|
February 18, 2010 - No. 36
Origin of the Investment Canada Act Is
Found
in Neo-Liberal Nation-Wrecking
- K.C. Adams -
• Origin of the
Investment Canada Act Is Found in Neo-Liberal Nation-Wrecking
- K.C. Adams
Plans for Cape Breton Island's Donkin Mine
• Xstrata's Nation-Wrecking Agenda -
A Researcher in Halifax
Origin of the Investment Canada Act Is Found
in
Neo-Liberal Nation-Wrecking
- K.C. Adams -
Are the destructive
actions of U.S. Steel, Vale,
Xstrata, West Fraser Timber and AbitibiBowater criminal or merely
debatable "non-compliance with regulations"?
Canadians are still waiting for the initial
ruling in the federal government's lawsuit against U.S. Steel. The U.S.
monopoly is accused of violating the contract it signed in 2007 under
the authority of the Investment Canada Act (ICA), when it
took control of the Canadian steel company Stelco.
U.S. Steel's violation of the employment and production
commitments contained in the contract is not in dispute. U.S. Steel
insists it has the right to ignore the contract because of changed
economic conditions, which it says the company cannot control. The
monopoly further contends that even though it signed
the ICA contract at the time of the Stelco takeover, it has no respect
for the law itself and considers foreign companies should have the
right to ignore it because the law violates their monopoly right.
Many Canadians would argue that the actions and thinking
of U.S. Steel prove that rules and laws governing the conduct of
foreign investors are necessary. But beyond this necessity, how is it
that a foreign company gets way with exhibiting such contempt for
existing Canadian law and the well-being of workers
and communities adversely affected by its actions and thinking? The
answer to this may be found in the origin of the current neo-liberal
laws and politics, which have now become the politics and thinking of
all the official parties in the House of Commons, Quebec National
Assembly and provincial Legislatures.
U.S. Steel, Vale, Xstrata and other foreign monopolies
are convinced they can do whatever they want once they have seized
Canadian property. Neo-liberal Canadian legislation and politics have
given monopolies a sense of confidence that nothing in Canadian law and
politics will restrict their activities no matter
how badly they may damage the well-being of Canadian workers, their
communities and the socialized economy.
All governments in Canada whether ruled by
Conservatives, Liberals or NDP constantly speak of the country being
"open for business." They praise monopolies for being the source of
prosperity and offer them every assistance in terms of public money,
legislation and low corporate taxes. The Parties in power
and opposition are one with the monopolies and dare not speak a word of
criticism. Possibly the only hint of rebellion has come from Premier
Danny Williams of Newfoundland and Labrador revoking AbitibiBowater's
water and forestry rights after the monopoly announced it was closing
the Grand Falls-Windsor
mill. But that one instance, which stands out so starkly, proves the
general rule. Canadians are not represented by any government willing
to stand up to the monopolies, whether foreign or based in Canada.
The written response of Canada's Attorney General to
U.S. Steel's legal challenge of the ICA would not shake any monopoly's
confidence that Canada's government poses no threat to a monopoly's
right to do as it pleases regardless of the social and natural
consequences. In his response, the AG reviews the
ICA and quotes from its content and various discussions held during and
since its adoption by Parliament in 1985. Readers should remember that
the Mulroney Conservative Party in power at the time brought in the ICA
to replace the Trudeau era Federal Investment Review Act
(FIRA).
(All following quotations are from the Attorney General
of Canada's Memorandum of Fact and Law December 4, 2009 in response to
U.S. Steel's Application. It is available in full here (PDF))
The ICA, while heaping praise on foreign investment,
very seriously limits the scope of its mandate to one of "national
security." The ICA has an "open for business" line to "encourage
investment" with little or no restrictions. Another limitation of the
legislation is found in the new language of "net benefit" replacing
the term "significant benefit" found in the FIRA.
The reality of foreign investment is quite different
from the rosy assertions of neo-liberalism. In developed capitalist
countries, foreign investment in this era of globalization generally
does not flow into what are called "Greenfield" projects built from
scratch but rather mostly consists of takeovers of existing assets.
