I have shown that, without the information that would normally be available to a prudent and knowledgeable investor, any man would be crazy to be involved in any payment. It may be that the Minister when he comes to conclude the debate will attempt to justify the valuation but he will not be able to do so from the point of view of an objective potential investor.

He has adopted an incorrect approach and entered into an area fraught with such risk that no expectation of values, which of necessity must be questionable having regard to the embryonic state of the project, can justify this payment. It is a matter of judgment. I say that his judgment is wrong. It was wrong in 1975 and it will never be right, whatever the result, because he is not entitled to commit the people's money at such risk and at such a time as he did in 1975.

Earlier I was about to discuss the possible gross revenue from the mining project at Navan to be worked by Bula Ltd., but then I had to go off and, like the Minister, look at how much money it would need before there is any revenue created. The figure probably needed, as I said, will be between £35 million and £45 million for pre-production and capital investment.

I will ignore the uncertainty as to how the ore is to be mined and move to the quantities to be mined. In February, 1975, Bula Ltd. published reserve figures of about 15 million tons of about 10 per cent average lead and zinc content. Due to the unknown factor with regard to the recoverability of the ore under and around the river, the company cannot bring this into the calculations because there has to be an agreement between Tara Mines and the Minister about the diversion of the river to suit Bula. So let us take one million tons of ore off for this uncertainty. That is a modest deduction in the circumstances.

Of course, not even Bula Ltd. will be able to recover all the ore, so for the purpose of this exercise let us say that Bula will mine one million tons of ore per year for a period of 13 years, that is rather modestly taking off only two million tons for these reasons.

This will produce about 160,000 tons of concentrate and, on the published average contents of lead and zinc, I would expect 140,000 tons of zinc and about 20,000 tons of lead.

If we take a net value of $200 per ton for concentrate we use simple arithmetic to arrive at the annual revenue of about $28,000,000. Let us round it off in the Minister's favour and call it $30 million per year revenue, for 13 years. Taking open pit and underground mining plans as being half and half, and assuming planning permission without onerous conditions I would expect average production and concentration cost for the ore as being $13 per ton for opencast and, say, $20 per ton for underground mining.

Average production and concentration cost for the ore will probably be $16½ per ton for one million tons of ore per annum, a total of $16,500,000, leaving an average of $13,500,000 per annum of gross profit. This, of course, will not be available immediately. The Minister cannot tell us when the mining will start, so let us assume it will take two years before there is any revenue. The Minister, of course, is not getting any dividend on startup on our £9.54 million and he does not know when he will, if ever. In addition, the Minister's and the shareholders funds would have to give priority to the servicing and repayment of the bank loans which one would anticipate would finance over 90 per cent of this project.

The Minister will be forced by circumstances into contributing more capital to get the mine into production. On average figures, I have shown how it will need more than £30 million to get into a revenue producing state. If this is to be all borrowed, it would require to be repaid over about seven or eight years because the theoretical life of the mine is only 13 years at most.

So where are we going with our £9.54 million? We are being asked to spend it on shares in a company which owns land in Navan in which there is lead and zinc. The Minister and his partners will need more than £30 million to get started. Therefore he does not say and cannot say when he will get his first dividend on his £9.54 million. Investment of State funds in such a negligent manner is clearly a breach of trust.

This House should ask itself and, in particular, the Minister should ask himself in all sincerity how can he continue with such a crazy proposal. The whole mine will only generate a total sales revenue or turnover—not profit—of about £18 million per year —about £200 million in all—and I emphasise again that is revenue, not profit. However, the Minister has already created the equivalent of £300 million of disposable pre-tax profit for the shareholders who are selling him his shares. The significance of this should be appreciated by anyone who is concerned to be around when such an incredible scandal as this is taking place.

In fact, the mine will not obtain in sales revenue as much money as the Minister has created for the shareholders by his purchase if they had to pay tax. I could go on with this line of approach but I suggest as it has been exposed up to now it clearly shows that a major error of judgment has arisen. This error of judgment has been compounded by an arbitration award which cannot be explained. It is too early in the situation for the payment of money. It will never be worth this amount but that is not really the point. It would never be worth taking a significant equity investment in this particular mine unless one got it at an extremely reasonable figure.

I want to summarise what I have been saying up to now from the investment point of view and to put it in as net a way as I can for the benefit of the Minister and his officials. As I said already, it may be that when the Minister signed the agreement to buy shares in December, 1975, he thought he was allowing sufficient time for proper evaluation of Bula before the first payment became due next week.

