COVER

THE WESTRAY FILE

CARL MOLLINS April 19 1993
COVER

THE WESTRAY FILE

CARL MOLLINS April 19 1993

THE WESTRAY FILE

COVER

CARL MOLLINS

When it opened 19 months ago, the Westray coal mining project was a win-win-win proposition—guaranteed funding, a guaranteed market at good prices and guaranteed jobs in the hard-times community of Pictou County, N.S., where the mine is located.

The project promised low-risk profits for swashbuckling mining magnate Clifford Frame’s Curragh Inc., Westray’s Toronto-based owner, whose six-year-old business was built on Yukon and B.C. zinc and lead deposits which, like Westray coal, major resource companies had refused to touch. It promised political dividends for Westray’s patrons in Ottawa and Halifax, most prominently Prime Minister Brian Mulroney, who was first elected to Parliament by the people of Pictou in 1983, and Premier Donald Cameron, who represents Pictou East. It promised 15 or 20 years of work at good wages for 200 local employees and spinoff gains across Canada.

All of that optimism brightened the celebrations of Westray’s opening in the Pictou village of Plymouth on Sept. 11, 1991. Eight months later, on May 9, 1992, the certainties and the promises shattered in a pre-dawn explosion that wiped out the overnight shift of 26 men and wrecked the mile-deep mine.

Amid the recriminations that followed the explosion, and while Curragh and its dwindling band of allies campaign to revive the Pictou project and the shut-down Yukon mines, Westray remains a textbook case of an enterprise that overwhelms arguments of economic logic, the prevailing political ideology and even common sense. Propelled by a convergence of commercial push, political ambition and social need,

such ventures acquire a momentum that defies all doubts.

It is a process that impels governments to pour taxpayers’ money into private enterprises even when the same administrations crusade to reduce government and to stimulate free-wheeling competition. In recent years, the Mulroney government has donated between $2.5 billion and $3 billion annually to private business in direct grants and contributions alone. In the Westray project, according to a study in the 1992 Report of the Auditor General to the House of Commons, federal and provincial loan guarantees, tax credits and other concessions would provide a generous $103 for every $100 in pre-production costs. To the sum of about $100 million in public money sunk into Westray, there is now an additional commitment of more than $15 million to families of the dead miners and millions more in the costs of an RCMP criminal investigation and a deferred provincial judicial inquiry.

Such public funding of private enterprise is far from unique in Canada. Nor is it new. More than 400 years ago, the British Crown subsidized the first substantial mining venture on Canadian soil—a misguided gold rush to the islands of Frobisher Bay and on the Baffin Island shore. Explorer Martin Frobisher, financed in part by 1,000 pounds from Queen Elizabeth I, led more than 400 men in 15 ships on a fruitless mining venture that he abandoned in 1578 after a supply ship sank with prefabricated buildings meant to house the miners.

Four centuries later, Mulroney defends the Crown’s support for the Westray project, including an $85-million loan guarantee, as being “in the interests of economic development.” He has compared it to government commitments to Hibernia,

An enterprise that defies arguments of economic logic, prevailing ideology and even common sense

the Newfoundland offshore oil project, and to financing for Curragh’s Yukon lead-zinc mines in the 1980s—commitments of almost $3 billion in cash and loan insurance to Hibernia, and about $20 million in a similar mixture of aid to the Yukon venture.

What makes the Westray case especially volatile is not only the deaths of the miners. It also involves evidence that some federal advisers had balked at financing the project. It raises an ideological question that, if public money bears the bulk of the risk, then the public should share in the profits. And it features partisan conflict between Conservatives and Liberals in both Ottawa and Halifax, and between two depressed regions of Nova Scotia.

The debate centres on the wisdom of creating the publicly financed but privately owned Westray to compete with nearby Cape Breton coal mines. Those mines are owned by the Cape Breton Development Corp. (DEVCO), a Crown company created by the federal Liberals in 1967. The Liberals argue that Cameron’s Tory government robbed DEVCO of a potential market and jobs by guaranteeing Westray a next-door market in a new Trenton power station, opened in 1991 by Crown-owned Nova Scotia Power Corp. The critics are also incensed that the provincial government made a deal to pay Westray up to $14 million a year for more coal, whether mined or not, and granted conditional rights to exploit Crown-owned surface coal nearby. A counterargument held that low-sulphur Westray coal would save the power company the cost of installing antipollution devices. (Now, the new Trenton station operates with coal from DEVCO and from an open-pit Pictou mine at Westville.)

The critics emphasize the historic hazards of methane gas and unstable geology in the Pictou coalfields, where 246 miners died in underground explosions between 1838 and 1952, when Pictou mining began to peter out. They cite a series of cave-ins during Westray’s construction. They point to repeated warnings and safety orders from provincial inspectors up to 10 days before the fatal explosion. Implicit is that all stakeholders in such projects—owners, political patrons and employees—are under pressure to succeed, and to meet deadlines. Federal NDP leader Audrey McLaughlin, for one, has referred in the House of Commons to “serious safety concerns” cited in a federal study before Westray opened and concluded that “there was inadequate time given to deal with the serious concerns that were raised.”

But for Clifford Frame, whose projects teeter towards total collapse, the concern is to get back to the basics of economic development, and the public benefits that flow from it. Few who have followed his career in Canada and overseas entirely count out his chances of reviving both Westray and the Yukon mines, with government support. The Northern Miner weekly newspaper, which named Frame its “Mining Man of the Year” twice, has described him as “a master of exploiting politically driven situations.” His most potent leverage I for recovery rests, as in the past, on the coalition I of interests with heavy investments at stake in the 5 commercial, political and social success of his and similar ventures.

8 CARL MOLLINS