Investment usually involves leveraged capital changing hands among the
financial oligarchy for control of assets that already exist. This is
what happened at Stelco, Inco, Xstrata and most of the other big
foreign "investments." Those investments have not encouraged "economic
growth and employment" or given
the country "increased capital and technology benefits." Quite the
contrary, neo-liberal foreign investment most often does the opposite.
It concentrates global ownership allowing owners of capital to close or
downsize particular enterprises that in the past may have been active
competitors and extremely viable and
productive but now may duplicate something done within their far-flung
empire or simply do not fit in and are downsized or restructured out of
existence.
The sheer size of the assets of many global monopolies
is a threat to the claims of workers on what they produce. The lockout
of U.S. Steel steelworkers at Lake Erie Works and strike at Vale Inco
are proof of the power global monopolies believe they possess to
pressure Canadian workers for concessions. The
amount of added-value that remains within the community of a particular
enterprise is determined in large measure by how far removed ownership
of capital and debt may be from that community. Just think of a small
family business and how it keeps profit within the community compared
with owners of capital
and debt that most likely live in New York, London, Tokyo or Toronto.
An example of concentration of ownership is the recent
Kraft takeover of Cadbury involving a transfer of capital among owners
centred in the U.S. and Britain. This concentration of ownership into
the Kraft Empire puts at risk plants in Toronto and Hamilton and does
not represent any benefit to the country.
But the ICA will not become involved because this takeover does not
fall into its "national security" mandate.
In addition, the ICA of 1985 adopted a very conciliatory
stance compared to the FIRA. This is reflected in the AG's response:
"The purpose of ss. 39 and 40 (of the ICA) 'is not to
penalize criminal conduct but to enforce compliance with the Act.'
As
such,
proceedings under the impugned provisions are neither criminal
nor quasi-criminal in nature. The objective of these proceedings is
'not to mete out criminal punishment
but to maintain order' in the context of foreign investment in
Canada...
This mechanism is not designed to 'punish' the offside non-Canadian
investor... There is nothing to indicate that the objective of the
orders available under s. 40 of the ICA is to redress a wrong done to
society."
Many Canadians would ask, how can justice be served
without redress. The government and its legislation contend that no
crime has been committed by U.S. Steel, Vale, Xstrata et al. Workers
and their allies have a completely different point of view. The actions
of these monopolies are criminal and morally
wrong and result in very serious negative consequences for workers,
their communities and the socialized economy. These social crimes are
no less crimes than those committed by individuals and most often have
far greater negative consequences affecting thousands of Canadians.
The AG goes to great length to placate U.S. Steel by
pointing out, "the ICA's non-criminal nature because any public
dimension to proceedings instituted under ss. 39 and 40 is in
accordance with the policy of the statute and not to redress a wrong
done to society... The ICA is clearly distinguishable from
criminal or quasi-criminal proceedings which are aimed at protecting
the public generally from harm owing to conduct which 'by its very
nature [is] morally or social reprehensible,' the domain of the
criminal, as distinct from legislation aimed at the regulation of the
economy meant to discourage conduct detrimental
to national economic interests."
From the perspective of owners of capital and their
political representatives, the suffering of workers and their
communities is not caused by criminal behaviour, "which 'by its very
nature [is] morally or social reprehensible'." No redress is necessary
because it is not criminal according to this obsolete view; it
is merely non-compliance with a regulation. The underlying assumption
is that owners of capital can do most anything they want with their
social property and the only problem that may occur is with
non-compliance with regulations, and that is non-criminal by nature.
Workers should discuss the issue of crime and punishment
in a modern society and its socialized economy around which many
contradictions are evident. Ask yourselves the simple question, what is
an economic crime. Are not the recent actions of U.S. Steel, Vale,
Xstrata, West Fraser Timber, AbitibiBowater
etc. criminal in nature and morally reprehensible? From the perspective
of workers and their allies, the wrecking of Canada's economy is
criminal and should be prosecuted as such with redress ordered and
punishment meted out commensurate with the crime. The AG's response
seems to build a protective barrier
around the socialized economy shielding the destructive actions of
owners of capital from being considered criminal.