The present situation clearly shows that the time for payment should not be February, 1977, because of the following deficiencies which basically summarise what I have said heretofore:

1. No planning permission exists to permit the mine to start-up.

2. No detailed production plan exists.

3. No detailed production cost estimate exists.

4. No detailed concentrating cost estimate exists.

5. No sales plan exists.

6. No revenue estimate or schedule exists.

7. No capital expenditure estimate or schedule exists.

8. No quantifiable yield on the Minister's payment of at least £9.5 million exists if it is made in February, 1977.

9. No capitalisation plan exists.

10. No proposal for river diversion is before the planning authority.

11. No precise workable ore reserve figure is available.

12. No provision has been made for capital additions of cost during production.

13. No allowance can be quantified for possible lowering of the ore mining grade which might be affected significantly, particularly if the river division is delayed or not undertaken.

14. The extraordinary arbitration valuation which comes to about £40 million for the mine and which is to be compared with a reported value of £7.75 million placed on the entire undertaking by the Minister's own financial advisers, must have been based on very high recovery figures provided by Bula which may not be justified particularly for the lower grade ore to be mined. It should be remembered that metal recovery into concentrates varies directly with the grade of the ore.

15. Concentrating cost estimates could be inaccurate if extensive pilot plant work has not been undertaken. Are we to be told that this pilot plant work has taken place elsewhere? The facilities do not and did not exist at Navan for it to have been there. No reputable merchant bankers like Lazard Brothers and Company Limited or any similar world class institution would attempt an evaluation, or no mining consultants and advisers they might employ. The attempt to let Lazard Brothers make such a valuable if extensive pilot plant work had not taken place on the site.

16. It is not possible to quantify the effect of all these deficiencies for a projected cash flow and therefore, for the resulting value of the project.

17. I do not think that they can be quantified in the discounting factor used for valuation purposes.

18. The Minister and the arbitrators have relied upon reports produced by Bechtel for Bula and submitted to the Minister and the arbitrators. The Minister's financial advisers must have sought the opportunity to commission a full report by independent consultants on the proposed developments. I asked the Minister was this done? Was there a full report or was it just four or five pages from some open-cast expert commenting on somebody else's report without having undertaken a thorough investigation himself?

19. We cannot obtain confirmation or evidence that the Bula report prepared for them by Bechtel has no reservations on concentrate recovery projections and operating costs. Is there sufficient supporting data for the assumptions made under these two headings by Bechtel in particular?

20. No acceptable investment analysis as applied to equity investment in mining projects is possible to permit any payment to be made either next week or in the foreseeable future.

I have been dealing for the last hour and 40 minutes with the investment approach to what the Minister has done. I have deliberately refrained from other approaches which will be taken by my colleagues. We try to deal with this question as broadly as we can. We will try to query it from each of the various points of view from which it should be queried. We can only hope for the sake of the country that the questions we have asked and will ask will be answered and that we will not get the kind of performance we got at 3.28 p.m. today when we were told everything was on-going and because everything was on-going nothing could be definite.

The Minister for Industry and Commerce is adept at sliding out of price increases or the closure of factories and so on because he has had more practice at it than all other Ministers for Industry and Commerce in the history of the State. However, the kind of performance he is good at in that sort of thing will not do here. This is fundamental and very important and will have to be answered. I am not going to lose my life if my questions are not answered. I am sure my colleagues will not either, but this country can draw some very valuable conclusions and we will soon know whether the Official Secrets Act was invoked by the Minister for Industry and Commerce in an effort to prevent criticism of himself.

Before I sit down there is one aspect of this matter that I want to deal with very briefly because, while I have set out in great detail by analysis what the Minister has done and I have set out certain criteria in relation to what I think the Fianna Fáil Party would have done in the circumstances, this opportunity is probably the only one I will ever have on a mining Bill in this House to set out very briefly our approach to mining problems as they exist at present. The first thing to remember about mining in general terms in this country up to 1973 was that as a result of what Deputy Gerald Sweetman did in 1956 and what Deputy Seán Lemass did in 1958 there was a sudden upsurge of exploration. That began in the middle or late fifties and in the early sixties was rewarded near Loughrea in County Galway with the discovery of a worth-while, marginal mine, not by any means a big or profitable mine. Some years later the same group, who spent far more on exploration than anybody else in Ireland either then or since, found another small and, unfortunately, even more marginal mine at Gortdrum near Tipperary town. They put both of these mines into production. Nobody else found anything of great significance. Then in 1970 at Navan the same company again found the biggest mine ever found in Ireland—this one. There was tremendous exploration during the late fifties and all through the sixties and the early seventies.

