asked the Minister for Energy if, in view of the continued export of zinc and lead ore from this country, and the reported new discoveries of ore, the Government will consider the construction of a smelter in order that the ore could be processed in this country; and if he will make a statement on the matter.
Ceisteanna—Questions. Oral Answers. - Ore Smelter.
56.
The Industrial Development Authority periodically review the prospects for establishment of a zinc smelter in Ireland. The most recent review in October 1987 concluded that a zinc smelter would not be viable. However, in view of improvements which have taken place in zinc prices and other factors relevant to the economics of a zinc smelter I am asking the IDA to carry out a further review of the project.
I am delighted to hear the Minister is having a further review carried out. Since the previous Minister failed to indicate in regard to the last review in 1987, would it be possible to get the basis on which the IDA carried out their assessment of viability? This question was asked 18 months ago but the then Minister refused to answer it. Therefore I ask this Minister if he can tell us that. Can he say if viability is on the basis that Rio Tinto Zinc decided it was not viable ten years before that, in other words there are smelters under-used in Europe and they need our ore for the smelters in Europe, therefore it is not viable for us to have a smelter for our own ore as it is needed elsewhere.
No. I have examined this and I am reasonably satisfied that the decisions were based on detailed investigations carried out by the IDA and by Departments here based on what the Irish interest was. They would not be overly influenced by what some major smelter company thought might be in their interest. It would be wrong to imply that. The IDA have done an excellent job, as any Minister for Energy will agree, going back over the years since ore was discovered here and since proposals were being made and continue to be made about the possibility of establishing a smelter. It would not be wise to establish an industry here which was going to end up creating financial difficulties for the State. Where there would be such a major financial investment it is important that in all the discussions that have taken place the State would have been involved. The State would have been required to make a very substantial capital investment in any of the proposals that were brought forward previously.
The State has a duty to ensure that an investment of this size should be one which had reasonable hopes of success and which would not lead the country into further difficulties. The IDA have periodically reviewed the project down through the years. As I said, the most recent major review was in October 1987. That review indicated that the projections remained uneconomic because of low zinc metal price, unfavourable US$ exchange rate movements at that time and increases in labour costs. The major changes in these factors which have taken place since that last IDA review have led me to decide it is time the IDA be asked to undertake another major review at this time because zinc prices have increased. They reached $2,000 per tonne in March but they have declined in recent weeks to about $1,600 per tonne and the $-punt exchange rate is reasonably favourable at present and in relative terms both electricity and labour costs have improved since the review was carried out in 1987. Therefore, while indications at present may lead one to be more favourably disposed towards building a smelter, it should be stressed that the trends in the major factors affecting an investment decision of this size have to be analysed over the life span of this smelter, not just on conditions at present. However, in view of the positive developments I have mentioned I intend to ask that a further major review be undertaken now.
I am glad it is being reviewed again, but I am worried about the type of review. Will the Minister consider getting in touch with the IDA to ask them to consider in their review assessing the huge number of industrial jobs which could be developed as a result of having the processing of our ore here in order to manufacture various parts that can be made from it and exported? Will that be considered as well as the financial viability of the smelter, in other words the value to the State as a whole?
Of course that would form a major part of any such review, but I think it would be wiser for me to await the IDA's recommendations. The Deputy will be well aware that most of the existing smelter capacity in the world was constructed long before legitimate concerns about the environment were translated into new and more rigorous standards. New smelter capacity would carry an additional investment burden to cater for these environment-related costs which would make their competitiveness in the short to medium term problematic. It is important that we get the up-to-date position and I will ask the IDA to give that.