May 12, 1998                                                            RESOURCE ESTIMATES COMMITTEE


The Committee met at 9:00 a.m. in the House of Assembly.

CHAIR (Canning): Welcome to the Resource Committee hearing for the Estimates for the Department of Mines and Energy.

Before we get into the business at hand today I would ask for - I think everybody has a copy of the minutes from the last meeting. I notice that Anna Thistle's name was left off the list of those who attended. We have a motion to accept the minutes with the amendment to add Ms Thistle's name.

On motion, minutes, as amended, adopted as circulated.

CHAIR: Good morning, Minister. Perhaps you might want to have a few comments before we get into the review of your Estimates.

MR. FUREY: Perhaps, just for my staff's sake, we could introduce all of the members for some of the staff over here and then I will ask the staff to introduce themselves. Percy, why don't you just start, introduce yourself and your district, and come along, for the benefit of the people who are brought here this morning?

MR. BARRETT: Percy Barrett, MHA for Bellevue.

MR. FITZGERALD: Roger Fitzgerald, MHA for Bonavista South.

MR. SHELLEY: Paul Shelley, MHA for Baie Verte.

MS THISTLE: Anna Thistle, MHA for Grand Falls - Buchans.

MR. WOODFORD: Rick Woodford, MHA for Humber Valley.

MR. T. OSBORNE: Tom Osborne, MHA for St. John's South.

MR. FUREY: Good. If I could, Mr. Chairman, I will ask each of the people seated here with me to introduce themselves and to just briefly describe their position.

MR. MORRISSEY: My name is Ferd Morrissey; I am the Director of Mineral Development.

MR. BLACKWOOD: Frank Blackwood, Director of Geological Survey.

MR. HAWKINS: Dave Hawkins, Director of Petroleum Resource Development.

MR. LESTER: Charlie Lester, Director of Policy, Planning and Co-ordination.

MS LAING: Tara Laing, Director of Communications.

MR. FUREY: Thank you.

I just have a brief statement. I do not usually do statements but I wanted to highlight some of the things that are happening in this department, if I could, briefly.

This department represents basically a $9 million budget which, if you put it in the context of the global budget of the Province, represents three-tenths of 1 per cent of the entire budget. The expectations from this department are probably around 80 per cent, but the means to deliver on those expectations are quite small. There is three-tenths of 1 per cent of the $3.3 billion that we spend in this Province, which is about $9 million dollars for the department.

As you know, we are responsible for the management of the Province's mineral and energy resources. The mandate, we believe, is a timely mandate: the development of projects that we see that are coming forward. We are attempting to achieve the highest level of employment for the people of the Province, and to develop the greatest range of opportunities for businessmen and women from all parts of the Province.

The department's mission is to create an integrated mining and energy industry to maximize revenues and to maximize benefits, basically. The long-term goal for the Department of Mines and Energy is to develop a comprehensive public policy framework which will govern mining, petroleum, and electricity for the Province well into the millennium. This will include a series of policies which respects the development and management of all mineral resources, offshore and onshore petroleum resources, hydro resources, and alternate energy resources. The policies that we will create will be reflected in the relevant governing legislation, through the acts that we are responsible for here in the House of Assembly.

What is the current situation? The current situation with respect to the total value of the mining sector, the mineral production, is that it will exceed $1 billion in exported value this year, a 1 per cent increase over last year. We have crossed the $1 billion mark, I think, Frank, for the second year in a row. I think this is mainly due - we have to be up front and honest about it - it is mainly driven off the iron ore exports out of Labrador City, that the Chairman would be very familiar with.

Employment in the mining sector remains fairly stable. The direct jobs account for about 3,400 direct jobs. Then there are spin-offs, of course, and depending upon which economist you talk to it is anywhere from two to three to four to one.

The energy sector, as represented by your barrels there this morning, reached a major milestone in 1997 when Newfoundland and Labrador join the petroleum states and countries and other provinces of the world as an oil producer. It was quite a feat which happened on November 17, 1997, roughly a month ahead of schedule.

Hibernia oil production is expected this current fiscal year to average about 60,000 barrels per day. By early next year it will ramp up to 100,000 barrels a day, and that may even occur later this year. As you know, over the life of it, the peak up output will be roughly 180,000 barrels a day and that field, the Hibernia field itself, the original economics were driven off 650 million barrels. The companies themselves now have increased that by 100 million. Our own department believes there is a billion recoverable barrels of oil in the (inaudible) basin, in the area known as Hibernia.

The announcement this past February that Terra Nova Consortium was proceeding with Terra Nova, a development, we think is another critical step in the development of a sustainable petroleum industry in the Province; because we have moved from just being a project, and being seen by the outside world as project, to a series of projects which now can be created and called with substance in industry. In fact, in our visit to Houston just last week, and meeting after meeting with CEO after CEO, everybody talked about Newfoundland very glowingly, but also as the new North Sea. That is quite a compliment to be paid to us because, as you know, the North Sea was developed some twenty-five or thirty years ago. It just started with one small well and rippled out to a second one and a third one; then it became a burgeoning, booming industry that just changed the entire economy and social fabric of Norway, on the northern side of Norway in particular.

People talking about Newfoundland as the new North Sea is quite encouraging. They are looking at this place as a good place to invest, and there is a whole series of reasons for that: There is a positive climate; there is a positive attitude; it is a friendly place to do business; the generic royalty regime gives certainty to industry, so it reduces risk; industry, business and capital (inaudible) and will move where there is certainty.

You are starting to see some funny things, for example, happen in South East Asia now. People who put lots of investment in Indonesia, as an example, are starting to get that money out of there because of the turmoil and uncertainty and the disruption that is happening there on a daily basis. Well, they like Newfoundland and Labrador. It is certain; the rules are fair; the royalty regimes are in place. They like certainty and clarity, and that is what they have and that is what they enjoy, and that is why they are coming here to invest. I will speak a little bit later about some of the parcels of land that are out there for bids this year and the excitement that is swirling around that right now.

I think we are moving in the right direction on the mining side and on the oil and gas side, and I think these sectors represent a important part of the GDP growth that we are seeing forecasted again today in The Globe and Mail by the Bank of Montreal. They are saying Newfoundland and Labrador and Ontario will lead the economies. I think they are projecting 4.4 per cent of GDP real growth happening this year, and another 4.2 per cent next year in Newfoundland and Labrador, and 2.9 per cent in Ontario. All of these projects as they roll out, as this capital has invested, will augur well, I think, for an expansion in the economy, and for growth and for job opportunities.

I am optimistic about the future in these developments. There are a number of hurdles with respect to Voisey's Bay which are still troubling for me. I think we are starting to see a positive path opening up. I think the companies are starting to see and take quite seriously the government's deep resolve to maximize benefits and to adhere closely to the legislation; in particular the Mineral Act amendments of 1995, section 4 I think, which allows for maximum development of the resource and value-adding through processing. They are taking that quite seriously.

The discussions have gone very well. The president has now entered those discussions with our chief negotiator, and we are talking quite seriously about how to get this done in a way that is fair, not only to the shareholders of Inco, but fair, reasonable and decent to the shareholders of Newfoundland and Labrador who own that resource, and who are giving Inco the privilege to develop it.

As I reported to you last year, by 2000 then we expect that both Hibernia and Terra Nova, and Voisey's Bay and a number of other projects, will be ratcheting up and moving forward through the construction phrases. Not Hibernia, but Terra Nova and Voisey's Bay will be moving through the construction phases.

We are proposing also in this department some major changes with respect to how we do things in the mining and offshore oil and gas sectors. We will be implementing a new mining tax. Basically the work is pretty well done on the mining tax. I have not made the mining tax public for one very simple reason. We are still in negotiations with Inco, and I am not prepared to put our cards on the table and show them our cards until I see all of their cards. It is just as simple as that. It is no more difficult to understand than that.

I could put it on the table, I could fix it in law, and we could have no room to be flexible in the aftermath, but I want to see all of Inco's cards, everything that they are putting on the table, and then I will put our tax policy on the table. It is not much different, I can tell members of the House, than the Bill 43 that was tabled. There are some slight variations but there is no change basically in the amount of capital that would be collected in revenue sources for the Province. There are some changes that are favourable to the company, that recognize the peaks and valleys and the vagaries of the London Metal Exchange which controls the price of these commodities. In essence, at the end of the day, the collection is not altered very much.