Then in 1973 it came to a stop. It is pretty evident why it did because the Government of the day broke their word in a stupid way. They did it for ideological reasons. Allegedly they wanted to get more money. If they had never broken their word they could have got more money out of royalties. The whole atmosphere in mining in Ireland changed quickly towards the end of 1973 and instead of frantic exploration which had led to the discovery of three worth-while mines, exploration began to grind down, not quite to a halt, but very nearly to a halt. An example of it was in the autumn of 1976 when 120 prospecting licences which had been issued to companies were returned to the Department. They were not interested any more.

Our attitude is that we want to encourage exploration at the rate that it went on during the late fifties right through the sixties and into the early seventies because it is only if we encourage that exploration that we will get the finds that that policy brought about in that decade between 1960 and 1970. Having encouraged the exploration on a wide scale that did exist and that we would hope to get going again, we are not going to make any fancy deals with private companies to pay their private shareholders incredible amounts of money for percentage shares in those companies. What we are going to do is to use the Minerals Development Act, 1940.

That Act was supported by all sides in the House, not least at the time by the Labour Party because the members of that party at that time had some shape or semblance of socialism about them which they have long since lost. We are going to use that Act to do what that Act is there for, to get over the difficulties that existed in, for example, two places, Wexford and Clare in the thirties where the private ownership of minerals interfered with the development of two mines which it was in the national interest should be worked—precisely the kind of situation that we have in Bula today. The 1940 Act was brought in and supported by all parties to overcome that. If there was some technical defect that the courts found in the order that was originally made then the order should have been made again without the technical defect that the courts found, and should have been made the very day that the courts gave the decision. The technical defect should have been set out so that the draftsmen the second time would change whatever word needed to be changed. Then the State would control the minerals as the 1940 Act envisaged. We would then negotiate with such person or persons as seemed most likely to deal with those minerals in the way that would be most conducive to the maximum possible public benefit here. We would have granted a mining lease to one or more firms—perhaps even as many as four —if the orebody was found to be big enough. They would have as one of the terms of that lease to work together in co-operation. There would be only one concentrator at that mine and not two as is the ridiculous situation today.

We must take into account the particular moral claims of those who found the orebody. If people who spend millions of pounds in exploration are ignored by the Government, then they will not spend more money looking again. That is what happened in 1973 and 1974 and there are very few people looking for minerals in Ireland today. Having granted a lease to one or more companies and having made it a condition that the companies would operate together if there was more than one, the most important covenant of that lease would be the insertion of a condition that a smelter would be established by the mining lessees, either by themselves or by arrangements they would make with others. I would not care whose money built it.

Look at the position in which the Minister finds himself today having failed to do that. He had the perfect opportunity to do it, and indeed I would say it was a duty. He now finds himself fiddling around with this little company which has 13 years left, if it is lucky, if it can divert the river. If it cannot, I suppose it will last only about seven or eight years. In the meantime the mining lessees of by far the biggest part of this rich orebody— perhaps 80 or 90 per cent of it—have entered into long-term contracts in order to capitalise their projects. Does the Minister realise what that entails? It means that Tara zinc concentrate is not available for an Irish smelter if we had one and is not available for eight or ten years. I do not know the details of their financing arrangements with the banks but it is in the region of that period. The concentrate is not available because it is already sold to zinc refineries all over the world. Even if the IDA could get someone now to build a smelter, though this is becoming increasingly problematic, I do not think they would get any ore for quite a long time. Tara's concentrates are sold and Bula may never go into production. The Minister knows that. We have only to read his own speech. Anticipating that things may go wrong the Minister said:

I believe we will still have a substantial credit balance. At the very worst, I do not think that we can lose, because even if the minerals are left unworked in the ground our participating interest will remain to bear fruit at some later date in the future.

Is that the statement of a man who is delighted with the deal he has done? It is an incredibly apologetic statement on the Second Reading of a Bill to approve the payment of £9.54 million to four individuals for a minority shareholding in a very small company with no plans and no quantified assets. To my mind this part of the Minister's statement is extraordinarily apologetic in tone. He realises that this mine may never go into production. If things work out as one anticipates it simply could not go into production. In any event its life is so short that it is extremely doubtful whether it is worth trying to operate it in the way proposed. The Minister says that if the worst comes to the worst at least we will own 49 per cent of whatever is there. If the Minister did his job properly we would own 100 per cent and compensate the owner, as was done in many other cases. Why is it that the Minister found such difficulty, since this Act was used in other cases? If similar circumstances should arise again we would forget about these equity shareholdings and forget about risking State money in the most notoriously risky business there is.

