Seanad Éireann debate -
Wednesday, 6 Feb 1963

Vol. 56 No. 2

Nítrigin Éireann Teoranta Bill, 1962 —Second Stage.

Question proposed: "That the Bill be now read a Second Time".

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

The purpose of this Bill is set out in the Long Title and outlined in the Explanatory Memorandum which has been circulated to Senators. Briefly, it is to provide for the financing and control of Nítrigin Éireann Teoranta on the lines of existing legislation relating to certain other State concerns such as the Electricity Supply Board, Irish Steel Holdings, Bord na Móna and Min Fhéir Teoranta.

The principal object of the Bill is to provide for repayable interest-bearing advances from the Central Fund to enable Nítrigin Éireann Teoranta to undertake on behalf of the State the establishment of a nitrogenous fertiliser factory at Arklow.

I should like to emphasise, at this stage, the fact that all moneys advanced to the Company will be repayable with interest, on the lines of advances made to the Electricity Supply Board and Board na Móna. There will be no grant or subsidy assistance for this industry and no tariff or quota protection in any shape or form.

Full information about the selection of the site for the factory, the raw materials to be used and the nature and quantities of the products to be manufactured, as well as the name of the contractor engaged to erect and equip the factory and the approximate aggregate cost of the project has been published.

I can give the House an unqualified assurance that, since the inception of the State, no industrial proposal has received a more thoroughly searching examination than that to which the Arklow project has been subjected. The decision to seek binding tenders for the establishment of the factory was taken by the Government on the basis of a unanimous report made to them through me, after a final objective and completely uninhibited investigation by a Committee set up by me to undertake the assignment. The subsequent examination of the tenders, with their guaranteed costings, confirmed fully the findings of the Committee that an industry could be established at Arklow to produce nitrogenous fertilisers to meet the growing requirements of Irish farmers and to make such fertilisers available at prices at least as favourable as the prevailing import prices, without protection or subsidisation.

The case, economic and otherwise, for the establishment of the factory has been given broadly in the Explanatory Memorandum. I have, of course, been furnished by the Company, in confidence, for my consideration and for consideration by the Government with comprehensive information on all the commercial aspects of the project including capital, production and distribution costing. The procuring of this information involved a full-scale and intensive investigation over a protracted period.

Senators may wish me to recapitulate the history of the investigations which led up to the Government decision to go ahead with the project. This industry has been under consideration since the early 1930's and might well have gone ahead some years later were the negotiations not interrupted by the outbreak of hostilities in Europe. The prospects for the industry were kept in careful review during the post-war period, and when it became clear in recent years that considerable expansion in the home demand for nitrogenous fertilisers was about to take place, a special Committee was set up in 1959 to report on the practical considerations involved in establishing a factory based on peat.

This Committee consisted of senior officers from the Electricity Supply Board, Bord na Móna and Ceimicí Teo. with special qualifications and experience in the engineering and chemical fields, as well as economist and administrative representatives of the Departments of Industry and Commerce, Finance and Agriculture, who were experienced in dealing with the fertiliser industry over a considerable period of years.

The Report of this Committee was submitted in July, 1959, and while it was being considered by the Government a considerable reduction in import prices of nitrogenous fertilisers took place. The Government announced in October, 1959, that, having considered the Committee's Report, it was satisfied that the project would be economically feasible at prices prevailing before the recent drop in import prices but that it was not intended to put the project into operation until it could be shown that such a step would be economically sound and of advantage to the farming community. I may say that this Committee was confined to the consideration of peat as a source of gasification for the production process.

In September, 1960, the Committee was re-established with additional representation from the Department of Transport and Power and the Economic Development Branch of the Department of Finance. The re-established Committee were not confined in their terms of reference to peat as a means of gasification. Detailed studies were secured from the foremost chemical and engineering firms in Britain, France, Germany and America, and further consultations took place with all possible sources of technical and commercial information in this country about production, distribution and application of fertilisers.

The Committee in their Report submitted in June, 1961, unanimously concluded that a nitrogenous fertiliser factory operated by a State Company at Arklow, using fuel oil and Avoca pyrites, could produce nitrogenous fertilisers for sale, without subsidisation, at prices in line with prevailing import prices. The Committee's recommendation was made in the context of a factory with a design capacity of about 125,000 tons a year, but they pointed out that with the increases which were taking place in the home demand, a capacity of the order of 150,000 tons a year might be necessary.

The Government accepted the Committee's recommendations and established Nítrigin Éireann Teoranta to implement their decision to go ahead with the factory.

As indicated in the Explanatory Memorandum the discontinuance of supplies of Avoca pyrites resulted in a change over to imported sulphur as an ingredient of sulphate of ammonia, one of the factory products. While sulphur from Avoca pyrites would have been more economical than imported sulphur, the change has proved not to be significant in the economics of the project as a whole. Sulphur is now in excess supply in world markets and prices are falling.

Nítrigin Éireann Teoranta have confirmed to the Government on the basis of the capital investment required and of the production costings guaranteed by the contractors that, using fuel oil, limestone and imported sulphur, sulphate of ammonia and calcium ammonium nitrate can be produced at Arklow at prices which will ensure that Irish farmers will continue to receive their requirements of these fertilisers at the present favourable levels.

Nítrigin Éireann Teoranta was incorporated as a private company in October, 1961, to acquire, erect and operate a nitrogenous fertiliser factory at Arklow, County Wicklow. The company engaged as their technical consultants the United Fertiliser Company of Holland, and its associate Shell Chemical Company Limited, England, both of whom are fully experienced in the operation and management of major nitrogenous fertiliser factories. The Electricity Supply Board provided consultancy services on the civil engineering side.

The factory site selected by the company in the townland of Shelton Abbey, situated about 1½ miles west of Arklow, has outstanding advantages. It can be readily and economically connected by road and rail. Movement of the products out of the factory will not cause any traffic problems. In particular, road traffic to and from the factory will not have to pass through Arklow town. In addition, the site is screened from public view and it will be suitably screened from the Forestry School at Shelton Abbey. I have placed outside the Library of the House a photograph of the site. Senators will be able to see how convenient the location is for road and rail connection and for adequate water supply. The factory will use a minimum of 1½ million gallons of fresh water per day. Fuel oil, which is the main raw material for the factory, will be delivered there by pipeline from Arklow Harbour.

The closest possible consideration was given to the question of location before the site at Shelton Abbey was ultimately selected. Representatives of the Arts Council inspected the site in April, 1962, and, having received full information as to the layout of the buildings, etc., they intimated to representatives of Nítrigin Éireann Teoranta that they saw no objection from their point of view to the location of the industry as planned. Full information about the site was also given to An Bord Fáilte, who raised no objection from the tourist amenities viewpoint.

The plant will include special equipment for treating such waste gases as oxides of sulphur and nitrogen to absorb any elements which could be harmful to local vegetation, or in any way unsightly. In this respect it can be said that the factory will be ahead of any of its kind in Europe and will more than comply with the requirements of the most modern clean air regulations.

The house and out-offices in this townland, known as Shelton Abbey, are used as a Forestry School under the aegis of the Minister for Lands. It is not open to public view save with the permission of the Minister. Contrary to the impression sought to be given by the critics of the site, the house in Shelton Abbey has not, as a matter of fact, been a tourist amenity of Arklow. The house is situated one and a half miles from the town and, without travelling that distance along the road, it cannot be seen.

For the convenience of any Senators who may not be acquainted with the appearance and other characteristics of sulphate of ammonia and ammonium nitrate, I have placed samples of these products on display in the House. It will be noted that both products are granular, odourless, and dustless. Senators, I hope, will agree with my view that the production of these materials in a modern, well laid out factory, giving permanent employment to upwards of 300 persons, should not detract in any way from the amenities of Arklow. I believe that, in the event, the factory will become a place of great interest to the public, and that planned landscaping of the grounds between the buildings and the Shelton Abbey house will add greatly to the tourist value of that property, should it be decided at any time in the future to throw it open to public view.

I can appreciate that the first announcement of the location of the factory could have caused some apprehension among the aesthetically minded. But I feel that, apart altogether from the undoubted economic and practical merits of the site chosen with which I will deal later, what I have just said should dispel any remaining apprehension.

Following the selection of the site, invitations to tender for the factory were issued by Nítrigin Éireann Teoranta to consortiums of chemical engineering firms, comprising fifteen firms of international repute from Britain, France, Belgium, Germany and the USA. Four Irish civil engineering firms were associated with the consortiums.

Tenders were received from those firms on the due date, 31st July, 1962, and the Board of Nítrigin Éireann Teoranta, having received a report from the consultants on the capital and guaranteed costs submitted in the tenders, furnished an immediate report to me indicating that the contractual offers had more than confirmed the costings in the Report of the Inter-departmental Committee in June, 1961, on which the decision by the Government to establish the factory was based. The Government, after full consideration of the circumstances of the project, approved the placing of a contract which was then awarded by the Company to the consortium of contractors headed by Messrs. Lurgi of Frankfurt am Main, West Germany. The basic contract price was of the order of £5 million. In accordance with the practice in the chemical industry and to ensure that work could commence on the site before the onset of winter, a Letter of Intent to place the contract was given to Messrs. Lurgi. The preliminary development work at the site commenced in November last and the entire factory is expected to be in commercial operation by 31st March, 1965.

The factory will have a design capacity of 150,000 tons of nitrogenous fertilisers per annum in the forms of sulphate of ammonia and calcium ammonium nitrate. These products are not manufactured in Ireland; neither is ammonia, which is a key intermediate product. For the information of Senators, who like myself, may not be familiar with the chemical processes involved I should say that the process to be used at Arklow is very well established and is of standard design. Briefly, the process involves the separation of oxygen and nitrogen by compression, the partial ozidisation of fuel oil to produce hydrogen and carbon monoxide, the removal of the carbon, and the treatment of a mixture of the hydrogen and the nitrogen to form ammonia. This is the main basic process.

Ammonia contains over 80 per cent. pure nitrogen. Part of the ammonia produced at the Arklow factory will be used for reaction with sulphuric acid produced at the factory to manufacture sulphate of ammonia. Ammonia will also be used for the production of calcium ammonium nitrate, the second main product of the factory, which indeed is expected to become the main product of the future. The manufacture of calcium ammonium nitrate involves the production of nitric acid from ammonia. The reaction of this nitric acid with additional ammonia gives ammonium nitrate, which, as a pure dry product, contains about 34 per cent. pure nitrogen. The nitrogen content is reduced while the product is still in slurry form by mixing the product with finely ground limestone. This treatment ensures that there can be no danger of fire or explosion which could happen in certain conditions with pure ammonuim nitrate. The grade currently favoured by Irish farmers contains 20.5 per cent. nitrogen, but the indications are that calcium ammonium nitrate containing 23 per cent. and perhaps 26 per cent. nitrogen is likely to find favour in the foreseeable future. These higher concentrations can readily be produced at Arklow.

