The facts that have emerged so far in this debate from the Government side could best be compared with a small boy who put his hand into a sweet jar with a very narrow neck and, having grabbed a big handful of sweets, had then to look at the alternatives open to him. The boy could not get his hand out of the jar because of the number of sweets he had grabbed but if he dropped some of the sweets he was holding he was afraid that the jar might not be there when he would return. That is the position the Minister created for himself in December, 1975. He had no need to do so in this case because he had all the powers of the State behind him and plenty of time to do the right thing as far as the people of the country were concerned.
We are entitled to expect from a Government behaviour different from the behaviour of a small boy which I have just mentioned. It gives me no pleasure to see a Minister with egg on his face, as has happened on this occasion, particularly when it arises out of a situation relating to the exploitation of our natural resources. He knows what my recorded views are in regard to the development of natural resources for the benefit of the people. We know that we suffer from lack of capital and expertise. When it comes to owning and controlling the exploration, production and downstream development of our natural resources we therefore have to get ourselves into the position where we can go into partnership with those who can make up for these deficiencies. But there is a right way of doing so and very many wrong ways of doing it. In our view, the Minister has chosen one of the many wrong ways open to him. Tricking around with shares whether obtained by purchase or by gift, is not in our opinion the proper way to do it.
Purchase of shares in an established mining operation is recognised the world over as being risky because mining itself is a risky business. Accidents will happen; production will be affected and market prices change; metal usage changes. This is certainly no place for the innocent. It is particularly no place for the foolish but it has been and always will be a place for the greedy and the losers. As we see it, the Minister has become one of the losers before he even starts in this case. He has really put himself on a highway to nothing. And we ask: for what? A minority share in a mining operation with an uncertain start-up date, an undetermined capital requirement, unproven production plans, unproven viability, limited management experience in metal mining and no marketing plans that we know of. Surely the Minister will not continue to argue the justification for this payment.
Before he continues to do so, I want to point out the position of the Minister in regard to his approach. In the Navan area he will be a 49 per cent shareholder in Bula Ltd., a private company with no stock exchange quotation. He has already obtained or will obtain a 25 per cent share in the adjoining mining operation owned by Tara Mines Ltd. This company's shares are dealt with on stock exchanges in Ireland, England, Canada and the US. He knows that the supervising authority for all shares traded in on the American Stock Exchange is the Securities Exchange Commission. He also probably knows that American shareholders have become quite accustomed to litigation between themselves and company management; it is not uncommon over there.
Now we come to the Minister's most important position in this case. He is the regulating authority for mining licences, exploration and production. We have heard and read much about the diversion of the River Blackwater. I understand that a condition imposed by the Minister in granting a mining lease to Tara provides for what in effect is a facility to be extended by Tara to Bula in regard to the river diversion. He has therefore already imposed as a condition of a mining lease a basis for cost for Tara, a company with American shareholders and in which he has rights over 25 per cent of the shares. I have read many estimates of the possible cost of this diversion; they range from £2 million to £10 million. Has he considered the possibility of inter-shareholder lawsuits before the American courts because of his 49 per cent shareholding in Bula? Whether he realises it or not, it is a distinct possibility.
Has he considered the effect of his position as Minister for Industry and Commerce of being involved in such litigation whatever the outcome might be? The Minister has made visits to the United States and Canada, very properly supporting the efforts over there of various State boards and companies to expand our exports and promote interest in Ireland as a base for American capital and industry. He knows as a result of his first visit that despite the size of the USA, the financial club there is very small. We can imagine what the effect will be and we can easily judge the effect on the economic development of this country as a whole. For what are we putting ourselves at such risk? The uncertain return on shares costing £9.54 million in a small mining operation at Navan. Where is the evidence there of the broad view necessary to the development of our natural resources? It may be that the Minister's strategy is to use Bula concentrates to feed an Irish smelter. That would at least ensure a market for Bula concentrates but Bula has a limited life of perhaps 12 or 13 years and we ask: what happens then?
We come back to the Bill which provides for the payment of £9.54 million, starting next week. The Minister knows that there is a surplus capacity of zinc refining; in fact, existing smelters are at present operating at 60 to 70 per cent capacity. He knows that even a Government financed smelter with present day costs would never achieve viability or be able to produce and sell refined metal with such underutilisation of existing capacity. Bula is not part of an international group; it is very much more a once-off effort. It is not even potentially a rich mine with ore reserves or high mineralisation. There have been details of a new proven mine elsewhere with over 30 per cent mineralisation which is not being pressed into production at present by its owners because of the level of world demands for lead and zinc.
