1. Vale Inco will be cutting jobs from its Canadian operations, including an unspecified number in Newfoundland and Labrador.
2. Kruger, Inc will be reducing production at Corner Brook by 15,000 tonnes in 2009. One of the mill’s machines will be idled for eight weeks.
3. Iron Ore Company of Canada announced it has ceased work on refurbishing at pelletizing plant at Sept Iles.
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Union and town politicians in Grand Falls-Windsor appear to be under the ludicrously mistaken impression that Tuesday's expropriation by the Government of Newfoundland and Labrador of AbitibiBowater's land, timber, mineral and water rights in central Newfoundland might lead to the contributed operations of the town's major private sector employer.
There was no indication that yesterday's legislation would prevent those losses [of hundreds of jobs when the mill closes in early 2009]. But Gary Healey, a Communications, Energy & Paperworkers representative at the mill, called it “an early Christmas gift.”
“If Abitibi's not interested in staying in the province, at least we have something to offer,” he said. “But losing the big employer in central Newfoundland is not what we want. I'm sure if Abitibi wanted to reconsider their plans, they'd be listened to.”
Grand Falls-Windsor Mayor Rex Barnes had a similar reaction.
“We would hope that Abitibi would reflect on what's just happened and come to a resolution with the unions to work this out,” he said.
Reconsidering the planned is not likely in AbitibiBowater's list of options. The company is facing stiff competition in an industry that is under increasing pressure. Two weeks ago the company announced plans to slash over 800,000 tons of production. A major client, the Chicago Tribune, filed for bankruptcy protection and, overseas, the company is facing intense price competition from smaller rivals.
AbitibiBowater discussed possible bankruptcy protection for the company earlier this year during efforts to restructure its finances. That point seems to have been missed by provincial government and union officials during talks aimed at keeping the Grand Falls-Windsor mill operating.
Meanwhile, in Ottawa Tuesday a paper industry lobby group issued a list of five proposals for action by the federal and provincial governments, the group would help save the ailing forest industry across Canada.
He said the restrictions have left the industry weaker, with many small failing mills, at a time when bigger companies are needed to compete effectively in tight world markets.
Provinces have put restrictions on consolidation to keep mill towns open, but Lazar said most of the jobs in the future will come from large operations that are able to win markets in Asia and other emerging economies.
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Related:
Mr. Williams:...It did not have to happen. We have a black eye now on the business reputation of this Province. People do not like heavy-handed intervention. They do not like it, and that is what happened in the business community. The national media are looking at it and they now see our intervention as heavy-handed. If it had happened back in April of last year, back in May of last year, there would have been no problem.
The hon. Member for Lewisporte talked about his concern about a privitive clause. We all share that concern. There should be no need for a privitive clause. There should be no need to hide behind your mistakes, so that people who have a right to sue you can rightfully sue you. We have done it; it is out there. You have this unique legislation that talks about privity, so you cannot sue us because we made mistakes. That is wrong. That could have been prevented. The legal opinion that you had last spring said that you could change that legislation for public policy reasons, and you did not do it. [Emphasis added]
Dunderdale said she expected there would be a second vote on the pension restructuring plan.So while the pols are laying on the tough talk in a fairly obvious effort to sway the mulligan vote, what the rest of us should wonder is how much public money the politicians plan to pour into the mill to keep it running.
Once those issues are resolved, she said, the government is committed to stepping in to ensure that the mill is sustainable.
From CBC:
"I'm kind of wondering where Danny Williams stands on it all. I'd like to know," said Nathan Wareham, who attended a meeting of Corner Brook Pulp and Paper workers on Wednesday evening about parent company Kruger Inc.'s planned cuts.
Apparently, the premier is on vacation, according to his office, following his recent election victory.
Which, if memory serves, was preceded by a vacation.
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The Gros Morne transmission plan generated opposition from environmental and tourism groups, along with Parks Canada, which must approve the project.
In February, Hospitality Newfoundland and Labrador (HNL) chairman Bruce Sparkes first raised the spectre of Gros Morne losing its spot on the United Nations list.
"It is a UNESCO World Heritage Site and it's been suggested that if you put this corridor down through it, it (may) lose the designation," he says.
No one from HNL or Parks Canada would comment for the Telegram.
"We believe Parks Canada is correct in opposing this."