That is as much as I will say about the tax right now until we move further down the path on our set of strategic negotiations with Inco, but I am quite prepared to table it at the appropriate time. All the work has been done. We have reached out to some terrific economists, both in the U.S. and in Canada, and some academic people in central Ontario who are very familiar with taxation in the mining industry. We have put their brains around our thinking. All of them have come to the consensus that what we are putting forward is both fair and reasonable to the company and to the Province. I am not too concerned about that, but I wanted to just give you a heads-up that that taxation stuff is pretty well done and I am ready to bring it forward in legislation through the Department of Finance fairly quickly, depending upon the pace of the negotiations with Inco.

There is a new mining act which will govern all phases of mineral development. Essentially that is bringing together all of the pieces of how we conduct and deal with mining generally in the Province under one comprehensive act now, rather than have loose ends everywhere. We are pulling it together in a streamlined, very clear and narrow act.

We are going to amend the Quarry Materials Act. That is to deal with offenders. The fines are so small now that as people abuse quarries - and sometimes, I am told, people actually put the fine in their bids. So that they actually win a bid, and then they go out and take the quarry materials. They have the $1,000 built into the bid so that when they get caught and the courts nail them, it is already factored into the economics of their bid. We are going to toughen that up. It is going to be up to $10,000 for a first-time - who helped me write this? Ten thousand dollars per fine now, is it, Mr. Andrews?

MR. ANDREWS: (Inaudible).

MR. FUREY: We are going to go after the repeat offenders too, as I understand it.

WITNESS: (Inaudible).

MR. FUREY: Right. There are amendments to the Mineral Act to deal with the staking rush to stop the line-ups down at my building every year, and to give fairness to people who live in rural and isolated areas. That will be done on a lottery basis - I love that word, lottery - rather than on a line-up basis.

I do not know if you see it every year, but you probably see people lining up in the cold twenty-four hours a day down outside my building. They are lining up to be first in line for when these pieces become available to get in on it. What we are going to do is stop those line-ups. People who want a particular piece of property and want a permit can apply for it. If there is more than one there will be a lottery, a public draw for that piece of property. We think that is fair. Because the people who live, say, in Baie Verte or Northern Labrador or wherever can not come in here and spend all that money and time and effort to get in. It is just not fair. The person who lives across from my building has an advantage, is the point, so we are going to change that.

There is a development of a geo-science policy through an MOU with the Government of Canada which Frank Blackwood has led the way on. Frank Blackwood here, by the way, has led the way with the Government of Canada on a lot of this work. I saw it at the last mining show, which is the largest, as you know, in the world, the prospectors and developers conference in Toronto. Absolutely fascinating, first-rate. The work that he is doing, which I will ask him to talk about a little later, is really leading edge stuff, and we are leading the way in the country. Say yes, Mr. Blackwood.

MR. BLACKWOOD: Thank you.

MR. FUREY: We are going to come up with a development of a comprehensive mineral policy for the Province as well.

With respect to the energy sector, negotiations for the agreements on the Lower Churchill are proceeding. We want to maximize the return and benefits to the Province. I will be announcing today in the House - and I will give you a copy of this later, Mr. Shelley - the first of three contracts for the Lower Churchill. We have to start the environmental scoping work right away. These will be given to three companies that have headquarters in Newfoundland. I will be calling for three engineering studies to be completed. Calls have gone out. We will be awarding those probably in the next couple of weeks as well. There will be about six contracts let for the Lower Churchill in the next couple of weeks. I will announce three today.

Then in the fall we are going to have the definition of what the project looks like in terms of final costs and stuff, and then we move into high gear. I will talk a little bit about that later, if you want, as well.

The generic royalty regime I touched on. We are finalizing the fiscal agreements with the Terra Nova partners. You know that Bull Arm will be reactivated. There is a $100 million contract going out there. I just had some great meetings with J.L. Holloway, the man who I brought to the Province two years ago, when I was Minister of Industry, Trade and Technology to have a look at Marystown, and who subsequently bought it for a dollar. It was the best dollar we ever spent. We saved ourselves $5 million every year. You recall there was an annual loss at the yard of $5 million per year on average for the last thirty years.

We stopped the bleeding, passed it to the private sector. He has taken it from 300 employees up to 1,000. He is hiring another 200 in the next two weeks. He has got an order book that he is coming to the Province to announce in August. He will be announcing 300,000 man hours in the next two or three weeks, and in August another 400,000. Then he has the patent on these specialized legs for semi-submersibles that he wants to bring into Marystown and make it a specialist area for it. He is going to take the workforce up to 1,200.

The unions as you know, have signed on to a profit sharing agreement for five years. Burin Peninsula, they tell me, is just hopping. Mr. Barrett, you have been down there recently. It is bopping and hopping, people are happy, good attitude, morale is up. It is fabulous. One of the best things we ever did as a government was privatize. Take that yard out of the public sector and privatize it. I know my good friend for St. John's South, my member, would agree with me that it is the best thing to do, to take business out of government. Government has no business in business. We should be out of it.

I understand the Dockyard is doing very well. I had a meeting when I was in Houston with one of the people down there who tells me that it is up to 300 people now. That is great.

WITNESS: (Inaudible).

MR. FUREY: Yes, and we have to do that. By the way, I should talk to you about another person I met down there. We should talk after, actually, because there is another great project, but they are getting screwed around by Marine Atlantic down there on land. You remind me to talk to you about it in private sometime later today. Maybe we can work on that together.

The other area is the promotion of exploration and development. I mentioned earlier that the C-NOPB - which is a creature that is owned equally by the Government of Canada and the Government of Newfoundland - just went out for its largest call ever. Thirteen parcels of land. I think it represents 800,000 hectares, which is the largest piece of land bids we have ever gone out for, and we expect those bids will be closed by September. There is already expressions of interest coming from all around the world, from companies we did not expect to show up on our doorstep. They are showing up, they are sniffing, they are having a look, and we expect those will go for probably record sums again this year. You know last year the four parcels went for $99 million. That is quite a chunk of change. We expect a lot of excitement out there as well. It is all driven off the generic royalty regime and certainty. That is what business likes.

I can talk a little bit about the disputed area on the Newfoundland-Nova Scotia boundary later if you would like. That is a very interesting and vexing problem for us. The problem really stems from Nova Scotia arbitrarily drawing a line when they created the so-called C-NSOPB, Canada-Nova Scotia Offshore Petroleum Board. They arbitrarily drew a line down through the St. Pierre Bank right out to the 200-mile limit. The line makes no sense in law. It is completely idiotic when you look at maritime law, but they have set it in their legislation, which I guess is mirrored, isn't it, David? Their legislation, C-NSOPB, would have to go through the parliament of Nova Scotia, much like ours here.

They have a law over there that has created a line which we believe is illegal. I will tell you a little bit about why it is so important after. It is quite fascinating. I had some meetings when I was in Houston with the senior executives of Gulf who came down from Denver to meet with the Premier and I. If you just remind me after I will come back to it and tell you why it is so important, especially if there is no press here.

We are going to move forward then with an electricity energy policy as well. It is stated in the EPCA, of course, which is in legislation, we are mandated to provide the cheapest form of electricity we can to the consumer, both business and domestic. I will talk a little bit about that as well, particularly as it relates to what is available left on the Island for river or hydro power. Mr. Langdon and I have been looking at this issue for some time and there are not many rivers left that really can be harnessed for power. There are about four or five in the hopper now. We are going to look at a policy that protects the rivers into the future. Those that are in now will probably be grandfathered, and if they make it through the environmental assessment and through the regulatory bodies, then they may get developed.

Somebody raised Northwest River the other day as an example, the one skirting through the Park. That has major hoops to get through. Does it skirt the Park or go through the Park? Through the Park. That is going to be a tough one, to go through a national park and set up a hydro-electricity project for the amount of power. I am not going to pre-judge it, nor should we, because of the investment these people have put in, which is real money and it is private sector, but if those that are in hopper - and there are about four or five of them - make sense they will probably go through.