Traditionally, sulphate of ammonia has been the main nitrogenous fertiliser used here. When imports were resumed after the war, calcium ammonium nitrate had come on the market and the imports for 1952/53 amounted to 51,000 tons of sulphate of ammonia and 4,000 tons of calcium ammonium nitrate. Since then the demand for both products has increased steadily and substantially. This is not surprising and the trend is likely to continue in view of the spectacular results achieved by An Fóras Taluntais in experiments in the use of fertilisers generally and particularly in grassland experiments with calcium ammonium nitrate. The actual figures of imports over the past three years have been as follows:—

Year	Sulphate of Ammonia	Calcium Ammonium Nitrate
	Tons	Tons
1959/60	78,122	21,005
1960/61	88,500	25,500
1961/62	101,969	30,638

The continued growth in the demand for these fertilisers has been closely studied throughout the entire post-war period and was the subject of the following comment in the publication Economic Development published by the Department of Finance in November, 1958:

On the other hand, while it has been estimated that ammonium nitrate fertilisers based on milled peat could be produced more cheaply than imported nitrate or sulphate of ammonia, it is unlikely that the economic output of the factory (100,000 tons) would be absorbed on the Irish market for some years. The current demand for all types of nitrogenous fertilisers is of the order of 80,000 tons per annum. A factory producing 100,000 tons of ammonium nitrate per annum would, therefore, be faced with the initial disadvantage of having to sell its surplus production on export markets in competition with large-scale British and Continental producers.

Senators will have noted from the figures I have already quoted that the total demand in the latest 1961/62 season was over 132,000 tons in all. Having regard to the trend of user and to the rate of increase in previous years, it is a reasonable expectation that when the factory is in production in 1965 the total demand in the home market should have reached the 150,000 ton level, at least. A factory with an output of 150,000 tons per annum is well above the minimum economic size and should be able to dispose of its whole output on the home market.

It is a fortunate circumstance that the very substantial daily requirement of cooling and process water is available free from the Avoca river, without affecting in any way the river amenities or the availability of river water for other possible users. A suitable water supply is essential for a project such as this and the ready availability of adequate supplies from the Avoca River was an important factor in the selection of the site.

The factory will operate round the clock for 7 days a week throughout the year, and to meet this requirement, operations on the basis of 4-shift working will be necessary. Permanent employment will be given to over 300 persons, the majority being males. These will include senior supervisory engineers and chemists, foremen and skilled operatives engaged on the plants producing ammonia, nitric acid, ammonium nitrate, sulphuric acid and sulphate of ammonia, as well as the storage and handling plant. Unskilled labour will also be employed on these units. The maintenance personnel will include instrument operatives, electricians and fitters. In addition, there will be the usual factory employment for accounts and sales staff, clerical staff, despatch clerks, security officers, gatekeepers, messengers, etc.

As soon as the design documents have been drawn up by the contractor, the main civil engineering work in connection with the factory will commence. Orders have already been placed for the major plant items such as compressors, and it is expected that many of the plant units will be ready for installation next Autumn. Substantial employment will be afforded on construction and development work.

Senators may have seen published statements that the employment content of this factory is out of proportion to employment in comparable industries elsewhere. These statements are simply not correct. The actual employment in each separate section of the plant and in administration and sales, etc., has been assessed by Nítrigin Éireann Teoranta in agreement with their consultants, who are themselves operators of nitrogenous fertiliser factories in Britain and the Continent. The figures have been very carefully worked out and compared with the employment content of similar production units elsewhere.

As regards the factory costings, I would like to point out that Nítrigin Éireann Teoranta will be operating a nitrogenous fertiliser factory in open competition with imported products, i.e. in conditions of free trade. While, therefore, as stated in the Memorandum, it is desired to give Senators as much information as possible about the project, they will understand I am sure, that there is no precedent for the disclosure by industrial concerns of such information.

It is quite understandable that Senators are anxious to satisfy themselves as to the soundness of a proposal to invest six million pounds in an industrial project even though the money is to be provided on a repayable interest-bearing basis. I can assure this House that the Arklow project as planned will be fully economic in free trade conditions. I have no doubt whatever that the company will be in a position to honour the undertaking already given that nitrogenous fertilisers will be made available to Irish farmers without subsidisation or protection at prices in line with prevailing import prices. This undertaking assures the supply of nitrogenous fertilisers to Irish farmers at the prevailing favourable prices.

There is, moreover, another potential advantage. Dumping will presumably be prohibited in free trading conditions, consequently there can be no expectation of a continuance of the current low level of import prices. Without the factory Irish farmers would, in European free trade conditions, be at a substantial price disadvantage vis-á-vis their farmer competitors on the Continent.

Any commercial or technical assessment of the location of a nitrogenous fertiliser factory must take account of the final cost to the consumer arising from the cost of raw materials, production and distribution of the products.

The best location for a nitrogenous fertiliser factory is a point convenient to a port where imported materials can be secured, and as close as possible to the principal areas of consumption of the factory products. In Ireland nitrogenous fertilisers are mainly consumed in the East and South, and the largest compounding factories which need sulphate of ammonia for bulk are also located in the same general area, i.e. Dublin, Wicklow, New Ross, Waterford and Cork. It has been established from detailed studies that the average cost of distribution of nitrogenous fertilisers to farmers is very favourable from the Arklow area. The actual factory location is most convenient for distribution purposes. The railway and public road are beside the site and no traffic problems will be involved in connecting up with these facilities. In addition, the factory site has the advantage, as I have said, of providing excellent foundations for the heavy factory equipment and stores. The factory will consume about 1½ to 2 million gallons of fresh water per day. The availability of adequate supplies from the nearby Avoca river at no cost, apart from pumping, was, therefore, a vital consideration. The factory's fuel oil requirements will amount to less than 100 tons per day. There will be no need, therefore, for large scale importations. Indeed the provision of substantial storage capacity and the financing of excessive stocks of oil, which such large scale importations would involve, would very quickly offset the benefit of any transport saving which might result from using large ships. To summarise, the location selected for the factory is the most favourable from the engineering and economic aspects.

This area was originally selected by the Inter-Departmental Committee which reported in June, 1961, that a factory located at Arklow using fuel oil and Avoca pyrites could produce nitrogenous fertilisers for sale without subsidisation at prices in line with prevailing import prices. It is, of course, a matter for regret that sulphur from the pyrites is no longer available. However, while that material, at the price at which it was available, would have been more economical than imported sulphur, the difference is not significant in the economics of the project as a whole, particularly as sulphur is now in excess supply in world markets and prices are falling. The House is aware that investigations into the future prospects for the Avoca mines are taking place at present and I am sure I am expressing the hopes of all the Senators that it will be found possible to reopen the mines on some basis which will be found to be economic. Bearing this in mind, the factory is being planned so that pyrites-burning plant can be readily installed if there are prospects for production at the Avoca mines on a reasonably long term basis.

The cost of transporting from the Continent bulky materials such as nitrogenous fertilisers is relatively high, representing about £2 10s. per ton. The total transport costs represent, in effect, an addition of some 20 per cent/25 per cent to the European ex-factory prices. The c.i.f. value of imports last season amounted to £1,800,000. It has been suggested in some quarters that it might be economical to import more concentrated materials such as ammonia, from which bulkier fertilisers could afterwards be made. I am aware of a number of commercial quotations for deliveries of ammonia to this country based on natural gas, and I can assure Senators that such supplies are in no way competitive with the guaranteed production costs based on the use of fuel oil at the Arklow factory. The reason for this is that ammonia is a difficult commodity to ship. Freight and storage charges are heavy. Fuel oil is, of course, an international commodity freely available from commercial sources throughout the world, and is readily transportable. In addition, fuel oil has a very high calorific value and one ton of ammonia can be obtained from ? of a ton of fuel oil. It is clear from our investigations and from the practice in other countries that it is more economical to import materials such as fuel oil for fertiliser production than to import either the basic chemicals such as ammonia, or to import the finished products such as calcium ammonium nitrate.

Imports of nitrogenous fertilisers are generally arranged on a c.i.f. basis. This means that the foreign supplier arranges for the shipping and the importer pays in foreign currency for the whole cargo on a c.i.f. basis. Total cost of imports of sulphate of ammonia and calcium ammonium nitrate last season amounted to about £1¾ million, and this figure may be expected to increase in the future. When the Arklow factory is in production the imported materials used in the process will be fuel oil and sulphur and the home materials limestone, water and air. The total annual cost of the imported raw materials will be in the region of £350,000 for the production of nitrogenous fertilisers for which without the factory we would require to send out of the country some £2 million per annum. By any standards this is a very significant and important contribution to our overall balance of payments position, particularly when it can be achieved without any degree of subsidisation by way of capital grant or otherwise and without the imposition of quotas or tariffs.

As Senators will have seen from the Bill, it is proposed to provide finance for Nítrigin Éireann Teoranta by way of repayable advances from the Central Fund, i.e. on the lines of advances to the Electricity Supply Board and Bord na Móna. I feel I must stress the significance of this arrangement. There is no question of a grant or subsidy to this industry. The money is being advanced on a repayable basis and the Company will be required to provide for the repayment of principal and interest in full to the Exchequer.

The maximum total sum provided in Section 5 of the Bill by way of advances out of the Central Fund for the purpose of enabling Nítrigin Éireann Teoranta to perform its functions is £6 million. The balance remaining after meeting the basic contract for the design, erection and commissioning of the factory will be needed to meet the cost of the following:—

(1) Electrical sub-station and power connection to the national grid.

(2) Supplies of mechanical spare parts.

(3) Initial stocks of raw materials.

(4) Factory mobile equipment, furniture and fittings.

(5) Training of factory operatives.

(6) Salaries, wages and other expenses before commencement of production.

(7) Provision for contingencies.

In addition to providing for advances totalling £6,000,000 to Nítrigin Éireann Teoranta, the Bill empowers the Minister for Industry and Commerce, after consultation with the Minister for Finance, to guarantee borrowings by the Company not exceeding £1,000,000 at any one time.

The House will, I feel sure, readily recognise the importance, in the context of our industrial and agricultural economy, of a factory capable of producing nitrogenous fertilisers in adequate quantities at economic prices. There is, of course, the further attraction that the production of basic chemicals, such as ammonia, nitric acid and sulphuric acid, provides excellent prospects for the development of subsidiary industries and for facilitating the existing fertiliser manufacturers to bring their production programme more in line with the modern demand for more concentrated forms of fertilisers. As I have said, the factory is being laid out so that there can be a major expansion of capacity in due course. In addition, provision has been made for space for subsidiary industries which we may reasonably expect to result from the availability of ammonia and other chemical products at this factory.

I confidently recommend the Bill for approval.

I have been rather lengthy in this introductory statement but I feel I have a duty to inform the House as fully as I possibly can, having regard, of course, to the commercial considerations to which I have referred in this very important national project.

Mr. McGuire

The Minister has given us a very full statement of this proposal to set up a fertiliser factory here but, as he says himself, there are certain details which we are not permitted to know because of the commercial know-how that is apparently hidden in the proposals for this factory. The Bill which we have before us here today is, of course, to authorise the Minister for Finance to provide the necessary funds to establish this factory. The few remarks I should like to make about this Bill are coloured by the statements which we have had from the Minister just now and particularly the explanatory memorandum. Paragraph 3 states:

In one vital respect it is on all fours with the Electricity Supply Board and Bord na Móna legislation in that the capital is proposed to be provided not through share-holding but in the form of advances bearing interest at current lending rates and repayable as to principal and interest over an appropriate period. The project will, therefore, not involve any charge on public funds, which would have to be met by the taxpayer.

Take that in conjunction with paragraph 27 which reads:

As already stated, however, the Government are fully satisfied that this industry can make nitrogenous fertilisers available, without subsidisation or protection, at prices at least as favourable as the present import prices.

Those two statements cover two points. They cover the question of the financing of the operation and the kinds of goods that will be produced— in other words, from the factory's own financial point of view and from the point of view of the consumer of the product.