“When park officials look at what the trade-off happens to be for the benefits we get at the end of day ... I think they will see the benefit,” he said.One of the trade-offs would presumably be the international designation. According to the Telegram only two sites have lost the designation.
[ NALCOR manager of business development Greg] Jones told The Beacon the province can only produce a limited amount of wind energy because it can cause water to spill from hydro dams if excessive amounts are produced. This roadblock will be eliminated with the introduction of a transmission link in 2016 for the Lower Churchill hydro project.The infeed is being justified, in part, on the grounds that the island will need additional power sources by as early as 2013.
Did anyone else notice the relaxed, jovial Danny Williams on election night?
No?
How about the post-election vacation?
Okay.
Well, did anyone notice that he came back to St. John's - where he lives - to celebrate his second majority government rather than celebrate in Corner Brook which is in his district?
Hmmm.
Well, those are clues that Danny Williams was serious when he said last year that he wouldn't be hanging around for a third election.
The world has changed a lot since last Christmas. Williams worked diligently and managed to get the oil companies back to the negotiating table so he could make concessions and get a Hebron deal.
The energy plan is done. Well, sort of done, since both the oil regime and the gas royalty regime are still in draft form.
And then there's the Lower Churchill. The crowning achievement of Williams' tenure secured, as it likely will be, with government loan guarantees backed up by the offshore oil deals, pretty much as Bond Papers has maintained. those are the things Williams will be focusing on in the next three years and that's basically what he said to reporters in a scrum after the cabinet swearing in ceremony.
The big clue of his departure, though, has been Williams' claim that he is loosening the grip on the cabinet he re-appointed, with minor changes, on Tuesday morning.
"As we mature as a government, I want to see an increased role for the ministers," Williams said after the cabinet swearing-in ceremony.
"I've been criticized on the one hand for being a one-man show. On the other hand, if you don't show up for something ... I get criticized for that, so we've got to strike that happy medium."
No one likely missed the curiosity of a guy claiming he doesn't run a one man show while at the same time saying that he wants to see an "increased role" for cabinet ministers. Not showing up for something is a reference to criticism Williams took last week for being away on vacation while about 100 workers in his own district were laid off at the local paper mill. Williams gave in to the criticism and interrupted his most recent vacation for a short meeting with union officials.
That's hardly the thing one would expect from a guy who is planning to run again in the same district in four years time, especially when the laid-off paper workers watched Williams go to the mat for their brethren in a neighbouring town only two years ago.
Aside: Incidentally, is it possible that the Kruger announcement was delayed after an intervention by the provincial? Word on High Street is that people at the mill heard rumours of the machine shut-down three weeks before it was made public. They were likely clued in by an announcement on October 2 - a week before polling day - and the shut-down of the same machine at Corner Brook in July. in hindsight, it looks like the July announcement was actually the closure. Look at the wording. There's no suggestion it was going to be for a mere two weeks yet that's what it turned out to be.
In any event, old habits are hard for the Premier to break though, as his other comments reveal. His penchant for using "I" still comes through loud and clear, as does the reference to people he supposedly doesn't watch. McGuinty announced his cabinet on Tuesday and up to the sudden announce from the provincial government's propaganda service Tuesday morning, there was absolutely no sign Danny Williams was ready to announce his cabinet.
"I don't guide myself, or our government doesn't guide ourselves, by what Premier McGuinty does or Prime Minister Harper does or anyone else in the country does," he said.
"We're running our own show down here and we do it as we see fit, and I think we're doing a great job."
The pattern Williams is following here is pretty much the one he used in 2003, although the overall circumstances don't warrant the delay in opening the legislature. in 2003, a cabinet was hastily sworn in out of constitutional necessity but it took until February before the names of the new departments were announced. This is an administration that takes its sweet time to do anything and there's no sign that will change in Williams' last years.
The serial government will carry on and, as noted here in January, speculation will mount as to which of the current crop of minister's will start angling for the Premier's job.
All the signs are there. You just have to look for them.
And in the meantime, Danny Williams will depart from office in the same way he has occupied the office: doing everything in his own time.
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Just when everything was settling down, the brute force expropriation of AbitibiBowater assets has stirred everything up again.
Lord Haw Haw of Brownenvelope is back on the airwaves praising his former employer to the hilt and taking issue with anyone who suggests that maybe the Premier might be acting a little rashly. Then at the end of the two hours of blindly praising his former employer, Lord Haw Haw proclaims that people shouldn't blindly praise leaders.
