EDITORIAL — Tobin tells miners, ‘my way or the highway’ — Rat pack tactics

Planning to explore for minerals in Newfoundland or Labrador? If you find something big, be prepared to butt heads with Brian Tobin, rat pack premier of The Rock and environs, fearless defender of the seas, and de facto minister of mines. No one carts away a piece of The Rock without Tobin’s say-so.

Tobin has yet to give his blessing to development of the Voisey’s Bay nickel-copper-cobalt deposit in Labrador, or, more specifically, to the development proposal favored by owner Inco. And in an apparent fit of temper, the combative premier is threatening to withhold his assent until he gets exactly what he wants from the Toronto-based nickel miner.

Tobin wants a $1.1-billion mine and mill at Voisey’s Bay in Labrador, together with a state-of-the-art smelter and refinery with a $1-billion-plus price tag at the coastal community of Argentia — all built to the highest of environmental standards. He wants to deliver a few thousand high-paying jobs and plenty of spinoff benefits. He wants Inco to respect the rights of aboriginals and give them their fair share of the Voisey’s Bay pie. If Inco won’t accommodate all these aspirations, Tobin may boot the company out and find a “more progressive” partner who will.

Never mind that Inco posted losses of US$39 million in the first six months of this year, or that the company is closing high-cost mines in Ontario and Manitoba. Never mind that that nickel currently sells for about US$2 per lb., about half of what it was when Voisey’s Bay was discovered, or that copper sells for a mere US76 cents per lb. And who cares about the Asian crisis, or the new crop of nickel mines being built in Australia and New Caledonia?

Never mind that Inco spent $4.3 billion to acquire the company that found Voisey’s Bay, or that a massive writedown of this original investment is looming. And never mind that certain parties ignored the rules on the books and took their anti-development fight to the courts, where they managed to convince a judge to quash Inco’s rights to explore and develop new reserves.

Had the company been allowed to continue work as planned, it might have found enough reserves to justify a smelter and refinery. As it stands now, Inco doesn’t have a snowball’s chance in hell of getting financiers on Bay Street and Wall Street to cough up enough dough to make Tobin’s dreams come true.

Tobin must realize all this. He must be posturing, for what Canadian politician would resort to such tactics on the business stage in this competitive global environment? His threat is every bit as bizarre as that of the politician from the Northwest Territories, who, earlier this year, threatened to impose a tax regime that would choke a horse (or words to that effect) if the diamond mines there didn’t sell some of their production to the government. It’s every bit as embarrassing as former Indonesian president Suharto’s infamous Busang edict that a free 10% stake for the government “would be nice.”

Yes, Newfoundland’s mining law states that companies should process their ores in the province wherever possible. But Inco is under no obligation to adopt such a practice if it would render the project uneconomic. The company has been making that case for months, apparently to deaf ears.

Politics and mines do not mix — a lesson learned tragically at the Westray mine in Nova Scotia, where 26 miners lost their lives in an underground explosion in 1992. Had normal market forces been allowed to prevail, and had politicians ignored mine owner Curragh’s tin-cup promises of job creation, Westray would never have been placed into production.

No one can fault Brian Tobin for wanting to reduce unemployment. But bullying and veiled threats of expropriation are not the way to do it. The best solution is to allow the project to move forward, with the hope that ongoing exploration will find enough new reserves to make a smelter and refinery feasible down the road.

Voisey’s Bay is a private sector project. As such, the government should restrict its role to making sure environmental and permitting requirements are met, and that the process is inclusive of all stakeholders, including Inco and its shareholders. It should create a climate that welcomes Canadian miners and job creators, not one that drives them away to Australia or New Caledonia.