Seanad Éireann díospóireacht -
Wednesday, 26 Nov 1947

Vol. 34 No. 14

Minerals Company Bill, 1947—Second Stage.

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

Minister for Industry and Commerce (Mr. Lemass)

This Bill is intended to make certain provisions in regard to our minerals company, Mianraí Teoranta, to provide for the winding up of certain activities in which it was engaged heretofore arising out of the emergency and to define its future functions. Senators are probably familiar with the circumstances which led to the intervention of the State in the working of the mineral resources of the country and are aware that the main Act, the Minerals Development Act, 1940, is based on the assumption that the working of our mineral resources is primarily a matter for private enterprise. That is still Government policy. The State has taken action to secure the working of some mineral resources only where the propositions were of a character not likely to appeal to private enterprise, because they might not prove to be profitable, or to ensure the maximum production of certain essential materials which could not be imported during the war years.

Originally, the company was two companies, one the Slievardagh Coalfield Company set up to develop the Slievardagh coalfields, and the other the Minerals Company which had a wider authority in mineral exploration and development work. Later, for the purpose of economy and better working, the two companies were amalgamated and the Minerals Company has carried on the Slievardagh coalfield workings since then. We endeavoured to dispose of the Slievardagh coalfield to private enterprise but no offer was received. It was then decided to authorise the Minerals Company to continue working there. The anthracite coal produced there is still very scarce, and all the circumstances which justified State intervention for the working of that coalfield still exist. If, however, there is to be a continuation of the working at Slievardagh, then more capital will have to be put in in order to get the best results there, and to bring the enterprise to the stage of profitable working. If it is brought to the stage of profitable working, then I should hope that another effort to dispose of the property might be more successful. If it cannot be brought to the stage of profitable working it will be closed down. One of the provisions in the Bill is to empower the company to carry on the Slievardagh coalfield working and to enable the Minister for Finance to make further advances for capital purposes to a limit of £50,000 for that purpose.

The main activity of this company during the war years was in the production of phosphate rock in the County Clare and pyrites in the County Wicklow, both commodities required in the production of an artificial fertiliser. During the war there was considerable difficulty in obtaining these materials, and when obtained they were at a very high cost, and in the case of pyrites, particularly, a very heavy subsidy had to be paid in order to make the artificial fertiliser available at a price at which it could be used. So far as the rock and the pyrites produced at home were concerned, the company were instructed to produce regardless of cost. We were concerned only with the tonnage they turned out and not with the methods they adopted to secure tonnage. These methods were often very makeshift because they were unable to procure proper equipment, particularly for the working of the Avoca mines where the pyrites were, and the company involved itself in a substantial loss.

It is now proposed that these commercial workings of the company should cease entirely. A programme for mineral exploration and development work has been prepared by the company in consultation with a number of international experts. That programme envisages a thorough examination of all mineral deposits where there are any possibilities of commercial working at all, and their development to the stage at which private enterprise might be interested in taking them to the further stage of commercial working. It is proposed to finance these activities of the company by means of non-repayable advances to a limit of £85,000 a year for seven years. That is the estimated cost of the full programme. It is clear, therefore, that the company will have no undertaking, apart from the Slievardagh coalfield, which would enable it to earn any money, and, consequently, there is no means by which the loss incurred on the war-time working and which was met by advances from the Exchequer, can be recouped, or the advances from the Exchequer repaid. There is little point in leaving the loss outstanding when the company has no means of meeting it. The proposal in the Bill is that an estimate will be made of all the assets of the company. When the value of the assets is determined in that way they will be deducted from the outstanding sums due by the company which amount to £414,000. When the amounts representing the actual assets of the company are ascertained they will be regarded as advances to the company from the Department of Finance and the balance will be wiped out.

The seven year development programme will, it is estimated, cost £595,000 in all. It is a detailed programme involving geological and geophysical surveys, diamond core drilling, sinking of shafts and, where minerals of commercial value are found, the development of these minerals to the point at which commercial working could begin. It is not intended that the company itself will engage in commercial working. If they locate and develop commercial minerals it will be their concern to induce other operators to do the commercial working. It is, of course, possible that they may not find any deposits at all which would yield commercial possibilities. There are many indications that such deposits exist. The reports received from the various consultants suggest that useful results are likely to follow from this exploration work. If exploration results in the discovery of a commercially workable deposit, then in disposing of the company's interest in that deposit to whatever firm proposes to work it commercially the amount expended in the exploration and development work will be recovered.

If there is no such satisfactory result from its work, the only thing we can say is that we will have as a consequence of this seven years' exploration programme a complete picture of our mineral resources. It may be that decisions will have to be taken that certain of these mineral resources, like the phosphate rock in the County Clare, should not be worked commercially at times when supplies from other countries are available. In the case of that phosphate rock, for example, it is the only known deposit of that mineral there is in the country, and the feeling is that it should be left there as a sort of iron ration against another international situation in which imported rock could not be obtained. Similarly, the same thing might happen in relation to other minerals. There are prospects of some metallurgical ores being found here. The mere existence of the ores is of no value unless there are commercial firms which could process them and bring the metals to the stage where they would be of commercial use.

