Vol. 352 No. 9
andProinsias De Rossa asked the Minister for Energy the reason, in reply to Parliamentary Question No. 17 of 8 May 1984 regarding estimated ore deposits in Bula Mines, he gave the figures of 20 million tonnes, which had been provided by Bula, rather than the figure of 7.8 million tonnes which had been estimated by the Geological Survey of Ireland.
4.
andProinsias De Rossa asked the Minister for Energy if he accepts the Geological Survey's estimate of ore deposits in Bula Mines, and whether Bula's estimate of the orebody or that provided by the Geological Survey is being used by his Department in any negotiations with Bula.
I propose to take Questions Nos. 3 and 4 together.
In my reply on 8 May 1984 to a question by Deputy Mac Giolla in regard to the estimated ore deposits of Bula Ltd., I stated that I had been informed by the company that the in situ geological ore reserves ranged from 20 million tonnes, grading 8 per cent combined lead and zinc at a 2 per cent cut-off, to 10.5 million tonnes, grading 13.9 per cent combined lead and zinc at 5 per cent cut-off. I would emphasise that the information I provided was in terms of in situ reserves in response to the Deputy's question.
The Geological Survey carried out assessments some time ago of the Bula orebody including an assessment of the extent of the mineable ore reserves, as distinct from in situ reserves. Several other assessments of mineable reserves have been made since then by other organisations and the Deputy may be assured that all relevant information on this subject will be borne in mind in the appraisal of the Bula mine project.
I might say that there can be variations of some significance in calculations of ore reserves by different experts, depending, among other factors, on the methods of calculation used and on their perception of the mineability of various parts of the orebody especially where the nature and extent of the mineralisation may not be fully established.
It was because of the Minister's reply to my question last May that I put this question down. I have since discovered the Geological Survey report. The Minister stated the Geological Survey report was in regard to mineable quantities and was not calculated on an in situ basis. If I may read from one small part of the report——
It is not in order to quote at Question Time.
Is the Minister aware that the Geological Survey report states that the demonstrated reserves have been calculated on an in situ basis? With a cut-off grade of 5 per cent they calculate 7.8 million tonnes with an average combined grade of 14.28 per cent. Is the Minister aware that in their report they state there is a striking difference between their estimate and the estimate given by Bula Limited of 11 million tonnes grading 12.36 per cent? There is a 40 per cent higher tonnage in the Bula estimate and a 13 per cent lower grade. Will the Minister explain why he refuses to accept the Geological Survey report?
In my reply of 8 May I made it quite clear that the estimate of the in situ reserves was given to me by Bula. I am aware of the Geological Survey assessment. It now forms part of the information available to me on the Bula orebody. I am aware that there are variations of some significance in the calculations in the various reports available to me. I pointed out in my reply that this is not unnatural or unusual. It depends on the number of factors taken into account by the various experts who assess the mining potential of the orebody and various other matters of a technical nature.
In regard to Question No. 4, will the Minister state which estimate the Government are using in their negotiations with Bula or with any financial companies in relation to the operation?
The Geological Survey report is one of a number of reports at my disposal. Due account will be taken of the contents of each of the reports including the Geological Survey report.
Surely the Minister will use the estimate he considers best in conducting the negotiations since the Government have a 49 per cent stake in Bula. Which estimate is he using?
There are a number of reports that have been compiled by experts in respect of the Bula orebody. I will be taking the best advice that is available regarding Bula from the technical experts in my Department.
Is the report that was carried out by a subsidiary of the ICC the one that is as close as makes no difference to the one that may be accepted by the Department in the final negotiations?
I can only give the same answer to Deputy Reynolds. There are a number of reports concerning the orebody, some of which have come to hand recently. I will take into account all the various elements involved so as to be in a position to take the best possible information from the reports. Should I not be satisfied that the information available to me is sufficient, I would not be slow to take the advice of other consultants.
I was thinking in terms of the amount of reserves. The Minister seems to be indicating that he will be considering other reports which deal with the liability of Bula as a separate and go-it-alone operation. Does the overwhelming evidence suggest that a go-it-alone operation for the mine is not viable?
That is a separate question. The question tabled relates to estimated ore deposits in the Bula mine. In that connection I am taking account of all the information available to me from the various sources.
We can deal with the matter on Question No. 5.
5.
andProinsias De Rossa asked the Minister for Energy the reason it was considered necessary to ask a private company (details supplied) to conduct a review of the viability of Bula as an independent mine when he has available the considerable experience and actual reports from Government agencies, such as the ICC and the Geological Survey; and if, in view of his commitment given to the Dáil on May 9 last that he would be willing to make all information known to the House, he will now lay the company's report before the Dáil.