In my speech I gave examples of some incredibly prosperous firms like Rolls Royce going bankrupt and the equity shareholders getting nothing. Mining is the most notorious kind of investment. I would ask the Minister to think about the Poseidon case. Poseidon had and still has one of the richest nickel mines in Australia. It never went into production and today Poseidon is in compulsory liquidation and the shareholders who purchased shares at as much as £105 and £108 per share have recently been told by the liquidator that if they are lucky they may get a dividend of 5p or 10p on their shares. Bula is no Poseidon; it is on a very mini scale. It might end up as a tragic loss. The most the State can lose is £9.54 million plus the £2 million or £3 million that it will have to put in as a rights issue. It is a serious matter if we may lose that much.

God knows State capital is scarce enough today. Look at the roads of this country. They are screaming out for capital. Every bump is an eloquent cry for the use of scarce State capital. Look at the telephones. One may have to dial Limerick ten, 12 or 15 times in order to get through to a number which is not engaged. There is a screaming demand for capital in this country today. What are we doing with it? We are putting it down a hole in the most notoriously risky business there is simply because the Minister has an ideological hang-up and he did not want to do what his predecessors were doing successfully. We could be getting our cut from the entirety of that mine and the whole orebody could have been in production more than two years ago but for the messing that went on. Every ton of ore which comes up is recorded for the Minister for Industry and Commerce of the day by his clerk. He counts every ton that comes up and calculates the money owed to us. We have a variable production royalty and at the end of every week the State is paid a substantial amount of money and nobody can complain.

Mr. B. Desmond

Just like Loughrea and Gortdrum.

Mr. O'Malley

The difference between Loughrea and Gortdrum is that, while they were only barely able to survive due to the low grade of the ore, this mine—particularly the Tara end of it—is a very rich mine. The Bula end is averaging 9 per cent, the Tara end at 12 per cent or 14 per cent and all that somebody has to do on behalf of the Minister for Industry and Commerce is count the output and take the royalty. Had one penny of State money been risked by that? Is there not a guaranteed income for the State and for the hard-pressed tax payer?

That is ideologically wrong. That is the right decision for a businessman, but tragically the Minister for Industry and Commerce of today is not a businessman. Instead of putting the £11½ million into a hole that has not yet been dug or into the pockets of four people, we could have spent it on roads, sewerage, water, housing and telephones. The ideology is wrong and this money has had to be wasted in this extraordinary way. Even if we do get back into power in the next few months, as one would anticipate, this egg has been so well scrambled that I do not know how anyone can unscramble it. The cheapest thing to do would be for the Government to try to buy their way out of the obligations that they have entered into.

Mr. B. Desmond

Yes, sell to Tara. It has taken two hours to say it.

Mr. O'Malley

The invalid approach that has been made will cause very serious losses not just in terms of investments being lost but in terms of the output not being made, or the employment not being given. If the Minister dislikes the company in which he has a 25 per cent shareholding—and obviously from all the remarks, the Minister does—he can go off and deal with somebody else if he thinks that appropriate, and or he could bring in Mianraí Teoranta.

There was a lot of talk from the Minister last year about what he would do with Mianraí Teoranta this year but the estimate for this year is only £10 for Mianraí Teoranta. The instalment for Bula for this year is only £4.90 million and there will have to be instalments next year and the year after. The estivestment mate is £10 for Mianraí Teoranta, the State mining company which has often carried out mining operations on behalf of the State and £4.90 million for four gentlemen, who happened to come along after somebody had found some valuable minerals, and we now find ourselves in the position, that the former socialist Minister has locked himself in to those individuals without any control because they are the boys who have the say. The Minister has invested State money that has created profits and assets for them, that are astronomical by any standards and which are not justified by the amount of ore and its potential recoverability in this mine.

Mr. B. Desmond

For two hours I have patiently tried to discern the precise interest of Deputy O'Malley in relation to his opposition to this Bill and to the proposition before the House. I am acutely aware that by virtue of the rigid constraints of a constitutional nature which have faced the Minister, he has been obliged to put this proposition before the House. The House should be aware of the restraint with which the Minister must approach the position. Deputy O'Malley has suffered from no such constraints because he is not involved in a business undertaking in this matter. At one stage I thought Deputy O'Malley was representing the interests of former President Eisenhower. For a while I was not quite sure what interest Deputy O'Malley represents. Does he represent the national interest, Fianna Fáil, Tara, the Bula interest, the taxpayer or the Constitution of the country? While Deputy O'Malley knows nothing of the details of the agreement, he has been able to arrive at very precise assumptions about the financial outcome to the State in relation to this agreement. Deputy O'Malley sounds like a man who has lost a few shares in Tara, as he confessed to the House earlier on.