It may be asked where the line of demarcation would be drawn between the activities of the geological survey and the Mineral Development Company. The geological survey is concerned mainly with the preparation of reports on the mineral resources of the country, from the study of surface indications and of records of old workings. It endeavours from data of that kind to give an opinion of the commercial possibilities of known minerals, but there is no effective method of actually determining the value of any mineral deposit except by boring in the first instance, and, if that boring suggested it to be desirable, by the sinking of shafts. All that work must be done, in any event, before commercial working becomes possible, and it will be the function of the Minerals Company to do that development work which will follow on the preliminary survey carried out by the Geological Survey Department. The indications are that, when this seven year programme has been completed, unless some new functions are given to this company in the meantime, the need for the company's existence will terminate, on the assumption of course, that, by that stage, the Slievardagh property will have been disposed of to someone else or written off as a bad venture.

The general principle is that mineral working on a commercial scale, if undertaken here at all, should be done by private enterprise. I think it is by far the best method. On our present system, private enterprise comes in on the profitable undertakings and the State takes the leavings and always loses on the leavings; but it is undesirable that we should have State enterprise and private enterprise working together in the same field, and it was with a considerable amount of relief that I secured the Government decision that this company should withdraw from the particular activities in which it engaged during the war and should concentrate upon what was intended to be its task, mineral exploration and development. We have still to leave it with the Slievardagh undertaking on its hands because we still need the coal which is being produced in Slievardagh and cannot get anyone else to produce it. They are, however, quite optimistic that, subject to certain further developments, which will involve some capital expenditure, the Slievardagh colliery can be brought to a stage of profitable working and there is evidence given that it can continue on that basis, so that there may be better prospects in the future of being able to dispose of it.

Sir John Keane

In considering this Bill, I think we have to look at it from the point of view of the moral or lesson it teaches us in respect of Government promotion of commercial enterprise or activities. Senator Sweetman moved a motion last April which attempted to define what was the proper sphere of Government interference in commercial enterprise and when I attempted to outline certain principles which should govern such action, in view of the undoubtedly increasing tendency, though not always mistaken, for the Government to take an increasing part in such work, the Minister said:—

"I do not know of any useful purpose to be served by discussing an abstract issue like this. Let me say at the outset, so that the Government's position will be understood, that when we decided upon the establishment of statutory corporations, of semi-State companies, to conduct commercial enterprises we were concerned only with the best way of getting a particular job well done."

Here we have a concrete issue and I think we have a right to go back on the past history of this entire mineral development in order to understand if it has been a job well done and to see whether we cannot possibly learn lessons for future State enterprise. We do not get many opportunities of doing this and here is one which I think should be examined.

The origin of this enterprise goes back to 1941, to two Bills which were passed in that year. The first was a Bill to develop the Slievardagh collieries and the then Minister, who is now Minister for Local Government, in dealing with the prospects of the enterprise, said:—

"These facts in themselves do not, of course, make certain that large returns in the way of dividends may be expected for any money invested in the establishment of the colliery at Slievardagh. All they do is provide sufficient justification for saying that there is a very good chance that the undertaking can be made self-supporting in a reasonably short time."

Six years have elapsed and we are writing off quite a substantial sum in respect of that and its conjoint or sister enterprise, the Minerals Bill of the same year. At this stage I think we might pause and look at the last accounts of the Slievardagh company. These show a liability of £92,471 in respect of State advances and accrued interest. I do not know whether the Minister at present regards that as a good asset or not, but I think we are justified in concluding that it is not a good asset when we come to relate it to the total sum now proposed to be written off.

At that stage I may pause and examine the capital structure of the Slievardagh company. Here again is a point of principle—the proper method of financing these enterprises. This was an enterprise which had to incur very considerable capital expenditure and yet there was only a nominal capital of £100 created. I do not say that there is not justification in certain instances for promoting companies with a nominal capital, companies which hold little or few assets where existing companies do the work—companies for handling commodities, such as Tea Importers, Limited, or Fuel Importers, Limited, who have practically no fixed assets, but I say it is wrong in principle for a company which is going to incur considerable expenditure in development, which owns assets of greater or lesser value like a coal-mine, to be financed in that way. Yet now, having failed to sell this company—and unfortunately we have failed—to any private bidder —I do not know if any bid at all was made—we are going to continue its working with the same bad and objectionable capital structure. We are going to put more loan money into it and leave the capital at a sum of £100. At this stage I do not suppose it matters what we do, but it will serve as a lesson as to the wrong method of financing companies which are to carry on commercial enterprise. That or some other company was created and it had an Irish name that I am afraid I will not attempt to pronounce. It was the Minerals Exploration Company. As the Minister says, that company was going to work independently at Slievardagh and going to do both mining and developing. I rather gathered that the Minister suggested this company was only going to do mining. In practice, it did mining almost entirely, but it had power to do developing as is now proposed in this Bill. I shall read an extract from a speech that I made six years ago in reference to the Bill that was then before the House. I said:

"Whatever the objections may be to the method of providing fixed capital adopted in the Industrial Alcohol Act, in the case of an enterprise which was intended to give us a substitute for imported petrol, and which I now understand is not being operated at all, it seems rather roundabout and rather misleading to apply loans which are going to bear a rate of interest and be repaid. As far as I can see, there is no conceivable prospect of a company like this earning anything and being in a position to repay loans and interest. It is rather a pretence that we should put it in that form."

