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BRITISH COLUMBIA

: By SEAN GRIFFIN

Piece by revealing piece, the outlines of a
sellout reminiscent of the Columbia River
scandal are becoming evident in British
Columbia’s Northeast coal fields.

And with the same bluster that character-
ized W.A.C. Bennett’s defence of the
Columbia deal, Socred ministers are deny-

ing that it is a giveaway, insisting that NE

coal will more than pay its way.

_ In 1964, when the Columbia River treaty :

was signed, then Premier W.A.C. Bennett
__ declared pompously: “That, my friends, is
__ the real meaning of cheap power — because
_ nothing is cheaper than something that is
= free.”

Within a decade, the enormity of the sell-
_ out was apparent. According to Ralph Loff-
' mark, a cabinet minister in the W.A.C.
Bennett government, the costs to the pro-
__ vince of the treaty dams built in B.C. finally
_ came in at $1.25 billion. The only return to
__ the province was some $479 million — the
_ downstream benefits plus accrued interest.
___ British Columbia was left to pick up the
_ tab for more than $700 million to provide
_ cheap power for the U.S.

___ That pattern is beginning to repeat itself
_ in 1984. This time, the giveaway involves
_ another valuable B.C. resource, coal, and
, the beneficiaries are the Japanese steel
producers.

_ Industry and Small Business Minister
_ Don Phillips, the minister responsible for

, Northeast coal development, told the Min-

_ ing Association in 1982: “Northeast coal is
"no giveaway to the Japanese steel indus-
_ try...The money spent on this mammoth
project by the government of Canada and
_ the government of B.C. will be returned to
the taxpayers of this province by taxes on
the private sector on the first contracts.”
Teck Corporation and Denison Mines,

Socred fees
force ‘cash
first’ care

_Astaff memorandum from the execu-
tive director of the Nanaimo Regional
General Hospital instructing accounting
staff to coilect a deposit in advance from
patients admitted to the hospital has
underscored the extent to which “pay as
you go” medical care has been brought
back in by the Socred government.
| The memo sent by executive director
| Gordon Frith to the hospital controller
|] Oct. 23, 1983 stated “...1 have recom-
mended to the board and received their
endorsement to tighten up our collection
procedures to reflect an efficient business
structure consistent with the necessity to
collect every available dollar during this:
tight economic restraint period.”

It instructed staff to send a notice to
each elective patient before admission
advising them that they would be
required to pay a seven-day deposit of
$59.50. :

“If the patient still arrives at the hospi-
tal without the necessary funds to pay the
deposit,” it stated, “the patient must be
instructed to have someone bring the
required money to the hospital the fol-
lowing day...”

The existence of the memo was
revealed by NDP health critic Eileen
Dailly who noted that a Prince George
hospital was also following the practice,
demanding a $30 deposit in advance.

Dailly called on Health Minister Jim
| Neilson to abolish the user fees and rein-

state universal access to health care.
“Due to this government’s policy of
increasing health user fees, hospitals are
incurring more bad debts as more people

are unable to pay,” she said.

>

Sellout looms larger in NE coa

Australia cufs

Dey Prime Minis-
ter and Trade Minister

$1 billion by 1990, a report from securities house
Lionel Bowen said the y Protects

Government has ap- ‘Midland a inati a
roved a contract for > tutional clients, project: ts
Kembla Coal and Coke eee Lid, will lose more than #1” =i"

to export coking coal to

Coalfields

Coal glut a problem

World seaborne = This is the view of in 1985, even if still

trade in coal in 1984 is Simpson Spence and short of it.”"