We must remember that the mining business is and always was a "Big Boys' League". The Minister in this case has been out-manoeuvred. He should examine whatever means are now open to him to extricate himself or delay finalisation of payments referred to in this Bill. On this side of the House we will wait until another day if he says he will have another look at the Bill. We shall not think any the worse of him if he comes back to say that he has changed his mind. In the hope that he may do so I want to tell him what our approach would be in the Navan situation. First, we would recognise that we require development of the orebody using other people's expertise and money but obtaining the greatest benefit for the people. We would want job opportunities, contributions towards necessary infrastructure investment, revenue based on sales realisation. Royalties in our opinion represent the safe way to obtain a monetary return: taxes are another way. A combination of both may not be popular with the mine owners but that is where a balance has to be struck, taking into account a fair return for expertise and capital encouragement for further explorations. It is one thing to dangle a carrot. The Minister is paying the interest fee in this case and the bill for the whole Bula affair. We should be prepared to be flexible but we should be firm. We have the expertise at least to ensure a fair return for what is Irish-owned. We know enough now about inter-company billings and transfers, commissions and rebates to ensure a fair return on the money. It will be no part of a Fianna Fáil policy to provide windfall profits to shareholders for the exploitation of Irish resources. Above all, it will not be Fianna Fáil policy to commit scarce capital resources to unproved risk situations, because that is what this Bill is now doing. It provides tax-free windfall profits for shareholders who did not even discover the existence of the ore in the first instance. It makes no contribution towards bringing the production one day nearer commencement in this case because it is no aid to the commencement of the mine's production. It makes no contribution towards providing one job. Can you wonder then why we oppose this measure? We are not playing a game. We are dogmatically against the Minister's approach. We say it is wrong and we demand it be corrected.
During the Minister's contribution we noticed that the Minister takes the opportunity of benefiting himself by association with the other mining company in its commencement of production of the Navan orebody scheduled for this year. Just in case anybody might believe in this case that it is Bula which is starting to produce this year, as one might be expected to believe having regard to the fact that we are dealing with Bula in this debate, it is Tara which is starting production.
We expected to hear facts from the Minister but what we have had is an irrelevant history lesson here yesterday. The few facts he has provided caused the greatest misgivings. The Minister said that he has a report from the London School of Mines recommending that, for safety as well as other reasons, the river should be diverted sooner rather than later. We should like to ask when did he get this report? If he got it prior to December, 1975, when he signed this agreement, what clarification did he obtain from the Bula management and why have Bula not included any proposal for the river diversion in its planning application at present before the planning authority? Is this an admission of his knowledge of the inadequacy of the application now being considered at great length and at great expense by the local authority? If he did not know, surely, as a contracted buyer for £9.54 million of 24 per cent of the shareholding, the management acting on behalf of the shareholders getting our money from the Minister should be dismissed for acting in such a negligent manner. But, then, perhaps this is just a continuation of the saga exposed here by my colleague, Deputy O'Malley, of nobody telling anybody anything.
When the Minister rambles through the maze of valuation he puts his finger on what may be the explanation for all the confusion about this matter. Under the heading "Are we Getting a Good Bargain?", the Minister seems to be asking a question. I thought that as he is about to spend £9.54 million he would be in a position to give us some answers. He said that it was agreed between the State and Bula that we would have the price for the 24 per cent element settled by independent arbitration. He goes on later to say that with each side employing well-known experts in order to put their best case forward the end result was that the estimates of the value— and here I am quoting directly from the circulated copy of the Minister's speech—of the private minerals in question varied from £1 million to £106 million. He then goes on to say that this may seem to be an extraordinary situation. It is, for reasons other than those considered by the Minister. We are not being asked to approve the payment of £9.54 million for 24 per cent of the value of the minerals. The Minister's Bill in this case requires the money for something completely different. It is required to purchase 24 per cent of the shares in the company, not the mineral value of the company.
Is this the reason for all the confusion about the value of the shares, then? Were the arbitrators valuing the minerals and were the Minister's financial adviser or advisers valuing the company? Is this where everyone has gone wrong. Or, is it that the Minister was unable to distinguish the difference? If this is so, he should be condemned for his ignorance of the matter.
The Minister says that he accepts the decision of the three arbitrators. We must ask the questions: had he any option but to accept and was it the decision of all three arbitrators in this case? If they made their decision based on the assumption that planning permission will enable Bula to develop the mine in an economic fashion, as he says, then they were wrong. Decisions on planning applications are based only on considerations of proper planning and development and they have no regard whatever for the economic consequences of the planners' decision.
The mystery of the diminishing value of a natural resource should be a mystery no more. The reason that value diminishes is that there is only a certain amount there in the first place. It reduces with every day's production. So, in the end, it all becomes exhausted. This investment is for real and it is real money that is being paid next week. That is why people like Lazard, who are experienced and responsible in the spending of depositors' money and are answerable for what they do, who know what the rules are, valued on the basis of a discounted cash flow.
Finally, the Minister says that even if the mine does not start in the foreseeable future it will not matter as our money will be safe in the ground. This is, surely, a new concept of economic development, namely, plant your money in a zinc mine and watch it grow in the ground. Is he really serious when he says this?