The man lampoons himself every day and seems blissfully unaware.
The airwaves of Lord Haw Haw's afternoon laugh-fest and the morning talk show were crammed with every manner of worshipper praising the expropriation. Then again, most of those were just the usual suspects spouting the usual pap.
Meanwhile, outside Newfoundland and Labrador, people wonder what the heck is going down in Hooterville.
Again.
Well, here are a couple of points to ponder:
1. No one should doubt what would have happened in 2006 if the provincial government had the legal power to expropriate offshore licenses. That's the time the Premier fumed about expropriation. Too many people laughed the whole episode off as a big bluff.
2. Since the provincial government can't expropriate the offshore, the oil industry is resting easy. Hibernia, White Rose and Terra Nova are salted away. The companies wrestled huge concessions from the government on Hebron. There's nothing for them to worry about.
3. Other companies on the other hand are probably not sitting quite so pretty. Kruger, Vale Inco, Wabush mines, IOCC. They all are likely checking their legal agreements with the provincial government. Some of them might even start discussions to secure whatever guarantees they can against precipitous actions by the provincial Crown. If the provincial government is prepared to use the extreme solution up front to strip the carcass of a dead project, no one would blame those companies for wondering what might happen to a troubled one.
4. IOCC and Wabush Mines might want to take another look at their power contract and the whole Twin Falls Company. The last time this issued was raised - in 2006 - the Premier raised the completely false idea of sweetheart power deals and resource giveaways to bludgeon to death any suggestion the companies could avoid paying commercial rates the next time the deal came up for renewal.
Here's an extract from the post on that issue back in early 2007:
In early October, the feisty Premier warned Iron Ore Company of Canada - owners of the other mine in Labrador West - that they could expect to pay commercial rates for electricity once the current agreement ended. Williams likened the IOC/Wabush Mines power purchase deal to the Hydro Quebec giveaway on the Upper Churchill presumably knowing full-well that his comparison and the truth were two completely different things.
Presumably the same thing applied to Wabush Mines. You can imagine the talk: Forget the low cost power, boys, sez Danny. No more give aways. Maximum benefits to the province or take a hike.
And since Williams had flatly rejected a power deal in public, there was no way he would back down.
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Kruger is talking cuts and concessions at the major private sector employer in the premier’s own district.
So far, not a peep from the provincial government.
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An internal Kruger memo leaked to news media suggest that the papermaker is planning to lay off upwards of 135 workers at the company’s operation in Corner Brook.
The memo notes that comparable plants in North America function with 250 employees compared to the 385 current on the books at Corner Brook. The memo also indicates the Corner Brook mill produces paper at $140 per ton compared to $100 per ton elsewhere.
The provincial government heavily subsidizes the Corner Brook mill already.
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The Telegram Saturday editorial takes a dim view of NALCO’s proposal to string high voltage transmission lines through Gros Morne.
The problem is that the Gros Morne proposal, on the face of it, is hardly an acceptable option for a national park. Between a rock and a hard place, indeed.
Indeed it is.
One of the comments from a reader suggests that it is preferable to do this than keep a diesel generator running at Holyrood.
Fair enough at least for a proposition.
But the NALCO proposal doesn’t address the current electricity demand and the current utilization at Holyrood to cement the case that this massive transmission project – at least $2.0 billion in added taxpayer debt – is actually the best solution to the Holyrood problem.
Electricity demand is not exactly skyrocketing on the island. Two major industrial projects have died since 2005 and the Vale Inco project at Long Harbour will only suck 75 megawatts a year, when it comes on line some time around 2012. In the meantime, the expropriation bill gifted NALCO with almost 150 megawatts of power that costs virtually nothing to run.
On top of that there are at least six other small hydro projects that have been frozen in place since the late 1990s. According to the province’s energy plan, that moratorium is due to be reviewed in 2009.
Meanwhile, Kruger was looking at a site at Silver Mountain. NALCO itself completed studies on two others in 2006, one at Island Pont (36 MW) and another at Portland Creek (23 MW). On top of that, AbitibiBowater had three sites under consideration in 2006:
There are others.