likely to be a record y; Shipbrokers of _ The company esti-

206.5 million tonnes, Britain, which also mated that there will

compared with 195 referred in its special be between 40 million

tine ty, nal market report to and 60 million tonnes of
. comet anal

ot wear it

i Projects. .
: The report, which has been circulated to Fi
Doherty’ id

—avnte af oublic funds pouring into

rice of coal

sl to Japan for northe . B prey. ote CUts
Betas : astB.C. COG. 2x8, SS! coal talks
fapanese “sel ml By ROD NUTT he eS 71 RMNERE lips could not be reached sapdcouvey nudge cet Atncreover, the
rieatniecnne — ghGxie eet ere ee ay PMR gear] Senet iacerSerS Siew opty Sa" aa Ace eda

and

feel shockwaves from Japan

tional Ltd., the ex

[ ANALYSIS |

i 1 mar-
downturn in the Japanese steel mai ‘
rieingests the coal vous in the benefit
sis are optimistic. —
SeAcdh a ecastial reduction in coal parcpaes
from the northeast would rip a hole in the
to the province.
caheere rend Teck Sean available for com-
ed slide in Japanese steel

2d last month
no attempt to
ame sensitive.
{ coal sold, the

of about eight
Coal Ltd. and
»rovince is esti-
are Denison and Te
d to 11.5 million ment on the project
i. juction.

foresee aioe contracts with st aspen
for a small variation in Cos Laren iA

Headline stories, from the first indications of the downturn in Japanese steel production in
1982 to the onimous report by the securities firm of Midland-Doherty this month have
begun to reveal the dimensions of the giveaway of resources taking place in the Northeast.

Inset, Don Phillips, the minister responsible
sellout. :

for the coal deal and the main architect of the

the two multinational mining corpora-
tions — which operate the Bullmoose and
Quintette mines, respectively — were even
more confident in their predictions a year
earlier. A series of advertisements run by the
two companies claimed: “The taxes and
other public revenue flowing from the
development will substantially exceed the
estimated investments that governments
will make in providing road and rail links,
new port facilities and a townsite to make
the development possible.”

They pegged the costs to government at
$741 million (in 1980 dollars) and cited
studies to show that revenues would exceed
that cost by $1.6 billion.

Less than three years later, those predic-
tions are coming back to haunt their
authors.

A report issued last week by Midland-
Doherty a securities firm based in Toronto
predicted that Teck and Denison between
them would lose $1 billion in Northeast coal

_ by the year 1990. The figure was based on

the two mining companies only producing
70 per cent of the contracted volume of coal
and selling it at a reduced price of $84 a
tonne.

Even if the full contracted volume were
delivered at contract prices, analyst Geoff

_Carter stated, the losses would still be in the

neighborhood of $425 million:

The report was immediately dismissed as
“garbage” by the senior vice-president of
Teck Corporation. But the predictions of
massive losses made by Midland-Doherty
are not the first and the government’s own
figures, sketchy as they are, have already
indicated the dimensions of the sellout.

According to the cost-benefit analysis
issued by the government in July, 1982, the
return to the province was to be $464 mil-
lion based on the current contract volume
of coal — about eight million tonnes —
and the contract price. In addition, it was to
take 20 years for that amount to be
recovered.

But the cost of B.C. Rail’s Anzac spur
line alone was $470 million, not including
interest on the money borrowed for that
construction. And there are numerous
other costs as well — the province’s share |
of the Tumbler Ridge townsite, new rail cars
and the loading dock at Prince Rupert. ©

The NDP opposition has charged that
the actual cost, in 1983 dollars, for the
government subsidy is closer to $1.5 billion.

Even at current prices and volumes, tax-
payers in the province will pay heavily for
the privilege of exporting their valuable coal
to Japan.

But in fact, according to an increasing

number of reports, both the volume and the
price will probably be cut in the face of

“curtailed Japanese steel production. .
In its 1982 analysis, the province figured

on increasing the volume of coal sales from -

the Northeast field by nearly 50 per cent, in
order to increase the return to the province.
But that assumption only underscored the
folly of the province in proceeding with the
development in the first place.

The Japanese steel makers traditionally
diversify their supply of coal — in order to
play one exporting country off against

_ another — and contract for more coal than

they need.

