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Seanad Éireann díospóireacht -
Wednesday, 28 Feb 1968

Vol. 64 No. 10

Smelting Bill, 1966: Second Stage.

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

This Bill is designed to procure that the smelting of ore concentrates will be carried on only under licence. This control will apply to the smelting of all metals although, as will be apparent as I go on, the immediate intention is to control the smelting of lead and zinc.

Mining of ores in this country is already on a substantial scale but the processes carried out at our mines are confined to the reduction of the ores into ore concentrates, all of which are at present exported. Obviously, it is desirable to encourage by all possible means any proposals which would lead to an increase in the extent of income and employment which this country can derive from its natural resources. The establishment here of a smelter to extract the metals themselves from the concentrates would be a major asset to our economy. Smelting is, however, an enterprise which involves a very high capital investment and the economics of a smelting project, therefore, require very careful study. The probable life of a mine or mines to feed the smelter and the feasibility of profitable disposal of the by-products of smelting are among the matters which must be investigated.

A group of companies, at present involved in the mining of lead and zinc in this country, proposes to study, with the aid of consultants, the prospects for the establishment of a viable smelter here. This study alone will involve the group in considerable outlay. The purpose of the study is, first, to decide whether the establishment of a smelter in this country would be an economic proposition at all and, if so, then to ascertain whether the necessary financial backing can be procured. It is hardly likely that this country could support more than one smelter, if, indeed, one proves to be feasible.

The Bill proposes to make it mandatory to obtain a licence from the Minister for Industry and Commerce to undertake the smelting of metals from ores. It is my intention, if this legislation is enacted, to give a conditional licence to the group that I have mentioned. This will enable the group to carry out the vital preliminary study. If the study should indicate that the erection and operation of a smelter here is technically and economically sound and if, for any reason, the group concerned are not prepared to undertake such a project, I will have power to consider alternative propositions.

During the final discussion of this Bill in Dáil Éireann, some anxiety was expressed as to the possibility that a mining company not connected with the group might be prevented from establishing a smelter in Ireland to process ore concentrates produced in its own mines. I said that it was not my intention that a licence would be refused in such a case and I promised to make a statement in the Seanad as to the exact nature of the undertaking I have given to the group to whom I propose to give a licence.

I indicated that it might not be feasible to lay before the House copies of the actual correspondence in this regard, since this might involve the disclosure of information of a confidential nature about the business of the group and, in fact, this has proved to be the case. My commitment took the form of an acceptance of proposals contained in a letter from the group of companies. I indicated to them in writing that provided the necessary study and, in due course, the construction of a smelter was undertaken by the company to be formed by the group, it was my intention, upon the enactment of this legislation, to give this company a licence and to arrange that for a period of 10 years from the commencement of operation of their smelter no other licences for the smelting of lead and zinc would be issued. It was clearly set out in the correspondence, however, that this restriction on the issue of additional licences would not apply to any company which would propose to construct and operate a smelter solely and exclusively for the purpose of smelting zinc and/or lead concentrates produced from a mine in Ireland owned by such company or any subsidary thereof.

I assure the Seanad that this exclusion from the restrictions on the granting of licences has not subsequently been altered or qualified in any way.

The particular advantage or incentive which the legislation would accord to the promoting group is that they will be entitled by licence to have the first opportunity to explore the feasibility of having a smelter here, from both the technical and commercial aspects. Not only can this be regarded as a recognition of the group's enterprise in being the first to declare preparedness to undertake such a project but I am satisfied that, from the commercial aspect, the financial backing for a smelter of the type envisaged will not be forthcoming unless the group can show that they, and they only, will be licensed to operate a smelter in this country which can process ores and concentrates from all sources.

There is nothing in the Bill to prevent mine operators in Ireland, other than those responsible for establishing a smelter here, from continuing any existing arrangements for sending their concentrates elsewhere to be smelted. I would hope, however, that if the smelter is constructed the smelting company will be able to offer sufficiently attractive terms to induce all operators of lead and zinc mines in Ireland to have their smelting done here. It would be the intention of the smelting company to provide facilities for smelting on an economic and competitive basis all technically suitable lead and zinc concentrates offered to them and produced from mines in Ireland.

I trust that I have made it clear that the sole purpose of this Bill is to facilitate the bringing into being in this country of a new and important industry which it might otherwise not be possible to procure. I, therefore, recommend the Bill to the Seanad.