6.
andProinsias De Rossa asked the Minister for Energy if there is any section in the State-Bula agreement under which the State agreed to finance or guarantee loans of up to £10 million for Bula mines; if he proposes to take responsibility for bank loans to Bula; and if it is intended to make further funds or guarantees available either directly or indirectly to the four directors of Bula who have already received £9.54 million, plus £665,257 in recent loans from the taxpayers.
7.
andProinsias De Rossa asked the Minister for Energy if he is aware of reports that the present private shareholders in Bula mines are negotiating a sale of all or part of their shares to a foreign company; if he was consulted about such a move; if he approves of it; and the implications of such a move for the State's shareholding in Bula.
8.
andPrionsias De Rossa asked the Minister for Energy if as trustee of the State's 49 per cent shareholding in Bula Mines, he will state the total outstanding loans or debts now owed by Bula; and if he will indicate how such debts were incurred as Bula has not yet mined any ore.
I propose to take Questions Nos. 5 to 8, inclusive, together.
A private firm of consultants with wide international links has been engaged to assist in an up-dated evaluation of the Bula mine project in conjunction with a State agency who have done similar evaluations in the past. Projections of the economics of any mining operation require periodic re-evaluation in relation to changes in metal prices, exchange rates, operating costs, the willingness of commercial interests to invest, and other factors which can significantly affect the outcome of the operation.
The firm of consultants in question have considerable experience in the evaluation of projects of this nature and their input will usefully supplement the work done already on the Bula project by other bodies to which the Deputies refer. Their report has not yet been completed.
It was provided in the agreement of December 1975 between the State and Bula Ltd. that the Minister would use his best endeavours to secure Government agreement to a State guarantee not exceeding £10 million in respect of the major financing required by the company to develop the mine. Such guarantee has not yet been given and any question of extending guarantees or other financial support for the company remains to be determined.
I am aware that from time to time various foreign companies have expressed interest in acquiring the private shareholding in Bula Ltd. and that there has been considerable speculation about this. The Deputies may be assured that the Government in considering all aspects of this matter will have as their primary objects the protection of the State's investment and the launching of the project with the consequent significant employment involved.
The total indebtedness of Bula Ltd. now stands at some £27 million. The bulk of this indebtedness comprises of principal borrowed with accrued interest thereon. My understanding is that the company's main expenditures have been in connection with their planning permission applications, mine development studies and company administrative expenses; in addition, a considerable amount of interest has been rolled up on the outstanding loans.
A number of questions arise from that reply but I shall deal first with the report that has been asked for by the Minister. Is it not true that the ICC were asked by the Department of Energy to undertake a study of the possibilities of the Bula mine and to assess whether the mine is a viable proposition? Did that ICC report not state specifically that they had reassessed Bula's viability as an independent mine and are still of the opinion that it is not viable commercially? Has the Minister asked for the report from the internationally known accounting firm with a view to overthrowing the ICC estimate and getting their view that the mine is viable? We are talking about what is a very expensive report.
We commissioned ICC Corporate Finance Ltd., a subsidary of ICC, to carry out a report on the viability of Bula. The Deputy must understand the necessity for an examination of the ore body in the light of changing circumstances — for example, the rising price of ore, lead and zinc, the value of the punt and various other matters which would either make the mine viable or otherwise. It is in that connection that we have engaged the firm of consultants to assess the project. As I have said, my objectives are simple; to have the mine put into production, to provide employment and to ensure that our natural resources are exploited properly. These will continue to be my objectives.
Have this firm been asked to investigate how Bula incurred such huge debts? Their borrowings have reached £18 million while their debts total £26 million. Are the firm of consultants to assess the management structure of Bula in view of the fact that after 12 or 13 years no work has commenced at the mine?
It is not unusual for the bringing into operation of a mine to take quite a long time. In tandem with ICC Corporate Finance Limited the company are examining the viability of the Bula project. They are evaluating a number of development proposals that are being pursued. I should not like to say more at this stage because the House is aware that negotiations are in progress and I should not wish to jeopardise the outcome of those negotiations.
When the report becomes available will the Minister place it before the House?
Ministers, Departments and State bodies often require consultancy reports on major matters of policy and on matters of a technical nature. It would not be my intention to put this or any other report pertaining to the Bula ore body before the House.
