Editorial Dominican Republic is being rapaciopus

The Dominican Republic could be shooting itself in the foot, if it continues to try getting tough with Dominican-based Falconbridge Dominicana, C. por A., the ferronickel-producing subsidiary of Falconbridge Ltd.

Falcondo, as the subsidiary is known, is one of the Caribbean country’s biggest industries, and for 16 years has been producing and selling ferronickel to international markets under a company/ government agreement that exempts the company from any kind of export duty on the product.

So big and so important was the Falcondo plant seen by the Dominican Republic government at the time of its inauguration in 1972, that the country’s president, Joaquin Balaguer, presented then-Falconbridge president Marsh Cooper with a medal signifying the highest honor the country could bestow.

It was in fact an open recognition of meritorious service to the country and it was richly deserved — Falconbridge brought a new measure of prosperity to that relatively poor nation. The ferronickel complex not only immediately provided a livelihood for about 1,300 Dominicans, but brought important infrastructure such as roads and housing. Falconbridge also built and now maintains schools at a community site near the mine at Bonao, and taps a considerable amount of much-needed electricity into the nation’s power grid via the big oil-fired power plant installed to drive the mine-mill complex.

Now, however, all that appears to have been conveniently forgotten. In a cavalier and decidedly grasping move, clearly designed to take advantage of higher nickel prices now being enjoyed by Falcondo (after years of low prices, high oil costs, and almost nothing but losses on the balance sheet), the Balaguer government has slapped what in effect amounts to a 25-per-cent export duty on the ferronickel product. And this by decree, not by negotiation. Falconbridge Chairman William James calls it “prohibitive,” and prohibitive it is, although the company has continued to produce at Bonao, and has so far at least managed three shipments to customers out of the country this year while it continues talks with the government.

Falconbridge hopes to persuade Balaguer to reconsider, and a meeting is anticipated between Balaguer, James, and former president Cooper, to try to resolve the issue.

President Balaguer should waste no time in back-pedaling. While his export duty decree if maintained could do considerable damage to Falconbridge and Falcondo themselves, he has also sent a clear signal to international markets that the Dominican Republic does not hold to its agreements and may no longer provide so hospitable a climate in which to invest and do business. No country can afford that kind of reputation.