We are looking at a policy to protect the rest of the rivers, simply because there is only about 150 megawatts of clean hydro power left in the Province. When you take out Granite Canal, which is forty-five megawatts, and you take out Upper Island Pond, which is about thirty megawatts, which are both owned by Newfoundland Hydro, that is seventy-five megawatts - and set it aside -, those are fair sized projects. There is really only seventy-five megawatts of realistic, able to be harnessed hydro power left in the Province anyway. Those are the four or five rivers, like Torrent River, which the member from Deer Lake is familiar with, which is about thirty-five megawatts of power, and some others on the South Coast, and Northwest Arm and some of these others.

When you put those in the hopper, if they make it through, fine, but we are going to look at a policy to set the record clear that there will be no more development of these rivers. That is a policy that we are working on now, and I would rather not articulate it in a public fashion until we hammer it out and get it straightened away in our own minds.

The last issue is this business of climate change - and I can talk a little bit about that, too, if you want - that is the so-called Kyoto Accord which commits Canada to reducing its greenhouse gases to 6 per cent below the 1990 levels by the year 2010. Charlie has done most of the negotiations at the officials level at the Kyoto table for Newfoundland in the Canadian context, and in the global context. That is a very significant one. It is not one that I think will grow too many teeth simply because of the US position. The US position, if they sign on to this, means a rapid closure of particularly coal-fired power plants. As you know, 62 per cent of the US is driven off coal. That is their energy source, and it is probably one of the dirtiest forms of energy, one of the highest pollutants, and one of the biggest problems with respect to the greenhouse gas emission problem, as are cars and vehicles.

California is cleaning up their act, I see, and some other states, but these are state laws. If the US does not buy into the Kyoto Accord, does not sign on and does not grow teeth to give effect to it, then Canada is not going to be putting itself in a non-competitive position by increasing our energy costs to have a clean environment so as to make ourselves non-competitive so we can all sit in a nice park in Canada with nobody employed. I am being a bit facetious but that is the long-term view.

Now there are other views, that if Al Gore comes in as Vice-President, Mr. Environment, that he may grow teeth in this accord and force it to happen. If that happens, of course, the value of the Lower Churchill quadruples, particularly the emission credits. Anyway, that's another story.

Let me conclude, Mr. Chairman, by saying that we have a small budget of $9 million, which is not very much, to promote some of the biggest projects in North America, if not in the world. I predict there will be $18 billion to $20 billion over the next six to seven years, (inaudible) to seven years, spent in this Province on major projects. What are they? Terra Nova, which is $4.5 billion. I think you will see White Rose coming on stream in that time period, which is about $2.2 billion. You will see the Hebron field coming on stream, which we thought was 195 million barrels of oil; but if you look at Chevron's comments in the paper today, from the president, that 195 million is ratchet up to a potential 600 million barrels of oil.

Remember Hibernia; the economics that drove Hibernia were driven off 650 million barrels of oil. That is 50 million short of Hibernia. If that holds, and their seismic work and stuff shows that there are some huge, interesting cavities and basins in that field now that they did not know about before, if that holds, that is a huge project. That is not the billion dollar project we thought it was; that is probably a $3 billion project or a $4 billion project.

Then, of course, Voisey's Bay, which we think the agreements will conclude in the next short while, that is a $3 billion project. Finally, of course, the Lower Churchill, which on the low side is a $7.5 billion project and on the high side is an $11 billion project.

So we have a lot of work ahead of us, a lot of exciting things ahead of us, a lot to do with a small budget, and sometimes I - you know, in the department we push hard. Sometimes we have to back off a little bit because we don't have the budgets for the overtime that we would like to have, and we don't have the budgets for the consultants that we do need. A lot of management people sitting here - and I have said this to them privately before - spend a lot of time, a lot of countless hours, that we do not have the overtime for, but they really do believe in the Province. They believe in their jobs and they love what they are doing. I feel so fortunate to be able to work with such a competent and technically superior team that, when I go to Ministerial Conferences, the Province shines because of these guys.

CHAIR: Thank you, Minister.

Before we go to questions and comments, I would just like to say that when members of your staff (inaudible).

MR. SHELLEY: Thank you, Mr. Chairman.

First of all, Minister, I have no problem agreeing with you on your staff because I do ask many questions, especially to Mr. Dean who is not here today - and, of course, Ferd and so on - being from a mining community; not only that, I guess, but as the mining critic and watching things as they flow out.

I do agree with you on one other thing, too, along with the three things you just mentioned which I put at the top: Voisey's Bay, the oil industry, and the Lower Churchill. They are the three huge mega-projects which, if done right and the process unfolds as it should, should be - I guess, to get down to it - the answer to Newfoundland and Labrador. It is as simple as that.

I have no problem in saying either that as far as the mining industry goes, long before I ever entered politics, watching things in the mining industry, I have always been interested in it. Growing up around it, I have always believed it could be a very significant part of this economy, bigger than it is now. Of course, then Voisey's Bay came on stream; but, besides Voisey's Bay, I really believe that the Island portion of the Province has a great potential also, which leads into the first question or comment on exploration. Instead of just listing out a bunch of things - well, maybe I will list out a few things and then I will come back and get a few answers from you in general, and then we will go into some estimates maybe.

Exploration, that is where it all has to start. If you don't start with exploration, you don't get your Voisey's Bays or anything else. I know you didn't make a lot of comments on the exploration potential for this summer. I would like to get a general comment for the Island portion, not so much for Voisey's Bay. I have been following that as much as I can. I met with Mr. Gendron just a few weeks ago and pretty well got an update on that, but I would like to know for the Island portion on exploration. Specifically, I will mention one right now - well, the whole Baie Verte Peninsula, of course, and also the Green Bay area - Rio. I would like to get an update. I don't know the whole name of the company, but I know their nickname, `Rio'. I think you know what I am talking about. So, if we can get an update on -

MR. FUREY: What is the name of it again?

MR. SHELLEY: Rio. There is a longer name to it. They are doing the Rendell Jackman property near Springdale.

MR. ANDREWS: Rio Algom Exploration.

MR. FUREY: Why don't you come over here so we don't have to shout across and play ping-pong.

MR. SHELLEY: I would like to get an update on that one. I have telephoned them to get an update, but I have not heard back from them yet.

MR. FUREY: We will just wait until Ken (inaudible) and give you an update.

MR. SHELLEY: Rio Algom is it?

MR. FUREY: Yes.

I should say to the member, generally the exploration pre-Voisey's Bay, I think it ran in the order of $10 million to $15 million spent in the entire Province. Then, of course, when Voisey's Bay hit in early 1994, the exploration rush took off and your dollar value went to about $98 million, as I recall, and then it levelled off after Bre-X and some real bad hits that the juniors took, including Cartaway. We had our hit too. For some of those, the stocks just danced on the moon. Then, bingo, overnight the assays came out and the true results landed. A lot of people got hurt playing these stocks that were bouncing; but I think after Cartaway and Bre-X and stuff, your exploration dropped. It has levelled off in the last number of years, I think, Frank, at about $50 million?

MR. BLACKWOOD: Fifty million for next year.

MR. FUREY: Fifty million will be the exploration dollars that are targeted, real dollars that will come into both the Island and the Labrador portion. Now, let me go from memory. The $50 million - I think about $15 million of that is Voisey's.

WITNESS: Fifteen is Newfoundland's.

MR. FUREY: Fifteen is Newfoundland, the balance is Labrador. About $35 million will be spent in Labrador. About $15 million, which is what we used to have for the entire Province, will be spent on the Island.

Why don't I get Ken. You will probably be able to speak more specifically about the explorations. Why don't you do that?

MR. ANDREWS: Sure.

MR. FUREY: You should introduce yourself, too.

MR. ANDREWS: I am Ken Andrews, Director of the Mineral Lands Division with the Department of Mines and Energy.

Mineral exploration this year is forecast to be in the range of $50 million. We feel that is a fairly conservative forecast for the area. It could possibly go as high as $60 million depending on the early results, the early successes in the exploration program in Labrador. The $50 million is going to break down, roughly, to $35 million to $40 million for Labrador, and $10 million to $15 million for the Island portion of the Province. That amount for the Island has been relatively static for about the past four or five years, and it has been in the range of $10 to $15 million during that period.

