Privatizing profits, publicizing costs?
A catfight is developing over who will get rich from the purchase of the Prince Rupert Ridley coal terminal. In one corner is Ontario-based Fortune Minerals, in the other five major corporations from the western Canada coal cartel.
Upstart Fortune Minerals made the news recently for shooting itself in the foot by arresting 13 Tahltan (including 9 elders) trying to defend the Sacred Headwaters of the Stikine, and Skeena from the company’s open pit coal mine.
Now Fortune has picked a fight with the politically connected heavy weights of western Canada’s coal cartel. I hope their strategy for Ridley is better than their bumbling approach to the tahltan issues.
Fortune Minerals entered the Ridley contest with a reported multi-million dollar bid just weeks after pleading poverty to the BC courts in order to get an injunction against the blockading Tahltan. In affidavits filed in support of their injunction against Tahltan elders and youth, Fortune swore that their financing might disappear if they weren’t able to arrest the Tahltan and begin drilling operations.
Julian Kemp, Vice President Finance and CFO of Fortune Minerals stated in his affidavit that, “if the blockade continues and a one-year delay in the permitting process occurs, Fortune Minerals’ share price may decline … Any impediment to Fortune Minerals’ ability to raise money could impact the [Mount Klappan mine in the Sacred Headwaters]
So is Fortune Minerals rich enough to buy a major coal terminal or too poor to wait a few days to allow the Tahltan’s lawyer to defend their interests in court? Who knows amidst the spin.
What is clear is Fortune is talking out of both sides of their mouths-but then that seems to be the norm for Canadian resource corporations.
For those of us tired of the free-market rhetoric of the Ottawa and Victoria Liberals and big resource companies, the saga of the Ridley Terminals sell off is theatre of the absurd.
The western coal cartel is made up of Teck Cominco, Northern Energy and Mines, and Western Canadian Coal (all based in Vancouver), Sumitomo Canada (a subsidiary of a giant Japanese firm), and Grand Cache Coal (these last two based in Calgary).(these last two based in Calgary).
The cartel is whining to government to interfere on their behalf against unknown Fortune Minerals.
Big guys whining about little guys! What about competition and laisez faire capitalism? And where is the free market rhetoric now that the chips are down?
The corporations in the western coal cartel have collectively donated $772,091 to Campbell’s Liberals, with Teck Cominco being the number one donor over the last 8 years. No doubt they made these donations – investing a tax-deductible fortune, so to speak – to put friendly governments in Ottawa and Victoria that march in time to their cadence.
Yet these western coal heavy weights are apparently being upstaged by Fortune Minerals who made no such donations.
Its no wonder a cat fight has begun-there is big money in coal. With coal prices rising, and new coal mines being proposed throughout BC (but especially in the north), Ridley is no longer a penny-ante operation eking out a tough living.
BC’s other coal port, Westshore Terminals at Roberts Bank, had revenues last year of some $127 million dollars. Net earnings were $48 million. In the first six months of 2005, revenues of the Westshore Terminals Income Trust jumped to $76 million and net earnings of $27 million.
Westshore Terminals is owned by BC’s own King Midas, Jim Pattison. Over 90% of Westshore’s business is derived from a comfortable relationship with the “Coal Partnership” – essentially Teck Cominco, Fording (with substantial Teck Cominco ownership) and Elk Valley Coal Corporation (which is largely a Teck Cominco and Fording entity).
Ridley was built with $250 million of taxpayers’ money in the early 1980s, but the federal government is rumoured to be willing to accept a fraction of that now. Given the potential big profits, it is no wonder Teck Cominco et al want a piece of the Ridley Terminal action.
Lost in the public discussion however is why the federal government was okay with operating the Ridley Terminal for years when it was losing money, but feels it necessary to privatize the thing just when it looks like it is poised to make substantial profits.
That’s what we call good business in Canada-privatize the profits, publicize the costs. Perhaps we should re-examine this proposed sale and the federal and BC Liberal’s privatization policy.