In this case my prophecy has come true, and it is now proposed to write off advances that have been made. When we come to examine the sums written off, I am puzzled. When I take the accounts of the two companies, I find that the total repayable advances without making any set off for assets amount with interest to £92,201 plus £201,000 or about £300,000. Now, after making allowance for assets, the amount has risen to £440,000. The only conclusion I can come to about these two companies' affairs is that they have been leading a pretty gay life in the last two years with the £100,000 advanced with interest, making no allowance for assets. Perhaps the Minister might be able to explain how the amount is so rapidly out of proportion to its earlier growth.

There is another matter which might only indirectly affect the Minister. Now that he is going to increase the number of these enterprises we should know where we stand. I raised this matter on the Finance Act. When I examined the assets of the State in the Finance Accounts I found that most of the advances made under this Act are not included in the tables in the accounts which show State assets. Other advances of a comparable kind are shown. I think that is a matter that can be explained and that the House would like to have. We have now reached the stage when Slievardagh is to be continued and a further £50,000 is going to do what £92,000 failed to do. It is hard to measure the extent of success or failure of Slievardagh, because I can find no satisfactory commercial figures dealing with it. There are annual reports of which I got one. There are reports of its activities, but there is merely a total figure of the coal mined, but no costs or costings.

I feel that if the State is going to enter on commercial enterprises it should adopt commercial methods. No businessman and no company would dare to give such flagrant information as is given. I think the whole method of financing and controlling these State enterprises is not satisfactory, the worst of all being in connection with steel, which we will have before us some day for the third time, possibly to wipe off the losses. What I say is that Government methods in these matters are not business methods, as there is no method of accounting, and the shareholders, having no information, are in the dark. It will be said, of course, that we must get coal anywhere we can get it and at any price. In a short time we may be able to export coal, but in the meantime we are going to put another £50,000 on top of £90,000 in Slievardagh and we can only hope for better results. I hope we will be told what the results are fairly soon after the event.

I cannot offer any valid objection now, but I think it is right with regard to mineral development to let it be done by Government enterprise. There it is not so dangerous. No great assets are created and the work is merely exploratory. If we find something with the £500,000 we are sanctioning, well and good. It is a legitimate risk, but it is most unfortunate that we should wake up now to find that we have put £414,000 into this enterprise when prices were very high, with practically no limit to what could be charged for commodities during the war. In spite of that, we were made pay the full price for the anthracite that the company got for Fuel Importers and I think the fertiliser companies paid through the nose for what they got.

Mr. Summerfield

I do not propose to follow Senator Sir John Keane's point, but I think this Bill will be regarded by the community as a good Bill. It clearly explains to the ordinary citizen the alluring picture that the Tánaiste painted. As I understood him, it is proposed to have a complete and exhaustive report on mineral resources as regards procedure, drilling and sinking shafts. If there is one thing more than another on which confusion exists, it concerns the lack of knowledge of our mineral resources. If the extent of these resources could be discovered within seven years, I think time and money would be thoroughly well spent in doing so.

We have to remember that exploratory work of this kind is work that can be done only by a Government. Obviously no private enterprise or concern can be let loose over the Twenty-Six Counties to discover for themselves what mineral resources we have. Private enterprise at this stage would be confronted with difficulties that could not be surmounted. The Government can, under the power it possesses, do certain things on privately owned land by way of discovering what minerals are under the surface of the land. I welcome this Bill because we will be in a much better position to know just what mineral resources we have in this country but I wonder does the community realise what the Bill actually is. It is going to set in motion a complete and exhaustive exploration of the mineral resources of the country and having ascertained exactly what they are it is going to submit these resources to industrially-minded and business-minded sections of the community who will do their share not merely in the development of something that is to their own good but to the good of the nation as a whole.

Mr. Duffy

I think the Minister has reached a very satisfactory stage in relation to industrial development when he and Senator Sir John Keane are much at the same level. Senator Sir John Keane was very critical of the attitude of the Government's industrial development plans five or six years ago. Now he is beginning to change: the Government is coming around to his way of thinking and he does not mind paying out £50,000 to see an end of at least more State enterprise. Senator Summerfield is somewhat different. He is willing to vote money for research and exploration but then, I hope I am not misrepresenting him, when all the work is done, when dividends are in sight, it will be handed over to private enterprise.

Mr. Summerfield

And why not?

Mr. Duffy

Very well, I am satisfied. As I see it, the aim of the Government, represented here by the Minister, is to use public money for the purposes of exploration, surveys, boring and general development and having got the facts up to a point where the investors with capital can calculate a rate of dividends, to hand over the whole show to the people who want to make dividends. The people for whom Senator Sir John Keane and Senator Summerfield speak are not concerned with producing coal; they are concerned with making profits.

