SELECT COMMITTEE ON ENTERPRISE AND SMALL BUSINESS debate -
Wednesday, 12 Jul 2000

Vol. 3 No. 18

Cement (Repeal of Enactments) Bill, 1999: Committee Stage.

Acting Chairman (Mr. Ardagh)

There are two Bills before the committee, namely, the Cement (Repeal of Enactments) Bill, 1999 and the Insurance Bill, 1999. As indicated on today's agenda we will begin with the Cement (Repeal of Enactments) Bill, 1999. It is proposed that we meet from now until 1.30 p.m. at which point we will have a one hour suspension. We can then resume at 2.30 p.m. until we complete our consideration of the Bills at around 5.30 p.m. Is this agreed? Agreed.

Both Bills fall within the remit of the Minister of State at the Department of Enterprise, Trade and Employment, Deputy Noel Treacy, whom we welcome to the committee. We also welcome his officials, Mr. Gerry Murphy and Mr. Turlough O'Molloy.

SECTION 1.

Question proposed: "That section 1 stand part of the Bill."

Minister of State at the Department of Enterprise, Trade and Employment (Mr. Treacy)

I am delighted to be back before the committee. This is a very simple Bill. It was the subject of a long debate on Second Stage in the Dáil. It was first introduced in the Seanad over a year ago. It is a minor technical Bill to get rid of redundant legislation to ensure we maximise competitiveness within the cement industry. The principal provision is that a company cannot manufacture cement without a licence from the Minister for Enterprise, Trade and Employment. Only one company ever got a licence in the history of the State. A number of applications are currently at various stages of consideration. We also get applications from Northern Ireland. We want to eliminate this redundant and outdated legislation from the Statute Book and ensure competition is the order of the day.

Mrs. Owen

I am substituting for Deputy D'Arcy.

I thank you for the co-operation I have enjoyed from the Chair and the Minister. As I will no longer be a member of the committee, I wish to thank the Minister of State and his colleagues for a very fruitful time on this committee which does not get nearly enough recognition for the important work it does. This is probably because the issues with which it deals are not issues of the day. I hope the committee will go from strength to strength and continue to protect small businesses.

During the Second Stage debate on the Cement (Repeal of Enactments) Bill, 1999, a number of Members raised serious concerns about the whole area of the cement industry in Ireland. This is a short Bill to repeal an old Act and open up full competition. Can the Minister of State do anything to ensure the Bill will do what is intended, that is, open up to competition the cement industry? There are allegations that CRH is dominant in a number of areas in the broader cement industry, including the aggregates and concrete and cement production. This committee met a delegation from the Family Alliance of Quarries and Cement Producers who were very concerned about how CRH has been buying up a lot of the industries, leaving them under their existing company names and increasing their cartel status. Is there any mechanism open to the Minister of State under the legislation to remove the doubts that exist? Perhaps some of the material we are receiving is not accurate and there is not the dominance suggested by the Family Alliance. When the legislation is passed can we begin on a level playing pitch? Can the Minister of State request the Competition Authority, which appears at last to be getting the necessary resources to do its work, to carry out a full investigation into the cement industry so that the legislation will work and do what is intended?

Acting Chairman

Thank you, Deputy. I will convey the kind comments of the Deputy to the Chairman and the Minister.

Mr. Treacy

The Bill in itself will not do everything. However, there are certain mechanisms, instruments and services available to the State that will contribute to sustaining competition. As I said earlier, there are two proposed new cement manufacturing plants to come on stream which are at various stages of development. The Seán Quinn Group have an application approved and the company commenced production in early May. The planning permission and EPA licence were granted and this has helped to introduce competition in the field. The Lagan Group have submitted a planning application. Meath County Council granted planning permission on 14 April 1999. This was appealed to An Bord Pleanála by a number of parties. Injunctions sought delayed consideration by An Bord Pleanála of the appeal and in April 2000 the High Court found in favour of the board's decision. The board approved the application on 26 April 2000 and the EPA confirmed that it is currently considering the application from the company. If the third plan comes on stream it will help to create competition in an important location close to the capital city where there is a huge demand.