But when their steel production fell in
1982 and 1983, their needs were even less
than expected. Accordingly, they went to
their suppliers around the world demanding
price cuts and reductions in the volume of
deliveries.

First Australia accepted a cut in price of
(U.S.) $12 a tonne and the Australian Trade
Minister acknowledged: “If we didn’t
approve the deal the Japanese would have °
bought the coal elsewhere.”

Only last month, South Africa, another
major supplier to the Japanese also cut its
price.

Closer to home, coal producers in the
Southeast part of the province were forced
to accept cuts in price of about 15 per cent
and reductions in volume of 30 per cent last
year. The cuts have meant layoffs for about
400 miners.

Last December, the Japanese pressed
their advantage even further, making over-
tures to the Northeast coal companies for a
$14 per tonne price reduction.

Both Teck and Denison have insisted
that there is no provision for renegotiation
until 1987 but a Westar Mining spokesman
has pointed out that Japanese coal con-
tracts “are really glorified letters of intent.”

Teck president Norman Keevil also
pointed out that contracts are occasionally
renegotiated if the terms become too oner-

ous for one party. He also noted that discus- ©

sions have beeen held with the Japanese.
Just this week, Ron Basford, director of
the provincial government’s Northeast coal
office, warned the Japanese that any price
reduction which threatened the project
would damage Japanese interests in Can-
ada. It was a clear indication of how serious
the prospect of renegotiation has become.
Certainly, with the Japanese steel indus-
try’s output still down and with the current
world glut of coal — the British firm of
Simpson, Spence and Young Shipbrokers
estimated this month that there would be
between 40 and 60 million tonnes of surplus

Carter said the “Japanese are hittin;
Wallen: mines over the head for price ot

s th aie this ees Stee! prEh Janay, earn’ from
Ts Tica; ens by edge Produc; Nese lier Je, the yea
ve peek ad bee Pdgeg peas UCtion 22° cur—” Evel Year

coal in the world market — the pressure

‘from the Japanese for cuts in both price and

volume can only be expected to mount.

Even if the price remains firm, there most
certainly will not be the increase in volume
necessary to make the Northeast coal pay
for the massive public investment. More-
over, Southeast coal may face even greater
cuts in volume, reducing the return to the
province and jobs.

If the price or volume is cut, the mining
companies will undoubtedly. press the pro-
vince for cuts in royalties and surcharges
and more tax breaks. The province has
already reduced freight charges for the first
six years of the contract — anindication of
how willingly it would oblige the mining
companies with concessions.

Every indicator points to a massive, con-
tinuing subsidy on the export of coal to
Japan — and even the possible closure of
the mines for a period of time if the compan-
ies and the province are forced to cut their
losses.

A report prepared last year for B.C.
Hydro by consultant H.N. Halvorson, sug-
gested that closure could indeed come
within two to three years because reduced
prices and volumes would quickly make the
mines uneconomic.

Even if the mines do remain open, he
noted, the Japanese have already twice the
coal they need and the return to the pro-
vince from the Northeast would be a long
time in coming.

Whether it is closure or continuing sub-
sidy, it is a virtual certainty that the costs to
the province will be enormous. And that
cost is linked directly to the massive budget
cuts in education, hospitals and other social
services as well as the government plans to
cut the number of government employees
by 25 per cent. _

Significantly, although the costs of the
Columbia River treaty added a substantial
burden to the provincial debt, they were
absorbed over a long period at a time when
the economy was relatively bouyant and
interest rates were low. But the costs of the:
Northeast coal sellout have been com-
pressed into a few years at a time of eco-
nomic crisis, depressed government
revenues — and higher interest rates. The:
economic efects of the handout to the cor-
porate sector have been devastating.

In short, money has been taken from

Vital social services and put into transporta-

tion and infrastructure that will benefit only
the mining companies and the Japanese
steel companies. And the cost will continue
to be borne by the province for some time to
come.

PACIFIC TRIBUNE, &<3RUARY 15, 1984 » +