This project has attracted much attention. That is only natural because of the magnitude of the scheme, involving, as it does, an investment of some £6,000,000. We all have a very serious responsibility in investing a sum of this magnitude in an industry of any kind. It must not be forgotten that any business in which we engage —whether through the State or private enterprise—can involve not only the initial sums invested but further sums at a later stage either for expansion or in respect of losses.

No matter how well the case may be considered and the scheme is prepared, nobody can tell beforehand for certain whether the scheme will succeed. It may expand or it may not be a success. Bearing that in mind, it is only right that the matter should receive the closest scrutiny before it is proceeded with.

I want to refer to the public and private criticism. The Fine Gael Party, as the leading Opposition Party in the Oireachtas, have been subjected to very strong pressure to oppose this whole scheme. They have even been criticised as failing in their duty as an Opposition by not doing so. We do not conceive it to be the function of a responsible Opposition to oppose whatever the Government are doing merely for the sake of opposing. That would not be opposition: it would be obstruction.

Some people's idea seems to be that an Opposition Party should oppose everything brought forward by the Government whether it be good, bad or indifferent. It is all right for persons who have no chance of ever being in Government to make headlines in the press by obstructing or even resorting to irresponsible tactics in public life. As an alternative to the Government Party, it is our function and our duty as an Opposition to behave responsibly at all times. Hence our line recently on the EEC proposals and now on the question of this fertiliser factory. It was dealt with in that spirit in the Dáil and now in the Seanad we shall likewise deal with the proposal in this Bill.

The idea of setting up a fertiliser factory is highly desirable. It is one with which we all fully agree if it can economically be justified. This project is being presented, in the first place, as a business proposition. Because of our particular situation in the past, many of our industrial undertakings were not presented purely in that light. There was a high consideration of employment, and so on. In all State undertakings of this nature, a high element of social as well as economic consideration is involved. On this occasion—and quite rightly—the Minister stressed that this proposal is put forward as standing on its own legs as a business proposition and, of course, carrying certain social advantages at the same time but with the economic consideration to the forefront.

Questions have been raised on all sorts of subjects. I do not propose to deal with the technical side of this Bill. I want to deal with it more or less as a businessman would see it in a general way, acting on the advise of experts in whom he has confidence. It is what most businessmen have to do. They are not experts in everything. They must lean on people who know what they are talking about and on whose judgement they can rely. Questions have been raised in regard to the site in Arklow, whether this is the right place for it as regards transport, raw materials, and so on. These points of detail have been pretty well dealt with in the Dáil and no doubt will be dealt with here. Employment content has a social side to this operation—as to what is meant by the employment of, I think, 300 people as compared with a similar factory in England where only some 70 people were employed in a project involving some £8 million. Perhaps, the Minister would clear up this point for us? He did refer to it in his statement but he did not really make it quite clear. I gathered, because there will be four shifts in the factory, this will mean that 70 people, multiplied by 4, which is approximately 300, will be employed.

The only point is, I presume, that the administrative staff will not work four shifts. Perhaps, that is the explanation of the employment of 300 people, which is very desirable. On the other hand, if it is being presented as a business proposition there is no validity in making out that a cost of £20,000 per individual employed is a high figure. It is not because in terms of modern thinking in productivity the fewer people employed relative to the capital investment, the higher the degree of productivity because, naturally, it reduces the wages cost in the operation. Again, as a business proposition and disregarding the employment side of it, a cost of £20,000 per person would seem to be commendable from the economic point of view.

I should like to refer also to the statement about repayment. The Minister says that the principal will be repayable as well as carrying interest. I have already quoted the statement that the advances will be repayable as to principal and interest over an appropriate period. I am not quite clear as to what prospect there is of repayment and what provision is being made in order to do so. It would seem to me that in this regard, perhaps at some later stage, it might be possible and even desirable for private investtors to participate in the company by shareholding. This would carry out an idea suggested some time ago by the Minister for Finance, Dr. Ryan. Perhaps, the Minister would give us some idea of what prospect there is of repayment and in what way it could be done. Otherwise, the moneys advanced might lie there forever, even though they were interest-producing. I feel that this whole proposition he is talking about of private shareholders rather falls between two stools, the State and the private enterprise aspects of an undertaking such as this. This particular project has the disadvantage that all these State bodies already carry, and that is we have already been told by the Minister there are certain things we cannot be told. In a private enterprise, if private money were put into a thing like this, the people investing the money would need to be told much more than we have been told. They would need to know details of the inner workings of these things. How can we be so sure that all these undertakings can be carried out? I think the undertakings are very far-reaching in that there can be so many changes in the marketprice of one product if the price of the product in other countries dropped to a very low figure through some reason or other.

There is an undertaking here that the product will always be sold at or below the price of the foreign products. That is a big undertaking about which I, as a private businessman, if I were putting my money into a thing of this kind, would be rather sceptical to say the least of it, especially as it is being said that an undertaking has been given that there will be no subsidies needed in order to make this factory viable and to sell its products at a competitive price. Therefore, this has the disadvantage of a State operation that, no doubt, later on, when the factory is working, if it is, just as in the case of CIE and the ESB and other State and semi-State undertakings, there will be a certain amount of its operation, because it is "no man's land", where nobody can get the true information about what is actually happening. That is a disadvantage.

I grant, on the other hand, this undertaking is one that could only in present circumstances have been set up —in the initial stages anyway—by the State which has got the funds and the machinery to put an operation of this order into being. I feel that is a point that should be mentioned.

Coming back to the critical views expressed about this whole project, I think the criticism was very good and showed a very good public interest in the happenings of our economic and political life. The critical views expressed did achieve the very desirable result that the fullest inquiries were set in motion to establish a good case for the viability of the project.

In that regard, I should like to compliment the Minister. He has gone as far as he possibly could to assure us that everything was done in order to satisfy public opinion. I shall quote the words—he used them on several occasions—he employed in the Dáil on 23rd January, in Volume 199, No. 2, column 216:

I can give the House an unqualified assurance that, since the inception of the State, no industrial proposal has received a more thoroughly searching examination as that to which the Arklow project has been subjected.... The subsequent examination of the tenders, with their guaranteed costings, confirmed fully the findings of that committee that an industry could be established at Arklow to produce nitrogenous fertilisers to meet the growing requirements of Irish farmers and to make such fertilisers available at prices at least as favourable as the prevailing import prices, without protection or subsidisation.

That really is a justification for the scrutiny to which this whole proposal has been subjected in public. There are a lot of details in this proposal which, no doubt, will be dealt with by people who are more technically qualified to deal with them than I am. I should like to say—and I can talk as a businessman—that in view of the statement by the Minister that we could not possibly resist supporting this Bill and this proposal to set up the factory, the whole idea is a most desirable and welcome one. In a predominantly agricultural country like ours it is the right kind of industry in that it assists and complements our agricultural activity. We have had to set up a whole lot of industries here in order to give employment. They were unsuitable to our country and could only work under subsidies of all kinds. We feel that the factory itself and the whole idea is certainly a commendable one and one we would not only not oppose but thoroughly welcome, provided the sums authorised in this Bill are safely and profitably in vested and we are told that they are safe; that they will be profitably invested; that the quality and price of the product is right—we have also got assurances on that—and that those employed in its working will have the best modern working conditions at all levels. On these points the Minister has given us his full assurance and, therefore, we welcome the Bill and wish the project every success.

Professor Dooge

This is the first time this proposal has come to us in the Seanad. It was mentioned almost half a dozen times in the Dáil before the introduction of the Bill. There has also been much discussion outside the House so what we have to say here today must in some way be a repetition of what has been said and what the Minister has had to listen to in respect of this project. Nevertheless, I think it is necessary for us to discuss it in some detail.

My approach to the proposition which the Minister has put before us is largely that of an engineer-technologist who has heard the proposal to set up a nitrogenous fertiliser factory in this country discussed among technologists for something like seven years now.

When we come to look at this final proposal that has come before us, I think there are three questions we must ask ourselves. First, we must ask the question should we have a nitrogenous fertiliser factory at all; secondly, is this specific proposal, the best possible in regard to size, process, location and all other variable factors; thirdly, is the proposed company organised in the best possible way to carry out the job it is asked to do?

When we ask ourselves the first question—should we have a factory at all—we have to be conscious, of course, that, in effect, a decision has been made. There can be no reversal of the decision to have a nitrogenous fertiliser factory. Nevertheless, that is no reason why the proposition should not now be examined. When we come to examine a proposition like this, it is necessary in the beginning to be very clear what are our objectives, what are we trying to do, because we have a number of objectives of different types in propositions of this sort. We have purely economic objectives; we have social objectives; we have political objectives.

In economic planning we seek at all times to have as much productive investment as possible. We wish also to maintain as high as possible a level of employment, to aim at full employment. We also have as an objective a control of our balance of payments. These are all very good objectives but very often they are not completely compatible. Very often they become intertwined and confused. They are all present but often it is very necessary for us to distinguish between the different effects.

Should we have a nitrogenous fertiliser factory at all? Let us go back to what was said in Economic Development. We read here on page 180 of Economic Development, Paragraph 8:

A home industry manufacturing nitrogenous fertiliser would be a desirable project if it could, without subsidisation, supply the Irish farmers' requirements as cheaply as they could be supplied by imports and could export any surplus production without loss.

On this proposal there must be absolute and unanimous agreement. If we can at all times supply the Irish farmer at a better price than the import price and can export any surplus, then there is no problem whatsoever. There is no room for discussion. The project is one to which we must immediately and without reserve consent.

Even though the Minister has said in his speeches and in his explanatory memorandum that he hopes for much in the present proposal, he has not, however, gone as far as saying he hopes to achieve what is laid down in Economic Development, because his proposition falls short of what is laid down there in two respects. The Minister says he hopes to be able to produce nitrogenous fertiliser at present import prices and there is no word at all of any ability to compete in export markets. Nevertheless, I think the proposition that the Minister has brought forward is close enough to what was proposed in Economic Development to make it well worthy of consideration.

As the Minister has told us in his introductory speech, this proposal has been considered and discussed in various ways for very many years— for the past ten years, in effect. In 1953 and 1954 it was considered by Ceimicí Teoranta who had the assistance of Dutch consultants. I myself was involved in a committee of Cumann na nInnealtóirí—the Engineers' Association—between 1956 and 1958 which considered this proposal among many others. I might say, for the benefit of the Minister and the House, that this committee agreed that this proposal was very well worth considering. In the report of the National Economic Advisory Committee of Cumann na nInnealtóirí— the chapter of their report dealing with the inter-relation between industry and agriculture—this proposal for a nitrogenous fertiliser factory was singled out as the best proposition for a large-scale capital industry inter-related with agriculture. The report reads:—

From these considerations it appears that the largest plant that could be built with native capital and using native fuel would be of the order of 25,000 tons of ammonia a year. It is impossible to make an estimate of production costs for this size plant without a detailed study, but, as the world prices of coal lie at present, peat can compete as a source of energy and it can, therefore, be expected that nitrogenous fertilisers could be produced in this country at a price roughly the same as that paid for imported fertiliser.

This tentative conclusion was, indeed, confirmed in the following year (1959) by the first inter-departmental committee which, in effect, reported that nitrogenous fertiliser based on peat would be economic at the 1958 prices, say £19 a ton c.i.f. at Dublin. In 1959 the price fell to £15 a ton and so this proposal became uneconomic. Then, we had the second inter-departmental committee which eventually reported that a nitrogenous fertiliser factory based on fuel oil would be economic at the import prices of approximately £14 c.i.f. at Dublin. Acting on the basis of this report the Minister set up the company—Nítrigin Teoranta—to carry out this proposal and a detailed design of the factory was prepared. This question, indeed, has been studied at length and I do not think there can be any complaint that it has not been gone into over a long period.