Mr. Summerfield

They could do both.

Mr. Duffy

You can produce coal without making profits, but I grant you that you cannot make profits without the coal. This is the attitude of the Government at a time when one of the great coal producing countries of the world has abandoned private ownership in the production of coal and has assumed for the State the right to explore and develop its coal mining industry from the pithead to the transport ship. It is admitted by everybody, by papers like the Sunday Times, the Observer and the Daily Mail, that there was an unanswerable case in Britain for the nationalisation of the coalfields because private enterprise is concerned with getting coal in the cheapest possible manner so as to make the largest amount of profit.

Sir John Keane

They were getting more coal than the present people are getting.

Mr. Duffy

But look at the heritage they left to the present people. Five hundred years of reckless misuse and waste of the nation's assets is the heritage they have left. That is what is being pleaded for in this House and I hope there are people on both sides of the House who are prepared to stand against it and prepared to insist that the industrial resources of our country are not going to get into the hands of people who are not concerned with the production of goods or the production of food or the building of houses but merely with making profits. The Minister's attitude is inexplicable in view of the fact that only a couple of hours ago another Minister and colleague of his proclaimed himself as a socialist Minister for Finance and denounced us as Tories. Another Minister will describe us as Communists but this does not matter. Actually a few hours ago a Minister described us as Tories because we protested against taxing the working man's pint of stout instead of the rich man's bottle of champagne. Now the Minister for Industry and Commerce has a different story. He told us that his interest in industrial development is to prepare the ground so that when the industrial field is developed it can be handed over to private enterprise.

Mr. Summerfield

When it is explored, not developed.

Mr. Duffy

Very well. The plain people, the people who drink the plain pint of porter will pay for the exploration of our coalfields and other mineral resources, and when they are explored they will be handed over to people with money to invest at the highest possible rate of interest. I remember reading, some years ago, the report of the debate that took place in this House or its predecessor when the proposal was first made to establish the Electricity Supply Board and to develop the Shannon as a source of electrical energy. I do not think that Senator Sir John Keane will contradict me now when I say that he was one of the most inveterate enemies of the scheme.

Sir John Keane

I learned a lot since then, that was 25 years ago.

Mr. Duffy

I am glad to know that there is somebody who has learned something with the passing of time. Listening to so many critics nowadays, I often wonder whether we do in fact learn anything. I remember the question being put to Senator Sir John Keane, in Seanad Eireann of that day, whether he would be opposed to the development of electrical energy on the Shannon if it were undertaken by private enterprise and his answer was, no he would not.

Sir John Keane

I would not be opposed to it even now.

Mr. Duffy

Senator Sir John Keane had no objection to private enterprise developing electrical energy and selling the current at whatever price they cared to charge.

Sir John Keane

Oh no.

Mr. Duffy

All right. Senator Sir John Keane was very conscious that here was something on trial, here was on trial the State—could the State develop a gigantic electrical generating plant and distribute electricity to the country? The answer is, it could. I think that Senator Sir John Keane will agree now that that scheme has been a gigantic success. It has measured up to our greatest expectations. It has generated more electrical plant than we believed possible 20 years ago and it has sold the current as cheaply as any undertaking of its kind in the world sold current.

Sir John Keane

Oh no. Where did you get that from?

Mr. Duffy

Probably, if the Senator will examine what I have said he——

Sir John Keane

I do not wish to interrupt the Senator but has he examined the figures for the production and sale of current in Canada?

Mr. Duffy

I have endeavoured to do so.

An Cathaoirleach

I should not care to pursue that matter.

Mr. Duffy

All I want is to make one correction.

An Cathaoirleach

We are getting away from minerals.

Mr. Duffy

No. I am getting to State enterprise. The issue that is raised by this Bill is State enterprise, with all respect. The submission I made was this—that the Electricity Supply Board has sold current as cheaply as any enterprise of its kind in the world. The Canadian enterprise is not of a kind with the Electricity Supply Board.

Mr. Lemass

What is the difference?

Mr. Duffy

I will not trespass on the time of the House by going into this matter further. I do, however, suggest that where our State has undertaken to do a job, got the right people to do it, undertaken the job on a big scale, put enthusiasm and energy into it, it has been a success and nobody has alleged otherwise. But I doubt if all the undertakings of the State measure up to that standard. I am very much afraid that where there is limited success, where there is in fact a measure of failure, it is because the Government were remiss, not because State enterprise is a failure. I consider that the State can get for its services the best equipped men and women in the country. They can get as engineers, doctors, advisers in any technical capacity, the best brains we have if they are prepared to pay them and to give them the facilities to do the job that is entrusted to them.

Sir John Keane

And the best feather beds.

Mr. Duffy

I have no objection to giving a feather bed to the man or woman who does the job he is expected to do.

Mr. Douglas

Why a feather bed?