MR. SHELLEY: What about Rio at the Rendell Jackman property, the Rio Algom? Is that $2 million right there in itself?

MR. ANDREWS: I beg your pardon?

MR. SHELLEY: Is that $2 million in exploration on that property alone? Could I get an update on that, if you don't have it? I have heard -

MR. ANDREWS: That particular program now - Rio Algom entered into a joint venture agreement with a junior mining company that has been exploring in that area for close to ten years now. Rio is a major Canadian mining company, and their specialty is base metals. They have entered into a joint venture agreement with a company called Major General Resources, and they are exploring the base metal properties and looking at the base metal potential of this particular area in the Springdale area. I don't believe they have published any figures on what they anticipate their budget to be this year; however, it will be one of the more significant exploration programs on the Island part of the Province.

MR. SHELLEY: I think I did read - they had a press release - that it was $2 million for that area.

MR. WOODFORD: Over four years.

MR. ANDREWS: That could very well be.

MR. WOODFORD: They will obtain 50 per cent if they spend $2 million over the four years in exploration.

MR. ANDREWS: That would sound correct, yes.

MR. SHELLEY: Okay. I will request then, Minister, an update on those exploration areas, because everybody asks the question and they are wondering what kind of activity is going to go on there. Is that okay?

MR. FUREY: What is that?

MR. SHELLEY: Oh, you didn't hear.

MR. FUREY: What did you say?

MR. SHELLEY: I would like to request an update on the exploration in that area and so on.

MR. FUREY: Sure, I will get Ken to take note and we will send it to you.

MR. SHELLEY: Because if people in the area see somebody out snooping around, they want to know what is going on.

MR. FUREY: No problem.

MR. SHELLEY: On the exploration, I can't pass by without making a comment on Voisey's Bay. Of course, everybody is concerned about it. It seems like it has been off track for a little bit, mostly due to rural markets, and we understand that - anybody can understand that - but also the Aboriginal concerns that are up there. Those are the two most outstanding ones, I would assume. That is all I will comment on that to date, and also add this comment to it: I know they are talking about concerns about the nickel smelter and so on in Argentia. Well, just for the record, I say that I still have thoughts about a copper smelter. I am still not convinced it is not possible. We will welcome Inco or anyone in this Province as a partnership, but at the same time we don't brush off a possibility, even if it is a slim possibility, and I have not been fully convinced. I know Hatch did some work and so on, but I have not been totally convinced that a copper smelter is not possible. I guess I will stick to my name, that a copper smelter may be still possible, and I would like to see what will happen to that and what is ongoing with potential for a copper smelter in this Province also.

Also, I would like to make another comment on IOC and the pellet plant expansion. Of course, with the philosophy and policy of the government that Voisey's Bay stay in the ground unless we get the full benefits, I would like to see the same approach taken with pellet plant expansion. Very simply, I understand there is a review going on, and somewhere near the end of this month they are supposed to give the review of consideration at Seven Islands and Labrador City.

Of course, I spoke in the House to the Chairman's resolution just the other day and you found out how I feel about it. I think the minister feels the same way about it, but I just wonder how hard-nosed we are with that approach in saying to them that... As far as I am concerned - now I don't know how technical we can get into this, but - I would say to them: Stop your review; stop wasting your time and your money. If you want to expand pelletizing in this Province, you do it at Labrador City or you don't do it at all. That is the way I feel about it. That is a pretty blanket statement, but at the same time I think that is the way we can approach it until we are told for sure otherwise.

I know, and you know, from living in Labrador City also, with the royalty regime that IOC enjoys in this Province, and with the millions and billions of dollars they have made over the years in profits - let's face it, they have been a good company in a lot of ways. I have had family work there. I know they have been good, they have been good to the town of Labrador City in a lot of ways, but at the same time the bottom line is that they were here for profit and they made a lot of it over the years. I think at this stage, when you see an expansion or you see markets open up for them - which is good, and we commend them on that - at the same time, if there is expansion that would affect Newfoundland and Labrador, that it would stay in Labrador West. I think we should be firm and strong on that, as strong as we are with the Voisey's Bay stand that it stays in the ground unless we get all the benefits from it.

That is the exploration of IOC and Voisey's Bay. I would just like to mention a couple of other things before I ask you a couple of questions.

Nugget Pond in Baie Verte - I would be remiss if I didn't mention something about that - their first quarterly report is out. You were away then and I don't know if your have seen it yet, but it was made public. Of course, they are doing very well down there. If you look at the price of gold, and these guys - Steve McAlpine, who is the manager of that mine site - if we had a few of those guys around this Province, I am going to tell you, the mining industry would benefit greatly. I think the minister knows who I am talking about. Every worker, every person around, can tell you, that is one of the cleanest, well-developed mine sites around this Province. There can be a page taken from his book, I can tell you, that could help us in here, so I wanted to mention that.

Silica deposits, of course, in Labrador West - very interesting. I would like to get an update on those. Also in La Scie, from what I understand, there is going to be a silica bulk sample taken down in that area this summer. I would like to get an update on that if the minister could.

I will not go into the oil industry part, but just finish off with this one. This a more local one again but it is important for the Province because, as the minister knows, it has a huge potential. That is the Baie Verte mine site and the potential magnesium development there.

I will tell you, if anyone has been studying magnesium in this last several months it is me, from the Internet to every book possible. I will be quite frank about it, I did not know very much about it. I know quite a bit and still have a lot to learn from it, but the potential for it is incredible. Of course, with mining, timing is everything. The timing in the markets for magnesium, and the potential for increase, I guess you have to be in the right place at the right time. Well, maybe we are; because it is such a funny thing, Minister. We looked at the Baie Verte mine site, and it is a dilapidating environmental mess down there, a town that went from boon to bust. We talk about Buchans and other places, but Baie Verte has had it as hard as anybody. When you get 500 to 600 people making good wages and all of a sudden drop off the face of the earth and that town is still surviving, it says a lot for the community. Right now we have that mine site down there, which we just looked at as a garbage disposal really, and while we were looking at the garbage disposal it was full of magnesium, 40 million tons of it from what I understand, a lifelong... It is important for that area. I just want to comment on it.

I know we are working very closely on it. I have not said very much on it in public, and I do not intend to. The minister said a little about it, just enough to let people know there was some potential there. There is a lot of work to be done on it, but if we take it slowly and do it right, I think there is a lot of potential there.

With that comment, I will say that the sawmill industry - I know it is not in your jurisdiction, but you understand - they want to go on that site and use one of the buildings, because there are a lot of buildings there. The minister has been to the site and seen the infrastructure that is there. I think it is prudent that they move forward with that development as a sawmill industry. Hopefully it will be compatible down the road with the magnesium, and hopefully they can all work together, but we will have to wait and see what happens there.

Without going into the Estimates - I will not be too cruel - I will leave you with those comments to see if I can get some reaction from you on those.

MR. FUREY: Let me just take each of those issues one at a time and, for the record, let me just read in about some exploration that is happening this year.

Donner Minerals, as you know, is the company that has aligned itself with Teck Corporation of Vancouver. Donner, I guess, is about 90 kilometres south of Voisey's Bay. They had some very high grade showings in some of their drill cores. They are moving in this year for a very aggressive exploration. Their original capital budget was about $5 million.

Frank and I met with the president in Toronto at the PDA, and they had increased, at that time, their exploration dollars to about $10 million. Now they have re-configured those dollars again. They are going to put $14.8 million in exploration into that zone this summer, which is quite a chunk of money. They are going to have a very aggressive drilling program in there. There are some very hopeful signs there.

I think one of our senior geologists, Andy Kerr, who is quite bright, just wrote an article on his view of the Donner property, and if any of you are interested in that property I would be happy to send you that article. It is quite an insightful piece of work. That is one to watch. They were very clever to rename the sight `South Voisey's Bay'. I think that is clever marketing, actually, because it captures the attention of the stock markets and everybody else, the investors around the world.

It does not seem like they are having very much trouble raising money for this property, and it seems a very intriguing property based on the very limited drill cores that have come up. One of those, for example, had an 11.75 per cent showing of nickel. Voisey's is considered one of the richest in the world, and it is 3 per cent?

WITNESS: (Inaudible).