There is one point in this connection I wish to comment on. The Minister mentioned that Nítrigin Éireann Teoranta had as their technical consultants the United Fertiliser Company of Holland in association with Shell Chemical of England. Now, I think it is only fair to say that, in fact, this did not amount to calling in an independent technical consultant in order to examine the whole question ab initio because, in fact, once it was decided to carry out the work at Arklow, once it was decided to base it on fuel oil, then the position is that you were bound to build plant based on Shell patents or Texaco patents. In fact, the Shell Company called in on such a basis would be merely in the position of Shell technical staff designing in detail a plant using a Shell process.

However, let us consider whether the final result produced is an economic position or not. The Minister has given us certain figures in the explanatory memorandum and there have also been two estimates made of the economy of the plant. One was an article by the late Professor Wheeler and the other was in a report published by the Irish Creamery Milk Suppliers Association. I do not think there is any need to go into detail as to these figures. It might be possible to say that one figure should be a little less, one figure should be a little more but I do not think that detailed examination is necessary in a discussion such as this.

There are just a few comments that I should like to make. First, it has been assumed for example in the report of the Irish Creamery Milk Suppliers Association that sulphur in the future would be available at £8 per ton and this is one of the costly raw materials used. On this basis the cost of sulphur is £2 per ton of fertiliser. It is possible that sulphur will be available in future at prices below the prices ruling at the present time but sulphur is a material, the cost of which depends very much on the size of the lot you are buying. The Minister has told us in his introductory speech that the Arklow factory is being planned on the basis of bringing raw materials into Arklow which can only take ships of roughly 2,000 tons. Arklow harbour was improved some years ago in order to take ships up to 2,000 tons at high water.

The position at the moment is that the price of sulphur is something just over £10—but something just over £10 only for lots of sulphur of 10,000 tons. For smaller lots the increase in price might be quite sharp. I think this is typical of some of the points where those of us who are familiar with prices that have been quoted in the technical literature, prices that are used for estimating purposes, feel that there may be an element of optimism in some of the prices that have been used in such costings as those of the Irish Creamery Milk Suppliers Association.

Now, the Irish Creamery Milk Suppliers Association estimated the total cost of raw materials as something about £3.4 per ton of fertilisers. Professor Wheeler in his article estimated it as something like £4.7. If we added to this the other costs which must be added, the cost of power which is very considerable, the cost of salaries and wages—indeed neither of them added in the cost of overheads which would be quite substantial in a scheme of this size—if we added the cost of maintenance, we find Professor Wheeler arrived at a price of operating cost of £8 per ton of fertilisers and the Irish Creamery Milk Suppliers report arrived at a price of £7 per ton.

An estimate which I made myself, based on information available from the technical literature, indicated a price of just over £8. It was in agreement with that of Professor Wheeler. Now, it appears to me from the examination of these reports and such information as is available that an operating cost of £7 a ton is somewhat optimistic and that a price of £8 per ton may be more realistic. However, I think differences of this sort in regard to the operating costs do not really in essence determine whether or not Arklow will be an economic proposition.

I think the economy of the Arklow proposition will stand or fall on the question of capital charges and in essence considered now as an unsubsidised commercial venture Arklow will stand or fall on the number of years allowed for the repayment of capital. Now this is absolutely vital because in investing in an industry of this sort the number of years for the return of capital which is used in private industry is relatively short. There are two reasons for this. One reason is that estimates must always be based on market prices and while we can see, and agree with the Minister, that it looks at the moment as if the price of sulphur will continue to fall and the probability is that the price of imported fertilisers would rise rather than anything else, still it is unwise to attempt to look too far in the future in our attempts to guess at market prices. The second reason why the burden of repayment is held short by private industry is that there is the problem of obsolescence.

Now, if we are dealing with a protected industry we need only think of obsolescence in the sense of the physical obsolescence of the plant, its actual wearing out. But we are asked to look at this proposal as an unsubsidised commercial enterprise. Accordingly, we have to look at obsolescence in the sense of process obsolescence, that is that the process used would become out of date. Indeed in some forms of chemical industry, though this does not apply to fertiliser, actually one must look at the product obsolescence, since the very thing you are selling may go out of date.

It is on these factors we must judge the period for repayment and this period is absolutely critical in regard to estimating the economy of the project. If you take a period of repayment of capital of say 15 years at six per cent. which is a very approximate rate at which the Government is borrowing at the moment — the rate is just under six per cent.; this does not affect the argument—the repayment of the capital would give something of the order of 10.3 per cent. for interest plus sinking fund or interest plus depreciation, or whatever words you like to use to express it. This would amount in Arklow to something like £4 per ton of fertiliser in capital charges. If you have to repay in 10 years, then the interest goes up to £5 4s. per ton in capital charges. If you have to repay it, as every chemical manufacturer in private industry would seek to have his capital repaid, if you had to repay in six years, the capital charges would amount to £8 1s. per ton. Even if we take an operating cost of £7 per ton, private industry in estimating this would use a six year repayment period and arrive at a total production figure in the factory of £7+£8 or £15 per ton—£15 before you start to bag it, before you start to distribute it. This would give a final price well over the £17 per ton sale price to the farmer which rules at the present moment. Even at 10 years' repayment the final price would come very close to the present selling price. I think it is here that the essence of the economy of the Arklow project can be found. If it is considered in the same light as an ordinary un-subsidised commercial venture then these capital charges should be used in assessing its economy.

Actually, a very distinguished chemical engineer from Britain, lecturing in Dublin a few months ago, mentioned that in the American chemical industry at the present moment investment is based on securing a complete repayment of capital within two years from the day the site is entered and that plenty of money is being invested in chemical industry in America on that basis. The products include synthetic rubbers, and so on, which may become obsolete. However, this does not apply to nitrogenous fertiliser which we shall be producing —but the period must still be relatively short. No private investor would dream of investing money in this proposal from the long term point of view. They would look for return of capital in six years and ten years would be an absolute upper limit to the repayment period. I think this is important because if the Minister allows the company NET to repay at a longer period than private enterprise would repay its capital then in fact the product is subsidised.

If the Minister uses the credit of the State to borrow money at six per cent. for 15 years and then uses that money as risk capital in a chemical manufacturing industry, he is in fact subsidising the product: he is subsidising it through the agency of the repayment period. It is no use saying that the same thing is done with the ESB. There is no analogy whatsoever with the ESB. In March of last year the ESB went to the subscribing public to look for money. They went out at six per cent for £5,000,000, repayable in 20 years, and the whole of the loan was subscribed on the day of issue. So, if the Government lend money to the ESB at 15 or 20 years they are only doing what the subscribing public itself is prepared to do.

If the Minister lends money to NET for ten or 15 years, he is doing something that a subscribing public would not do. If this explanatory memorandum were used as the basis for a loan in this project in the morning, it would not I think have the success which that loan floated by the ESB in March last year met with. This is no reason to say that the project should not be proceeded with. I do not wish to urge that it should not be proceeded with but it is an indication that this project should not be thought of as an ordinary commercial venture.

I have no objection to the Minister if he comes to us and says: "I wish this factory to be set up and in order to have this factory set up and in order to set up heavy chemical manufacture for the first time in this country, I want to do this thing and the only way to do it economically is to lend these people what in effect is risk capital for a period of repayment which does not apply to risk capital. I am doing it for certain reasons." If the Minister says that, then I think this scheme should go ahead but we should be absolutely clear about what is being done. I do not think there is any objection to doing it. I have no objection to the State entering into a new field of industry of this type but we should all be absolutely clear as to what is involved.

There are other factors which enter into the case to make it desirable for the Government to set up industries of this type and to subsidise them in one way or another. There is, for example, the balance of payments factor. I agree with the Minister that this is a factor that should be taken into account. In paragraph 11 of the explanatory memorandum the Minister mentioned the balance of payments effect. I do not think he has mentioned it in a very explicit way or in its really true terms. I wish to give my version of what I think the true balance of payments saving on this particular project would be.

The Minister says that if these fertilisers are to be provided by imports it means a £2,000,000 effect on our balance of payments, but the materials necessary to do it in Arklow involve only £350,000. I have not the complete breakdown of this particular figure. Assuming 100,000 tons of the output is sulphate, the cost of sulphur—even at £8 a ton—is £200,000. Then materials, including maintenance materials, would be something like £50,000 and crude oil £100,000. However, I do not think this is a correct assessment of the balance of payments position at all, for the following reasons. By 1965, this country will not be able to provide all of its own requirements for fuel oil. By 1965, every extra ton of fuel oil required in this country will be a direct import of fuel oil, not fuel oil refined in Whitegate from imported crude oil.

This is a new project and therefore its effect on the balance of payments must be considered. If it uses, as it will use, something in the order of £180,000 a year worth of fuel oil then that £180,000 enters into the balance of payments equation directly. This is not its only effect on the balance of payments position. This factory, according to the Minister's memorandum, uses something like £200,000 worth of electricity per year. This country is not self sufficient in electrical power. Short of having its own atomic reactors, this country will never be self sufficient in electrical power. A substantial proportion of our power is based on imported fuel. Therefore, all extra units of power must, from a balance of payments point of view, be considered as based on imported fuel.

If £200,000 per year is spent on electricity—we have not the actual figures —I imagine this must be a load of something like 50,000,000 units per year. According to the ESB Report the most efficient of the ESB stations, Ringsend Station, running last year at a load factor of over 50 per cent.—its cost of fuel per unit is 0.427d. Accordingly, £90,000 worth of fuel would have to be imported to provide the power to run the Arklow factory. This should be accounted in the balance of payments position. If we take these two items we find that actually on a materials basis alone the amount of materials to be imported per year would be £520,000—not £350,000, as the order of 50 per cent higher than on materials alone the amount is of the order of 50 per cent. higher than stated. That is not the only consideration. We cannot import millions of pounds worth of capital equipment and say it has no effect on the balance of payments position. Something between £5,000,000 and £6,000,000 is the amount of capital involved in the Arklow project. If this is broken down by the rules of thumb used in estimation in chemical engineering, it will be found, according to those rules of thumb that something between £250,000 and £750,000 will be spent on Irish labour and materials.

It can be taken as a rough guide that there would be an import of £4.5 million of capital items. The importation of capital for productive purposes is good but we cannot ignore its effect on the balance of payments. If we take this £4.5 million on a basis of a repayment period of six years, which I think is the period which should be taken, then this would amount to £900,000 per year. If we take the two together we find that instead of the effect on the balance of payments being only one-sixth of what it would be if we were importing our fertiliser, it would actually be two-thirds. There still remains a substantial saving on the balance of payments. There is still a saving of £600,000. We should be very clear as to what the exact saving is. We have been told that this has been a matter of very thorough investigation and I think we should be completely clear as to exactly what the figures are in regard to the balance of payments.

There are other factors to be considered in evaluating the project and these are listed in Paragraph 14 of the explanatory memorandum. First, there is the question of employment. The Minister is in the lucky position in that his critics have been almost equally divided in complaining that this was too low and that it was too high. There is one question I should like to ask the Minister on this point and that is what percentage of these 300 would be employed in the bagging plant and what proportion would be employed in the actual manufacture of the fertiliser plant; and would be be able to inform us what would be the breakdown of those employed in the actual chemical plant in the categories that are usually used? The usual categories are managerial and clerical, technological, technician, skilled workers and general workers.