Mr. Duffy

I do suggest, however, that in this country there is a tendency on the part of the Government to seek cheapness rather than competence. Evidence of that is to be found in many cases. In fact, there was some evidence of it in the case of the Shannon scheme. The Government of the day introduced an exceptionally low standard of wages for workmen and an exceptionally low standard of salary for professional people on the scheme. That practice exists to-day. Where there is failure in relation to a State enterprise it is due entirely to the fact that the State has not sought the services of those most competent and best skilled to do the job required.

Sir John Keane

Does Slievardagh come under that?

Mr. Duffy

There is one other point I would like to submit to the House. Whenever we are in difficulties, if there is a war, or famine, or some exceptional circumstances, we all look to the State to come to our aid. We are willing to tolerate the State during war or emergency to get us fuel of any kind, to keep the trains running, to keep the Post Office delivering our letters and telegrams, but the moment the emergency is past, private enterprise is glorified. Now, why is it that this great institution, that has been defended so eloquently by Senator Sir John Keane and Senator Summerfield, obviously and admittedly breaks down the moment a crisis comes?

Mr. Summerfield

Because the politician is in control then.

Mr. Duffy

So, we must fall back on the politicians to save us when crises come.

Mr. Summerfield

The State takes control then.

Mr. Duffy

The State cannot trust private enterprise in the dark.

Mr. Summerfield

Private enterprise cannot operate in those conditions.

Mr. Duffy

Somebody said the sun never sets on the British Empire because God could not trust her in the dark. The sun never sets on private enterprise because God cannot trust it in the dark. Certainly, we do not trust it in crisis. When there is a war, famine or emergency, we give the State unlimited powers—emergency powers Acts, emergency powers Orders galore —in order to ensure that we are provided with food, clothing, fuel, transport—the things we need—all the things which private enterprise will willingly provide for us in times of peace and security for anything from 5 to 25 per cent. profit.

Mr. Summerfield

Your argument is not fair.

Mr. Douglas

I have listened with a considerable amount of surprise, to find that on the Minerals Company Bill, of all Bills, Senator Duffy finds a suitable occasion to show the benefit of State enterprise. I wish him luck with the Bill and I hope he publishes the Bill and the results, together with his speech. It seems to me that, as far as this is concerned, it is largely a matter of tweedle-dum, tweedle-dee. It is like, to some extent, some of our other institutions which are private enterprises and controlled by the State. There is a certain type of enterprise in this country which, whether it is in the hands of private people or in the hands of the State, the State is jolly well going to control it, at any rate, under present circumstances, and it makes extremely little difference whether the money is found by the State by borrowing from the people by a loan at 2½, 3 and 3½ per cent., or whether the money is found in the form of capital, as in the case of Córas Iompair Éireann, which is supposed to be a private enterprise, but the State guarantees a dividend of so much per cent. I may be weak in intellect, but I cannot see any fundamental difference and I cannot see that one is particularly capitalist any more than the other is particularly Socialist. I am inclined, personally, to think that they are both symptoms of the tendency towards Socialism, which has been going on for a considerable time in this country, but, apparently, Senator Duffy does not think so. That is because he is very proud of having been called a Conservative by the Minister for Finance. He has repeated it twice in the House to-day and his pride in it surprises me. But is not this a case where you could not have got private enterprise to have operated it without some guarantee from the State? Either you would have had a guarantee of so much repayment of capital or a guarantee of so much interest or a guarantee of special facilities in some other form. If you had not that, there would be too much risk involved. It is easily arguable that you should not touch these things with the State and should do without them; and it might quite well prove in the case of Slievardagh that it would be better if left alone. Although I am as ready as any one else to criticise the Government, I am not satisfied, when it comes to attempting to try and mine our mineral resources, that we should indulge in wild and indiscriminate criticism. I think any Party in power, whether now or in the future, will have to be prepared in certain cases to take some risks. Whether that is done by means of private enterprise, so called, with Government guarantees, Government control and Government interference, the fact remains that it will be a risk until some particular point is reached. The Minister is hopeful and I hope he is right.

Again, I do not see that it matters very much, after the seven years' plan which he has indicated, if it is not a paying proposition, whether the State gets the money, provided it gets adequate payment, whether in the form of interest on the money or because it saves paying a State loan. I do not think there is much difference. There is no possibility of the production of coal, electricity or gas, or any other commodity of that kind being entirely free from State control in regard to price, in any time that I or my children are likely to see. It is quite obvious that there is no very fundamental principle concerned as to exactly how it is to be worked. It is obvious that if there is coal there we should try to get it and be prepared to take some risks. You could go mad and go on spending and spending with a vague hope of success. I understand the Minister's idea is to try for seven years and then see what the position is. In every debate in this House here to-day that we have had to deal with, we have had reference to the election. I am not going to say what Government may have to deal with this in seven years, and all we can do is deal with the facts and accept a Bill of this kind.

