Canada: Concerns about loan to reopen Jeffrey Asbestos MinePublished by MAC on 2012-08-06
Source: Montreal Gazette (2012-07-30)
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Analysis: Charest government may have miscalculated announcement to reopen Jeffrey Asbestos Mine with a $58-million loan
By Michelle Lalonde, Environment Reporter
30 July 2012
The Charest government's decision-making has come under fire after announcing they would provide a loan to help reopen Mine Jeffrey Inc. located in the town of Asbestos, Quebec, 170 kilometres east of Montreal.
QUEBEC - If the Charest government was hoping to avoid criticism by quietly announcing the relaunch of Quebec's controversial asbestos industry on the Friday before a holiday weekend, it might have miscalculated.
In the month following the June 29 announcement that Quebec would loan $58 million to help reopen and expand the Jeffrey Mine in the town of Asbestos, newspapers across Quebec and Canada have run editorials and columns condemning the decision. The wisdom of staking public money on this project has come under question, and last week an international scientific organization of epidemiologists joined the call for a global ban on asbestos.
In April 2011, the Liberal government had promised to provide a guarantee on a $58-million loan to the project's proponents - Westmount businessman Baljit Chadha and Jeffrey Mine president Bernard Coulombe - if and when they could come up with $25 million in private investments to enable the reopening of the mine.
The government is now providing a direct loan rather than a guarantee, and critics charge that's because no financial institution would loan the money, even with a government guarantee. Asked why the government decided to provide a direct loan, an aide to Economic Development Minister Sam Hamad said only that it was done to speed up the relaunch.
"The Quebec government has done this in order to accelerate the process of the relaunching the Jeffrey Mine," Economic Development Ministry spokesperson Jean-Pierre D'Auteuil wrote in an email, days after the question was posed in an interview.
Finding investors proved to be no easy task. Although, Chadha and Coulombe had earlier indicated they had an international consortium of interested investors behind them, in the end they seem to have found only one: Ulan Marketing Co. Ltd. of Thailand.
That company has put down $14 million, and the remaining $11 million in private investment has been scraped together by Chadha and Coulombe themselves, Guy Versailles, a spokesperson for the Jeffrey Mine, confirmed in an interview with The Gazette.
Chadha and Coulombe are now co-owners of a new company called Mineral Fibre Inc. which owns the Jeffrey Mine.
"Mr. Coulombe and Mr. Chadha have already put their money into an account at the mine, and Ulan of Thailand has put in $14 million. The $25 million is there. That money is there. It is in the bank account of the mine," Versailles said.
Asked about reports that Chadha and Coulombe have had to remortgage their assets to get the money together, Versailles warned against reading this as a sign of desperation.
"You have to be careful when you start talking about remortgaging and such. What we know is that businessmen like Mr. Chadha, who have all kinds of different investments, they mortgage their homes and leverage their assets left and right. It's normal."
The provincial land registry indicates that Chadha took out a new $1.7-million mortgage on his Westmount home on April 2 of this year.
Proponents of Quebec's exportation of chrysotile asbestos to developing countries say the substance is a low-cost construction material that can be used safely to fulfill a growing demand in the developing world.
The Thailand investor, Ulan Marketing, is part of a chain of companies that make roofing tiles out of asbestos-reinforced cement, and the company is predicting brisk sales next year, according to news reports from Thailand.
The trouble is, the government of Thailand seems to be seriously considering a ban on asbestos imports, following in the footsteps of more than 50 countries worldwide.
A resolution calling for a ban from Thailand's National Health Assembly was submitted to Thailand's National Health Commission, which is chaired by the Prime Minister, in February of 2011. Some reports indicate the government will be voting on a ban as early as September.
But Versailles is optimistic.
"The ban-asbestos movement exists in every country where there is a market, and there is talk in Thailand about banning it, but so far it hasn't happened. Even if they succeed and asbestos is banned in Thailand, then we will sell it elsewhere."
He stressed that the reopening of the mine, which he said will begin production by summer of 2013, will benefit the region and the province in a number of ways. The loan bears a 10 per cent interest rate. Over its expected 20-year lifetime, the mine will pay $124 million in mining duties, $176 million in corporate income taxes, and $25 million in municipal taxes. The mine will also support 425 direct jobs and 1,000 indirect jobs.
The company will also pay the province $1.5 million every year; the first $7.5 million to be used to create a fund dedicated to economic diversification of the mining region. The mine is expected to produce 250,000 tons of chrysotile asbestos over the next 20 years.
While creating jobs in one region may help the Liberal government's chances in the expected September election - at least in that region - the asbestos file continues to bruise Quebec's international reputation.
A damning position statement released last week by the Joint Policy Committee of the Societies of Epidemiology called for a global ban on mining, use, and export of all forms of asbestos.
The committee, which includes epidemiologists from around the world, completed a thorough review of epidemiologic evidence and concluded that all types of asbestos cause diseases and premature death and that continued use of asbestos in developing countries will lead to "a public health disaster of asbestos-related illness and premature death for decades to come in those countries."