The second consideration which the Minister mentions in Paragraph 14 of the explanatory memorandum is that the factory would provide extra business to the ESB. I do not think this would necessarily be a justification for a factory. It is a good thing that we should have this growth of our industrial load but it is not necessarily a benefit which should be credited to the individual factory concerned. I agree that a factory working 24 hours a day, seven days a week, is a good sort of load for the ESB to have from the load factor point of view.

The other considerations which the Minister gives in (3), (4) and (5) are that it would provide a market for sacks, that it would provide key materials for other industries and that it would make nitric acid available for phosphatic fertilisers. They are excellent considerations and very good arguments as to why this factory should be erected. I think that this linkage between the present proposal and other factories which either supply some of its raw materials or else use some of its intermediate products, is a most excellent thing.

The final consideration which the Minister gives is that the existence of an assured local demand for by-products—pyrites—would be an important encouragement towards the reopening of the Avoca mines. I should like to ask the Minister a specific question on that point, and that is whether the sulphur plant now proposed to be installed at Arklow for the use of sulphur could handle pyrites. If not, how much extra capital would be required in converting the sulphur plant to a pyrites plant.

As I say, we are faced with the position here that we have something into which private industry would not go because private industry could not get out its money in the six years which it would seek in an investment of this sort. Should we go in as taxpayers into a venture of this sort? I think we should. I think the side benefits are sufficient, but we should realise clearly exactly what we are doing. We should realise that there are real dangers in attempting to look beyond six years.

I mentioned before that it is dangerous to think that we can forecast market prices for anything more than a few years ahead. It is a very dangerous practice. Even more dangerous is it to attempt to look ahead and say that this process will not be outmoded in six years' time.

This is something which should be present, not only in the Minister's mind but in the minds of the directors of Nítrigin Teoranta, because the position is that if this process becomes outmoded in six years' time the fertiliser industry in other countries will then be able to produce fertiliser cheaper than we can. What can the Minister do then? He could either hold out this fertiliser, but then he says that is not his proposal. He could re-equip Arklow, but the position is that the capital would not have been repaid in this time. This is not a correct attitude that even before the initial capital has been repaid more capital should be spent.

When we look at this question as to whether it is likely or not that this process will be outmoded in six years, a terribly important point to remember is this. The process now going into Arklow was not in existence six years ago. The process based on fuel oil which makes Arklow a technologically sound factory at the moment was not installed anywhere in the world six years ago. I do not know when the first plant was installed, but I think it was about three or four years ago. By installing the plant, based on a process which is less than six years old, Arklow can produce fertiliser more efficiently than a plant based on solid fuel. However, Arklow should be very careful that, though it can cut the ground from under countries whose fertiliser industry is still largely based on solid fuel, that the ground, in turn, is not cut from under it by some new process.

The Minister apologised that he had wearied the House with some details and, indeed, I must also apologise to the House, but I think that these are considerations which should not be ignored. The proposal that we should spend £6,000,000 on this particular project is something that should be given the most careful consideration.

Even though I agree that this proposal is an excellent one and that it should go ahead, we should be clear as to exactly what we are doing. Those of us who are interested in the technological development of the country—one aspect of which is the development of heavy chemical industry—are very interested that Arklow should be a success, because it would be a very great blow to those of us who think that such development is a development in the right direction if for any reason Arklow should turn out to be a failure.

It is well to look very briefly at the second question which, I said, should be answered, and that is the question as to whether this specific project is the best possible. Of course there are a number of possible alternatives. There are many possible ways in which we could manufacture nitrogenous fertilisers here. The Minister mentioned the possibility having been suggested of importing the intermediate product — ammonia — and working from that stage on. In fact there is very little doubt that there are only two alternatives which would come into serious consideration. I do not think there is any question about size. I agree with the Minister that the plant is above the critical size— not too much above it—and indeed from the point of view of economic running and efficient production I would very much hope that conditions would be such that the Arklow plant could be extended as quickly as possible from 150,000 to 200,000 tons of fertiliser per year.

The question does arise in regard to process and location. The 1960 recommendation—the recommendation of the second inter-departmental committee —was a recommendation for a process based on Arklow pyrites. I would like to ask the Minister specifically whether there was anything in the terms of reference of that second committee which would have limited them in any way. He mentioned in his opening speech they were an uninhibited committee. Would the Minister be able to give us the terms of reference of this second committee, or, if not, would he be able to tell us whether those terms of reference limited the committee in any way and, in particular, did they limit them to considering only native sources of sulphur? Because the two alternatives which arise in this particular connection— they have been mentioned already— are, the question of location at Arklow or location very close to the existing refinery in Whitegate. This has been mentioned, I think, by those who have gone into this matter. In the article which the late Professor Wheeler published on November 4th he stated as follows—

The determination of the optimum site is a complex business. The cost of bringing in raw material, of distribution of product, of availability of labour, will have to be assessed for various sites and optimum area determined. No information on these matters has been given, but it is known that an earlier survey, made some 10 years ago, pinpointed Arklow as one of the few suitable sites. It is perhaps to be regretted that the fact it involved did not suggest a site nearer Cork.

Of course, ten years ago, when Arklow was pinpointed, there was no refinery in Cork. There was no prospect, it seemed, of any refinery in Cork.

The other report on the subject, published by the Creamery Milk Suppliers Association also dealt with this question of location. In it, said:

It would also appear that the water supply at Whitegate falls far short of the Arklow supply.

The Minister also in his introductory speech today mentioned this point of water supply. He said:

It is a fortunate circumstance that the very substantial daily requirements of cooling and processed water is available free from the Avoca river, without affecting in any way the river amenities or the availability of river water for other possible users. A suitable water supply is essential for a project such as this and the ready availability of adequate supplies from the Avoca river was an important factor in the selection of the site.

I do not think that cooling water could possibly be a criterion on which to choose between Whitegate and Arklow. The position is that in Arklow, according to the Minister's memorandum, the requirement for water is 3,500 gallons per ton of fertiliser. This I take it, in the absence of any further information, is make-up water and not total amount which is circulating through the factory. On the same basis, if this factory were to be erected near Whitegate the position is that the cooling water for this factory could be taken from Cork Harbour, and surely nobody suggests there is more water in the Avoca river than there is in the harbour at Cork? The position is that very little of the water is processed water, and in a location such as that at Whitegate either air cooling could be used or else water could be pumped from Cork harbour and recirculated.

So the criterion used in the report of the Irish Creamery Milk Suppliers Association and hinted at in the Minister's speech is not one which should determine the choice between these two leading alternatives. On the other hand, if we look at the technical literature and compare the cost of a plant based on fuel oil, which is the process used at Arklow, and a plant based on stack gases from the refinery, which is what would be used at Whitegate, we find a distinct difference between the two. We find immediately that if it were to be based on stack gases at a refinery, the capital cost would be reduced by something of the order of £500,000—something not to be ignored. Apart from this the saving in power would be a saving of at least £150,000 per annum. These are based on figures given in a technical bulletin by an international chemical firm which supplies plant under both processes. Maintenance and overheads would be reduced by something in the order of £20,000 and, of course, capital charges, due to the lower capital, would be reduced by something of the order of £100,000.

If the stack gases from the refinery were charged at their full fuel value the fuel cost would be of the same order as the fuel cost at Arklow and, therefore, there would be no difference in this respect. These figures would give a saving of £270,000 per annum, which is almost £2 per ton of fertiliser. My figures are necessarily crude as I have not the advantage which the Minister has of having access to detailed study on this point. From the technical literature one can get an indication that there would be a saving of the order of something over 30/- per ton of fertiliser from one process and location against the other. I have taken this on the basis that these stack gases, which are now going into the atmosphere at the Whitegate refinery, would be charged for at their full fuel value, and, indeed, I suppose this would be the initial price asked for them. But surely these prices would be subject to negotiation and if it were put to negotiation one would imagine that there would be a further saving of £100,000 or 16/8 per ton.

I should like to ask the Minister at what stage in the detailed consideration of this proposal was the question of Whitegate ruled out. By this I mean a nitrogen fertiliser factory based on stack gases at Whitegate and located close to the factory to take advantage of this. I think if there were a detailed examination this alternative could not have been overlooked and I should like to ask on what grounds it was turned down.

Again, if we look at this from the point of view of balance of payments, we have the stack gases now not being used and the position is one in which we can compute what the balance of payments effect would be. If we import everything the adverse balance is £2 million; if we put the plant in Arklow, the adverse balance is reduced to £1,400,000. If we put it close to Whitegate, the adverse balance would be reduced further to £1,000,000.

There are also important linkage effects in the placing of it near the refinery. Already, there is a very large phosphatic industry in Cork city, and I think there could be a very good linkage between the nitrogenous fertiliser factory in that area and the existing phosphatic industry. There could possibly be beneficial arrangements for the supply from one to the other of ammonia and of sulphuric acid. These are all things which should be gone into in detail, and I think this is a point which one cannot fail to raise in a discussion on a matter of this sort.

Now the third question which I said should be asked in this particular respect is the question as to the organisation of the company. Is the organisation of this company as at present proposed the best organisation for entering the field of heavy chemical manufacture to the tune of £6,000,000? The Minister himself said in Dáil Éireann, Volume 192, No. 2, Column 262 of the Official Report in regard to Nítrigin Éireann Teoranta:

There are on the board four civil servants and one representative— not a nominee—of the National Farmers' Association. The function of the board will be to negotiate by tenders with the companies which have already approached them with regard to the setting up of the factory. These individuals will not necessarily be members of the company which will ultimately operate the factory and which will be set up by subsequent legislation.

I have nothing to say in criticism of the individuals whom the Minister has nominated as the five initial directors of Nítrigin Éireann Teoranta but I think it is fair to comment in criticism of the Minister that he should, in setting up five persons to negotiate for such a factory and to appoint the initial staff for the running of such a factory, have included amongst those people at least one person who had technological training, and, if possible, some experience of heavy chemical industry.

I think this is a bad signpost to the way in which one would expect the company to operate. This is not a simple business, the running of a factory of this type. This is a critical business and the tendency has been all over the world, in the running of such businesses, to give a very large proportion of the administrative direction of the business to people with technological training who can appreciate the factors which make for success in the business, people whose whole training has been in a direction to make them immediately receptive to adaptation, people whose whole attitude is not to carry on what has been done before but continually to look for improvements. I think in this respect that one would have hoped, as I say, that at least one of the five original directors should have been a person with such competence in this particular direction. May I say that I think in not doing this the Minister has necessarily weakened confidence in this particular company? At a time when posts of responsibility in this company have already been advertised and already technologists, engineers and applied chemists have already applied for posts in this company, I think it is a pity that it has not been recognised that this is not merely carrying on some routine operation but is something new and of a peculiar type. Indeed, already a rather disturbing report has become known among technologists, who are interested in such things, that in the case of one very senior post in the proposed factory the post was refused by the person to whom it was offered on the basis that he was not guaranteed sufficient freedom in the carrying out of his technical duties and the necessary autonomy which he would require as a technical person in carrying out those duties.

These questions in regard to the organisation of the company are something which it would probably be better to look at on Committee Stage. The Minister was good enough, in answer to a question in the Dáil last week, to agree to place in the Library a copy of the articles of association of the company. Unfortunately, these were not placed in the Library until just before the House met today and, accordingly, it has not been possible to study them.