If employees or others take money from a public
enterprise or service, money that is not connected with work, wages,
salaries or public lawful entitlements, this is considered corruption
and criminal. Yet similar taking of money not associated with work,
wages and salaries from a private corporation unconnected
with social programs, is not considered a crime. It is called taking
profit, interest or rent, and the greater the profit removed from the
enterprise, the more owners of capital applaud the action. In a
productive public enterprise, such as Hydro Quebec or BC Hydro, profit
belongs to the public and it is supposed to be
put back into the economy in a way that serves the public good such as
into social programs or extended reproduction of the public enterprise.
In private monopolies, which by their nature are really public and
socialized, profit is taken out of the enterprise by certain
individuals and most often removed from the
communities and economy directly harming the public good. This practice
of removing added-value from socialized enterprises not based on work
but on a percentage of ownership of capital or debt is not considered
criminal and morally reprehensible but rather praised in official
circles, legislation and law as good
business practice. In this era of global monopolies, the working class
needs to challenge the official ideology surrounding the functioning of
the socialized economy.
Existing governments and legislation however are not
content defining destructive egocentric economic practices as good
business practice and not crimes. They have even reduced the issue of
"non-compliance" to neo-liberal gibberish.
This is not a rule of law but the rule of powerful and
privileged men. Justice rests on whether or not "the Minister elects to
apply to the Court for an order under s. 40." The Minister did elect to
apply for an order with regard to U.S. Steel but has not with any other
monopolies that have just as much clearly harmed
the interests of Canadians such as Vale and Xstrata. This subjective
process and reasoning described by the AG takes us back to
pre-enlightenment medieval injustice and rule of the sword and great
men over the ignorant and illiterate masses. Modern workers are quite
capable of looking after themselves thank you
very much without "great egocentric men" dictating how to run their
society and the socialized economy.
In the modern socialized economy of mass industrial
production, actions by owners of capital that harm workers, communities
and the economy must be considered criminal and dealt with according to
a rule of law that recognizes the social nature of the economy in which
Canadians live and work. A monopoly
is not the equivalent of a peasant holding or family farm where the
owner's economic actions more or less affect only the farm owner's
family. Decisions taken within the main enterprises of the socialized
economy affect all of us and should not be the purview of a tiny elite
band of egocentric owners of capital.
The ways and means and institutions for exercising control over the
direction of the economy must reflect its mass socialized nature where
almost everyone within the polity is involved and affected must be
fully informed and be able to have a say-so and vote on its plans and
direction. Modern workers have the
right to say no, and economic institutions must be developed to
guarantee that right.
The 1985 ICA was a deliberate propaganda device to
signal that Canada was "open for business" and would adopt legislation
and other neo-liberal instruments such as Free Trade to annex Canada
into the U.S.-led imperialist system of states and give full rein to
monopoly right. The AG's written response in
the matter of U.S. Steel and the Minister of Industry's non-response to
the destructive actions of Vale, Xstrata and other monopolies expose
this negative neo-liberal trend in Canadian politics, which now holds
sway without any official workers' opposition inside the country's
political institutions.
These quotations give evidence to a neo-liberal takeover
in Canada and an unfolding process of nation-wrecking. The anti-social
offensive that began in the 1980s also took aim at the standard of
living of unionized workers and their post WWII social contract with
owners of capital. Legislative changes such as
the ICA reflect that attack on Canada's socialized economy and working
class.
In addition to a rise in foreign ownership of Canada's
basic sectors and concentration of ownership in the hands of fewer
owners of capital and debt, the neo-liberal takeover has also greatly
increased unregulated capital flows both coming into and leaving the
country.
On the economic front, neo-liberalism further distances
control over the direction of the economy from the Canadian people.
This lack of control must be changed if problems are to be sorted out
and nation-wrecking stopped. The Marxist-Leninist Party of Canada
encourages workers and their allies to unite to
build a Workers' Official Opposition. The key is for people to activate
themselves in one way or another as Worker Politicians. Canadians
cannot afford to believe that they will get representation which
favours
them from the cartel party system. No other force but the people
themselves organized into a political force
independent of the owners of capital is capable of wresting control
over the direction of the economy away from the monopolies.