This is an age of constitutional politics in terms of business dealings in many countries and an age of disclosure. I was appalled that Deputy O'Malley could come in here and give us a long discourse on what Fianna Fáil might have done, on what Deputy Sweetman did in 1956, and what Deputy Seán Lemass did in 1958 and what was done in the early 1960's and about how they got some income to the State from royalties and so on. It is all very interesting but it has nothing to do with the Bill before the House. The Deputy did not touch, as a matter of Fianna Fáil policy, on the constitutional issues involved. I am gravely concerned that such is the nature of the section of the Irish Constitution which deals with the disposal, the use and inherent rights of private property, in this country, that the House tonight must pay £9.5 million, in effect, for the confirmation of that right. This is the most important point and it has not been referred to by Deputy O'Malley in his contribution.

The Minister received the best legal advice in the country that if the State is to have an involvement in Bula, it must pay for it in cash and has so negotiated a shareholding. The State also received advice that were it to exercise an order of a compulsory nature on a company of this size, bearing in mind the Supreme Court and the High Court judgments in this regard, the State would in a subsequent legal compensation claim be most likely obliged to pay full compensation in the event of repeating of orders in this regard. Deputy O'Malley is saying, in effect, that the Constitution cannot be touched because Fianna Fáil ideological position is that it supports the inherent private property reservations within the Constitution. All that Fianna Fáil come up with after a two and a half hour speech, is that they would operate a royalty system and have a new order made, Bula would have to hand over and they would give them some compensation. Of course, that is totally different from what the Minister for Industry and Commerce, in effect has been putting before the House.

In effect, Deputy O'Malley is saying that the Fianna Fáil Party will pay £40 million in the event of their being obliged to defend an order following compensation in this House. I find that an incredible contradiction because it shows neither logic nor common sense. In the late sixties and early seventies I had hoped that the Constitution would be amended in such a manner that the inherent right of the State vis-à-vis our natural resources would have been enshrined in the State without any ambiguity. Of course, the pure republicanism of Deputy O'Malley does not even extend to that elementary level. The nub of Fianna Fáil policy is to take a few bob in royalties from private mining interests. It is the most out-dated concept of mining development for any political party to advance. Fianna Fáil have no other policy. Their attitude is to let Tara do as they will but to catch Bula on an order and to charge them anything from a penny per ton upwards as it comes from the ground. With due respect to the Fianna Fáil Party, even the late Seán Lemass, who had to go through the embryonic development of mining and exploration policies, would have thought of something better than that. They even go back to the days of 1956 and laud the late Gerard Sweetman in terms of mining development. Some of the earlier mining ventures have monuments in that regard. There are living monuments to extraction rates and royalty levels and to sums of money poured into holes in the ground in respect of State investment in mining, some of them not more than 50 miles from Dublin. I need not say much more than that because these monuments are there for all to see.

It is also the age of disclosure. This House should have some form of mechanism whereby there would be selectivity operating within rigid and clear areas of confidentiality and whereby Members of this House would be appraised of the agreements entered into by the State. Members of the House might well be obliged to adhere to the Official Secrets Act. We should have a structure in Parliament whereby the type of agreement entered into by the Minister would be brought to the notice of both Government and Opposition in a strictly confidential manner so that Members could advise the Minister of their views.

It is noteable that, while Deputy O'Malley is demanding total disclosure in relation to Bula, he has never demanded the disclosure of any other agreement in relation to any other private company. It is notable that the viewpoint of Deputy O'Malley is not shared by Deputies Lynch and Colley. It is extremely doubtful if it is shared by the former Minister for Industry and Commerce, Deputy Lalor. I remember teasing Deputy Lalor about agreements entered into. In fact, I recall teasing some of his predecessors in relation to non-participatory Marathon Oil agreements. From 1969 onwards I was instrumental in getting a copy of that agreement lodged in the Library. On each occasion holy horror broke out in the Fianna Fáil front bench at the idea that confidentiality might be breached in relation to agreements of a non-participatory nature. I remember being assailed by Fianna Fáil when I suggested that details should be given in relation to Bord Fáilte grants to hotels. Eventually we got the information by having it included in the annual reports of the companies concerned.

I suggest there is more than a touching concern on the part of Deputy O'Malley for that utterly valueless, totally inconsequential piece of rubbish of 200 acres in Navan. Deputy O'Malley has apparently written it down to such an extent that the Minister would be well advised to flog the State percentage in it to Tara for £20 and to throw a few bob in as luck money. Is that what Deputy O'Malley wants the Government to do? I suggest that the matter should be taken seriously in the national interest. I hold no brief for either company. I hold no brief when adventures and entrepreneurs decide to cut one another's throats and to exploit, explore and develop in the hope of making money. That is the name of their game. The State should maintain a definite role in that kind of poker game. The writing-down that went on here this afternoon nearly resulted in the asset being written off. It varied from 20 million tons to 13 million tons. Unfortunately for Deputy O'Malley, the Minister has not made any disclosures but he is sure of his data. One might even ask who wrote Deputy O'Malley's speech. It seems to possess an inordinate degree of investment analysis. Did he write it himself? I find his contribution contradictory. On the one hand, he advanced the view that equity capital investment by the State is a high risk investment if it is in Bula; on the other hand, equity capital investment by multi-nationals in Tara is in a rich orebody which will give rich returns. Where is the logic in Deputy O'Malley's approach?