I, like the Minister, offer an apology to the Seanad for the length in which I have dealt with this particular matter. But, like the Minister, I think it is a proposal which we should not dismiss hastily and I would like in conclusion to say that even though at times I have appeared to be critical—perhaps over-critical—of the proposal which the Minister has brought before us I want to make it absolutely and abundantly clear that my criticism is directed to certain details of these proposals, to the way in which certain arguments have been brought forward in support of them and in the manner of their presentation.

I welcome most heartily this venture into heavy chemical industry. I hope that it will be so successful that it will itself generate further industry of this particular type. It will not do so; it will not be able to generate further industry of this type, which would be so profitable to the country, unless there is clear recognition at the beginning precisely what we are doing and unless we go in the best possible way about doing that thing. As I say, there are certain aspects of what has been done, certain aspects of the way in which it has been presented, which give rise to certain anxiety. It is better that that anxiety should be expressed here rather than that I should keep silent now and criticise at a later date. I thank the Minister for the way in which he has, to the best of his ability, made the information available to us. I wish the Minister and the company well in this particular project.

Mr. L'Estrange

The Minister here today gave the members of the Seanad a very full, and frank statement as regards this project. At the same time in my opinion the manner in which this project has been presented to the Oireachtas—both to the Dáil and to the Seanad—is most unsatisfactory. Let me quote from Page 4, Paragraph 22 of the Explanatory Memorandum issued some time ago:

As already announced, Nítrigin Éireann Teoranta have awarded the contract for the erection of the complete factory to a consortium of German and Irish contractors headed by Messrs. Lurgi of Frankfurt, West Germany. The fixed price contract is of the order of £5 million.

Therefore, any discussion that we have here today is a complete waste of time because already this is an accomplished fact. Now I think that a project of this magnitude, envisaging the spending of £6,000,000 of the taxpayers' money, should be tackled in a different manner. I consider that legislation for approval by Parliament should have been submitted before steps were taken to establish the company.

The present Government, acting through Parliament, are for the time being in any case the representatives of the people. They are the custodians of the people's money. If Parliamentary institutions are to function properly, if the people are to retain their belief in our Parliamentary institutions and in our methods of government, then we should not be treated as we are being treated here today. We are here today, you might say, as a rubber stamp to discuss what is a fait accompli. I do not want to blame the Minister for that. That is a Government matter. The Minister himself today was very frank. He gave a full explanation but it is very hard for people to have respect for democratic institutions and to look up to them if the Government of the day ignore them, as I believe Parliament has been ignored in regard to this whole project.

We all know that the establishment of a nitrogenous fertiliser industry has been the subject of protracted discussions away back for the past 20 years —going back, I think into the 1930s. Let us have a look at the publication, Economic Development which was published in November, 1958. At paragraph 7, chapter 19, page 179 it is stated:

Consideration of the matter has recently crystallised in a proposal to establish a nitrogenous fertiliser factory at Shannonbridge to produce ammonia nitrate fertiliser using milled peat from the nearby Blackwater bog, which has already been partly developed by Bord na Móna for the production of electricity. Until this proposal is further developed, however, detailed estimates of capital and production costs will not be available and it would be premature to attempt any conclusive assessment of the economics of the project.

I believe that the Minister should have informed us of the reason for this sudden change. That was in 1958 and I think those proposals were rejected in 1959. I think there was a committee then set up, as the Minister informed us, in 1960. Had he any additional information to go on that has not been made available to us? I think we are entitled to know that. In Ireland almost 50 per cent. of our people are gainfully employed in agriculture. We all know that agriculture is responsible for roughly 75 per cent. of our exports. If at all possible, therefore, we should have first class fertiliser industries.

What we take out of the land of Ireland depends to a large extent on what we put into it. That Ireland is an agricultural country cannot be over-emphasised in our industrial picture and, as Senator McGuire said, this is a right sort of project to develop in this country, Agriculture is our copper, coal, oil and gold all in one. Therefore, it is essential that we make the best use of the 12,000,000 acres of arable soil we have in this country at the present time. It can be argued by many people that we have not been making the best use of it up to the present. There is no denying that we are not putting anything like the amount of artificial manure we should put on the land of Ireland. There may be various reasons for that. I suppose money is the root of all evil and many of them have not got the credit or the money to purchase the artificial manure. If they could find the money—even if they were to get it by loan or otherwise —it would more than repay them afterwards.

If we examine the quantity of fertilisers used by Irish farmers compared with that used by farmers in other countries which are members of OEEC, like ourselves, we find we are trailing a very long way behind those countries. According to the OEEC statistics, from 1950 to 1953 the average for the OEEC countries was £13 per acre on nitrogenous fertilisers. In 1956-57, that had increased to £17 per acre and in 1960-61 it increased to £20 per acre.

For Ireland, during the same period, the relevant figures are as follows. For 1952-53 it was £2 per acre against an average of £13 for the other OEEC countries. For 1956-57 it was £3.30 per acre against an average of £17 for the other countries. In 1960-61 it was an average of £5.40 per acre against an average of £20 per acre for the other OEEC countries. We are using roughly only 25 per cent. of the average used by the other countries in OEEC. There is no doubt that there is plenty of room for expansion.

In paragraph 27 of the White Paper circulated with the Bill, it is said:

As already stated, however, the Government are fully satisfied that this industry can make nitrogenous fertilisers available, without subsidisation or protection, at prices at least as favourable as the present import prices.

Provided that the undertaking is honoured, I believe the farmers will be satisfied. It is essential that our primary producers get the raw material at least at the same prices as those with whom they have to compete. The assurance given by the Minister is given in the light of information not available to us. I suppose that, for different reasons, he cannot make it available. Many of us would like a little more information. Many critical views have been expressed. There are supposed to be many snags. I am in favour of this project. At the same time, it is no harm to quote some of the critical views. We are entitled to do that because we envisage an expenditure of £6,000,000.

Members of the NFA claim that the new Irish factory is likely to be put out of the picture in a short time. I think other Senators have more or less mentioned something similar. The late Professor T. S. Wheeler, Professor of Chemistry in UCD, speaking about six weeks ago, stated that the Government was to be praised for the way they had disregarded criticisms and had done what they thought best in deciding to establish a nitrogenous fertiliser factory at Arklow. He regretted that the Government had not gone further. I have a report of his remarks here which continues:

In the interests of chemical efficiency, tell the farmers that from a certain date they must use ammonium nitrate and like it. To continue to apply ammonium sulphate is sheer conservatism and such conservation will not be eliminated by the carrot only. It needs the stick. Acceptance of subsidies involves some obligation to accept orders.

He seemed to think that ammonium and nitrate would take the place of ammonium sulphate. Have the Government considered his statements? His judgement should be respected. I should like to know that this body or the Government took that into consideration.

People connected with the NFA also claim that there is a surplus of nitrogen in most parts of Europe. Whether we enter the Common Market or not the factory would be a liability in, perhaps, six or eight years' time. I should like to know is there any basis for that. The Minister has the information and from what he has told us, perhaps, there is not. My own opinion is that there is not. We also know that a big British firm have closed down the production of nitrogenous fertilisers because they found themselves priced out of the market by more up-to-date factories on the Continent. Has that been considered by the Government? If not, I think it should. Does the Minister believe that the factory will be able to survive in face of the intense competition from bigger firms in Britain or on the Continent? We all know that we are moving into a time when we will have freer trade than we have had in the past.

There are many people who also believe that Arklow was chosen—the Minister did say it—because of the availability of Avoca pyrites. They may not now be available—we are not certain of that—but the fact that the machinery has been sold in Arklow leads one to believe that they will definitely not be available in the future. There are many people who claim that Arklow is not the ideal site, that it has an inadequate port for a large industry and that we will be deliberately incurring extra cost transporting goods from a port to inland sites and to places where they will be used. It will mean extra haulage costs. The roads and the rail communications between the factory site and the centres of consumption are inadequate and over-lengthy compared with other sites. I believe that even in Westmeath, where we have no industry of any description, we could provide, perhaps, better sites in places like Mullingar, Castlepollard and Kilbeggan. There is no denying that they are needed and would give much-needed employment. They would be much nearer the centres of consumption.

As regards the employment content of the factory, we know that, according to figures and statistics of the industrial grants programme from 1952, I think, to 1963, on the basis of the number of people employed, it worked out at a total cost of roughly £1,600 per job. This project in Arklow requires State expenditure of roughly £20,000 per worker. Even accepting the official figure of 300 jobs, there seems to be an extreme contrast in value for money there.

Senator McGuire spoke today on this subject and, perhaps, his theory is quite correct. Perhaps, the Minister might comment on this afterwards. I want to claim, as agriculture is our principal industry, that we on this side of the House agree with the principle of providing work for our own people at home here in Ireland. That is one of the reasons why I am in favour of this project. I think it was for that reason also that the Government in 1956 changed paragraph 32 of the Control of Manufactures Act and welcomed foreign money into this country. We believed it was much better to have foreign money coming in here, with our own people working at home in Ireland, than to have them go abroad to work in England or elsewhere.

In this instance, an expenditure of £6,000,000 to employ 300 people is envisaged. It was stated in the Dáil that the cost per person is £20,000, that if they invested that money at six per cent, each worker could stay at home and draw £1,200 per annum. Whether there is anything in that statement or not I am unable to say, but if there is, perhaps, we could spend our money in a better way. There is no doubt that the expenditure here relative to the employment is of a very high nature. Money is not too plentiful here at the present time. We know that the last national loan failed to fill and investment capital for the employment of our own people is extremely scarce. There are many people connected with farming who claim that the money could be better employed to put agriculture on a proper foundation at the present time and to put it in a position to stand up to competition. They claim they would need £100,000,000 at present for capital investment in agriculture, research, marketing, building, modernisation and perhaps, shipping, et cetera.

I think that the greatest difficulty facing us at the present time is that of getting many of our people to realise that Irish manufactured goods can be as good as any that we import. The Minister told us that this factory will produce roughly 100,000 tons per annum. It is reckoned that in 1965 the farmers of Ireland will be using 150,000 tons. If they are, and if we could get them to use the Irish produced artificial manure, then there is no doubt that this would be a viable proposition.

In all probability we may have some trouble with the output of this factory. To make it a viable proposition I think that it will be very important to get our farmers to buy the home-produced artificial manure. We may have to educate them to do that. I do not know, but something, I believe, will have to be done in that direction, with our adverse trade balance standing at a very high figure of £100,000,000, our imports increasing, our exports decreasing and the number of unemployed increasing. This matter of educating our people and getting them to support home industry was never more important. It is more important now than ever before to impress on our people the necessity of buying Irish goods. At this stage in our industrial development it should not be necessary to engage in any special advocacy of the sale of home products. In this particular case, when we are going to spend £6,000,000 of the taxpayers' money, it would be only proper and right that an appeal should be made to them.

There is no denying that manufacturing industries, as well as agriculture, are vital to the national economy. The production here of nitrogenous fertilisers will save us, I think, in the region of, perhaps, from £1,500,000 to £2,000,000 per annum if we can convince our people to buy what we produce when this factory is finished. As well as saving us in the region of £1,500,000 to £2,000,000 the production here will provide work for 300 Irishmen at home in their own country, and those who purchase it can rightly claim that they are making a practical contribution towards the solution of one of our main economic and social problems.