There will not, I think, be any serious debate in this House about the desirability of the establishment here of a smelter, if this should prove to be feasible. There will, on the contrary, be an agreement that the erection of such a facility would be of considerable national benefit. It would represent a higher degree of processing within this country of a natural resource and its economic benefits would be analogous to those which result from the further processing within this country of agricultural products. Indeed, much of our economic development in this country has suffered from the fact that it has been piecemeal and that there has been too little linkage forwards or backwards in the whole industrial process to have made those investments as fruitful as they might have been.

Indeed, many of our difficulties in regard to economic development may well be traceable to this piecemeal development. Therefore, a proposition to insert a smelter which would take the production of a primary industry such as mining and its processing to a high degree and, therefore, make available readily within this country the raw materials for a metal industry, is something wholly desirable.

The Government and the Oireachtas should be prepared to facilitate the erection of a smelter in order that the country would benefit in this way. The difficulties one has in regard to the Bill arise from the fact that the Minister has stated here, as he stated in the other House, that it is his intention, initially at any rate, to grant only one licence for the erection of the smelter. This, of course, involves an element of monopoly. While in his speech recommending this in the Seanad today the Minister has more closely circumscribed the commitment which he is prepared to enter into, nevertheless, there must still be reservations on this particular point. Indeed, any proposition to establish even a quasi-monopoly is something which must be thoroughly justified by special circumstances. Accordingly, I think it is a pity, perhaps even it is to be deplored, that the Minister in introducing a Bill like this Bill, in which there is an element of monopoly, should have done so without producing an explanatory memorandum. In fact, we find ourselves now discussing this Bill here and it is only now for the first time when the Minister proposed this to the Seanad, after the Bill has been through all its Stages in the Dáil, that a limitation of time appears in the Minister's proposal. It would appear from the whole of the Dáil debate that many things were confused at the beginning of that debate which were clarified in the course of it. It was not clear at the beginning of that debate whether people would be entitled to smelt their own ores or ore concentrates. But even at the end of that debate there was still no word of whether this licence which can only be revoked under certain conditions was to be a permanent licence and whether it would be a permanent monopoly.

It is a pity that the detail that is in the Minister's statement here today was not in an explanatory memorandum right from the beginning. It would have facilitated the debate in the Dáil and would have facilitated the debate here. There is an element of monopoly here and there must be special justification for this.

Some time towards the end of the last century a writer described the growth of the liberty of the individual as something which in the course of history had broadened from precedent to precedent. I am afraid that at this time the liberty of the individual and the liberty of the group in the community tend to get narrowed from precedent to precedent.

We have here an unusual proposal and so we should take it carefully and slowly. The Minister, in recommending this Bill to us indicated that he feels, unless he is prepared to give a strong undertaking to one particular group, feasibility study in regard to a smelter may not go ahead and he feels that this is such a desirable thing that he should be able to enter into a very strong commitment.

When the Minister comes to this House of the Oireachtas he should be able to say more to us than he has said. When we are asked to do what the Minister asks us to do here, to put everything into his hands, when it is his declared intention that for ten years he will not grant a second licence in regard to the smelting of this type of ore, I think he should be prepared to give us some more information.

It would help us if we were to know how much has been spent already on preliminary studies in regard to this matter, how much is proposed to be spent on the feasibility study, not exact amounts but what is the order of the cost. The Minister has, indeed, now at this late stage, told us of the extent of the Government's commitment. It now appears clear from what the Minister said that the Government's commitment in regard to this particular group of companies is a commitment in regard to lead and zinc only and one which will run out in ten years.

This, of course, does not show on the face of the Bill, and I think a Bill which will create a situation of monopoly in the smelting of lead and zinc for ten years should show the monopoly situation on its face. The very least we should have had is an explanatory memorandum which would have indicated to us what the situation was.

We must, then, be careful in our examination of this proposal. It is true to say, and we can agree with the Minister, that those who have put forward this proposal have put forward a proposal which we would all like to see coming to fruition. While this particular group contribute to the development of our economy through the work they have done in regard to mining in a particular area, we must not neglect those others who have made, or are likely to make, now or in the immediate future, similar contributions to this important industry.

I think it should be quite specific, if necessary specified in the Bill itself, that other mining interests in this country have the liberty to export their ores or ore concentrates. They cannot do so, I understand, at the moment without a licence from the Minister. We need here a firm guarantee.

The Minister has said, again at this late stage, in his speech recommending this Bill to the Seanad, that these other mining interests will also be able to smelt their own ore. This, again, is not apparent in the Bill and does not appear on the face of it. The Minister may well say that it is not necessary that it should be so but I am not so sure.