MR. FUREY: Yes, some of the highest numbers - 3 per cent. So 11.75 per cent is quite an anomaly. We don't know if it is an anomaly, or whether there is the motherlode there, but they are going in there very aggressively this summer.

I mentioned Cartaway earlier. Cartaway has joined forces with International CanAlaskan. They are doing $100,000 worth of survey work in a similar area up there. Celtic Minerals, Copper Hill Corporation, the Dart Creek property, First Labrador Resources, Virginia Gold Mines, these are all companies; there is a bunch of them going in to do some work in Labrador.

As well, the member touched on the silica Shabogamo Mining and Exploration Company over there in Labrador West. As I think, we gave them authority to send out about 20,000 tons of bulk samples, Mr. Chairman, into the marketplace. That is a test sample to see what comes back from it. The reserves there are very high, and I think there are some very good opportunities there. We are looking closely at that.

On the Island portion, you mentioned Buchans River. That is a very interesting property. I met the people who were in Toronto who are involved in that. The member from Deer Lake worked there, or he lived there for a period of time, and attempted to play hockey there or something.

MR. WOODFORD: And worked there.

MR. FUREY: And worked there.

You might want to comment on this, too. The people who have taken over that property think that ASARCO may have missed the motherlode of zinc, that there is a huge find back there. Apparently ASARCO, when they were in there - you would have more knowledge than I would - just high-graded for quite a period of time and off they went with the profits and sailed out of here.

These guys have taken over that property and they are up there marketing it. I don't know how successful, Frank, they were. Did they do okay in this past show?

WITNESS: I think they attracted quite a bit of attention.

MR. FUREY: Quite a bit of attention, yes. What is the name of the company?

WITNESS: (Inaudible).

MR. FUREY: Buchans River Minerals, yes. They are having a little bit of difficulty raising money, but if they can raise a few bucks and get in there and do the exploration and the kinds of things they want to do, they think ASARCO missed the giant zinc reserve. There is evidence that they may well have. That is speculative, what I am saying, but it is quite interesting that this group is up there marketing aggressively and commanding a lot of attention. You might want to talk on that after; the Member for Grand Falls may want to say a few words about it.

Celtic Minerals, British Canadian Mines, Altius. Altius are a group of young guys I met in Toronto as well. One guy, I think, is about twenty-five years old, the other partner is about twenty-seven years old. They kicked off this company. They have it registered now in the Alberta stock exchange. They have taken up a bunch of properties in Central Newfoundland. They are aggressive young marketing kids who are just fabulous. They are fabulous to watch, too. What is their stock trading at now?

WITNESS: (Inaudible).

MR. FUREY: But they are doing well, aren't they?

WITNESS: (Inaudible).

MR. FUREY: No, Altius Minerals. These are two young kids. Kids - they are twenty-four and twenty-seven years old, around that age, aren't they? They have an old geologist with them who really knows... Why don't you speak on that for a second, Altius? Go ahead.

MR. ANDREWS: It is, as the minister says, a very aggressive, energetic young company whose principals are extremely bright, we feel, and are actively pursuing a number of important prospects on the Island. Apart from the two principals the minister referred to, they also have Dr. Geoffrey Thurlow, who is a veteran of the Buchans mining camp, and is extremely knowledgeable and very well respected, with a national and even international reputation. So they have a great synergy there of mature geological experience and young, energetic bright ideas being brought together to promote a number of properties around the Island.

MR. SHELLEY: Altius, is it?

MR. FUREY: Altius, A-l-t-i-u-s. I think it is one of these things up in the constellations, where the Member for St. John's South usually resides.

Noveder, a Cabot property in Baie Verte, outlined a significant electromagnetic conductor on the Cabot property north of Baie Verte. Are you familiar with that? A conductive zone of moderate to very high intensity extends over a distance of 600 metres to either side of a copper cobalt showing, which was discovered by PNL Ventures in '97. Surface sampling values were 1.13 per cent to 6.8 per cent copper. Drilling is planned and, in addition, Noveder also optioned 185 claims from British-Canadian mines in the immediate area. You know about that, do you?

MR. SHELLEY: Pardon?

MR. FUREY: You know about that, do you?

MR. SHELLEY: Yes.

MR. FUREY: Sulliden Exploration completed six holes, a 1,600 metre drill program at Beck's Cove gold property, Baie Verte Peninsula, in February and March of this year. You are familiar with that too? Previous drilling by Sulliden returned values of seventeen gold over .6 metres. The program is designed to test the possible extensions of the Nugget Pond sedimentary host to Richmond Mines, Nugget Pond gold mine. Interesting about Nugget Pond, they are projecting 48,000 ounces of gold this year. It is the most cost-effective gold mine in Canada. A fabulous group, and I agree with your comments about the personnel who run it. Ten more of them and we would have zero unemployment.

MR. SHELLEY: Steve McAlpine.

MR. FUREY: Unbelievable. Vulcan Minerals in Flat Bay, of course, is doing a drill program. There is a group of other ones but I would be happy to send this to you if you all want an update on this.

With respect to the copper smelter you mentioned, I have not given up on it either but I think it was the proper thing to do, to seek an independent consultant who had no axe to grind and who is a world-class operation, which Hatch Associates is, as you know, and I think they did a superb job. That is not to say that we ought not to pursue new technologies and new opportunities, and even with Hatch's study in my arm I chased, as you know, Mitsubishi. They are still quite interested; I am waiting for their report to come back to me.

I should also tell you that I met some interesting people in Toronto, on my way back from Texas, who are willing to work with me with the giant copper consortiums of Chile, to look at doing some kind of joint venture using the copper out of Newfoundland, and to see if we can do something beneficial there. It may require me meeting with them in Chile later on in the fall, and I am quite prepared to do that, or bring them up here, or have a twin visit. So I have not given up on that idea, and it is very much top of mind for me because I hate to see one speck of ore exported without value added. It has happened too often, far too often in our history.

With respect to the pellet plant, I concur with your comments that IOC has been a pretty good employer in that area and we cannot condemn the company for the massive amounts of investment, the job creation, and the tax and revenues they provide to the Province. In fact, just last year their investments peaked up to about $148 million in new capital. A lot of people do not realize that. Again this year they are forecasting another $75 million in equipment replacement et cetera, but I share your view: If the ore is in our Province, and it is, and if the labour is in our Province, and it is, and the power is available in our Province, and it is, those are the fundamentals of any economic equation to say that it ought to stay here. You have the labour and experience; you have the power and it is reasonably priced; and you have the commodity, which is the iron ore. Those are the basic elements that will drive any good business project.

Now I have been very firm with them. I have not been very public because they have asked me to tone down the rhetoric and tone down a whole bunch of stuff, but the Chair has also chaired a mining committee for me in Labrador and has done great work behind the scenes ferreting out information, providing me with background, setting up meetings, attending meetings on my behalf. A lot of work, I have to tell you, has been done behind the scenes. You can take this to the bank: They ain't taking that ore out of Labrador.

WITNESS: (Inaudible).

MR. FUREY: And they particularly are not taking it to Quebec. Having said that, I should report to you that the independent study that was under way had not had Labrador City in it. It was the efforts of the Chair, the member for Labrador City, the Premier and others, who summoned the new board in and said: You had better put Labrador City in your study. And it was included in the study. In fact, we helped shape some of the terms of the study. I can tell you, the initial capital costs of this project of about $230 million have mushroomed, and whether this project goes ahead is very, very, iffy.

There are three components to the study: the capital costs, the operating costs, and the marketing costs. They have not come to the second two because they need to definite and scope out what are the capital costs for a brand new expanded pellet plant facility in Sept-Iles, which is currently an old antiquated twenty-year-old plant which was built for Schefferville, which was mined out under the Mulroney stewardship and handsome cheques given to those Quebecers and half the cheques given to the Labradorians. Anyway, they got a lousy deal. That is another story for another time. I do not mean that as a political comment; I mean it as - President of IOC, (inaudible). Anyway, the way he treated Newfoundlanders and Labradorians is unacceptable. That is another story. We were too sedate and too laid back and too charmed and too everything else.

The point I am making is that the antiquated Sept-Iles plant was built for Schefferville, which was mined out and closed down. The Sept-Iles plant would - the capital costs are just incredible to reactivate it. It never ever worked well anyway. It worked for about two years. There were all kinds of problems and snags. Two or three years?

