I should like to say at the outset that the Fine Gael Party will give the Minister every co-operation in getting this Bill through the Seanad today in all its Stages, if the Minister so desires. As the Minister said, the Bill is largely a financial measure to regularise the present financial set-up of Nítrigin Éireann and from that point of view I do not think there is very much objection to the proposals he suggests. I should like, however, at a later stage, to suggest to the Minister—not indeed that I expect him to accept them—some alternative proposals which I think might be more in line with sound business practice.
To deal with the Bill in general terms, I must say that, as a Limerick man, I envy County Wicklow and Arklow the chemical fertiliser complex which has been established there by Nítrigin Éireann. Certainly, their record since they were established about four years ago is a most impressive one. The Minister did not mention in his speech here today, but he did mention it in the Dáil, that Nítrigin Éireann now employ more than 700 people. That is a very impressive record by any standards in any country and, even on the grounds of profitability, NÉT can boast of a very excellent record in their short history. I only wish that a somewhat similar development could take place in an area much closer to me in the Shannon estuary which the Minister knows something about. Indeed, I can see in the original notes I drafted some months ago, when we thought this Bill would be coming before the Seanad, I had an oblique reference to the possibility of establishing the ore smelter in the Shannon estuary. It now appears I might delete this reference from my notes.
I want, in congratulating Wicklow and Arklow on this development, and NÉT on their progress—and I am sure the Minister would agree—to impress on the Minister and the Government the necessity for regional development in a very real sense and to draw attention to the fact that one of the most important growth areas in the country, that in and contiguous to the Shannon estuary, up to now has been grossly neglected. I appreciate, as we all do, the reasons why Nítrigin Éireann was established in Wicklow at the time following the close-down of the mines there. I should like to remind the Minister and the House that, when the Silvermines operation closed down some ten to 12 years ago, no comparable effort was made to establish a worthwhile industrial development to take up the unemployment which unfortunately resulted as a result of that inevitable close down.
I saw recently in a reference to NÉT that they are having some difficulties with regard to the export of their products through the port of Arklow. I am interested in port development myself and wish every possible future success to the port of Arklow. However, I could not but be amazed at the fact that it was suggested a sum of £1 million should be spent on the port of Arklow to make it viable for the export of products from NÉT factory. I do not know if the Minister would like to comment on this possibility when he is replying, but I am sure he and the Government would be far more interested—and it would certainly be a far more logical development—in spending a sum of money like that, or perhaps even a little more, in the Shannon estuary where far greater possibilities exist for the entry of ships of literally any tonnage.
Since its establishment NÉT has made very encouraging progress. In fact, sales have increased from just over £2 million in 1966 to approximately £6 million in the year ended 30th June, 1969, which is a very fine achievement. The fertiliser industry goes through very difficult periods from time to time, as the Minister knows. It is affected by weather conditions and by outside conditions such as dumping and competition of one kind or another. Progress like this deserves the very highest commendation. The directors, management and workers concerned are doing a great job and deserve a warm tribute from this House.
I cannot help wondering—it is easy to have hindsight on these matters now —whether the original feasibility study which reported that the manufacture of nitrogenous fertilisers was a viable proposition was, in fact, a sound document. Reading through the Dáil Debates I noticed that the Minister stated that one of the reasons why NÉT was established at the time was because neither of the two large fertiliser concerns were making nitrogenous fertilisers. It was decided that NÉT would fill the gap. One wonders if these two companies, with their long experience in the field of fertiliser manufacture, were wise in their decision not to enter this field. After a very short time—I have no evidence to support the statement—but before the factory was built it must have been obvious to the promoters that they would have to engage in the manufacture of concentrated fertilisers to fulfil the demand for that type of fertiliser which is now accounting for about 90 per cent of the fertilisers used. These are the compound concentrated fertilisers. The decision was made and the factory was established. It realised the change in the market for fertilisers and, to its credit, it adapted its plant to manufacture the CC fertilisers, as they are called, within a very short period of time. Since then, as the Minister has pointed out, it has further diversified and if one is to judge by the intention of the directors in their annual report they hope to enter into further fields ancillary to the industry in Arklow. We in this House wish them every success.
The fertiliser industry, as most people are aware, is not for the small man. It is a giant industry in which only giants can participate. They require tremendous capital and they need to be in a position to withstand the inevitable ups-and-downs in the fertiliser industry due to the weather and the other reasons I have mentioned. Only very large companies such as ICI and the giant continental companies can hope to withstand the vicissitudes of this particular industry. It is only right and proper, if we are to have a State-sponsored industry in this field, that we should ensure it is properly financed not only to compete in existing conditions but to face the future. We could reasonably look years ahead and try to see what competition is likely and what developments are likely to take place over the next decade. It is obvious that the fertiliser industry, like every other industry, will change. With our anticipated entry into the EEC within the next few years there may be further vast changes in this industry. It is obvious that, unless NÉT and the other two major fertiliser industries in this country, are strong enough financially and technically to stand on their own feet they will be swept aside and we will be faced with a serious situation leading to substantial unemployment within a few years.
