This Bill is a fairly standard piece of legislation, the purpose of which is to provide for certain amendments to the Industrial Alcohol Acts, 1938 to 1947. These Acts relate to Ceimicí Teoranta, a State-sponsored company currently engaged in the production of industrial alcohol, potable alcohol and glucose. The main objects of the Bill are: to provide for an increase in the authorised share capital of Ceimicí Teoranta from £500,000 to £10 million with, as a consequence, a similar increase in value of share capital which the Minister for Finance may take up; the guaranteeing by the Minister for Industry, Commerce and Tourism, subject to the consent of the Minister for Finance, of borrowings by the company up to a limit of £10 million; the transfer of certain functions from the Minister for Finance to the Minister for Industry, Commerce and Tourism; and the revocation of certain restrictive provisions in the Industrial Alcohol Act, 1947.
The background to the setting up of this State-sponsored company is briefly as follows: Under the Industrial Alcohol Act, 1934, the Minister for Industry and Commerce was empowered to undertake the manufacture, distillation and sale of industrial alcohol so as to provide an assured outlet for potatoes surplus to market requirements and, at the same time, to provide employment in areas where it was not previously available. Accordingly, five factories were established—one each at Carrickmacross, County Monaghan; Cooley, County Louth; Corroy, County Mayo; Carndonagh, County Donegal and Labbadish, County Donegal. That Act was superseded by the Industrial Alcohol Act, 1938, under which Monarchana Alcoil na hÉireann Teoranta was set up to manage the undertaking. The Industrial Alcohol (Amendment) Act, 1947, changed the name of the company to Ceimicí Teoranta and under this latter Act the company were given wider powers for research in relation to the manufacture of substances by chemical process and the manufacture and sale of such substances.
Although the original objective in setting up the company was to provide an outlet for surplus potatoes, from as early as the 1938—39 season sufficient quantities of this raw material were not available to keep the five factories going and the company began to use imported sugar cane molasses to supplement the available supply of potatoes. Following a rationalisation of the company's activities in the 1950s the premises at Carrickmacross were disposed of and starch was produced from potatoes seasonally at Labbadish until 1971, when, owing to a lack of raw materials, this operation ceased. The production of industrial Alcohol continued at Carndonagh and Cooley. Ceimicí Teoranta now produce glucose at their Corroy plant, using imported maize starch. The company diversified into potable alcohol production in 1971—72.
Ceimicí's operations are currently, therefore, confined to the following areas of activity: Industrial and potable alcohol production at the Cooley, County Louth, and Carndonagh, County Donegal, distilleries and production of glucose at their plant at Corroy, County Mayo.
Industrial alcohol is sold to the petrol companies who, under the Industrial Alcohol Act, 1938 are obliged to purchase it in quantities stipulated by the company with the consent of the Minister for Industry, Commerce and Tourism at a price fixed by the Minister with the concurrence of the Minister for Finance. The price is fixed at a level adequate to give Ceimicí Teoranta a profit on alcohol production. A small proportion of industrial alcohol is also manufactured for use as a solvent and other related uses.
Potable alcohol is sold to Irish companies which require neutral spirit for the production of vodka, gin, white rum and certain liqueurs.
Liquid glucose is sold to producers of confectionery, chocolate, jams and so on, and Ceimicí Teoranta are the only native suppliers of glucose to this industry which employs in excess of 15,000 people.
Employment by Ceimicí Teoranta is of the order of 150 persons and in addition imports of maize starch through Ballina harbour provide part-time employment for 33 men.
Following a review of the company's activities by the IDA in 1973 at the request of the then Minister for Industry and Commerce the Government in May 1976 decided that the board of Ceimicí should be reconstituted and that the new Board would be instructed, inter alia, to phase out these activities found to be non-viable. They would also be instructed:—to consider the possibility of association with another Irish firm in the field of potable alcohol; to study urgently the establishment of an integrated maize-glucose plant, perhaps in association with a major foreign producer; and to examine the prospects for producing fine chemicals.
It was noted at that time that it could be necessary for the Government to give capital backing for any sound projects which might evolve and this would involve amending legislation to increase the share capital of the company.
The board were reconstituted with the appointment of three new members in 1977 and 1978 and a new chairman was appointed in 1977. Two new general managers were also appointed who are specialists in their own fields. For various reasons, and despite the best efforts of the company, it was not possible for Ceimicí to secure the interest of a joint venture partner in either the potable alcohol or glucose fields.