A number of other issues were raised by various Members during the Second Stage debate. I will respond to these issues in as much detail as possible. The control of explosives is a matter for the Department of Justice, Equality and Law Reform. CRH does not manufacture explosives but has an interest in the current sole manufacturer. New interests through this market would reduce dependence on a single supplier.

Mrs. Owen

Can you indicate how much interest they have?

Mr. Treacy

I do not know what the percentage interest is.

Mrs. Owen

That issue needs to be examined.

Mr. Treacy

The Glen Ding issue was raised. This is before the Moriarty Tribunal and we must await the outcome. On the dominance of CRH pertaining to dolomite, this is a classified scheduled mineral. Sanction is required from the Minister for the Marine and Natural Resources for its extraction. Currently there is just one licence holder, Roadstone Provinces. Other companies are in negotiation with the Department of the Marine and Natural Resources to acquire licences for dolomite. It is categorically wrong that operators have been faced with massive royalty demands. There is no information to this effect.

Reference was made to the purchase of PFA by the ESB and CRH, the take over of Sugar Company quarries and the fact that CRH had a dominant role in fertilisers. Each of these issues was covered in a submission by the Quarry and Concrete Alliance and has been referred to the Competition Authority. This issue will be investigated by the authority and we await the reports to which we will be pleased to respond. There were allegations pertaining to secret acquisitions by CRH. As a result of statements made in the Dáil, these and other related issues are being examined in detail by the company law section of the Department in conjunction with the Chief State Solicitor's office.

The cement certification scheme was introduced in the 1980s and was based on an earlier Institute of Industrial Research and Standards standard. The scheme is open to all applicants who meet the standard. Only one application has ever been refused and, contrary to an assertion made in the Dáil, there is no question of the scheme ever being in breach of European Union law. The point was made the cement prices are a major contributory factor to the high cost of housing. Deputies commented on cement prices during the discussion on house prices. Construction materials are just one of the constituent elements. It would appear from recent commentary that cement prices are not rising as fast as inflation or other building products, therefore, the average input from concrete products in a house is in the region of £10,000. Consequently, this could not be a major contributory factor to the high cost of houses. I hope my replies will clarify some of the points made during the Second Stage debate.

Mrs. Owen

It is heartening to know that some of the speeches made during Second Stage do not go into the ether and are forgotten. However, it is disappointing that it required many of us to raise these issues during the Second Stage debate in the Dáil for anyone to take a blind bit of notice. Small companies have been making complaints for years about over-dominance in the cement industry and these complaints have been ignored. I suppose one could say better late than never. Has the Minister of State set a time limit for the company law section of the Department to examine the complaints made? It is important that these investigations do not drag on for years while the industry stagnates. How long will it take to process applications for new licences in the dolomite section? If those who wish to be in competition with CRH believe there is a genuine effort to grant licences to other industries to proceed, we might begin to see real competition taking place.

Given that just one portion of the complaints has gone to the Competition Authority, is there any indication when it might be able to carry out these examinations? The authority said nothing in recent press releases except that it cannot proceed with many of the examinations.

Mr. Higgins (Dublin West)

For clarification purposes, I do not think the Moriarty Tribunal has yet agreed to investigate Glen Ding. It has been referred to by a number of parties and was raised in the Dáil during the setting up of the tribunal. The Attorney General spoke to leaders of the various parties on whether there was any objection to Mr. Justice Moriarty taking the issue on board following the revelations about the shareholdings and so on. He was assured by all the parties that there were no objections. This issue needs to be clarified given that Cement Roadstone Holdings is a major multinational company. We know an illegal bank was run from its headquarters. Because of the power that brings to bear on its own economic situation and its dealings with competitors, residents and the environment, we should have clarification. No one has claimed that the price of concrete was a major factor in the increase in house prices. That honour must go to speculators and speculation. However, I join Deputy Owen in asking about a time limit on the various investigations regarding allegations raised on Second Stage and by some of the smaller people in the cement and related products market.

