EDITORIAL & OPINION — Between a rock and a hard place — Grinch spotting

With the holiday season approaching, households across North America are bracing themselves for an onslaught of visits from their immediate, extended and blended families. In the interests of harmony and good digestion, many a household has learned to steer clear of potentially divisive issues such as politics, religion, Aunt Shirley’s past lives, the nephew’s nose-ring and Uncle Oliver’s collection of weird conspiracy theories. Peace at all costs, and at all costs, peace.

If the guest list were expanded to include Newfoundland Premier Brian Tobin and Inco Chairman Michael Sopko, the head of the household would have to add Labrador’s Voisey’s Bay project to the list of verboten topics. East is East and Newfoundland is Newfoundland, but thank goodness turkey is turkey.

As the world knows, Tobin and Sopko have very different views about how Voisey’s Bay should be developed. With nickel prices in the tank, Inco says it can no longer afford to build a smelter and refinery to process ore from Voisey’s Bay. Tobin’s stock reply is simple: No smelter, no refinery; no mine, no mill.

Tobin’s tough talk has won him political marks at home. To many Newfoundlanders, Inco is the Grinch who wants to steal their smelter and refinery, and high-grade their deposit. To Inco and much of the mining industry, Tobin is the Grinch who changed the rules in the middle of the game for political gain. With polarized views like these, it’s small wonder Voisey’s Bay is caught between a rock and a hard place.

If any hope existed that the impasse would be resolved soon, it went out the window this past week when the Newfoundland government tabled amendments to the Mineral Act to tighten its noose on Inco. They were adopted to close any loopholes or “conflicting interpretations” that might have existed under the government’s 1995 legislation, which stated that companies must process their ores (through to smelting and refining) in the province if it is economically viable to do so.

The government now has the right to order further processing of minerals under a mining lease “if it is in the best interest of the province”, and the right to exempt lease-holders from the new provisions. Tobin argues that these changes will “create certainty,” for mining companies as well as for the people of the province, the “owners” of the mineral resources.

We would argue that changing the rules in the middle of game increases uncertainty. And the rules were changed. In the early 1990s, the government rolled out various incentives to lure juniors to explore in Labrador and Newfoundland. After Voisey’s Bay was found, the tune changed, resulting in mineral policies worthy of a Banana Republic.

We’re surprised, too, by talk about “the people” owning the resources. In these competitive times, such terminology is strictly pass, except perhaps among a few diehard Marxists. Modern-day resource development is supposed to benefit all “stakeholders,” including the mining companies that made the discoveries in the first place and the shareholders who put up the risk capital.

The amendments are tyrannical, mean-spirited, and will create uncertainty for junior companies searching for deposits of sufficient size to attract majors to the bargaining table. What major, we ask, would welcome political interference of this magnitude?

Granted, Australian miners approve of Tobin’s policies, particularly those hoping to get their nickel projects into production before Voisey’s Bay. And New Caledonia is no doubt cheering Tobin on with one hand while using the other to welcome Canadian nickel companies to develop its vast nickel resources.

The other reality is that Voisey’s Bay is an emotional and political issue, one that strikes a chord among many Newfoundlanders who feel they have been saddled with a series of bad deals, such as the Churchill Falls hydro deal that gave power at a pittance, and for near-perpetuity, to neighboring Quebec.

We can talk till the cows come home about competition from laterites in Southeast Asia and dumping from Russia, and about the poor outlook for nickel. We can argue that politicians should welcome private-sector investments, not scare them away, and that political interference caused many of the problems of the past. We can do all that — and we will — but we won’t hold our breath waiting for a breakthrough.