Plans for Cape Breton Island's Donkin Mine
Xstrata's Nation-Wrecking Agenda
- A Researcher in Halifax -
Xstrata (of South Africa & Australia) has the mining
licence from the Government of Nova Scotia to develop the Donkin Mine
in eastern Cape Breton Island, Nova Scotia. Xstrata is in
partnership with a local Nova Scotia company, Erdene Resource
Development Corp., to "develop," i.e., high-grade,
the remaining coal reserve as a source of coking coal for steel
production. That is the justification to hire only 200 of the 300 it
originally promised the provincial government it would hire in order to
procure the mining licence. Before we even get to any other concessions
this voracious multinational monopoly plans
to extract out of the hides of the workers that are eventually hired at
Donkin, this reconfiguring of the project to hire one-third fewer
workers than Xstrata originally promised in order to snatch the mining
licence for itself already represents a major concession by the
provincial government.
If Xstrata's downsizing serves once again to demonstrate
why concessions cannot be solutions when dealing with such
globally-operating monopolies, the effort of the government and media
to wrap this concession in the dignified clothing of an enlightened
move in defence of the public's health is truly sickening.
The original plan reportedly was to licence Xstrata to produce coal
that was to be consumed by the thermal heating plants of Nova Scotia
Power, which monopolizes the provision of electricity in the province
and is privately held (not publicly owned). The most likely reason
Xstrata's Donkin project could not be
matched with Nova Scotia Power as an end customer, on the other hand,
comes straight from the words of a folk song from the late 1960s,
entitled "North Country Blues": "...'cause it's much cheaper down/ Some
South American town/ Where the miners work almost for nothin'." NS
Power was already purchasing
and importing many tons of "blood coal" from Colombia for use as
thermal coal. Hence, this promised hook-up of Xstrata with anything
even vaguely connected with Canadian industrial infrastructure seemed
highly doubtful even at the time Xstrata expressed "interest" to
develop Donkin. The justification being
given now of a sudden and touching concern -- be it on the part of the
NS government, the NS Power monopoly or Xstrata -- over the pollution
from the mercury, sulphur and worse that consumption of Donkin coal
could inflict on the respiratory systems of Nova Scotians is an insult
to the intelligence of working
people.
The following news article and commentary published by The
Halifax
Chronicle
Herald disclose that the future destination of
Donkin output now being arranged is, once again, not part of any kind
of nation-building program for Canadian manufacturing. On the contrary,
this news confirms that Xstrata's
mission is nation-wrecking. The Canadian-government-owned Devco coal
mining monopoly was set up in 1967-68 to prepare to close down coal
mining in Cape Breton and thus open the door to putting an end to
steelmaking at Sydney NS, where a steel mill had been in production
since the 1890s. Devco developed
the Donkin Mine in the 1980s as a possible reserve coal supply for the
Sydney Steel mill, by then a much-downsized remnant known as Sysco
which was offloaded onto the provincial government of Nova Scotia in
the 1970s after being bankrupted several times over by its British and
American owners and the
Hawker-Siddeley Corp. It was after the provincial government announced
its plan to dump its interest in Sysco, effectively closing it forever,
that Devco flooded the Donkin workings. In the end, it turns out the
key feature of the Donkin site for Xstrata has to do neither with the
energy content nor polluting potential
of its coal nor proximity of markets but rather with the Donkin site's
access to oceanside port-loading facilities for speeding delivery of
the coal to steel mills thousands and even tens of thousands of
kilometres from Canada, in Europe and-or Latin America and-or China.
Xstrata's plans for Donkin coal production in Cape
Breton, abetted by major provincial government concessions, are healthy
only for its shareholders.
Concessions Are Not Solutions!
Manufacturing Yes! Nation-Wrecking No!
Reference
King Coal Can Be Both Fickle and Harsh
- Roger Taylor, Halifax
Chronicle-Herald,
February 12, 2010 -
To some, it's a sign of hope for a hard-luck part of the
country. For others, the return of coal mining to Cape Breton is a
symbol of failure.