One of the problems facing any development of those alternative sources of power is the stranglehold NALCO now holds on development in the province. The energy plan makes it clear that the government now considered NALCO to have a monopoly within the province even before it expropriated several private sector developments including Star Lake:
We believe this means the Energy Corporation should control the development of all small hydro developments for the benefit of all electricity users and determine whether to do this alone or with private sector partners. However, in the long term, the province, through the Energy Corporation, must maintain full control over any new hydroelectric generation assets. We will do this by adopting a policy that no new water rights for hydroelectric generation will be issued except to the Energy Corporation or another company acting in partnership with the Energy Corporation.
If that weren’t enough, changes to the Electrical Power Control Act – passed in 2007 but only quietly implemented after the expropriation in December 2008 – ensures that NALCO can enforce its control over future developments through the Public Utilities Board.
NALCO isn’t famous for getting things done expeditiously. It has taken the company the better part of a decade to implement several small wind power projects. Efficiency and effectiveness aren’t the usual order of the day at any Crown corporation and as a recent study on Hydro-Quebec shows, taxpayers usually aren’t well-served by the behemoths.
Between a rock and a hard place, as the Telly-torialist put it, doesn’t even begin to describe what else NALCO will come up with besides stringing power lines through a UNESCO World Heritage site. Next thing they’ll want to add upwards of $10 billion to the public debt for something or other without any sign of a way of paying for it beyond borrowing.
Oh, wait.
They have already.
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Corner Brook Pulp and Paper Limited announced Wednesday the company will not re-start the Corner Brook mill’s idled Number 4 paper-making machine. The move will result in the loss of 130 jobs.
The move is blamed on deteriorating markets.
The Premier and other members of cabinet met with union officials on Wednesday afternoon at the government’s main office building in Corner Brook.
"There's no numbers put on the table from a perspective of … 'government, give us a cheque for this amount of money.' But [what] we have said is that we're prepared to play our part quite simply as we always have in any of these situations," [Premier Danny] Williams said.
"Our primary concern at these times is always the workers, the workers who are affected right now. And this mill needs to stay viable and competitive and needs to stay alive. And that's what we're discussing."
That tone compares markedly to the confrontational one that characterized government discussions with AbitibiBowater in Grand Falls-Windsor before that mill closed earlier this year.
Corner Brook is represented in the House of Assembly by the Premier and justice minister Tom Marshall.
In a related story, loggers are protesting on the Great Northern Peninsula to draw attention to their plight.
The forestry industry employs between 400 and 500 people on the peninsula.
The protest was called off around midday [Tuesday] to give politicians time to respond to the loggers. [Spokesman Ralph]Payne said Transportation and Works Minister Trevor Taylor, who is the Tory legislature member for The Straits and White Bay North, did call Tuesday afternoon and agreed to meet with the association Thursday, but Payne wants more than that.
“We want to meet with all four of them and that includes Trevor Taylor, Natural Resources Minister Kathy Dunderdale and the two other MHAs from the area, Wally Young (Tory legislature member for St. Barbe) and Darryl Kelly (the Tory legislature member for Humber Valley),” said Payne.
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On Wednesday we warned the government was putting on the push to slam the House closed.
It’s twoo, It’s twoo, as Lily von Schtup would say. Even voice of the cabinet minister is covering it.
The reason: nurses strike.
If the House is open on Wednesday, nurses will be filling the galleries and the opposition will be hammering away at the provincial government asking all sorts of difficult questions.
Hardly likely the provincial government would want that when their pollster is in the field collecting the quarterly harvest of poll goosing results.
Very embarrassing would it be to have nurses doing even one tenth what the crab crowd did to government in the spring of 2005.
Not only that but with cracks opening within the government caucus there could be a sorry-assed repeat of the whole Fabian Manning fiasco. Seriously, people. If Ray Hunter has to get up from his uncomfortable new pew to refute an accusation he’s been muzzled – and thereby confirm the accusation – then you know there are others who are feeling a tad unsettled trapped between the wishes of their constituents and the diktats that come via blackberry from the Tower.
Ray’s on edge. Who else? Sullivan maybe and the pressure she must be under from people in central Newfoundland pissed off about Abitibi.
Jim Baker and the crowd in Labrador west? More bad news coming on Friday, if rumours pan out.
Anyone feeling heat from Corner Brook and the failed Grenfell autonomy thing? Increasing uncertainty about the Kruger mill and one of its machines?
How about townie MHAs? Or those from the Third City? Must be hard having all those former mayors in one spot and the guy who goes in to cabinet is the one who can’t speak in whole sentences.