If one of these other mining interests wish to carry out smelting of one type or another in regard to their ores or ore concentrates, the Minister might, in accordance with the commitments which he has given, be prepared to grant them a licence but it may well be that the company which got the original licence from the Minister might well be able to go to the High Court and have it determined despite what the Minister might say that the original licence granted to them, in fact, covered this new operation. Since the Minister has no power under this Bill unilaterally to revoke a licence he may well find himself powerless in this regard. Some of these mining interests, for example, would probably if they intended to smelt their own ores do so, not through the mining company or even through a subsidiary company as mentioned by the Minister, but might operate through an associate company which might be associated with the mining company, both being in a holding company. In such a case there might and probably would be a determination of the division of cost between mining and smelting. It might well be that the structure of these associate companies would be such that there would be real charges between the associate companies and it might well, under those circumstances, be held that such an operation even if done with an associate company was something done as stated in the Act "by way of trade or for the purposes of gain."

When the Minister is giving an irrevocable licence for ten years these are all matters which must carefully be gone into. We must be careful here with what is an extremely wide definition of smelting which is included in section 1 of the Bill, which says:

"smelting" includes extracting metal by a pyrometallurgical, chemical, leaching or electrolytic process

Indeed, it is so wide that it includes not only all the existing methods of extraction and concentration but, indeed, new techniques which may well be developed within the next ten years. In fact, some of the techniques covered by this definition do not involve smelting in the ordinary sense of the word. Many of the processes covered by the definition in the Bill are processes under which the metal is recovered underground in the mine itself. I think there might be serious difficulties in regard to this.

(Longford): Does the definition cover the panning of gold?

That might be tied in with the other point but I doubt if it is within the definition on the face of it. I think that these are all points on which we would have to be completely clear before we would pass this Bill in its final form.

It is to be hoped, of course, that if this smelter were in operation it would act for other mining companies where this was mutually satisfactory, but, of course, the presence of monopoly always presents the danger of monopoly prices. Even if the Minister in the conditions attached to the licence had indicated that there were to be certain guarantees in this regard the Minister's power is not very great. The Minister, indeed, can only intervene to revoke a licence if an offence has continued for six months. In the short-term here there might be a serious situation which would be otherwise remedied. However, these are points more of detail which need to be teased out on Committee Stage of the Bill.

On the general principle I think it can be said, as indicated at the beginning, that the benefit to this country of a smelter is such that there must be among the Members of this House agreement in principle to the facilitation of the erection of such a smelter. If this involves a degree of monopoly we must, I think, be prepared to accept this under these particular circumstances because of the nature of the project and the extremely heavy capital investment involved.

But while we are prepared to agree to this with reluctance I think that there is need for clarification in regard to many points of the Bill. It can be dismissed as merely an enabling Bill to allow the Minister to grant a licence or licences under certain circumstances, but it is a Bill that enables a monopoly to come into being. It may be a limited monopoly but, nevertheless, it is quite a real one and on these points we must be careful, particularly on the wide meaning of "smelting", which indicates that either we should narrow that definition or that we should narrow the scope of the licence to be granted. At this point in my notes here I had a remark to the effect that it was highly necessary that the granting of a licence should be limited in time. I would urge the Minister that this should, indeed, be the case, but he has indicated for the first time in his recommendation to us today his intention to let the first licence run unchallenged for ten years. I myself would have thought that five years might have been a more appropriate period.

The granting of this initial licence or of any subsequent licence regarding any particular type of ore other than lead or zinc will be a virtual monopoly, and I do not think that we in this House should be asked to pass an enabling Bill to allow the Minister to grant a monopoly licence without the terms of this monopoly licence being laid before the House. I would urge the Minister most strongly that an Order made by him in regard to either the granting of a licence or the revocation of a licence or perhaps even the transfer of a licence which is provided for in the Bill should be laid before both Houses of the Oireachtas and subject to annulment within 21 days. This, of course, is for the purpose not of having the House reverse an undertaking or commitment of the Minister but so that the Members of the Oireachtas and the public would know the terms of the monopoly. This is not a matter of private business. It is a matter of monopoly and public interest, and the terms should be published and should be known.

As I say, the principle and idea of facilitating the erection of a smelter is a good thing, and there would be no difficulty about the House agreeing in principle to it but as regards details of the Bill there are many things at which we should take another look. Among the amendments that would have to be made on Committee Stage is an amendment to section 10 which now reads that this Act may be cited as the Smelting Act, 1967. I do not know if we need to make any amendment there immediately but if we find the Minister co-operative on Committee Stage it might only be necessary to alter that to 1968 and not to 1969.

