UPDATE: Who do you Believe

Back near the start of February I wrote a posting about an apparent conflict between statements made by Natural Resources Minister Kathy Dunderdale and Premier Danny Williams regarding the development of a smelter in Labrador (to take advantage of Lower Churchill power). See post.

That posting contained a copy of a letter I sent to Premier Williams just after the new year asking him to reconcile both positions. Clearly my email to the Premier was bounced back to Minister Dunderdale for response. Just this past week I received a letter from the Minister (copied to the Premier) addressing the issue. It doesn't provide much information but it does attempt to reconcile the two positions. I guess you need to be careful what you ask for.

Here are the contents of the two letters:

My letter to the Premier

January 2, 2008
To: Premier Williams
From: Myles Higgins

I am writing to ask your office for clarification of the statements you have recently made to various forms of media which appear to be in direct conflict with those made previously by your cabinet representative, Ms. Kathy Dunderale.

Recently you have made it very clear that one of the mega-projects you hope to see come to fruition is the development of a smelter in Labrador that would make use of Lower Churchill power and create much needed jobs in the area. I congratulate you for investigating this approach to utilization of the Lower Churchill as I have long been a proponent of using that power to attract industry to the region rather than for export alone.

My concern lies in the fact that when I approached Minister Dunderdale in November of 2006 on behalf of the Newfoundland and Labrador Defense League (NLDL.org) to ask her why your government did not appear to be very proactive in pursuing a smelter for the region she responded to me that a study, conducted by ALCOA, had shown that, “…it was not a viable option and in fact required almost $1 billion of Government financial assistance.” (Please see attached letter “Dunderdale_Nov_2006.doc)

When questioned about the details of these costs Ms. Dunderdale said she could not go into the details of the study but reiterated that a smelter in Labrador , using Lower Churchill power, would cost ALCOA $1 billion more than other alternatives. (Please see attached letter “Higgins.pdf which was sent to me by Judy Beckwith on behalf of Minister Dunderdale in March of 2007)

My concern does not lay with the government’s intention to attract industrial development to Labrador , in fact I applaud the move. My concern lies instead with the apparent conflict in message between your office and that of your Minister.

I am also concerned over which message is the correct one and as I expressed to Ms. Dunderdale at the time, my concern is also what the province might be lacking that would require an expenditure of $1 billion dollars in order to make Lower Churchill spin off development competitive with other options available to large organizations like ALCOA.

Your latest comments on the development of a smelter in the region have once again raised my concerns and additionally, I wonder why this massive expenditure no longer appears to be a factor. Has the cost simply disappeared for some reason, are we to expect that if a smelter is developed it will cost the provincial government a massive expenditure to make it happen, or is there really a drive underway to build a smelter at all or is this simply political posturing of some kind? I sincerely hope the latter is not the case.

Sincerely,
Myles Higgins

Kathy Dunderdale's Response:

Dear Mr. Higgins:

I am replying on behalf of the Premier to your letter of January 2, 2008, in which you expressed concern about what you interpreted as conflicting statements regarding the possibility of establishing an aluminum smelting facility in the Province. When I wrote to you in November 2006, I conveyed to you the general outcome of studies done by ALCOA, and referenced the additional cost of almost $1 billion that the company had estimated. That work was done by ALCOA in 2001-2002.

More recent preliminary discussions with other potentially interested parties are placing the issue in a different perspective. The global picture for the aluminum industry has changed considerably in the time since ALCOA did its study, in terms of new capacity, price, and other fators. Aluminum companies, as well as other energy intensive industries, have shown interest during our preliminary discussions with them.

I hope this addresses your concerns, and I trust you will understand that I cannot go into details about current discussions. Please be assured that this government will take every possible measure to ensure that we obtain the absolute best overall balance of benefits for the Province from teh Lower Churchill development, as well as from all other major natural resource developments in the Province.

Yours Sincerely,

Kathy Dunderdale, MHA
Minister

c. Premier Danny Williams

Well folks, that's it in a nutshell. I'm not sure that I'm any more informed than when all this began over a year ago.

In her letter Ms. Dunderdale said she was responding to what I had "...interpreted as conflicting statements", I beg to differ. I still believe they were (and still are) conflicting statements but at least her response has clearly shown me two things:

1) When a government doesn't want to do something they have no problem digging up studies and numbers to back up why they shouldn't do it. Even going so far as to accept as gospel the word of a major corporation when it says it needs a billion dollar handout to make a project worthwhile.

2) When the tide of public opinion changes and that same government determines that voters do not support their position, they can just as easily dismiss those studies as outdated or only representing a single point of view and of not having any real importance.

Isn't it odd that as late as March of 2007, less than a year ago, the ALCOA study was used by Ms. Dunderdale as a means of making it clear to myself and others that a smelter was not a likely scenario in Labrador. At that time the study was apparently very pertinent and so secret that even after being asked on several occassions to elaborate the Minister refused to divulge what those costs included.

Now, less than a year later the study quoted has no bearing, new factors and studies have taken precedence, yet the Minister claims she cannot divulge anything about this new information either (and still hasn't provided anything about the old).

We now have two sets of facts that can't be made public, even though one is apparently outdated and useless.

I guess when it comes to politics the more things change the more they stay the same.