Does the committee have an assurance that the Competition Authority has sufficient resources to carry out a proper investigation? Many allegations were made regarding abuse of power by Cement Roadstone Holdings in its dealings with smaller companies which, on a regional or county basis, might have been in competition with it. Serious matters were raised and resources, time and personnel will be needed to investigate them. Is the Government aware of that and will extra resources be made available?

Mr. Daly

Can the Minister of State tell the committee if the orders made under this legislation govern the importation of cement and are these now repealed? What controls are there over the importation of cement? Does the Minister of State know what quantities are involved?

The Minister of State is aware that some of the ash from the waste disposal unit in Moneypoint has been used as a base in cement manufacture. Are there any plans to use this very valuable ash? Does the ESB have an interest in entering this area of activity, now that this legislation gives the board new authority?

Mr. Boylan

I welcome the Bill. It is important that we open competition in this field. I acknowledge the commissioning of one of the most advanced cement factories in the country, if not in Europe, by the Quinn Group in Ballyconnell, County Cavan, last May. This will have a major input in the supply of cement and cement products. I acknowledge the great work done by the Quinn Group in the building industry and in the supply of raw materials.

The price of cement and cement products has not risen in line with inflation in the last decade. We must recognise that. The cost of concrete products for the building of an average house is approximately £10,000. This is a small proportion of the total cost. Cement producers are also involved in the manufacture of insulation materials. A licence for the extraction of gypsum is now available in Glangevlin, adjacent to Quinn's operation in Ballyconnell. A licence was previously held by another company but little work was done despite the supposedly very rich deposits. I hope the Minister of State will indicate to the successful applicant that the licence should be used to extract the very rich deposits and an industry set up in that remote rural area.

Chairman

I thank the Deputies and I thank Deputy Ardagh for taking the Chair in my absence.

Mr. Treacy

Deputy Owen raised a number of issues. We have not placed a time limit on requests we have made to the Competition Authority or the companies division. Thirteen investigations are taking place at the moment and very able officials in the Department and the various agencies are involved in all of them. The Competition Authority will report as quickly as possible and if there is a long delay we will follow the matter up. We are very pleased that the issue is to be investigated. Deputies Owen and Higgins raised the question of staff. Extra staff has been allocated. I am assured that staff numbers are satisfactory and I expect the staff to proceed with the various tasks they have been assigned.

It is for the Moriarty tribunal to decide what it investigates at any time. I expect it will examine this issue but we cannot direct it to do so. If the tribunal decides not to proceed with an investigation into Glen Ding, another decision must be taken.

Deputy Daly raised the importation of cement. The ban on the importation of cement was lifted in 1962 to assist the construction industry and the economy in general, to stimulate economic growth and to create competition. Although the ban has been lifted for almost 40 years we import only 5% of our cement requirements. Much imported cement comes from Northern Ireland so that the amount of cement coming from outside the island of Ireland is small. Some bulk cement is imported and demand is greater at some times of the year than at others.

I am aware of the Moneypoint situation. Efforts have been made in the past to do technical research and other work to make the greatest use of the ash. I do not have detailed knowledge of this matter because it is not in my area of responsibility but I believe that potential exists. The Deputy may wish to pursue this matter with Moneypoint, SFADCo, the ESB and CRH. The Department will give him any support it can. Resources are available for research and development in this area.

I am aware of the Glangevlin situation and I concur with what Deputy Boylan has said about the stability of prices in the cement and concrete products industry. Prices have risen at less than the rate of inflation. This is due to competition in the industry and special tribute must be paid to the many smaller manufacturing outlets in the industry which keep a stabilising influence on it. I examined Glangevlin and listened to submissions from Deputy Boylan and others when I was Minister of State with responsibility for energy. The licence is up for renewal and new applications can now be accepted. That is a matter for the Minister for the Marine and Natural Resources. I presume he will take a decision in the best interest of maximising the economic value of the resources and sustaining the gypsum industry. I am sure Deputy Boylan will communicate with the Minister if he wishes.

Mr. Boylan

I will.

Mr. Treacy

I hope I have covered all the points raised.

Question put and agreed to.

Section 2 agreed to.

Title agreed to.