On Jan. 21, the Town of Wabush was reported as “calling on government to release the third hydro line for Labrador West from the PUB process.” It was also reported that the town had “received confirmation from Liberal Leader Dwight Ball supporting their call to exempt that part of the project to allow power for further industrial development in the region.”
Since then, Alderon CEO Mark Morobito has also gone to the public airwaves suggesting that failure of government to step up to the plate and to construct the transmission line could mean that Alderon’s Kami iron mine project would have to be put on hold.
While clearly there are times when government should use taxpayers’ dollars to foster economic development, taxpayers and ratepayers should note that the Jan. 27 edition of The Business Post also reported that the CEO of Vale (the world’s largest iron ore producer) said that “projects … without full funding are at risk.”
He also said that while existing producers “enjoy a number of advantages over newcomers, including greater availability of cash and a lower dependency on external funding … new entrants … are dependent upon external financing during periods of volatility and high risk.”
With respect to Alderon’s Kami mine project, The Business Post also said that Alderon's Chinese shareholder (Hebi) “is the off-take partner for 60 per cent of the first phase of production at the Kami project.”
If Alderon is dependent on its single Chinese shareholder for the sale of 60 per cent of its production, does that in any way add to the risk associated with the Kami project?
While Alderon’s CEO is reported as saying that “Alderon still has to raise a further $1.5 billion to build the mine,” he also confirms that, “We have no revenue and we have one project.”
Accordingly, I would suggest that our government would have to be well steeped in the same virtual/
fictional economic philosophy that Nalcor is using to justify Muskrat Falls if it were to put $240 (plus) million of taxpayer/ratepayer dollars into the construction of a third transmission line for a project that is far from being fully funded and which has only one market (a Chinese company that may or may not purchase 60 per cent of its most lucrative production).
While, when it comes to Muskrat Falls, government has long been accused of drinking economic Kool-Aid, I thought — or at least, had hoped — that our opposition parties would not be so quick to support excluding the PUB from exercising its legislated mandate and that they would instead look for and demand a more transparent and evidence-based approach to the expenditure of public funds.
If Premier Tom Marshall plans to really press the reset button and to do more than just carry on with the failed policies of his predecessor, then he must ensure that government takes a more evidence-based approach to policy making and the expenditure of public funds.
The construction costs associated with a possible third line to Alderon’s Kami mine project must be referred to the PUB for a thorough, transparent and evidence-based review.
The PUB is this province’s democratically established institution that has the legislative mandate, the experience and the objectivity to do the job.
This is not a problem for government, but yet again, another opportunity for government to choose a new path — one that respects its own quasi-judicial institution and puts its duty to the taxpayers and ratepayers first. Reset? Or regurgitate? Taxpayers and ratepayers will decide.
Maurice E. Adams writes from Paradise.