Governments, both federal and provincial, have spent
millions in an effort to develop a Cape Breton economy unrelated to
steel making or coal mining. Today, even though Cape Breton coal has
plenty of things going against it, mining seems to be one Island
industry that can't be killed.
Cape Breton's coal is often described as "dirty coal"
because its high sulphur content -- and a lot of other contaminants,
such as mercury -- make it an environmental hazard. And extracting the
coal from the underground seams that reach far out under the ocean is
both dangerous and expensive.
In fact, coal mining was identified as a dying business
as far back as the early 1960s, when the federal government created the
Cape Breton Development Corp., predecessor of today's Enterprise Cape
Breton Corp.
Devco, as it was known, had as its objective the
transition of the local economy away from a reliance on mining.
Underground coal mining ended about a decade ago but
Xstrata Coal Donkin Management announced Wednesday it will open the
Donkin mine. The Donkin operation is a partnership between mining giant
Xstrata PLC of London, England, and Erdene Resource Development Corp.
of Dartmouth.
Xstrata, with a 75 per cent stake in the Donkin
operation, has the most influence in determining whether the Cape
Breton mine goes into production. The company boasts that it is the
world's largest producer of thermal coal and one of the top five
producers of metallurgical coal, commonly called coking coal,
used in the steel industry.
While the initial plan called for the Donkin coal to be
sold to Nova Scotia Power Inc. for power generation, Donkin backers
came up with a Plan B after the electrical utility rejected burning the
high sulphur coal last year. Now the mine is to produce coking coal for
use by steel makers around the world.
This time, the federal government isn't investing in the
Cape Breton coal project, according to D.A. Landry, spokesman for
Enterprise Cape Breton. He told me that neither the Atlantic Canada
Opportunities Agency nor its sub-agency, Enterprise Cape Breton, has
any money involved in the Donkin project.
"Our mandate ... specifically precludes us from being
involved in coal mining. That's because our legislation dates back to
the 1960s, when the plan was to get out of coal mining on Cape Breton
Island. So our legislation specifically says we are not to get involved
in coal mining."
Funny thing, Devco was operating coal mines in Cape
Breton up until a little more than a decade ago.
In fact, the Donkin mine tunnels were dug in the 1980s
by Devco at a cost of $100 million. The mine, however, was never put
into production. The mine shafts were flooded and the project abandoned.
In 2005, the Nova Scotia government gave Xstrata Coal
Donkin Management permission to pump the water out of the tunnels to
evaluate if it was feasible to put the mine into production.
Now, the company says it expects to spend about $300
million over three years mining the coal, which will be shipped on
barges. Xstrata representatives reportedly said the mine has enough
coal to last for 25 years and could employ up to 1,000 people.
OK, coal is back, but Cape Breton residents know better
than anyone that mining is a boom and bust business. It is imperative,
therefore, Cape Bretoners continue efforts to diversify their economy
to prepare for the next time coal isn't king.
Stake in
Donkin to Cost $80m: Dartmouth Firm Isn't
Worried about Raising Capital over Three Years
- Chris Lambie, Halifax
Chronicle-Herald,
February 12, 2010 -
A Dartmouth-based junior mining company must raise $80
million over the next three years as its stake in the $350-million plan
to extract coking coal from Cape Breton's Donkin Mine.
Erdene Resource Development Corp. is partnered with a
subsidiary of Australian mining giant Xstrata on the project that's
anticipated to employ about 200 people and produce 2.75-million tonnes
a year of washed export-grade coking coal for up to three decades.
Xstrata holds 75 per cent of Donkin and Erdene controls
the remainder.
"We actually have an arrangement with Xstrata where
they're required to pay the first $10 million of development on our
behalf," Peter Akerley, Erdene's president, said Thursday.
"But other than that, we would be responsible for the
remaining 25 per cent."
Akerley said he's not losing any sleep over the daunting
task of raising $80 million.
"This will be a staged spend on the capital and we
wouldn't expect more than $40 million over the next 12 to 18 months, so
if Xstrata's paying the first $10 million on our behalf, we wouldn't
have any out of pocket expenditures during that period," he said.