Mrs. Concannon

In an old cookery book, there was once a famous recipe for making hare soup—the first direction being "Catch your hare." It seems to me that the object of this Bill is to catch the hare, and after you have caught it, that is to say, after you have discovered what mineral resources we have, that is, after the seven years' survey, the question might remain to be debated as to who is best fitted to cook the hare or in what method we can get the best soup out of the hare. We might leave to that time the discussion as to whether our mineral development is to be by private enterprise or under state control. I do not think we commit ourselves to either in this Bill. We do certainly recognise the fact that private enterprise could not do what this Bill proposes to do. The discussion in other respects is not relevant. By the end of seven years, if Senator Duffy has not adhered more closely to the Tory Party, he will find out the results of the nationalisation of coal-mines and other things in neighbouring countries, and by that time we will be able to come to a more reasoned conclusion as to the best means of facing our particular problems.

Mr. Lemass

I think it would be no harm to get certain facts right. As regards the Slievardagh collieries, the first action taken by the Government was to employ a very eminent firm of consulting engineers to give a report on the coal deposits there. We had acquired the mineral rights over the area, from a number of private owners, before arranging for the expert report. That expert report indicated that there was a substantial quantity of good quality coal capable of successful commercial development. The report was placed in the Geological Survey, its existence was publicised and any person interested in getting a licence to work the coalfield was invited to inspect the report, to get the information which the Government had procured at some expense and utilise it in making a proposal for the leasing of the coal areas. Nothing happened; nobody proposed to work the coal deposits; and the report lay in the office of the Geological Survey, the coal lay at Slievardagh, and nothing was done about it.

Then came the war, and with the war a shortage of coal. When the shortage became acute, it was natural enough for us to remember that there was a report from an eminent firm of coal mining engineers that there existed at Slievardagh a substantial quantity of workable coal. We decided that, in the circumstances, an effort should be made to get that coal worked and, as no private concern was willing to do it, we set up a State company for the purpose, telling them to go in and work the coal.

That company made losses, but I want to tell the House how that arose. At an early stage, when I was in charge of the Department of Industry and Commerce, some time after the company had been formed and commenced work, the directors of that company said to me: "If this were our property, because of the difficulties we have encountered in obtaining equipment, recruiting skilled miners and other causes, we would close down until the war is over, as it would be the sensible thing to do to shut down until normal conditions are restored and work the deposit of coal then with the best equipment we can procure." Remember that in any mining proposition there is only a limited life. A boot factory or a flour mill can keep on turning out boots or flour as long as the raw materials are coming in at the other end.

Mr. Douglas

Question. Machinery must be replaced.

Mr. Lemass

The machinery may have to be renewed, but so long as the machinery is renewed they can continue the work—and there are flour mills which have gone on here for a thousand years. On the other hand, when there is a deposit of coal, it may be a deposit of 2,000,000 or 10,000,000 tons of coal, and no more. It took 2,000,000 years of chemical action to produce that quantity of coal, and when you have mined it all you have nothing left and the enterprise folds up. Therefore, any private commercial concern owning a mineral deposit will, if necessary, postpone the exploitation of that deposit until it can be done in the most economical way, with the most modern equipment and the most skilful advice and assistance to enable it to work at a profit. The directors of the company said to me: "If this were a private company, we would shut down until the war is over." They also said: "If we can procure the equipment we need and recruit a corps of skilled miners, we would develop the property in a particular way, which, however, would mean that we would not be producing coal in any quantity for about two years." I said to them: "We are concerned with getting that coal now and getting it in the greatest quantity and in the quickest time possible; and you are to ignore the ordinary rules of commercial operation to which you have referred; you are to develop the deposit, not in the way that the experts advise would be the best way, but in whatever way will get us the most coal in the least possible period of time." That is why the colliery was developed in the particular way in which it was developed.

It is true that some of the information contained in the Johnston Report which was published in the Geological Survey did not prove to be accurate, when the actual development work had occurred. The company's own technical staff have now advised us that they can make the deposit commercially workable at a profit, subject to development in a more scientific way. That is what the new capital is for.

I want to make it clear here and now that I contemplate that that mine will be worked at a profit—a profit calculated on the soundest calculating principles—and that if it does not work at a profit we will close it down. I want that to be clear, not merely here but to all those who may be in any way interested in, or associated with, the working of the undertaking. The State does not intend to keep putting in more and more money to enable it to be carried on at a loss, particularly as it is an enterprise of a kind which, in normal circumstances, would be in no competition with other privately owned enterprises in the same locality.

The minerals company, to which Senator Sir John Keane referred, was, however, of a different kind. It was set up by the State to carry out mineral exploration work. It was primarily intended to do the type of exploration work that we propose it should do now. Again, however, there emerged these war-time difficulties, and we had to get somebody to undertake the production of the phosphate rock and pyrites required for the production of artificial fertilisers. This company was told to do it, and told to do it with whatever equipment they could get and in whatever manner would yield the largest tonnage of both. Again, the actual cost of mining was a secondary consideration. Private enterprise might have gone in to work the pyrites but only on the payment of heavy subsidies. We bought pyrites in Spain and sold them at a subsidised price to superphosphate manufacturers because the Government was concerned not merely in keeping up the supply of superphosphates but in making them available to farmers at a price which would have relation to the current level of agricultural prices. There was no point in going through the formality of making this company charge an economic price which would enable it to recover its total outgoings, and then paying it a subsidy. The method of letting it carry on on advances from the Government had the same result in the long run, and was much more simple in operation.