I think there is no doubt the greater the volume of wealth we produce at home the greater will be the opportunities for employment and for a rising standard of living for all our people. If we do not arrest the present trend of our imports increasing, there is little use in spending, I believe, this £6,000,000 in Arklow or anywhere else.

I just want to say in conclusion that as a firm believer in Irish industry and in the ability of our own people to acquire the technique and the knowhow to make our industries succeed in the competitive years ahead, I sincerely hope that this project with so much money involved will be the success that we would all like to see it.

Mr. Murphy

The Irish Congress of Trade Unions has for years been advocating the establishment of a chemical industry in this country, not so much for the employment it would immediately provide but for the consideration that it would be an important factor in the economic growth of our economy.

The White Paper issued with this Bill makes the point that the setting up of this factory in Arklow will provide key materials for the development of other chemical industries in this country. Again, in the concluding paragraph of the White Paper the point is made that this industry in Arklow will provide the important nucleus for trained operatives in this skilled branch of the chemical industry. It goes on to say that the availability of basic chemicals such as ammonium and nitric acid for chemical processing will enable private enterprise to provide for production based on these products. Industrialists have already shown interest in these possibilities and approaches have been made to Nítrigin Éireann Teoranta. I am very glad that that is so and I wonder if the Minister in reply to the debate could give us any further information as to the extent of the approaches that have been made and the possibility of further employment being created around this industry which is being established at Arklow.

The Minister in the White Paper and in his statement here to the Seanad this afternoon has gone to a great deal of trouble to justify the establishment of this factory and its siting in Arklow. The Minister must be advised by experts. I cannot pretend to follow the technical details mentioned or the technical arguments we heard this afternoon but, as a layman and from a limited judgment I can make of the position, I feel that the decision to establish this industry now is the correct decision. I have often felt great sympathy for any Minister involved in a question like this, the setting up of an industry where the investment of public money is involved, the possibility that it may fail, the possibility that all the advice tendered may not be good advice in the long run. It must be very much easier for any Minister to sit tight and do nothing and not risk his reputation, or risk the possibility of being told in years to come of a white elephant or some such thing.

As a sincere believer in public enterprise, I must say that a Minister must take that chance. Having weighed up all the possibilities, having considered all the technical advice, he must come to a decision and if he is convinced that the decision is a correct one he must take the chance, even though later on he may be abused and criticised because of it. It could well be that the employment of processes outlined above which we heard this afternoon may in years to come mean that the factory might not be as successful as it otherwise would be, but that is a chance that must be taken. Nobody can prophesy with certainly what will happen in the next few years, how prices for these raw materials will move, what developments will take place by way of new methods of manufacturing this product, but I think that the Minister, with all the advice he has got, is taking the right decision and from our side we are supporting the decision to set up this industry.

There is one criticism I have to make and that is in relation to the provision for the repayment of the capital. I think it is ridiculous, something I cannot very easily understand, that this company should not alone have to provide for depreciation, for replacements, for the interest on the capital involved in the industry but, as well, should have to provide for the repayment of that capital over a certain number of years. I wonder what would happen or what the position would be if it worked out like that. If it were possible for this company to provide for replacements, pay the interest on the capital and, as well, be so prosperous that it could afford to repay all the capital invested over six or ten years, what would the position be at the end of that ten years? You would then have the delightful situation in which the company would have no capital charges at all and no interest to pay on the capital invested. I do not know whether that is what is envisaged in this. It is clearly stated in what the Minister said this afternoon, and in the White Paper, that provision will be made that the capital must be repaid to the Central Exchequer.

If this were a private enterprise concern, or a private undertaking setting up this industry, what would happen? They would presumably float an issue of shares. Those shares would be taken up by the public. Those shares might be saleable, according to the success of the company, or might be realisable by transfer from sales on the Stock Market, but they would not provide for repayment. They would not provide for the ordinary share capital of the company and would not provide that at the end of a certain number of years, as well as getting interest in the meantime, you would be entitled to your money back. That would be the approach of private enterprise for the setting up of an industry such as this or any industry. But, we are providing here that this company will not alone have to pay interest on the capital involved but will also have to provide for the repayment of that capital over a certain number of years.

I think that is rather unrealistic. Perhaps, the Minister could elaborate somewhat on it when he comes to reply. I think it would put too onerous a burden on an industry like this. In fact, it would never be realised.

There is one final point I want to make very briefly. Here is an important public enterprise, important from the point of view of the amount of money being invested and important to the economy if it is going to be a success, which I sincerely hope it will be. In such a situation I want to suggest to the Minister that in appointing the board of directors it would be desirable that a person with a background and knowledge of trade union and labour relations should be appointed to the board, not a representative of workers as such. He would be a very useful member of such a board as this. It would be in line with the policy that has been followed occasionally by this Government in making appointments to such important enterprises as is envisaged here.

Mr. Desmond

I think we could all agree that in an enterprise such as this everybody would wish it well and that it would succeed if for no other reason than the employment content alone. A further reason is that a factory such as this would help to produce raw materials which at the present time we are importing. It is important that any article we can produce ourselves would be produced. Our imports would be reduced as a result of an enterprise of this kind succeeding.

I notice in the Minister's explanatory memorandum that it is classed somewhat along the lines of the ESB and Bord na Móna. If we are to take those as a guide we can expect to meet with every success. They certainly have made their mark in the country. They gave much needed employment and have helped to produce goods we previously had to import.

Reference was made to the prices which might be charged for the article produced but that is not the important point. We are told by the Minister that he expects the price to be competitive and equal to the world prices that we are paying for the imported article at the moment. The fact that we can compete and produce the article ourselves is, I think, the answer. We wish the factory every success.

Mr. McAuliffe

The Labour Party have definitely given this Bill a welcome because it will give employment to a very considerable number of people. It will provide fertilisers at prevailing world prices to farmers under what might be described as conditions of free trade. Really, I was surprised at the opposition to this project by the NFA. They seemed to think that it would not be a good proposition. I am also surprised at the attitude of the Fine Gael Party which support this Bill with certain reservations.

Mr. L'Estrange

We are entitled to ask questions.

Mr. McAuliffe

The Party have told the Minister that if the project is a success they will be quite glad of it and if it is not a success that they will not take any responsibility. I think two or three speakers in Dáil Éireann took that line. I would not like to take that line myself. The Minister has been most courageous in his approach to the problem. He has got the advice of experts from all over the world. He has got the advice of people who are in the fertiliser business and he has also got the advice of our own technicians and experts. For that reason I think there is a fair chance that this project will be a success.

There were people who said that the Shannon Scheme, Bord na Móna, the Sugar Company, the Oil Refinery, Aer Lingus, Aer Línte and various other semi-State projects would not be a success and they were all proved wrong. We are glad that they were proved wrong. In every big project like this there must be a certain element of chance but the Minister has reduced that element of chance by long and careful investigation. With these investigations I think it is more likely to succeed than fail.

There are a few aspects of the project that give me some reason to have doubts. One is the fact that the principal raw materials, oil and sulphur, have to be imported. We have also the problem of over-production. If we take the present figure of 130,000 tons of nitrogenous fertiliser being used each year, it would not follow that we would require 150,000 tons in five years time. I hold that the dropping of the Land Project may have a detrimental effect on the amount of nitrogenous manure or fertiliser of any particular type that will be used in this country. People became very conscious of the value of fertilisers through the Land Project. First of all, they drained their land because, without having drainage, it is useless putting on fertilisers. They saw the value of putting sufficient lime on the land; they saw the value of putting down proper grass seed and they saw the value of putting sufficient phosphates on the land. Unless you have all these things on the land there is no use putting nitrogenous manure on it.

Nitrogenous manures are manures with a very short life. You would repeat them season after season. You sow your crop; you put on your nitrogen and your sulphate of ammonia. By doing so you force the crop and you probably get a good return by doing so. But, if you continue year after year to put on nitrogenous manures without having seen to the lime content, to the proper seeding, to the amount of phosphates in the land, you will get no results after a number of years.

It is for that reason that I think the Government were wrong at any time ever to drop the Land Project. In the old Land Project where the people could get their land reclaimed, get it drained and have the extra cost put over a period of 60 years, that was the type of credit that the farmers looked for in order to buy manures. The question of production could also be solved in another way—instead of giving rebates in rates as they are given at the moment, they would give manures to the farmers instead of giving them the rebates in rates.

There is no land in this country that is not starved for manures and we must give encouragement to people to use manures because we are not using sufficient manures. Neither is the land of the country giving sufficient production. In the midlands if I say that we were disappointed that this factory did not come there it would be a complete under-statement. We were led to believe in 1954 and in 1958 that there was a great possibility that the milled peat could be used to provide nitrogenous manures. Probably the type of manure that would have been produced there would not have been of the high standard that we will get in Arklow. The Minister, I am quite certain, went into all the pros and cons of the case of the nitrogenous fertilisers based on milled peat.

We definitely were disappointed that it did not come to the midlands. We had the raw materials there and we would not be dependent on oil and sulphur. If there were any world crisis in the morning these are two products which would be cut off from us at the very first moment. Even in the Suez crisis, which lasted a very short time, we found ration tickets in our pockets for petrol and the same would happen in the case of this fertiliser factory if any world crisis did arise.

When he did not select the midlands I am glad that the Minister selected Arklow as site for the factory because a very large number of men in Avoca were let go owing to the mine's failure to be an economic proposition. We are glad he has selected Arklow and in doing so he has put up very strong arguments why Arklow should be a success. For that reason I welcome the Bill and I feel confident that it will be a success because it does not interfere with any other industry we have in the country. We have got a guarantee from the Minister that it will not increase the price of fertilisers which is very important, that it will produce a first class product which is also very important and that it will give a reasonable amount of employment which appeals to us as a Party.

Professor Hayes

The last speaker in a mild way rebuked the Fine Gael Party because we are not unqualified and jubilant supporters of this particular measure. At the same time, I think he said he regretted the absence of a Fine Gael project—the Land Development Project. Without arguing the case politically, this is an example of a measure where the Government are going to invest six million pounds of public money in a particular project and the Seanad is asked—as the Dáil has already been asked and agreed—to approve of that investment. If we were asked to invest our own money in this project, we would not do it on the information the Minister has found himself able to give us. I am not, perhaps, blaming the Minister for that.

You are now going into what has been described as a business project, but the Minister has made a promise that if this project does not turn out as he hopes, as we all hope, it will, the farmers will get their fertilisers at certain prices. The only way farmers can get their fertilisers at these prices is by Government subsidy, a thing which has no analogy in private investment. If a group of men were sitting down and were asked to invest, say, £20,000 each in a project they would ask for certain information about the project which we have not got and which in the nature of things a Parliamentary assembly cannot get and would not probably be able to assess. There is a fundamental difference between Government investment in industry and private investment. The members of the Labour Party are all in favour of public investment and a good deal of it has been done in this country by Governments which were neither Socialist nor Labour.

The ESB has been mentioned as a successful project. May I just, from memory, cite a very important difference between the position when the ESB was being set up and this particular project? A proposal was got from a German firm, Siemen Schuckert, regarding the development of water power on the Shannon. When that proposal had been got three experts, two Swiss and one Swede, were asked to report on this scheme and on their favourable report the scheme was proceeded with. No such analogy exists here. The only thing anybody can do about it is to say that we have not got all the information we would desire to have and which, for example, Senator Dooge, with his particular knowledge of engineering and chemistry, asks for.