WITNESS: It worked for approximately a total of eight years, but on and off.

MR. FUREY: It really only worked for two or three years, if you consider the shutdowns, the problems they had, and everything else.

To put a greenfield site in place next to the plant in Labrador City, their initial thinking was about $200 million or $240 million. I do not know the final sum, but apparently the capital costs have mushroomed way beyond what they ever believed the cost should be. My own gut and my instincts tell me that I do not think they are going to expand, but that is my own instinct.

We have given them good power rates; I have already signed off on them. We have told them about the economics where we sit. We have told them the resource is a Newfoundland and Labrador resource, and ought to be beneficial to our Province. We have quoted the Mining Act under which they do not come because they have a separate act which was instituted under a former regime in 1938, but I have looked carefully at that act - very carefully at that act - and I have some other arrows in my quiver, should they not listen to reason.

With respect to the silica - I mentioned to you that there were 20,000 tons of silica that we allowed to be exported in the raw so that it could be market tested, and we are waiting for the results. That is driven off a company called Shabogamo Mining and Resources out of Labrador City.

We are quite prepared to deal with them, and to deal with the silica. I attempted to bring in a number of Norwegian companies, as the member from Labrador City knows, and some other companies from around the world, to look at it. It is a difficult prospect because silica is only one of many components that are required to build others alloys and metals, so we are waiting to see what the results on that are.

Baie Verte magnesium, you are quite right, is an exciting project. You have done a lot of reading about it. I think I have kept you up fairly well up to speed on what is going on, and kept you briefed as I normally do. I think these are great people - the Verbiskis - who are the co-discoverers of Voisey's Bay. They have considerable capital, time, energy, smarts, and intelligent people surrounding them looking at this project.

As you know, the car manufacturing industry, and in particular the parts industry, is moving more and more away from aluminium, as we talked about, and more and more into magnesium. At Baie Verte, I think there is about 100 years' supply and the new technology, which is proven out by SNC Lavalin and Noranda, shows that you can not only extract 60 per cent, which was the old technology, but the new technology allows you a recovery rate of 97 per cent. So the beauty of this project is, it kills two birds with one stone, if I can put it that way. It helps clean up a mess, the tailings that are there that are hopelessly spoiling the environment. You take those and extract from them something of value. You take that value and export it to the world marketplace, in this particular case the auto industry, and you create, if they move it up to full production - the member probably knows a little better than I because you have met with Mr. Virbiski now; I have to call him after this session, incidentally - if you take it at full production it is about a $750 million plant, and it would create about -

WITNESS: (Inaudible).

MR. FUREY: About 450, is it?

WITNESS: Eight hundred in construction maybe.

MR. FUREY: Yes, so it is quite a significant project if we can pull this off. He is earnest about it, we are earnest about it, and you are earnest about it. We have agreed to work together and to circle the wagons, toss our political hats to the wind, and make this happen if we can.

Now I should report to you also that my Assistant Deputy Minister, Mr. Dean, tells me that the early indications they are getting back are that this sawmill project as well could probably be compatible. We will make a decision on that in the next week or so and I will let you know.

You also mentioned - no, I think that is about all you said. Was there something I missed that you wanted me to talk about?

MR. SHELLEY: No, you covered pretty well most of them. I will leave the oil industry thing (inaudible) colleagues here.

CHAIR: Thank you, Mr. Shelley. Ms Thistle.

MS THISTLE: Mr. Minister, I could not help but pick up on some of the things you were mentioning about the Buchans area. I know you are aware that there was a mining conference held last November in Buchans, and there was quite a lot of excitement there, and particularly around the young people you just mentioned, Altius Minerals. I think they were the hit of the whole conference. There was so much enthusiasm shown from those two young people.

It was interesting to learn also that I think there was about $1 million spent in the Buchans area last year in exploration. I think there were about five or six groups that participated at that mining conference. Most people there came away encouraged that they will find what they are looking for, that mother-lode everyone is talking about.

It was also interesting, too, to see recently that another barite mineral company has started up now, Phoenix Minerals, in Trinity Bay, their operation; United Bolero of course, are almost up and running in Buchans. When you see the oil industry on the move, and on the heels of it you are seeing other interests like barite that will serve the offshore industry, that is good. There is a lot of interest there. What I would like to find out from you this morning is this: How many companies have registered their interest in the Buchans area for the upcoming season for exploration?

MR. ANDREWS: We expect there are going to be three or four companies active in exploration in the Buchans area. They all have not finalized their plans yet for this upcoming year. However, we expect that Buchans River will be active in that area. There is a company called Celtic Minerals which will be active in the Buchans area, in the Hungry Hill area. Archean Resources have properties in that area and I expect they will have an exploration program. As well, Phelps Dodge, which is one of the major exploration companies in the United States, will have an exploration program in that area again this year. They have been active in the Central Newfoundland area for over five years now, so they will be active.

All considered, the Buchans-Central Newfoundland area is one of the more active areas of the Province. There is a really interesting mix of junior mining companies and major international mining companies, and it all makes for a very healthy, competitive environment between the different players. Success on the part of one of the players down there will certainly aid the exploration efforts of other players down there. It will facilitate the raising of exploration capital and that type of thing. You have to be optimistic with what is happening in the Buchans area.

MS THISTLE: Thank you. You did not mention Altius Minerals. Are they having difficulty raising funds to further their exploration?

MR. ANDREWS: No, they are not experiencing any problems other than the usual difficulties that all junior mining companies are experiencing at the moment. Altius has been successful in listing, I believe, with the Alberta stock exchange. They are raising exploration capital and they will be active again this year. They may not have a huge program, but they will be one of the players in that area.

MR. FUREY: They are going to investigate their Shamrock, Lockport, Victoria River, and Wild Cove base metal properties, and their Moose Head, Tom Joe, and Big Arm precious metal properties throughout 1998. They are raising money on the stock market. I do not think they are going to have any problems raising it, to be honest with you. These guys are good, they are promoters.

MS THISTLE: Of course, all this exploration work generates a lot of economic activity, directly and indirectly. I am pleased to hear that, and I am sure the people in the Buchans will be interested in knowing that there is so much interest and that there will be a lot of activity again this summer. Thank you very much.

CHAIR: Thank you, Ms Thistle. I think we will move now to Mr. Fitzgerald.

MR. FITZGERALD: Thank you, Mr. Chairman. Minister, I do not have a mine in my district. I have lots of government wires and slipways. I did have a mine there, in Keels actually, the slate mine which was mentioned in your budget last year, put forward as an opportunity to create employment there. There is still a lot of potential there, and hopefully somebody will join forces and become partners with the present owner there and make that mine function.

I do not know if you can give me an update or if there is anything new on that, or if you even want to talk about it. I would like to ask the question because I think there is a great potential there. It is something that would be able to employ probably twenty-five or thirty-five people there for many months of the year.

Maybe the minister might be able to tell us how much money we received from the first shipment of oil. The minister passed out a sample of oil. Maybe he would like to inform us how much money the Province of Newfoundland got from the first shipment of oil from Hibernia.

MR. FUREY: Did you want to ask a series of questions, or do you want me to respond as we go?

MR. FITZGERALD: Probably respond as we go.

MR. FUREY: We signed a confidentiality agreement with the companies in terms of releasing. The problem is that the companies do not want their take in the marketplace out there, and there are good reasons for that, competitive reasons. Anybody who wanted to calculate - for example, let's assume a dollar came in and you know that the royalty rate is 20 per cent. They do not want anybody to factor back what there earnings are on that field. We - "we" being the previous and current governments - through the Atlantic Accord and through the arrangements that we finally signed off on, agreed to keep that confidential.

It is difficult for me to tell you when we are bound by legal agreements that say we can not do it. We treat it as we would treat any income tax matter. It is purely for competitive reasons. It is not because I would not tell you, and I do not mind telling you privately so long as you respect the legal agreements that are in place that I am bound by. It has not been significant yet. When I say significant, everything is relative. What is significant? It is a significant amount of money, but not in terms of the amount of money that the oil has actually generated for revenue for the companies. I think that is a fair comment.

MR. FITZGERALD: Would you like to make a comment on the slate mine? What is happening there, other than the financial problems?