Will the Minister of State tell the House if the cost of this additional survey will be borne by the company or by the State? Secondly, will the Minister not agree that ultimately the decision of whether or when the mine will be brought into production will rest with the 51 per cent owners rather than with the State as a minority 49 per cent owner?
The report has been commissioned by my Department. The question of the mine coming into production and State involvement would be a matter for me, for the Minister and for a Government decision. I am a little perturbed to hear from some Deputies — not the Deputy who has spoken but members of The Workers' Party — who seem to be emphasising that the mine is not viable. I would have expected they would be anxious to encourage the State to ensure that the mine comes into production. Instead, they seem to condemn the mine which is rather unusual for The Workers' Party.
We are taking over their debts.
I do not know how The Workers' Party want to assess the viability of Bula mines but I have very definite criteria as to how that viability should be assessed. Did the Minister say that he has got additional studies and that they have completed assessment of those studies? Are we finished now with assessment of studies?
We have a company of international accountants assessing the position in the light of a number of proposals that are being examined. They are the subject of negotiations and we hope they will result in the establishment of a project.
From what the Minister of State has said it appears we have passed the stage of assessment of deposits and so on and we are now in negotiations regarding the future of the Bula mine as a "stand alone" operation. I put it to the Minister that he must have satisfied himself that it was viable as a "stand alone" operation before entering negotiations with the company and other parties whose names fly around from time to time. I do not pay much attention to them until I get the facts.
The Deputy will be aware that things have changed rapidly in the price of minerals, especially lead and zinc. He can be assured that my Department made every effort to bring Tara and Bula together because we saw that as a logical and simple solution to the problem. However, despite our best endeavours — and the Deputy, as Minister, was involved in this also — we failed to bring the parties together. The position now is that unless something else happens we have a "stand alone" project. In the Department we examine if a project is viable as a "stand alone" project and if we are satisfied we put the matter to Government in the normal way. If we are satisfied it is not a viable project we say no. It is as simple as that.
Will the Minister of State tell the House when he expects the report will be available and, secondly, how long will it take the Government to make a decision on the viability of the mine? Unlike some other Deputies, we are very interested in this matter and hope that if there are 300 jobs involved they will be provided in the next few years.
It will take some weeks before a full assessment will be made. I hope the matter will be determined before Christmas but I cannot be definite in that regard.
I will allow a final question from Deputy Reynolds. I have allowed about ten supplementary questions already.
This is a big issue and it will be a bigger issue——
It could be too big for Question Time.
It was too big for Question Time on the last occasion. I hope Deputy Farrelly was not referring to me. I am only interested in viable projects and I give such projects my blessing.
I was not referring to the Deputy.
Having put aside the reports, evaluations and assessments that have been done by the two parties involved — I do not know what view the Minister takes of either of them but I know what view I took — can he tell me truthfully and honestly that the overwhelming evidence available to him is not totally against a "stand alone" operation apart from one final report probably by Cooper and Lybrand? I ask the Minister to accept that is not sufficient ground in view of the other reports by semi-State bodies and the entire history attaching to this matter to go ahead with this project. There is another matter I wish to clear up with the Minister. This arose during Question Time when I was not in the House. I refer to the decision to pay £665,257 in recent loans. The Minister seemed to indicate to Deputy O'Malley that that was a decision I took when I was Minister. I want the Minister of State to clarify that and to accept that the decision I took as a holding operation accounted for £166,000 because there was the promise of a deal at the time. Neither I nor my Government took any decision to pay £665,000 to the bank.
The viability or otherwise of any project can only be assessed when I have seen on my desk the terms of a project and have it assessed from a financial and technical point of view. I have not seen that assessment yet in this case and I cannot say if there is a viable project in prospect. When I have all the data I will examine it and make a decision. With regard to the Deputy's other query, I hope I did not impugn his character in any way. The moneys paid were £502,000 in October 1983 and £163,000 in February 1984 and both periods were within the term of office of this Government. I want to make that quite clear.
This will be positively the last supplementary on this question.
I asked only three supplementary questions. Can the Minister confirm that the four private individuals who have already received £10 million from the State will not be bailed out of the £26 million debt they have since incurred without anything to show for the money? That is my first question. Second, when the report of the international firm is received finally will the Minister show it to the ICC for review and analysis?
Regarding the existing debt of the company, £27 million, the Government are not responsible therefor. We would be most anxious to ensure that the project would come to fruition. I am sure the House will understand that I do not want to say anything that would jeopardise present negotiations.
In reply to the second part of the Deputy's question. I might say that on any feasibility study or report I would be anxious to involve the ICC in having it examined.