One of the dangers which exist in this industry is the possibility of monopoly arrangements. A pleasant term "orderly marketing" is not unknown in this industry. I am sure the Minister is very alive to the dangers of the big companies getting together and making arrangements in regard to production and distribution to suit themselves very profitably but not necessarily to suit the consuming public, which in this case is the Irish farmer. I see no objection whatever to two or three large manufacturers getting together for the purpose of rationalisation of distribution, and stocking and making other similar arrangements provided this is going to lead to greater efficiency and to lower costs which will be passed on to the Irish farmer. In many instances the charge of monopoly arrangements and cartels is unfairly levelled at companies which, through co-operation with other companies in the same industry or trade, bring about a situation whereby the ultimate consumer, whether it is the housewife or the farmer, gains from sensible rationalisation of distribution. Subject to this, I do not think we should cavil at a State company combining with two large enterprises to ensure that fertilisers in this country are distributed, by road or rail or other transport, to the Irish farmer at the lowest possible cost. After taking a reasonable return on the capital involved we must see that the Irish farmer gets his fertilisers at a cost comparable to that obtainable by the farmers in Europe. We should not cavil at the co-operation between the large companies, subject to these conditions. When the tariffs go and when we become a member of the Common Market, it is obvious that the Irish companies which look large to us in Irish terms will be quite small in terms of European companies. I would encourage industries in this country, whether manufacturing fertilisers or other things, to come together and to make arrangements for the benefit of Irish industry in the face of competition from very large continental firms.
I noticed while reading through the speeches of the managing director of NÉT, Mr. Hynes, and of Sir Basil Goulding of Gouldings—who always couches his speeches in very quaint language—that both gentlemen have severely criticised the Government for permitting in their last year—from June to June—the imports of substantial quantities of fertilisers which could have been manufactured in this country. Not alone could they have been manufactured in this country, but they could have been sold at prices comparable to normal European prices. The Minister, after a great deal of upset to the fertiliser trade and heavy unemployment, did take steps to ensure that this dumping—because it is dumping— was stopped.
I do not pretend to know all the ins-and-outs of this industry with its world-wide ramifications but I understand a gentleman's agreement has been made between the giant fertiliser manufacturers whereby surpluses in one country or another will be marketed or exported at not unreasonable prices. I suggest there is a genuine desire between the major manufacturers in Europe to discourage dumping but, at the same time, the question of what is a reasonable price is one that is obviously open to several interpretations. I am sure the Minister will keep that aspect of the situation in mind because last year, as he is aware, dumping caused considerable upset to our fertiliser industry and threatened quite widespread unemployment. This dumping also coincided with a difficult trading year and the chairmen of both these companies mentioned in their addresses to shareholders that, as it was a late spring last year, the spreading of fertilisers went very late with the result that heavy stocks accumulated.
The further point emphasised by the chairmen of both companies was that we have no tariff—I know that, through the Dumping Commission, the Minister can take quick action in the matter—on fertiliser imports, whereas European countries have a 16 per cent tariff on imported nitrogenous fertilisers. I assume that when we enter the Common Market these tariffs against us will go. I hope this will encourage manufacturers to increase their exports to Europe in spite of the heavy competition. Last year both companies made some headway in exporting fertilisers: NÉT exported about £300,000 worth and Gouldings exported about £500,000, although it must be remembered that Gouldings' exports are difficult to breakdown because they include products other than fertilisers.
One encouraging feature is that the demand for fertilisers over the years has increased. The demand for nitrogen has been going up. Over the last decade the consumption of nitrogen has trebled, the consumption of phosphorus has doubled and the consumption of potassium has more than doubled. It is obvious that, if this country is going to become, as we all hope it will, a supplier of beef and milk products and even possibly grain to the wider European Community, the fertiliser manufacturers can look forward to a substantial expansion of their business in the years ahead provided they can supply their products at competitive prices.
The fact that the Avoca mines have opened up again, as the Minister mentioned in his speech, has enabled NÉT to revert to the original proposal which was that it would draw its sulphur requirements from the pyrites at the Avoca mines and save the importation of sulphur from continental sources. I would point out that there are other sources of pyrites in other mines. NÉT should be encouraged to co-operate with other mining enterprises to ensure that pyrites are used to the maximum extent in the production and manufacture of fertilisers. I know that the late Deputy Sweetman and the late Deputy Norton would be very happy to see the Avoca fertiliser industry using pyrites from the Avoca mines. Both men played a great part in the early days of the mine and the fact that through circumstances outside the control of the Government the mine had to close down does not detract from their own efforts. As one who had some association with the mine at that time I know these men would be pleased that their dreams have been realised by the present Minister for Industry and Commerce.
I wonder if any consideration has been given by NÉT to the distribution of nitrate in liquid form. I understand that it is common practice to distribute liquid ammonia nitrate in England. I do not know whether it would be feasible to do so here but it is quite usual to see tankers going around distributing nitrate in liquid form in England. We also differ from England in the matter of subsidies. We subsidise phosphate and potash and in England nitrogen and phosphate are subsidised but potash is not. I do not know if the Government have ever considered subsidising nitrate.
