Recent funding to a Newfoundland limestone aggregate producer from the Atlantic Canada Opportunities Agency (ACOA) has drawn criticism from a Liberal MP and the recipient’s competition.
Last month, NCL Holdings of Cormack received about $438,000 from the agency to modernize and expand its agricultural limestone operations. NCL president Pansy Cross said the money would be used to buy two crushers to replace the aging equipment it was using at its quarry. NCL also received $247,500 from ACOA in September 2011 (with documentation noting other public-sector sources), and a $3,375 grant in 2010 for the preparation of a business plan.
Gerry Byrne, Liberal MP for the region, said he was concerned the money would give NCL — which also produces crushed stone and sand — an unfair advantage over its competitors. NCL last week renewed its five-year contract to supply bulk agricultural limestone to provincial farms.
“Whenever financial arrangements are made from public sources to a private-sector company, competitive impact analysis is normally front and centre on such a decision,” said Byrne.
He said it’s even more important for long-established industries like the construction sector, including the production of aggregates for road-building and other activities. Byrne acknowledged there are no other provincial producers of agriculture limestone, but said the funding will assist NCL in more than just limestone aggregate production.
“Whether or not the proponents themselves intend only to remain in the agricultural limestone business or whether or not they’ll use the two pieces of equipment to get into the production of aggregates for the construction industry, I guess time will tell.”
A Cormack-area competitor, who spoke on condition of anonymity, said the government funding gives NCL an unfair leg-up.
“If a company is getting money from a government, that everybody else is out working and has been in business for 40-plus years … it’s pretty unfair,” he said.
“I’m buying my crushed stone off of Humber Valley in Corner Brook for my cement plant because I don’t want to go and put myself in the hole to get a new crusher. But if a government’s going to be giving out money for crushers, I don’t see why I shouldn’t get one.”
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Outstanding lawsuit against company
The competitor said he hasn’t applied for government funding, and that his complaint isn’t just sour grapes.
Also at issue for Byrne and the competitor was a supposed outstanding lawsuit against NCL, which, if successful, would hinder the company’s ability to repay the loan.
Court documents obtained by The Telegram indicate a statement of claim was filed in Newfoundland and Labrador Supreme Court in late 2008, alleging NCL Holdings had quarry permits transferred to it from Island Aggregates in an effort to protect the assets from Island’s bankruptcy that year. But there has been no followup legal action and the lawsuit is considered dead by ACOA.
A request for an interview with an ACOA representative was turned down, but the agency provided a written statement
“NCL is the only supplier of bulk agricultural lime to the agricultural industry in Newfoundland and Labrador, and in March 2012, entered into a five-year contractual agreement with the Government of Newfoundland and Labrador under its Provincial Agricultural Program to provide agricultural lime for provincial farms,” reads the statement, emailed by ACOA director of public affairs Doug Burgess.
“The equipment purchased by the company is standard crushing equipment that can be used for other applications. ACOA’s loan to NCL is going towards the replacement of two older crushers to enhance the company’s existing agricultural lime operation. The balance of financing for this project is provided through a loan from a commercial bank.”
Pansy Cross, president of NCL Holdings, also declined to be interviewed for this story, but emailed The Telegram a statement that noted the loan provided funding to replace old and inefficient equipment, and that NCL was the only company to bid on the provincial contract.
“NCL Holdings continues to be a Newfoundland and Labrador owned company that operates solely in Newfoundland and Labrador. We employee 20 employees and provide a valuable service to the farming industry,” wrote Cross.