Close the House and let the pollster do his part in poll goosing saga free from all that “counter-spinning negativity”. The line still brings a chuckle since it starts from the premise that there is “spinning” in the first place that is being countered. Think of it as a round about confession, like telling Randy Simms that if one wanted to goose polls one would start the week before the pollster goes to the field. Which of course is exactly what they do.
Anyway, it’s not like someone didn’t tell you what was going on.
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Premier Kathy Dunderdale, answering media questions about the future of the province’s last paper-making machine:
“[Kruger are] going to run their operation in consultation with the union on how they can manage their operations here in Corner Brook so that they can compete and compete globally because that's what they need to do,” she said.
Manage operations of the plant so they can compete globally.
Sensible idea.
And the provincial government isn’t going to interfere.
Watch the whole scrum.
Dunderdale talks about the company needing to run efficient, lean operations, “especially in this kind of a climate”. She means a globally competitive business climate in which plants are closing up because they can’t compete.
Note as well that Kathy Dunderdale acknowledges that neither she nor natural resources minister Jerome Kennedy know about running paper making operations.
Then the scrum switches to the fishery and immediately Kathy Dunderdale changes her headspace. Suddenly she knows so much about the fishery that she needs to have overwhelming control of the industry – by her account – in order to sort things out.
Dunderdale’s premise in the fishery is that everything should continue as it is, with the government presumably dictating how much companies should take in losses each year. After all, that’s what fisheries minister Darin King was talking about recently when he told the world that he and his cabinet colleagues had rejected OCI’s processing proposal. The provincial government looked at the company’s financial statements and made up its own mind about how much work needed to be done in the province.
Now neither Dunderdale nor King know more about the fishery than they do about forestry and papermaking. Yet, King insists that when it comes to the fishery, the government is interested in getting the most out of the industry for the province.
Two resource industries.
Both facing significant economic pressures that come, ultimately, from the need to operate lean, efficient operations in an intensely competitive global economic environment.
And yet the provincial government follows a policy in one diametrically opposed to the policy they follow in the other.
No need to wonder for a moment why the fishery remains in a mess. The current provincial government is just the last in a long line of cabinets that simply lacked the political will to come to grips with the fishery problem and fix the problems. The simplest fix would be to treat the fishery the same way they treat the forestry.
Kathy Dunderdale knows, though, that if she said about the fishery what she said about the forest industry, the dinosaurs would lace into her from all sides. When you listen to what King and Dunderdale told reporters and how they said it, you’d be making a pretty big ass of yourself if you assumed that King and Dunderdale even thought of doing such a thing in the first place.
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Like many things in local politics lately, the AbitibiBowater expropriation bill is one of those things in which it is hard to separate the history (and facts) from the political histrionics.
We are told the bill “repatriates” resources from a company which, by closing its paper mill, had broken the sacred trust under which it had received access to public resources. This is an end to the supposed resource “give aways”. It poses a struggle, in this case over resources, putting “us” against “them”, with “us” being led by the one leader of all leaders who can do no wrong and in whom all should repose great and unquestioning trust despite the many and evident questions about the move.
Before getting into other issues, let’s establish at the outset what the expropriation bill (Bill 75) does.
First, the bill cancels with immediate effect all licenses held by AbitibiBowater in its central Newfoundland operations. This includes the original 1905 charter lands granted to the Anglo-Newfoundland Development company as well as all other leases and licenses the company inherited (purchased) from its predecessors. [This is arguably an expropriation as well. See below]
Second, Bill 75 quashes an active court case in which Abitibi was suing the provincial government over the terms of Bill 27. In 2002, the Grimes administration revised a series of licenses to give them a common expiry date in 2010. At the same time, these licenses were tied to the operation of a specific machine at the Grand Falls mill such that if Abitibi shut it down before 2010, the cabinet could cancel the licenses by order in council before 2010.
Third, the bill expropriates all the company’s hydro-electric assets. This includes those involved directly in supplying power to the mill as well as Star Lake which was a venture entirely separate from the mill operations.
Those are the key elements of the bill.
With that done, let’s establish that Bill 75 was introduced with great haste. While there was some indication government was considering an expropriation, there was no warning of this measure until it appeared in the legislature. The premier himself conducted a hastily arranged briefing for the opposition. He obtained their consent to move the bill through all stages in a single afternoon with scarcely any substantive discussion in public.