As the company were unsuccessful in their efforts to secure a joint venture in glucose, the board decided that the only realistic option was to refurbish their existing glucose factory at Corroy in order to maintain the company's position as prime supplier of glucose to the Irish market and to achieve viability in this product while providing time for a new project to develop. The cost of the refurbishing, now £1.6 million, was approved in April 1979, to be financed by the means of an IDA grant of £445,000 and temporary borrowings by the company of the balance of the finance required pending the enactment of amending legislation which would permit an increase in the company's equity base. This is necessary because, of the company's existing authorised share capital of £500,000, £495,755 is paid up and held by the Minister for Finance. This equity participation is the only Government investment in the company.
In 1979 the company expended £150,000 on the Corroy project all of which was borrowed and in order that the refurbishing of the Corroy plant can proceed with the utmost speed, the company have had to resort to further borrowings in 1980 to finance the project, which is expected to be completed at the end of this year. A provision of £585,000 from Exchequer sources had been included in the Public Capital Programme for 1980 but this capital cannot be provided to Ceimicí without amending legislation. Meanwhile, with the present high level of interest rates, the company are finding these borrowings an unbearable burden which can only be relieved by an immediate injection of equity.
In 1980 two major developments have occurred in relation to the future activities of the company. One of these has been the consideration by the company of proposals to refurbish and modernise their two distilleries at Carndonagh and Cooley. In considering the proposals account will be taken of the use of industrial alcohol in the context of gasohol production, which is a blend of petrol and alcohol. Studies into the use of gasohol have been undertaken in several overseas countries and in some countries, Brazil and the United States, for example, programmes involving the use of gasohol as a transportation fuel are already under way. Information available to me at present would seem to indicate that such a programme would not be a viable proposition in an Irish context due to the large difference in price between alcohol and petrol, alcohol being considerably more expensive. However, in the long term, with the ever increasing cost of petrol and technological improvements, this situation may change. For this reason, further study of these possibilities appears to be warranted.
The second development in the company during 1980 has been the commencement of negotiations with an Australian company with a view to a joint venture in a milling-glucose-dextrose operation based on wheat.
The proposed new venture would be the largest of its kind in Europe producing starch and gluten for the home market and starch, gluten and animal feed for EEC and world markets and would provide a valuable spin-off benefit to the Irish farming community.
Employment would be created for about 120 persons and the proposed new enterprise will be the first major manufacturer of gluten on the Irish market. The project will be of strategic importance in the development of the food industry, providing inputs for the flour and sugar confectionary industries, with the prospect of further downstream employment in these industries.
This project is of particular significance in that it is a joint venture between an Irish State-owned company and a prestigious Australian public company and should be mutually beneficial. Ireland offers to this company an experienced chemical company as partner and ready access to the lucrative European market. In return the Australian partner, a recognised leader in its field, will contribute valuable technological knowledge and experience.
Negotiations on this project are now at an advanced stage and while the details of equity provision and borrowings cannot as yet be finalised. Ceimicí estimate the main equity requirements at £4 million, £2 million for each partner. Ceimicí have also indicated that there may be several further stages of development in the project involving a doubling of investment and employment.
The company have also been actively investigating possible opportunities for the manufacture of fine chemicals particularly in terms of a joint venture with an overseas company.
An increase in the authorised share capital to £10 million and provision for guarantee by the Minister for Industry, Commerce and Tourism of borrowings in a similar amount would allow for the financing of the Corroy glucose project and also provide the necessary financial backing for further projects which may be approved. The company have found in their negotiations on joint ventures that the fact that their authorised share capital is only £500,000 is a minus factor; although this level may have been adequate in 1938 it could hardly be considered realistic in 1980. In the circumstances it is clear that a more realistic share capital base for the company is now necessary.
I am taking the opportunity in this Bill to seek the transfer of certain functions from the Minister for Finance to the Minister for Industry, Commerce and Tourism. These functions are mainly of an administrative nature and are being transferred on the recommendation of the Public Services Organisation Review Group.
Finally, this Bill provides for the repealing of sections 5, 6, 7 and 8 of the Industrial Alcohol (Amendment) Act, 1947. Sections 5, 6 and 7 of this Act prohibit the manufacture by Ceimicí Teoranta of certain chemical products except under licence from the Minister for Industry, Commerce and Tourism. This provision was originally intended to prevent Ceimicí Teoranta cutting across any chemical manufacturing operations being carried out in this country by private enterprise, but this position can be achieved without these legislative provisions, which have been found to have an inhibiting effect on possible joint ventures by the company with private enterprise.
Section 8 of the Industrial Alcohol (Amendment) Act, 1947, which provides that the Government may prohibit the importation of any specified chemical product is contrary to our EEC commitments and it is accordingly necessary to repeal it.
I am confident that the Industrial Alcohol (Amendment) Bill, 1980, will commend itself to the Seanad and I recommend the Bill for its approval.