If the Minister had been successful in obtaining a 24 per cent shareholding for the same ratio consideration in Tara, would Deputy O'Malley have come into this House tonight and assailed the Minister? The answer would be no. Yet the Government of the day, not because it is a particular desire of the Minister's not because it is the desire of the Labour Party, not because it is the desire of the National Coalition Government, have been obliged by virtue of the Constitution to pay £5.9 million for that particular stake in the orebody in question. Whatever else we may hold in terms of parliamentary democracy, at least the Labour Party have abided by the Constitution. That is not to say that the Constitution should not be changed. Of course it should be changed. That is not to say that this particular episode does not highlight the need for a change in the Constitution vis-à-vis mineral, gas and oil ownership.

I should like to go on record, as a member of a committee on Irish relations since various members of the committee are not prepared to confess in public what happened in that committee. When it was suggested that the committee should proceed to examine our Constitution Article by Article Fianna Fáil ran out of the committee room like constipated ducks. They will not examine any Articles of the Constitution because we might get to Article 2 or Article 3 and we know we could not go any further. We cannot examine the Constitution. We cannot even have a new Constitution dealing with questions of mineral wealth, oil, gas, human rights and everything else because somebody might feel that we are giving concessions to the Unionists.

We spend £9.5 million today because we would not examine the Constitution because the Fianna Fáil Party are as obdurately opposed to changing our Constitution so that if the Minister were to make an order tomorrow morning under the 1940 Act or any other Act he would immediately be caught on a constitutional basis for full compensation to the tune of anything up to £40 million. Nobody knows this better than my colleague opposite, Deputy Lalor, because he well knows that he went through the crucifixion of being Minister for Industry and Commerce when those cases were in the High Court and in the Supreme Court.

I have no love for this Bill but while there is a Constitution in the country and while I am, as a Deputy in this House, constrained by that Constitution I will abide by it. I would love to see it changed. This is an important point to be made. I regret that no such anxiety exists in the minds of the Opposition. They are only concerned about saying that if they were in Government they would give this orebody away to a private group of leaseholders provided Fianna Fáil got their royalty for each ton mined. That is their sophisticated approach to mining in 1977. It is a bit of a joke in the context of an Opposition policy on mining.

I do not believe the Government were left with any great choice except to proceed to pay, by way of the arbitration agreement, the particular sum agreed. I believe the State were right in seeking a major shareholding in this company. I should also like to say, since companies are named, that if Tara were not originally too greedy in this regard the matter might well have been glossed over. I believe it has boomeranged in that regard. I believe there should be some mechanism in the House whereby a great deal more information would be available to us. I do not believe that this would be opposed by Members of the House. When I hear the speeches made by some of my Norwegian and other colleagues in the Council of Europe about disclosing even the minutest detail regarding their oil and gas, I feel we in Ireland might be saying a bit too much. The remarks made by Deputy O'Malley today, in relation to where he got this information, will not be helpful in the long run because he may finish up as a future Minister for Industry and Commerce. I believe that any international entrepreneur would be very careful to examine the clause of the agreement about public disclosures in relation to what Deputy O'Malley said. Ministerial responsibility in this country has a very peculiar habit of changing people rapidly once they assume the mantle of the portfolio.

How will the orebody be finally mined? Will it be done on a joint basis? This is the obvious wish of the Government. Will one party, presumably the larger one, squeeze the smaller party out of existence? Will this be done with the approval of the Opposition? Is this the avowed aim of some people in relation to this matter? I do not know but the tone of the speech made by Deputy O'Malley today for two hours in relation to one particular company leaves me with the view that one has a selective interpretation of the legislation going through the House.

Do the Fianna Fáil Party agree that what is needed in relation to this legislation before we have any future repetition of this type of legislation going through the House is to amend our Constitution? If they do they should say so and we could proceed on an all-party basis to amend that section of the Constitution and, perhaps, have a new section written in whereby we would have full State control on a public, supervisory basis over the mineral, oil and gas wealth of the country where, in relation to some of the more recent agreements it is conceivable that similar type situations could in the long or short run emerge which would not be to the credit of anybody in the country.