We know that the move was hasty since both opposition party leaders discussed urgency. Liberal leader Yvonne Jones said “we certainly understand that there is no urgency here…” while evidently there was. Parties to the expropriation portion of the bill - including Fortis Generation, Enel and Sun Life – for example received notice only a handful of minutes before the bill was introduced in the legislature.
New Democratic Party leader Lorraine Michael said this:
I think we understand why the briefing had to be at such a last minute moment, to put it that way.
…
So, while there is urgency about what we have to do today, we also have to take those urgent steps with caution as well.
The Premier did make reference to urgency, although he was not keen to explain why the expropriation bill appeared when it did:
At that point, of course, we felt that this was certainly an urgent matter that should be dealt with forthwith.
Immediately prior to that he recounted that government issued a demand letter to AbitibiBowater on the preceding Friday for the transfer of “assets” to the Crown at no cost with a response demanded by mid-day on Monday. On Monday, the company replied he wished to discuss transfer of the assets as well as appropriate compensation.
This haste is important.
In the ordinary course, there was plenty of time to negotiate the closure of the mill and the disposal of its assets. Abitibi announced the closure for the first quarter of 2009 and this is generally understood to have meant the end of March 2009. Orderly, negotiated closure is what took place in 2005 with the closure of Abitibi’s Stephenville operation. In that move, government allowed the company to remove a relatively new paper machine from the province rather than move it to Grand Falls to replace a unit installed in 1926.
That was a moveable asset. The assets at Grand Falls are all fixed in place. The hydroelectric assets could have been integrated into the provincial power grid based on a negotiated deal of the type seen previously with both Kruger and Abitibi. From a public policy standpoint, it really doesn’t matter whether the hydro power comes from private sector or public sources as long as it comes. If Abitibi demanded an exorbitant price, the province’s hydro utility could simply refuse to purchase the power and in its monopoly position, Abitibi would be left with assets but no cash.
Likewise, the mineral rights associated with some of the licenses also have lasting value to both the license holder and to the provincial government. But who really cares if a mine grew on Charter lands, for example, run by Abitibi or under a license through Abitibi to a third party. After all, that’s what happened at Buchans.
As for timber, some have speculated that the wood might be exported to feed other paper mills. This misses the fairly obvious point that Abitibi is removing production – some 800,000 tons globally - from its system. As such, it isn’t likely to have wanted to remove the timber for use in other mills, especially when those mills are a considerable distance from Newfoundland.
Even if the company did want to export the wood, the provincial government has every legal right to establish licenses and taxes for exporting timber from the province. The resources couldn’t have gone cheaply, if at all, unless the provincial government consented.
The timber, though, had an evident value within the province. It could have gone – and may still go – to Kruger or to other commercial operations. Here again, from a public policy standpoint, it really doesn’t matter whether Abitibi used the licenses and made paper or furniture. The key public policy goal is to ensure that the resources are used to generate economic activity within the province. The legislature has all the power it needs to ensure that happens.
Ultimately, the legislature had the power to establish terms and conditions, new licensing regimes or even to expropriate if need be.
In its admitted haste, though, the legislature has effectively jumped the gun. The expropriation bill referred to an event – the closure of the mill – which has not yet occurred, even though in public statements politicians talked of it as though it had happened some time ago. The licenses and power generation are all crucial to the mill operations. Little surprise that the company ceased logging operations within a week of losing its licenses. For Abitibi to accept any temporary or conditional licenses for timber issued under Bill 75 would be to acknowledge the cancellation of the
Expropriation is usually a last resort. In this instance, it was - in effect - the first resort.
It may prove to be a weak measure.
As commentator Madelaine Drohan notes:
As for the legal case, Mr. Williams contends that the 1905 agreement clearly ties the rights to the operation of a mill in Grand Falls-Windsor. No mill, no rights. Yet the fact that the Premier felt compelled to pass legislation to this effect seems to indicate that there is room for a different interpretation.