"So following that, we would be seeking either debtor
equity to support the capital, and we've already had discussions over
the last couple of years and certainly more recently with institutions
that would be interested in assisting us in funding that. So we don't
have a concern. We have the ability and the interest
to put that money together."
If the company has to start putting money into the
project a year from now, Erdene would have another 12 to 24 months to
raise the $80 million, he said. Right now, Erdene has about $13.3
million in working capital.
"But if you have a project that is as robust as we
believe this one is, you can locate the financing," Akerley said.
Proponents revised the project from a thermal coal
operation after Nova Scotia Power Inc. announced in late 2009 that it
would not purchase raw coal produced during the Donkin exploration
phase. The utility has said the unwashed coal contains too much mercury
and sulphur to be usable under existing environmental
regulations.
The coking coal project is far from a done deal, as
proponents still need to conduct more feasibility studies and win
environmental approvals from both the provincial and federal
governments.
"Those hoops have to be passed through before we get to
the point where we have a final production decision," Akerley said.
"Having said that, we have three years under our belt
working with the province and the federal government. ... So we have
a very high level of comfort and confidence with moving forward. But
there are still those milestones that have to be passed."
The original plan to mine thermal coal would have
employed as many as 300 people, said Val Istomin, Xstrata Coal's
manager on the Donkin project.
Supplying coking coal to steel works around the world
will mean about 100 fewer jobs at Donkin.
"If the mine reaches its full potential, we'll finish up
with four continuous mining units," Istomin said. "We'll have about 200
people employed."
Typically, for every mining job, four other people are
employed providing miners with goods and services and repairing mine
machinery, he said.
The first continuous mining machine should be on-site by
2011, Istomin said.
"It's effectively a tunnelling machine. Imagine a
bulldozer, but instead of a bulldozer blade it has a large rotating
disc on the front of it, which cuts the coal."
Donkin will need lots of upgrades and a coal washing
plant that could cost between $50 million and $60 million, Istomin said.
Xstrata hasn't finalized any deals for coking coal from
Donkin, but it has a large marketing division that's talking to
potential customers, he said.
Donkin is located on a headland on the eastern point of
Cape Breton.
"Instead of using trains, we're actually going to use
barge loading directly from the mine on to barges and then
trans-shipping it offshore on to ocean-going vessels," Istomin said.
The ships will use large cranes to grab tens of tonnes
of coal and load it on the larger vessels.
Proponents looked at the idea of building a pier that
would allow ocean-going vessels to dock near the mine, but the water is
shallow and the work would have been extremely expensive, he said.
"But with barging, it's far more economical and it's a
well proven system of transporting coal," Istomin said.
Heavy weather could cause problems with this plan.
"There's a potential impact of the pack ice for
sometimes up to six weeks a year," he said. "There are obviously storm
effects where the ocean gets so rough that you simply can't transport
coal. So it means we can't have a full 365-day-a-year transport
operation."
But there will be room to store coal on-site, Istomin
said.
"We'd never stop the mine," he said. "We'll design the
surface coal-handling facility to be able to stockpile six to eight
weeks of production anytime."
Potential markets for Donkin coal include Europe, South
America, India and China, Istomin said.
Full production at Donkin, expected by 2015, could
coincide nicely with the widening of the Panama Canal. That project is
slated to be finished in 2014, and will shorten the route Donkin coal
would take to the Asian market, he said.
"We are one of the most successful mining companies in
the world. We certainly wouldn't be entering into any project unless we
thought it was viable and our shareholders could get a profit out of
it," he said.
Ian Flint, a mining engineering expert at Dalhousie
University, said coking coal is used as a carbon source in steel
production.
"It's worth a lot more" than thermal coal, "like three
or four times," Flint said.
He wasn't surprised to learn Donkin proponents have
decided to produce coking coal.
"It's the way to make money," Flint said.
Coking coal has to be washed to remove impurities, he
said.
"It's typically a washing process where they break up
the coal to a certain size."
Read The Marxist-Leninist
Daily
Website: www.cpcml.ca
Email: editor@cpcml.ca
|