I do not want to comment on the technicalities of Deputy O'Malley's contribution, which was purely speculative. He said that the beneficiaries of the State consideration would have a tax exemption. I find that incredible. All the indications are that they will not have such a tax exemption. He quickly went away from it to other areas. The touching concern of Deputy O'Malley for such a valueless hole in the ground at Navan has raised my estimation of the real value of the company we are talking about. I ask the Opposition, in their contributions, not to revert to the old, hollow argument that we would merely have a rather out-dated and rather naïve system of minute royalty collection from such mining development but rather that the State would be deeply involved in each of the companies concerned. It is quite significant, despite the major efforts of the Minister for Industry and Commerce, that Tara resolutely refused to give the State any shares for a consideration in relation to their company. It is significant that they would not part with anything in relation to what one would call an established commercial basis.

I do not think they would have found the State unduly parsimonious in relation to such a venture. Pending constitutional changes, which are eminently desirable, it is far better that in a mixed economy there should be a joint venture agreement by the State and private companies in this area. There was nothing to stop such a joint venture being undertaken by the Tara company representatives and the Minister of the day; yet that did not come about.

I would have thought that in some way Bula was a Trojan horse. Many things have been said about this company and I suppose one can afford to luxuriate in speculation, but it would have been interesting to know if any agreement would ever have been made by Tara were it not for the agreement reached by the State with Bula? Whether development would have commenced is a matter of speculation. We shall probably never know the answer, but I would surmise that what I would regard as a small Trojan horse had a fair kick in its hind legs in terms of an agreement finally being reached.

It is a sad day for Ireland that exploitation of a major orebody such as we have at Navan should have been delayed for such a long period. Individual greed enters into it, a greed to which apparently the Opposition would willingly pander provided anybody would come in and develop the site and give them a few shillings in royalties. It shows that such a development cannot operate in the national interest.

However, as the Minister rightly said, we cannot brush aside the constitutional right of persons who have land and the ore underneath it to exploit it, and if we wish to see development taking place with the State deeply involved in it, then we must pay for it. That pinpoints the need for all-party action on our Constitution. I believe that once a constitution is there all mining developers both native and foreign are prepared to operate within that constraint. I find that most companies when they go into any country will abide by the Constitution, but it must be there and when it is there it has to be observed both by the State and the company entering into such business arrangements.

Therefore it gives me no pleasure to talk on this Bill but I deplore the appalling selectivity of Fianna Fáil and of Deputy O'Malley in particular; I certainly would not accuse Deputy Lalor of such selectivity. The lack of balance in Deputy O'Malley's contribution does not add one bit to his competence as an economist; in fact, for a while I thought he sounded like a broken-down lecturer in rather elementary business economics. He had no objectivity of approach. He had outstanding mastery of his brief, but he let his prejudices run riot. He is totally incapable of restraint, certainly incapable of it in relation to major State investment. He made sweeping statements which are in no way validated except by the phrase "I am informed". One might legitimately ask Deputy O'Malley who is informing him. He went blue in the face here about the Minister not disclosing a commercial agreement. At the same time, he can gaily write off a million pounds here, a couple of million tons there, and assume extraction costs and production costs and project into the 1990s without giving the slightest inkling of proof of the commercial background of his assertions. Therefore, he does not rank very high as a poker player in the game he has tried to play here this afternoon. He is playing poker with State money and that is something we are not too anxious to see done.

I do not think the Minister relished the choice he had to make but, on balance, he has made a bargain which in time will be justified, despite the public revulsion which has always existed that we, the taxpayers, should have to pay some £9.5 million for minerals which we always thought, until we looked at the 1937 Constitution—a product of Fianna Fáil, I might add—were our minerals, our gas and our oil but which, of course, are not but belong to some gentleman who has the foresight or the commercial agility, or whatever description one wants to put on it, who buys a couple of hundred acres of land with these resources.

I hope all those good Irishmen and women who are so anxious to defend the rights of private property will realise they have to pay £9.5 million to some individuals for the public endorsement of that right that is enshrined in the Constitution, that they know what they are paying for and appreciate the cost of such a right. The Constitution should be amended and a new look is needed in regard to certain aspects of private property, the development of a mixed economy, State and private investment and public capital programme investment.

I welcome the Minister's indication that he thought the mining legislation was in need of substantial updating. It is appalling that a Minister for Industry and Commerce has almost every year to spend tens of thousands of pounds on constitutional lawyers wondering if he is going to be caught for anything from £9 million to £40 million if he adopts a given course of action. We should not have a constitution as imprecise as that, which hinders industrial development in such a vital area as mineral resources. It is not good even for the business community, that they might be hoping, as a result of the outcome of an abstruse interpretation of the Constitution, to be able to proceed with industrial development. That is not a healthy entrepreneurial climate in which a country can advance industrially. I would hope that new legislation would be introduced and that it would be preceded by Constitutional amendments, and I do not think we would hurt the development of industry in any way in that growing sector.