I should like to deal briefly with the proposed capital construction. I agree in general with the proposals. It is obvious that the nature of the company's business and its progress to date make it imperative that it be based on a sound financial structure. The proposals which the Minister has outlined get away from the famous £100 company which was very popular a few years ago. I have often wondered why it was used. Some people took it as an indication that the company was going to be a failure. It is far better to establish a company with adequate capital than to establish a company with £100 capital in a business running to £5 million or £10 million. I think it discourages promoters and certainly if the wider investing public are ever called in to participate it also discourages them. The Minister's proposals, which have been accepted by the Dáil, provides for an increase in the nominal capital of the company from £100 to £6 million. The Minister proposes to convert £3½ million of the £6 million advanced by the Government into equity capital and issue shares for that amount, leaving a balance of £2½ million outstanding as a loan. In addition, it is intended to allow the Minister to issue shares for £1.212 million of the accumulated interest to the end of June, 1967.
I wonder if the Minister would be good enough in replying to say why he has decided on the date 30th June, 1967? Could he also give some indication of the accumulated interest at the end of December last? That would leave a balance outstanding of the accumulated interest which will remain. The result of that proposal will be to bring the issued capital up to £4.417 million, leaving the balance of £2½ million to be converted into share capital which will be payable on terms and conditions to be decided by the Minister, together with interest accumulated from 1st July, 1967.
Is it too soon—it does not seem to me to be too soon—in regard to an industry established four years ago and operating very efficiently and profitably, to ask what will the repayment terms be, or is the Minister waiting until this Bill has passed through both Houses before announcing these terms? The Minister has agreed that the limit on loans guaranteed by him will be increased from £1 million to £2 million. The reason for that extension in the Minister's guarantee became very obvious in June last year when guaranteed loans amounted to £1.8 million, £800,000 in excess of the then permitted guaranteed limit. I wonder what the figure was at the end of December last, to bring it nearer to the present date?
I should prefer that the increase in the nominal capital would be in excess of £6 million. I have already indicated the reason for this. It is, that I feel that in an industry like this, with the almost certain imminence of Common Market membership and the consequent requirement of capital for further development, this company should be financed adequately for future development so that we shall not be looking, as we seem to be, at the immediate future but towards the coming decade, and so that we shall not be talking in terms of a nominal capital of £6 million, which just about covers the company's present commitments, but of £8 million or £10 million.
As the Minister has stated, we must remember that the assets employed in this company are of the nature of £9 million and that therefore a capital of £8 million or £10 million is not inordinate and would not be extravagant in any further financial sense. I would convert the entire advance of £6 million into share capital. I do not understand why £3½ million is converted into shares and that £2½ million remains outstanding as a loan. I think it would be clearer and more logical to convert the entire £6 million loan into equity and ordinary shares.
The Minister may reply that it would be difficult for the company to service share capital of that kind, but I do not think it is unknown for share companies to fail to service equity capital for years or indeed, on a Kathleen Mavourneen basis, sometimes forever. I would not worry about that kind of procedure. I would prefer to see it done in that way. I should like to see all outstanding interest paid instead of having it converted as at present: I should prefer to see it all converted into shares. I should like to see what remains now, the £1.8 million, repaid, because that is a prior obligation on the company.
This idea of converting interest on loans into shares to my mind is basically a bad and unsound procedure. There may be good reasons why the Minister adopted this procedure, but to me it does not look sound finance. I would go further and try to ensure that the company have adequate capital by increasing the Minister's proposed guarantee from the suggested limit of £2 million to £3 million, again looking some years ahead. This capital reconstruction rearrangement only tidies up the existing arrangement and does not make any provision for the years ahead. We are living in rapidly changing times where costs are rising daily, where inflation will continue—I think so, anyway, and if somebody can prove to me that it will not I shall be very glad to hear it—where costs will go on escalating year after year.
The two most important considerations are the increasing use of fertilisers in our own country and the possibility of exporting to a wider market including many of the underdeveloped countries in Africa and elsewhere. Finally, from the financial point of view, I think shares in this company should be offered to the public here, perhaps not immediately but at some time in the not too distant future. I suggest that the Minister should consider offering at least a proportion of the shares of NÉT to the public. By any criterion that makes excellent sense, particularly in the case of NÉT who, after only a few years of trading, have done an excellent job. I cannot see why NÉT, with a capital of £8 million, should not be able to give a reasonable return to the Irish investing public. All of us who have a few pounds to put into shares now and again would much prefer to invest that money in a basically Irish industry rather than investing it in comparable companies abroad.
When the Minister is considering the points I have made, if he does not think they are too wide of the mark, I shall be grateful if he would deal with them. The Minister can be assured of the full support of Fine Gael in his proposals. Our feelings, if anything, would be that he is being quite modest in his proposals we should like to see him take time by the forelock and ensure that an essential basic Irish industry is properly financed, particularly an industry which is manned by technicians and management of high quality.