The company, of course, had all the difficulties in working the pyrites deposit and the phosphate rock that the Slievardagh company had in working the Slievardagh coalfield, including particularly the difficulty of getting modern, up-to-date equipment. During the war it had to work on makeshift plant, and some part of the loss which has to be written off now represents the purchase price of that plant. It is not suitable if more modern equipment can be procured.

Senator Sir John Keane referred to the method of financing these companies by repayable advances. From the point of view of the Minister for Industry and Commerce in relation to enterprises of this kind, it is much more suitable to have companies formed with share capital and with legislation empowering the Minister for Finance to subscribe for shares on that basis than if the State, through the Minister for Finance, was investing money permanently in business. The Minister for Finance thinks that is a bad system on which to manage the State's finances. He much prefers that the amounts advanced should be regarded as repayable and not as a permanent investment in these undertakings. He thinks that they should be repayable so that if profits are earned the total capital investment of the State will, eventually, be recovered. I think, from the viewpoint of good financial principles, that is a better system, although if the State is to enter on any scale into commercial working it will clearly have to do so in many cases upon the basis of a permanent investment. I should have thought that Senator Sir John Keane would have preferred the system of financing these activities by means of repayable advances rather than by a permanent investment.

Senator Summerfield did not fully appreciate the fact that this Bill is merely an addendum to the legislation already passed, and that this company, Mianraí Teoranta, is there ready to undertake this development programme, with the necessary plans made, and with some part of the staff needed and requiring only the money for which this Bill makes provision. Senator Duffy has the reputation of being the brains of the Labour Party. He is, obviously, not the keeper of its conscience. When he quotes me as saying that the proposal is that when all the preparatory work on mineral exploration has been done, and when dividends are in sight the business will be handed over to private enterprise, he is guilty of gross misrepresentation. I did not say that.

Mr. Duffy

I am very glad. I apologise if I misunderstood what the Minister said.

Mr. Lemass

What I said was that when this company has proved the existence of a mineral deposit and has developed it to the stage at which commercial working can begin, it will then endeavour to dispose of its interest in it to private enterprise on the basis that it will recover for itself the whole of the cost which it has already incurred. But that is not the stage at which dividends are in sight. It is the stage at which any company coming in to work minerals has to make big investments and take great risks. There are international mining combines. One came in here and did a great deal of exploration work in Waterford with our consent and approval. They explained to me their method of working. They spent large sums of money investigating mineral deposits in various parts of the world, losing heavily on exploration work. In the first, second, third, fourth, fifth or eighth attempt they may find nothing, but in the next attempt they may strike some valuable deposit. In the ninth or tenth attempt they will get back out of the working of that deposit all that they had lost in their previous exploration work. That is the way they work. That method of working is not possible here. Even where private enterprise undertakes small scale mining operations the position is that the State comes in at the present time and assists in the clearing of overburdens, the construction of roads and in all the unproductive expenditure which private people are naturally reluctant to undertake.

In this particular case we are anxious to obtain information concerning the mineral resources of the country not primarily with a view to ensuring their commercial development, but primarily with a view to having knowledge so that we will know what the resources of the country are. As I said before, we may, even in relation to some classes of minerals, decide that it is preferable that they should be left there as a reserve against some future emergency, and that their present development should not be encouraged.

Senator Duffy also said that there was an unanswerable case in Great Britain for the nationalisation of the coal-mines. I am not going to dispute that with him, but it is typical of the logic of his Party that he assumes that, because there is an unanswerable case for the nationalisation of the coal-mines in England, there is also an unanswerable case for the nationalisation of the coal-mines here.

Mr. Duffy

No. At the time Britain was nationalising the coal-mines we were selling out the only nationally owned concern that we had.

Mr. Lemass

Surely, there is substantial difference between our circumstances and those in Great Britain. In Great Britain all the coal used there is produced in Great Britain. In normal times they produce a substantial surplus for export. There is no problem there of bringing a nationalised, or State-owned concern, into conflict with other private producers or private traders. Here, at the most, 10 per cent. of our total supplies of coal will be produced by all our coal-mines and that coal is sold and must be sold in times of normal supply in competition with far larger quantities imported from abroad and imported by private commercial trading concerns.

There is another difference. In Great Britain, the mining rights were owned by private individuals, and a large part of the case for nationalisation of the coal-mines was based on the objection to the payment of what were known as royalties to private individuals. Here practically all the mineral rights are owned by the State, and if there is any royalty payment resulting from the exploration of minerals, they are paid to the State. If we transfer the Slievardagh coal-mines or give a mining lease to any company to work in that coalfield or elsewhere, they will have to pay to the State whatever royalty is fixed on the lease, because the mining rights are State property.

Mr. Duffy

That is so in Great Britain for the past ten years.