MR. FUREY: I think that there is magnificent potential there, there is no doubt about it. It is difficult again for me to talk about it because of the circumstances that surround what is going on there. I think if we can find some capital to go in there, there are magnificent opportunities, and that is something we are looking at quite seriously. It is a difficult one for me, again, to talk about.

MR. FITZGERALD: Minister, there is a lot of speculation out around the -

MR. FUREY: I think you know what I mean.

MR. FITZGERALD: Yes, I know what you mean. There is a lot of speculation out around the community where I live, in the Musgravetown area there, about an ore find in the Bunyan's Cove area. It has been carried in the media, and there has been a fair amount of exploration there by an individual. Is there any truth to the rumours that are floating around, or has there been any significant find in that particular area?

MR. FUREY: No, there has been no significant find. There had been some prospectors in there, there has been some shows of gold, but it is very preliminary.

MR. FITZGERALD: Minister, you opened your statement by talking about the small amount of money that was in your department, $9,119,100, something like one-third of 1 per cent of the total budget of over $3 billion. When you look at the cost of running the Minister's Office, Minister, your office is more expensive than any other office within the confines of this book of all the government departments. Maybe the minister can tell us why his office is so expensive to run compared to other offices with billions of dollars in their budget.

MR. FUREY: If you look at the increases in my office, it is reflective of the changes that we made, where we brought the p.r. people into the minister's office, (inaudible) of the benefits that accrue there. There is a small amount in that office for overtime because the secretaries are often kept there a long while. I think there is about $10,000 or $15,000 in overtime. If I had to pay the real overtime costs my budget would be about $400,000. I am quite serious about that. A lot of people stay on because they just stay on. They stay there. They are always there when I am there, and they hang in there. Also, you see that my travel costs have increased. I should not say they have increased. They are what they ought to be, and that is what it costs to have the Minister of Mines and Energy travel around the world and promote.

In fact, I think the Member for Baie Verte would agree that these missions are quite good and quite substantive, and if nothing else, they promote the Province. As you and I will recall, you and I so gallantly and valiantly promoted the Province in Italy. These are the costs of doing business. It is not cheap to fly to Texas, it is not cheap to fly to Toronto. I always try to stay in a moderate, sensible and fairly decent clean hotel that is not outrageous. You say my expenses are fairly high. If you compare them to my predecessor of another time, you will see my expenses were basically 60 per cent of my predecessor's predecessor.

MR. FITZGERALD: Would you have the same number of staff, Minister, as other ministers in other departments?

MR. FUREY: Yes.

MR. FITZGERALD: The staff remains the same, it is just the difference in expenses.

MR. FUREY: Yes. It is mostly reflected in faxes, phones, travel, communications, hotels, that kind of thing.

MR. FITZGERALD: Transportation and Communications seems to be a heading where what is budgeted and the revisions, there is a big difference. That seems to happen every year.

MR. FUREY: They always undervalue it, and I always tell them during budget time: It is stupid to put $40,000 there. I can tell you right now, with the things that are on my plate it is going to be $100,000. If you want me to look like a jackass, put $40,000 there.

MR. FITZGERALD: I agree with you.

MR. FUREY: It is stupid. I think the Member for Baie Verte last year said: Why don't you just put $150,000 in there, or whatever, and make it reasonable? It is sensible. If you look at my column of the Department of Mines and Energy and go across the country to where there are mines and where there is energy - and by the way, most of the departments are split - , most of those ministers of mines have $100,000 to get out and promote the mines and exploration and whatever it is they do. Most of the ministers of energy have $150,000. If you combine the two departments it is $250,000 and they are still complaining, and they are always over budget.

Here I am with $40,000 to promote the hottest properties both mineral-wise and oil- and gas-wise in the Province of Newfoundland and Labrador to the world. It is just dumb, it is stupid. They want to make me look like a jackass every year, and they stick in $40,000, and I spend $100,000, so I look like a jackass.

MR. FITZGERALD: Purchased Services is just as big a difference, every year in the budget as well. Not only your budget, but every budget, and I am wondering how accurate the budgets are, the figures that are put forward.

MR. FUREY: In the global context of the budget you will see that we never overrun, but inside the subheads you will see we always overrun because we are moving money around. We need to move money to Frank's division, and we move it from Dave's division; if Dave needs it we move it from Frank's division; or if we need more in my department for travel. In the context of the global budget, I should say to the hon. member, there are no overruns, but there are overruns in terms of each subhead within that global budget.

MR. FITZGERALD: Information Technology is another one this year that seems to be a catchy item. Just about every department has fantastic amounts of money put forward into Information Technology, but computers have been around a lot longer than 1998.

MR. FUREY: That is true, but there are different systems, different programs. Frank may want to talk about this. Who would be best to talk about IT (inaudible)?

WITNESS: Are you referring to the Information Technology allocation in the Mineral Resource Management sector of the budget, sir?

MR. FITZGERALD: I am referring to Information Technology under all the headings in the budget.

WITNESS: One thing that has happened this year is that government in the Information Technology area has allowed an extra expenditure to deal with the year 2000 problem. This is the major issue that the information technology industry is confronting in terms of making sure our computers operate after the year 2000. There has been an allocation to deal with that issue right across government, and that does represent a portion of the increased expenditure (inaudible) IT for our department.

As the minister alluded to, we are constantly trying to stay in Newfoundland on the leading edge of IT developments. We want to make sure that the databases that we collect, maintain and promote to our industry clients are leading edge and state-of-the-art, that can compete with any jurisdiction in Canada. In order to do that we need to acquire, as the technology improves, the most current processes and techniques for recording and promoting our data. In fact, we as a province lead or are matching leaders in the country in this area.

MR. FITZGERALD: In heading 2.1.02.05, Mineral Lands, there was $7,000 budgeted in the 1997-1998 budget and there was $43,200 spent. Why would there be such a difference there, Minister?

MR. ANDREWS: There was a requirement there for a professional services study, a consultant study to be undertaken, and it was decided that the funds for that study would be sourced from Mineral Lands. This was a consultant study undertaken to examine the regulatory efficiency of regulations affecting mining and mineral exploration in the Province.

MR. FITZGERALD: Heading 2.1.03.05, Mineral Development. There was no money budgeted in the 1997-1998 budget, but the budget was revised to spend $84,000, a significant amount of money there. What was that for?

MR. ANDREWS: I believe that was the funding provided to hire consultants for the work for the smelter and refinery at Argentia.

MR. FUREY: Yes, there are a number of studies in there, one of which was the Hatch study, for example.

MR. FITZGERALD: 3.1.02.01, Salaries. There was $205,000 budgeted and $166,000 spent. Does that mean there were people laid off in that particular department?

MR. HAWKINS: This is my division. We had a few staff go to the private sector and we had savings in the Salaries because of that. It took us a bit longer than we had hoped to recruit and fill those positions, which we have now done.

MR. FUREY: By the way, that is a real problem for the department. The other side of the story Dave is not telling you is that we lost one of the best petroleum engineers in this country who got taken away by the private sector - Mobil or someone grabbed him - in Ontario. They just doubled his salary overnight and he is gone, because we just don't pay the salaries to keep competent technical people in a very technical department. Our salaries are pretty meagre. The wage freezes and what we have been doing over the last number of years, I know we have had to do those things, but the point is it is very difficult, as industries coming in here - somebody mentioned engineers yesterday. Do you know that the oil companies are going in now buying up engineers at our University? They are actually paying for their last years so they can buy them and get them out west. You have seen that, different specific engineers.

One oil company was telling me they tried to get an engineer recently. Of the applications they had, the people that they interviewed, by the time they got around to making the job offer they had to give it to the sixth person on their list. By the time they got around to making the offer, which was in a two-week period, the first five had jobs. They were gone to Alberta, Fort McMurray, the Gulf of Mexico. When I see what is coming down the pipe in $20 billion worth of projects, we are going to have to import, believe it or not, technical know-how and engineers. The trick is, when you import it, to get the technology to stick and stay here. That's the trick.

MR. FITZGERALD: Maybe that's another reason why we should be looking at labour market information when we offer courses in our colleges, our universities and this sort of thing -

MR. FUREY: Absolutely.

MR. FITZGERALD: - instead of training people for unrealistic jobs.