We are assured by the Minister that certain private information cannot be given to us but that he has examined it and come to a certain conclusion and I accept the Minister's bona fides. We are all as anxious as the Minister that this project should be a success. We accept it on that basis. There is no other basis on which a project of this kind can be accepted by a Parliamentary assembly unless one is committed, as I am not committed, as my Party are not committed and as, I think, the Party opposite are not committed, to Government investment as distinct from private investment. With regard to the ESB very great steps were taken to have the matter examined by experts before money was invested. I shall leave it to the Minister to answer the point Senator Murphy made about the repayment of capital. I am sure he will have a very effective answer to it.

Mr. J. Lynch

I think we are more or less on common ground here as far as State investment is concerned except that some would like to go further than others. The vast majority of the people of the country favour State investment if and when private enterprise is unable or unwilling to undertake certain necessary projects and I think this is one such project. I think it is obvious from what some of the Senators have said that the capital involved in a project of this nature and the returns expected from it are such as would preclude the possibility of the industry's being set up by private investment. Therefore, we are faced with the problem to decide: whether it is worth while setting it up at all: having decided that it is, we are faced with the problem of the kind of organisation we are going to get to run it; and having set up the organisation, to what extent Parliament should exercise control over the organisation and its ordinary activities.

That I think is the main problem that afflicts State companies in their relations with the Oireachtas. It must be agreed that State companies will have to get a reasonable degree of autonomy in their day-to-day activities so that they can carry them out without fear or favour and without having their motives and their ordinary administrative techniques held up to public scrutiny at every hand's turn.

In this case the project to set up a nitrogenous fertiliser factory is one to which we all give approval provided it can be run on the basis that it will make fertilisers available to the farmers at prices comparable to import prices without subsidy or protection. In order to establish whether this can be done or not facts have to be amassed and an examination of the facts has to be undertaken. Unfortunately, it is not possible to give publication to the extent I should like, and I am sure every Senator would like, of what these facts and these considerations were. In reply to Senator McGuire and Senator Hayes in this respect, I doubt if this industry, being set up on the basis of private enterprise, would be expected in its prospectus to publish all these facts either. There are margins to be given to wholesalers, retailers and other considerations like that which would not be available even to the investor in the equity of that company. It is more likely that the prospectus would contain a certificate over the name or names of some eminent person or persons and on whose certificate the public would be invited to invest. The same applies here. I have given the undertaking to the Dáil that the closest possible scrutiny was given to the matter by the various committees that have examined it.

It is not possible for me to answer all the questions that have been asked. Indeed, I should like to go a long way in answering questions such as those Senator Dooge raised because obviously he has examined the matter very closely: I am almost tempted to say, colloquially, that this subject seems right up his alley. From the technical and technological aspects, he knows a lot more than I do. I am in much the same position as Senator McGuire mentioned. He mentioned membership of a board and the examination of technical considerations by technical experts. He pointed out that he is a layman and, as a director of the board, gives the matter his consideration and applies the best judgement he can on the findings of these men. I found myself in that position too. Nevertheless, I should like to answer some points raised by Senator Dooge in the course of his speech. I have marked only some of them. Unfortunately, I could not answer all of them at this stage nor would I be expected to go into any great detail, I think.

First of all, Senator Dooge spoke about the saving of outlay in the provision of nitrogenous fertiliser here from home sources rather than buying the completed article from abroad. He reduced the saving I suggested would be made in the balance of payments from £1.6 million to something less than £500,000. But, in the process of doing so, he applied the interest and write off of the capital costs of the undertaking, of the plant, over a six year period and said that £900,000 a year cannot be taken into account as far as saving in balance of payments is concerned. But that £900,000, even on six years write-off basis, would last only six years. Therefore, that £900,000 would have to be taken into account in balance of payments saving at the end of that period.

The second committee was completely uninhibited as to their terms of reference. The first committee was definitely charged with the examination of a project based on milled peat. That committee reported that nitrogenous fertilisers could be manufactured in the country at a cost comparable with the then existing import prices but before it actually presented its report there was a sudden drop in the cost of nitrogenous fertilisers. I will not suggest it was completely fortuitous. Everybody knows it was not. Ever since then, our farmers have been buying their nitrogenous fertilisers at £4 to £5 a ton less than they are available in the home countries of manufacture. Even already, the price is increasing because the international organisation, Nitrex, has tried to ensure that export prices of nitrogenous fertiliser for the member companies will come nearer to economic prices in the future.

Prices are beginning to rise now. But, if we had no intention of ever having a nitrogenous fertiliser factory here, our farmers would not have enjoyed the favourable prices they enjoyed over the past few years. When the sudden drop took place, the Government decided not to proceed with the nitrogenous fertiliser factory with milled peat as one of the raw materials but reconstituted the committee and said: "We are interested in this project as a whole. We want to keep the matter under review. We do not limit you now or henceforth to any particular raw material. If you report back to us at any stage that we can establish here a nitrogenous fertiliser factory using any type of raw material with which we can produce nitrogenous fertiliser at favourable prices, report back to us." Therefore, not only were they not limited or circumscribed in any way by limitation as to raw materials but neither were they as to location.

Arklow was selected without the availability of pyrites being a major factor in the decision. Senator Dooge suggested Whitegate would have been a more advantageous site by reason of the stack gas that would have been available instead of the gasification produced by fuel oil. As well as that he suggested that the availability of free water, except for the cost of pumping it, at Arklow, should not be a factor in view of the availability of sea water at Cork harbour. If this factory were located at Cork harbour on its merits nobody would be better pleased than I would.

Again, there were certain deterring factors in Whitegate as a location, one of them being the cost of distribution. It is at the very far end of the country and the cost of distribution in the end product from a nitrogenous fertiliser factory is one of the most important factors in the end costings in such an undertaking. From that point of view, Arklow is very convenient. Secondly, no guarantee could be given about the continuity of supply of these stack gases by the refining company. Thirdly, there was the question of the huge volume of water—one million odd gallons per day—to be used in the undertaking. About 300,000 gallons of fresh water would have to be used in the processing and fresh water as well—I am advised—would be required for cooling. Certain disadvantages lie with the use of salt water for cooling for nitrogenous fertiliser factory purposes and kindred purposes by reason of the degree of corrosion involved. The cooling system in the refinery itself, I understand, is air cooling because, I take it, of the effect which salt water would have on the plant.

These are a lay-man's reasons. These are a lay-man's answers. But these are answers given at short notice to a technical man's questions. However, I think they are reasonable enough in respect of the questions he raised about location as affecting cost of distribution and in regard to the cooling system to be used.

The Senator also asked about the proportions of the different categories of employees. Again, I can only say that that is one of those things that must be a matter for the company itself. A company will have to be set up to employ and to deploy its own staff as it sees fit. As far as the employment of technological and other trained staff is concerned, I want to assure the Senator that, up to the time he died, the company were in close touch with Professor Wheeler. Having mentioned his name, I paid a tribute to him in the Dáil for his long association with and interest in this project. He contributed immensely to it. He assisted the successive committees in any way that he was required to assist, and I should like here in this House where many of his colleagues served to pay a tribute to his memory, particularly for his contribution to the thinking behind this undertaking and to the undertaking itself.

The Senator also suggested that if this company were to seek money from the public, as the ESB did some time ago, they would not get it. I readily admit they would not get it. The ESB did not try to get money 37 years ago when it was set up first. However, now it will get it because it is well established. I venture to say that in 10, 15 or 20 years' time, Nítrigin Éireann Teoranta will get money from the public if they want it. By then they will have been well established and will have shown that they can produce nitrogenous fertilisers in competition with the imported article.

Another question I can deal with is the Senator's one about the possibility of switching to the use of Avoca pyrites for the production of sulphur and sulphuric acid. There would be some cost involved in the necessary transfer. It would mean the purchase of pyrites burning or roasting plant. I do not know offhand how much this would cost. It would depend on the type and on the size. It would cost a couple of hundred thousand pounds. However, the installation of such a plant would naturally be taken into account when and if pyrites become available, having regard to the cost at which they would be made available by whoever would be in charge of mining operations in that area.

The Senator specifically asked at what stage was Whitegate ruled out. I cannot say when it was ruled out as a possible location, but the committee, having examined all possible locations and having taken the advice that was available to them, decided on Arklow as against any other location in the country and, again, without any special regard to the availability of pyrites in the area.

Professor Dooge

Might I ask the Minister was that in 1960—the report of the second committee?

Mr. J. Lynch

It must be, because the first committee were limited to the use of milled peat and for that purpose Blackwater Bog was reserved for them, which was then being developed by Bord na Móna. Since then, of course, it has been diverted for ESB purposes.

I think that answers Senator L'Estrange's question. He quoted from some document—I forget which—the relative use of sulphate of ammonia and calcium ammonium nitrate, but I am advised that there will be no difficulty whatever about increasing the proportion of calcium ammonium nitrate to be produced vis-à-vis ammonium sulphate, subject to an overall limit. I am satisfied that the plant will be capable of adjusting its proportions to production of these two commodities to supply the needs of Irish farmers. I do not know what answer Senator Hayes was going to give Senator Murphy about share-holding.

Professor Hayes

I am sure the Minister knows the answer.

Mr. J. Lynch

The only thing is that I think Senator Murphy thinks that once a person puts his money into any equity, he expects the money is going to remain there and he can never get it out but collect whatever dividends accure.

That brings me to another point raised by Professor Dooge. I did not realise the Americans were trying to get back their money in two years. I had some dealings with them in other respects. I know they like quick returns for writing off capital within the five-year period, but I did not realise that in modern undertakings in the United States, they were looking for a two-year write-off. I would readily agree with the Senator that the write-off period is an important factor in the undertaking and in the costing of the end product. However, I want to assure the House, while I am not at liberty to disclose what write-off period is involved, that it will be a reasonable one. Deputies in the Dáil asked me the same question but they accepted my assurance that this is one of those factors that I thought I would have to keep undisclosed in relation to the whole undertaking.

Senator Murphy also asked me what were the subsidiary industries that might be established as a result of the setting up of this factory. There are some that readily come to mind, for example, the concentrated fertiliser industry which is coming to notice. Ammonia, which is the main intermediate product of the Arklow factory, is a necessary component for these c.c.f.'s as they are called, the possibility of the manufacture of explosives for quarrying, copper sulphate for spraying of crops, liquefied carbon for paint, and other similar industries. These are just four or five that readily come to mind.

I think that there was one other point raised but I cannot bring it to mind at the moment. I have tried to answer in the short time available to me most of the questions raised during the course of the debate. I hope I have answered them reasonably satisfactorily.

Question put and agreed to.

Leas-Chathaoirleach

Next stage.

Tomás Ó Maoláin

Since there has been such unanimity, might we have the remaining Stages after tea?

Professor Hayes

Senator Ó Maoláin is not in earnest. He will have to be serious about £6,000,000.

Tomás Ó Maoláin

Everybody in the House agreed with the Bill. Everybody approved of it and there are no suggestions for amendment. I cannot see any reason why we could not have the remaining Stages.

Professor Hayes

I shall refrain from saying what I want to say. There have been suggestions for recommendations to this Bill by Senator Dooge. For our own sake and for the sake of the House, we should have the Committee Stage of this Bill. There are plenty of points to be elucidated still. In view of the Minister's attitude, Committee Stage could be quite fruitful. The Minister does not share Senator Ó Maoláin's facetiousness.

Committee Stage ordered for Wednesday, 13th February, 1963.

Business suspended at 6.10 p.m. and resumed at 7.30 p.m.