Mr. Lemass

Oh, no; only in relation to unworked minerals, but these coal-mines were not unworked minerals. There is no need in this case to discuss these theoretical considerations. I have said here, and I repeat, that, when the Government adopts a particular method of securing some commercial result, it does so on the simple principle of finding the best way to do it and not because of any theoretical idea in favour of State enterprise or any particular form of nationalised operation. In this case, we think the best method of getting mineral development done is by private enterprise. I do not think it is desirable that the State should go into mineral development work and I will give the Seanad one good reason. I have discovered, from my years as Minister for Industry and Commerce, dealing with matters of this kind, that if there is one thing which will absorb money without limit it is a mining enterprise, because always the technicians will tell you, when you have gone underground, dug your tunnels, sunk your shafts and located perhaps only an unsatisfactory deposit of ore: "Go on a bit further. Go another 100 yards and you will find it", and, of course, the State, with theoretically unlimited resources and unwilling to admit that it has run into a failure, will keep going on. I would lay down as a golden rule that mining works should be done by people with a limited amount of money who must stop when their money has gone, because in that way they will not merely be forced to ensure every possible economy but will be prevented from being tempted into this continuous repetition of expenditure upon exploration and development work. That is one very practical reason why, if there is to be mining development here, it should be done by private individuals rather than by the State.

We have mineral resources of some value. We have, as the House knows, proved as a result of exploration work done through the Geological Survey, a very valuable deposit of gypsum in County Monaghan. That exploration was done by a British firm of mining engineers and their report was published. Since it was published, there were indications that the exploration work done by them did not go far enough, that we had not spent enough money in deep drilling in the area, and a programme of deep drilling is now in progress which is already producing satisfactory results and showing that the gypsum deposit there is far more extensive and far more valuable than was at first thought. That area alone will, I think, in due course, repay, in manufacturing industry and export trade, all the money we are ever likely to spend upon mineral development work of any kind. It is already the centre of quite a significant industrial development, and what has been done there is, I think, unimportant in relation to what that area will in fact reveal after a systematic plan for the development of these gypsum deposits has been worked out.

It may be that, in other areas known to be mineralised, we will find some other deposit of equal importance which can be the basis of industrial development. But if we do come to that stage, we will encourage, as in the case of the gypsum deposit, the taking of the further steps by private companies. Mineralised ore of any kind, if mined, can be sold as such, or can be processed here for the production of various metals. That work is work upon which the State should not engage. It is far too speculative and far too technical and private concerns are far more likely to do it better. I am quite prepared to discuss with a great deal of sympathy the principle of State activity in certain old-established industries which are engaged in the production of commodities which are essential to the community, where it is desirable perhaps to eliminate the profit motive, if it can be done without increasing the cost of the commodity, or where there are security reasons why the enterprise should be under public control; but that does not apply and is never likely to apply to the highly speculative industries which result from mining activities.

Finally, I want to give certain figures concerning this enterprise which will perhaps remove some of Senator Sir John Keane's difficulties. The trading losses incurred by this company were as follows: At Avoca, £61,000—that represented a loss in the production of pyrites and would have been almost equivalent to the amount which would have been paid to the company if they were authorised to charge higher prices and subsidised on the same basis as imported Spanish pyrites were subsidised; at Slievardagh, £28,000—and for the whole period there were head office expenses chargeable against all the undertakings of the company of £32,000, making a total of £121,000. On the working of the phosphate rock deposits in Clare, there was a profit of £25,000, so that the net trading losses amounted to £96,000.

A large part of the expenditure which has been written off represented development expenditure, that is, money spent on the building of roads, the sinking of shafts, and all the type of development work which was not directly related to the winning of minerals. At Avoca, development expenditure incurred amounted to £100,000; on the phosphate rock deposits, £12,000; and at Slievardagh, £41,000—a total of £163,000. The value of the plant in Avoca, in County Clare and Slievardagh was £97,000 and that is being written down in the company's balance sheet so that the loss upon the purchase of that plant which, as I have said, was purchased during the emergency and was of a makeshift character and the only equipment procurable for this work, was £60,000. There was an accumulation of interest charges on the advances of £50,000, making a total of £359,000, as on 31st March, 1947. An additional £50,000 being the difference between that figure and the one I gave earlier, represents further expenditure incurred by the company since March of this year, both on the maintenance of its properties in the different areas and on head office expenses, and to some extent to the writing-off from their accounts of a higher proportion of their development expenditure.

There will be deducted from that figure of £410,000 or £411,000 approximately—whatever it may prove to be— the ascertained value of the plant and other assets of the company. The difference will be the amount to be written off and the company will then start off with a new balance sheet in which capital liability will represent the actual value of its assets. It will have no trading activities, except the Slievardagh mine, and will be financed by means of non-repayable advances which will go into this business of exploration and development which cannot yield any continuing income to the company, but which may be recovered to the company, if they are successful in locating mineral resources which are capable of commercial exploitation.

Question put and agreed to.

Committee Stage ordered for Wednesday, December 3rd.