That’s not the only weakness in the case. The provincial government has already conceded that Abitibi held more than a mere lease to the lands, timber and minerals. In the legislature, natural resources minister Kathy Dunderdale spoke explicitly of Abitibi and resource ownership:
The company also acquired ownership of land through allocation of Reid Lots. Reid Lots were parcels of land granted to the Newfoundland Railway between 1893 and 1909. Originally intended to be land bordering the railway, a provision was included that where such land was deemed unsuitable the railway had the option to select lands elsewhere. The AND Company [Anglo-Newfoundland Development] secured title to a number of Reid Lots as it proceeded to develop the Grand Falls mill. [Emphasis added]
Earlier in 2008, the provincial government engaged in negotiations with Abitibi to purchase the Charter lands from the company. Purchase carries with it the implicit assumption that something is owned. A landlord does not purchase a lease from a tenant. One purchases an asset from an owner. As the Telegram reported in October:
Following a meeting in St. John’s with representatives of CEP, Dunderdale said the province is close to a deal with AbitibiBowater on the repatriation of Charter lands, which will see the province pay the company millions of dollars to purchase many thousands of hectares of leased lands.
The AbitibiBowater case may well prove very costly for the provincial government if it gets to court. The provincial government doesn’t have a solid record for much other than going bare headed at public policy.
In the offshore ownership case, the provincial government had legal advice that its case was weak. It lost in both the Newfoundland supreme court and the Supreme Court of Canada on essentially the same grounds. A desperate gambit to shore up a weak position failed miserably. Similarly in the water rights reversion case, the provincial government threatened the financial interests of the companies that backstopped the Churchill Falls deal. People conveniently forget that it was the bondholders – not Hydro Quebec – that challenged the water rights reversion act in court and won.
By the same token, Danny Williams has usually been good at tough talk ending in a settlement for far less than he ever demanded. That was the pattern in the 2005 federal transfer deal with the federal government and in the Hebron negotiation. When things have gone to court – Henley v. Cable Atlantic and Ruelokke v. Government of Newfoundland and Labrador – the Premier has lost and lost badly.
There is still room for a negotiated settlement here and one which sees Abitibi and other other interest holders – Fortis, Enel, and Sun Life – rewarded handsomely based on the weaknesses of the government’s case. It wouldn’t be the first time Danny Williams bluffed at the front, lost big and then claimed victory anyway. In this case, the compensation payment would channel through the province’s energy corporation, the proud owners of the expropriated hydro assets.
The terms of the settlement deal? Well, those would be subject to a confidentiality agreement of course and the cash payments would be buried away behind the veil of secrecy dropped last spring over the energy corporation. No member of the public would ever know the real cost of the expropriation bill.
The cost to the public of bare-headed public policy sometimes isn’t clear until long after the fact and at the outset it is usually hidden with histrionics. That was the case in water rights, the offshore ownership and even with NALCO, the energy corporation’s namesake.
It’s likely going to be the case with Abitibi as well.
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Note: Drohan’s blog post refers readers to Bond Papers with a note that your humble e-scribbler provided the text to the 1905 pulp and paper act plus the AND charter. Here’s a hat tip for the traffic, but credit where credit is due: all we provided around here was a link to the Globe and Mail which provided it in pdf from the day the story broke.
Williams also banned the company from Tory fundraisers in 2002.Apparently, the fact that INCO is trying to negotiate with the province over the smelter/refinery complex location wasn't in the publicist's notes.
"We didn't want to be in a conflict of interest position, or be perceived as being compromised, quite frankly," Williams said in 2002. [quote added]
The Telegram editorial on Thursday linked the Muskrat Falls project with the recent announcement by Kruger Inc of a wind energy project in Quebec:
Power, apparently, is cheaper in Quebec. Hydro-Québec says its 2,000 megawatts of wind power are being purchased for an average cost of 8.7 cents a kilowatt hour. That's a huge difference - especially because we're also supposed to be selling power into North American markets.
But you have to wonder - if Hydro-Québec is bringing 2,000 megawatts of wind power on stream at 8.7 cents a kilowatt hour before Nalcor brings 824 megawatts of power on stream at 14.3 to 16.5 cents a kilowatt hour, who will be subsidizing the off-island sale of power of Muskrat Falls to make it competitive with power that costs a third less?
And just why is Muskrat Falls clearly the provincial government's only choice - and Nalcor the only possible supplier - to meet our energy needs again?
- srbp -
Newfoundlanders and Labradorians got a vivid example on Thursday of the Orchestra Pit Theory of Political reporting.
For those who don’t know the story, the Orchestra Pit theory goes like this: two politicians are on the stage. One announces a cure for cancer. The other falls into the orchestra pit. The media will cover the guy in the pit.
Well, the guy in the pit on Thursday was Brad Cabana.