As the last speaker indicated, I am sure that there will be almost unanimous agreement in the House that this legislation which facilitates the establishment of a smelter is in the economic interests of the country. The Minister has indicated in introducing the Bill that it is hoped that the plant, if and when established, will be used as widely as possible by all engaged in the mining, particularly of lead and zinc. It is proper to say at this stage that, as the Minister has said, this is what we might term the final step in exploiting fully the natural resources of the country, particularly the mineral resources, in which field there has been very signicant development in recent years. In Tipperary in particular we have seen the immense benefit of the mining development in both North and South Tipperary and we have every reason to appreciate fully, and the interests concerned appreciate fully, the initiative that the Government have given to such mining activity. It is for that reason that we look forward to the further extension of the mining activity at present being carried on.

I would suggest to the Minister something which might not be immediately his function. In considering the granting of this licence, which would be limited to a fixed period in the first instance, he should consider the economic advantage of facilitating all companies at present engaged, and for that reason the situation of the smelting centre is a matter requiring immediate consideration to facilitate all the industries concerned. I would, with a certain degree of selfish interest, recommend to him that in considering this he would recommend to those involved that the town of Nenagh would be of immense suitability for this purpose, in that it is almost equidistant from all of the mining fields at present in operation in Galway, North Tipperary and South Tipperary, it is not far distant from any one of them and is immediately available to one of them. Secondly, it has, of course, an immediate outlet by rail and road to the great port of Limerick and Foynes through which much of the product of the Silvermines is at present being exported.

I will reserve further comments on the Bill to a later stage, but I would request the Minister to consider the convenience and facility of all the companies concerned when the question of allocation, which would, indeed, occur to him, is one of the utmost importance.

(Longford): I suppose that one can understand the views expressed quite sincerely by Senator Dooge on this matter. One can see the Minister's difficulty in this matter of the necessity for making some progress in the establishment of a smelter, that unless there is some guarantee to a company or group or association of companies acting in co-operation, then nothing will be done. Against that, there is the legitimate feeling, which has been expressed by Senator Dooge and which can be held by myself, by other Senators and even by the Minister, that the Minister ultimately must come down on one side or the other and take some risk. Mining is a high-risk industry and my view is that the Minister must take the steps he is seeking in the Bill to grant a licence to a company, a group of companies or to an association. I suggest a little more study should be given to the matter, some amendments may be necessary and the giving of a little time to the consideration of the Bill may help to clarify the Minister. I feel sure the Minister did not intend that he might get legislation from the Oireachtas under, shall I say, false pretences— without giving sufficient information. I am satisfied that was not intended and it would be a pity if any one of us had reason to hold that view.

As I have said, mining is a high-risk industry both as an occupation and from the point of view of capital involved and the mentality of the people who participate in such an activity is geared to that sort of thing. That probably explains the fears expressed by Senator Dooge. Therefore, the Minister might indicate in his reply whether the people who will be involved in this smelter undertaking will be an association or a group of companies — principal and subsidaries — or a group of companies coming together in a federation to do just this thing, similar to the composition of the operators of the refinery at Cork. No one would like to see a principal and subsidaries having an absolute monopoly which they could use to crush or thwart the efforts of people who would go into operation in the future and thus render mining a less economic undertaking for small operators. I know that sort of thing can happen and none of us likes to see it happen. It would be well, therefore, that the Minister should give us information on this aspect.

On the question of the ten-year period, to my mind that is not inordinately long, though Senator Dooge suggested that five years would be sufficient. I should like to emphasise that before anything can happen the licence must be issued and I take it that the period of ten years would operate from the date of the issue of the licence by the Minister—that it is from that date that the smelter may go into physical operation. Therefore, I do not think it would be practically possible to provide a much shorter time than ten years.

Senator O'Kennedy raised the question of the location of the smelter and suggested a town in Tipperary as being the most central place. There are other economic factors involved and though I am not suggesting that the town suggested by Senator O'Kennedy is not the most economic, this is a matter in which the Minister should have a say in the long run as a matter of public interest. I wonder how far the Minister will have power to attach conditions to the licence governing the point raised by Senator O'Kennedy. I know that a concern in North and Mid-Longford are engaged in an operation involving the mining of zinc and I am afraid the people of Mid-Longford, if they were consulted, would hardly agree with Senator O'Kennedy. As I have said, this is a matter in which the Minister must have a say and he should, therefore, have power to attach conditions to a licence.