The basic issue facing this House is whether we are or are not getting value for money in terms of the £9.5 million investment of the Minister in a given share of the ownership and control and exploitation of the 20 million tons of Bula orebody. I do not think this House is in a position to precisely appraise that. We should have mechanism whereby a select committee of the House would evaluate the wisdom, or otherwise, of a State investment of that nature. It is questionable as to whether the responsibility for such a decision should rest entirely with one Minister and his departmental staffs. Inevitably, Ministers are dependent on the advice given to them by their staff and consultants employed. However, the Minister and the Cabinet, make the decision but a Parliamentary mechanism could be devised whereby on a wider basis the incredible ideological suspicions of people like Deputy O'Malley could be allayed. I do not think Deputy O'Malley understands the ideological nuances of this development.

Deputy O'Malley should tell the House in what interest he was speaking today. We know where the Minister stands because he has put a proposition before us but we do not know whether Deputy O'Malley stands for the national interest, the constitutional question in relation to private property or whether he wishes Tara to take over Bula, presumably for something less than £9 million or, perhaps, something in the region of £40 million. Presumably, he has a scenario which he, as a hopeful Minister designate, can advance here. Does he represent the interest of Fianna Fáil which is of a rather irrelevant past in relation to the royalties situation? I do not think Deputy O'Malley should bring us through the exercise of suggesting yet another-order as a follow-through to the defective order of 1971. We could finish up like the Third Order. We should not have further exercises of that nature with his throw-away comment: "We will take them over; we will give them compensation". He did not give us any assessment of how much the compensation would cost. If we followed his line of argument, we would finish up paying a sum between £35 million and £40 million.

No alternative has been put forward by the Opposition. We have only heard a general abuse of the Minister, something which has been very obvious in recent months. The suggestion put forward by the Minister is within the rigid constitutional constraints and obligations which he must fulfil. If he did otherwise, he would finish up in the High Court or in the Supreme Court. I would not like to see the Minister for Industry and Commerce having to go through the same rigmarole which Deputy Lalor had to face in relation to constitutionality. Under the system of constitutional or entrepreneurial environment which we have the State finds itself paying £9.5 million for the stake it is seeking. I would like to see the State with a larger stake.

I found it very disturbing to hear Deputy O'Malley, a lawyer who has on many occasions availed of arbitration, suggesting outmoded methods of fixing valuations by arbitration. He dismissed the method of arbitration used gaily. It is incredible that a budding young legal luminary of Deputy O'Malley's alleged reputation should dismiss arbitration between the State and private interests in such a gay fashion without putting forward an alternative. I have no doubt that if I put forward the suggestion that the State should determine what the share value should be Deputy O'Malley would immediately get up on his hind legs and yell ideological revulsion. I would be accused of being ultra-socialist, of seeking State control and ownership. When the Minister reasonably suggests that the level of compensation for X interest in a 20 million ton orebody owned by these gentlemen as private individuals under a Constitution which apparently nobody wants to change Deputy O'Malley expresses the view that a method other than arbitration should be devised. He suggests that the State shed all its involvement and that we stand like weights and measures mining clerks at Navan while the ore is extracted and get the royalties. I have never heard such naivety in relation to mining extraction and revenue for the State as I heard from him. The most remote mining interest in Australia has forgotten about such a policy and one would be laughed out of South Africa today if one suggested such a policy— countries that are not known for their socialist policies in terms of mining.

Is Deputy O'Malley asking the Minister to hand over the State's interest in Bula to the owners of Tara mines and let them worry about the planning permission on the grounds that it would be better to have one company? That is a rather silly obscure assumption when one bears in mind that Irish people who may not be that notorious for their business acumen at least are not that notorious for throwing away their money on such propositions.

Mr. Lalor

Like Deputy O'Malley, I am very much opposed to this Bill. It is interesting to hear a Government backbencher who is also a member of the Minister's party, being just as critical. He spent a lot of time this evening apologising for the necessity to introduce this Bill. He continued on the same line as the Minister for Posts and Telegraphs started on the 8 o'clock news this morning, repeated again at 9 a.m., 1.30 p.m. and again at 1.45 p.m. in his Labour Party election broadcast, that we should do away with the Constitution. It is extraordinary that the Constitution is being blamed for the Minister's lack of ideas and the bad handling of affairs in his Department over the last four years.

Debate adjourned.