That brings me to my concluding point. I suggest that it will become necessary in the case of mining operators concerned with zinc and lead that they be given the service provided by the smelter without any extra penalty —that the non-connected operators would not suffer any economic disadvantage.

I think Senator O'Reilly at one stage, put his finger on the kernel of this matter, namely, that if we want to have any possibility of a smelter in this country it has got to be approached in this way. Ideally, we would not approach it in this way but, in practice, having regard to the expense involved, the difficult problem involved technically and the various aspects that have to be considered in the feasibility studies, and having regard to the fact that it is unlikely that there will be ore for more than one smelter to operate economically in this country, unless we approach the matter in this way, undertaking with one group that, if they go ahead with the smelter, they will be able to ensure that they will be the only smelter, subject to the qualifications I mentioned when introducing the Bill. They would not be able to raise the money necessary to finance this because quite a substantial sum of money is involved. Therefore, I approach this matter in the way I indicated when introducing the Bill, on the purely pragmatic basis of trying to ensure that everything that could be done to have a smelter erected in this country would be done. If I had adopted any other attitude and said I would not favour one group rather than another, it might appear very laudable but, in fact, it would effectively ensure that we would never have a smelter in this country.

The undertakings that have been given and spelled out here are very much narrower in their application than might appear from listening to some of the speeches, especially that of Senator Dooge. I suggest that what is proposed to be done here can be described as giving a monopoly only if one uses the term "monopoly" in a very restricted sense. Some of Senator Dooge's suggestions as to items which perhaps should have appeared in the Bill—according to him—make sense only if one accepts that it is proposed to give a monopoly: in fact, it is not. What is proposed is to give only one licence for a smelter, subject to this, that any firm wishing to erect a smelter to process its own ore is quite free to do so. Also, any firm wishing to export its ore, as it does at present, will continue to do so.

At the moment, all the mines of this country have to export because we have no smelter here. Many of them are operating under a fairly long-term contract for the supply of material abroad and are obliged to do this because some of the smelting companies have invested considerable capital in their operations and it will take time for the various mines-to work off these obligations. There is no question of restricting the right of any company to export its ore or to erect its own smelter for the processing of its own ore. In these circumstances, it is somewhat misleading to describe this as a monopoly for a smelter.

The question raised by Senator O'Reilly, arising out of this approach to it, concerned the possibility that some company which was not one of the group operating the smelter might be victimised. In my opinion, it could not arise. If the smelting company here wants business from other mines in Ireland, it must be competitive. If it is not, the other mine will export its ore to smelters. If the smelter here is not competitive, it will not get the business. It is as simple as that. In these circumstances, it is somewhat misleading to talk of a situation envisaged here as a monopoly when, in fact, people are not obliged to deal with the smelter, to supply ore, and when, in fact, they are allowed to erect a smelter for their own ore.

Having regard to that perspective, it should be clear that we are not proposing a monopoly. A number of things were suggested that might be in the Bill. We must envisage a situation in which the group to whom the undertaking was given might decide not to proceed with the proposed smelter and another group might proceed. We must envisage the situation where some mining company might have a mine with sufficient ore in it to justify, in their opinion, the erection of a smelter for their own ore. The Bill has to cover all these situations.

What the Bill is doing is providing for the issue of a licence for anybody who wants to erect a smelter and providing conditions which may be applied. I have indicated to the House the way it is intended to operate this. I repeat that there is no question of granting a monopoly, in the normal sense of the term, to any group and that, in order to have any possibility of getting a smelter erected in this country, it was necessary and is necessary to proceed in this way.

Some mining groups which are now possibly somewhat interested in this matter did not display any interest in the erection of a smelter at the time when this proposal was put to me. They were not interested in it at all. Indeed, there are some who may be interested in the future who would not be interested now. It seems to me that, from the point of view of the national interest, we must proceed on whatever way appears most likely to lead to the erection of a smelter in this country at the earliest possible moment.

I am satisfied that the line of approach we have adopted in this Bill is the one that will produce the quickest results. I am satisfied also that the conditions which are been imposed, as made clear to both Houses, are not such as to create a monopoly or to put any other mining company at any disadvantage whatsoever. I trust I have made these conditions clear to the House. It is important that it should clearly be understood that we are operating in what appears to be the national interest and that we are not operating to the detriment of people other than the group to whom it is proposed to issue this licence.

Question put and agreed to.
Committee Stage ordered for Wednesday, 6th March 1968.
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