MR. FUREY: I agree.

MR. FITZGERALD: I can name as many as you can as well, Minister.

My closing comment would be that I do not think that anybody here will ever say that the minister shouldn't travel, or the minister is spending too much money travelling and this sort of thing. If we are going to get our people working, then that needs to be done and we need to promote what we have in order to attract people to this Province.

We talked about the wonderful things that are happening on the Burin Peninsula, and that is good stuff. It is needed right across this Province. In my own district, probably one of the most destitute areas of the whole Island, the Bonavista Peninsula, there have not been many opportunities since the fishery closed. I say to the minister, if there is anything that can be identified to help solve the problems that we have there, then I hope you would keep that in mind and be able to put forward whatever you can in order to attract something there to maintain the people so that they might be able to continue to live in the Catalinas, the Port Unions and the Bonavistas. Thank you.

MR. FUREY: I accept what the member is saying. In fact he and I worked on a project a year or two ago when I was another incarnation as Minister of Industry, Trade and Technology, but it turned out to be a lot of chicken feed, as I recall. It is too bad, because we both believed that this could lead somewhere, but it is interesting. I wonder if any of those areas you just referred to are speaking to this clothing manufacturer, Mr. Lee. Have they contacted him at all?

MR. FITZGERALD: Yes. (Inaudible) they did -

MR. FUREY: By the way, I took the time to visit his five factories in Toronto. They are top-notch. As I recall, they have a base salary and then it is piecemeal work as well. Most people were taking away $150 to $200 a day. Now they are making clothes for Tommy Hilfigar, Polo, top-class brand names and quality products, but it is very much like an assembly line. It reminded me of a fish plant with no rotten smell. (Inaudible) because everybody (inaudible), and everybody has a particular job. Now I was a fish cutter at National Sea. I remember being in the line. You got a base salary, but every so many pans of fish that you got you got a bonus. I was a pretty good cutter, too. I still have my fingers. The point is, has your area talked to him? He is in (inaudible)? What (inaudible)?

MR. FITZGERALD: Yes. As soon as I heard the comment that this gentleman was visiting the Province I called down to Cabot Resources here, which is a provincially-federally funded group in the area that is trying to promote the area and attract new industry. They have put together a package and faxed it off to Industry Trade and Technology to be presented to him. There have already been a number of people who have been trained in that area. Apparel technology, I think, was the name of the course that has been offered there on several occasions. Lots of space there, certainly the need for employment. If that has been done, hopefully it will give a fair hearing for those people up there.

MR. FUREY: Do you know the single biggest reason why he is looking at Newfoundland? The loyalty of work force. By the way, you only have to look traditionally at outport Newfoundland to see the loyalty. People going back to the fish plant. At least where I grew up there was small turnover. The other thing is, look at Point Leamington, the glove factory. They had almost had zero. The Member for Bellevue, I think you have been out and saw that. Zero turnover. That is a guy who -

MR. BARRETT: I used to be the principal of the school so I (inaudible) most of (inaudible).

MR. FUREY: That is right. That is a guy who brought the factory from Toronto and set it up in Point Leamington, and everybody there works. Why do they work? Loyalty. The guy recognizes he can get good work done, it is quality work, they are a loyal work force, low turnover. Back haul rates back into Ontario. He has all the contracts now for all the hydro corporations across Canada. Those little white gloves that everybody wears three or four times and throws away. Everybody is working around the clock. It is unbelievable. This is what Lee sees. This is what Arthur Lee sees. He sees profit, he sees an opportunity, he sees a chance to create jobs, and he sees a chance to do some good. Don't kid yourself, he is a businessman. Profit, loyalty, low turnover, that is what he is after, particularly loyalty.

 

MR. FITZGERALD: It is pretty hard for some of those areas, and I think of my area, to compete with places according to the article that appeared in The Evening Telegram on the weekend, where you have a group of businessmen who collectively decide they are going to spend millions of dollars to put up a building, and millions of dollars to maintain it over a ten year period. I don't know of any business people in my area who would be able to afford to even think about doing this kind of thing, and all of a sudden you are at a disadvantage from that point alone. So I think this is where maybe government should step in. If we are going to allow that scenario to continue to happen then we will have two or three or four major work centres and the rest of the areas will be allowed to die and disappear by the mere fact of the regional disparities, if you would, happening right here in our own Province.

MR. FUREY: That is a good point. Even worse than that is when governments provide pots of diversification funds and they start bidding against each other. That is even worse.

MR. FITZGERALD: That's right.

MR. FUREY: But I hear you, and I am glad to hear that your group put in a proposition. That's good stuff.

MR. FITZGERALD: Thank you.

CHAIR: Thank you, Mr. Fitzgerald. Mr. Woodford.

MR. WOODFORD: Thank you, Mr. Chairman.

I wonder, could the minister or some of his officials give me an update on what is happening with regards to Tally Pond? I understand Noranda now controls that. What is the latest on that?

MR. FUREY: Yes, Noranda still owns the property. I am just not right up to speed myself on it. Ferd, do you want to speak to that?

MR. MORRISSEY: At the present time, Noranda are looking at all of the properties in that area and determining what they want to do with them. In fact, most of them they would like to be able to either auction off to another company, keep a retained interest, or sell the properties. They are looking at all their properties in Central Newfoundland, Tally Pond being one of them. I am not sure if they have truly decided whether they want to dispose of that property totally or not. I think they want to keep a retained interest and they would like to have some company go in there, preferably, and do the development. I don't think that Noranda actually wants to do the development on the property itself. The reserves are a bit too low for Noranda to get involved with. So right now what they are looking for is basically a partner, preferably a partner, to go in on that property, where they would - just to keep a retained interest and perhaps be the operator of the property but not put up the capital.

MR. WOODFORD: My understanding is that - that is not a recent find. Tally Pond was found when ASARCO operated Buchans years and years ago. Twenty-five or thirty years, I remember Tally Pond being - the old (inaudible) used to do the drilling in there for ASARCO at the time. Am I wrong in saying there is nothing new there, that what they found at that time is what they found and that is it? And why they were sitting for so long with this property.

MR. MORRISSEY: The reserves, Mr. Woodford, are about 5 million tons there, and each year they do further exploration. They put down a couple of more drill holes. The reserves have slowly increased over the original reserves which had been identified, but the reserves are not at a level that Noranda would like to get involved with. They have expressed an interest to us whereby they said: We would like to get into large projects. We would like to get into hundreds of millions of tons of projects. That is where we are going corporately, and these smaller projects are not what we really want to be involved with.

MR. WOODFORD: Is it a case of a 5-million ton property like that not being viable? Or would it be something similar to... If a smaller company owned that property, at today's prices, do you foresee that being developed, other than Noranda? I understand Noranda is much bigger, they are looking for much bigger things to play with and so on. If a smaller company had it, do you think it would be developed based on some of the (inaudible) and everything that has come out of it?

MR. MORRISSEY: Well, that is one of the things Noranda has done. They have looked for a smaller company to operate it, and they have also revised their mining plan whereby the extraction of that ore would be at a higher rate than they had originally planned when they looked at the property the first time. They are actively looking at doing something with the property. Whether they will be able to do something this year or not, I am not sure. I know it is still under consideration by them. They spoke with us about a month-and-a-half ago on that.

MR. WOODFORD: What's new with regard to the Deer Lake basin, the exploration and seismic work that (inaudible) was doing there? I think they were doing it for (inaudible) if I am not mistaken. What is the latest on that particular project? I understand they had problems there with regard to the frost and they could not move around, but they were back there again in the spring. What is the latest on that?

MR. MORRISSEY: Inglewood did complete their seismic survey with the Deer Lake basin. They are looking at the results of that data right now, and they have indicated in the media that they do intend to do some drilling this summer. They are also out into the investment markets to raise some funds for that drilling program. We are waiting to see whether or not it is successful to proceed to drilling the one or two wells they previously talked about in the media. That is the current status right now.

MR. WOODFORD: I will pass now, Mr. Chairman. I had just a couple of brief questions.

CHAIR: Thank you, Mr. Woodford.

Mr. Osborne, would you like to wait for a second until the minister returns?

MR. T. OSBORNE: Just a couple of quick questions. I do not know; the minister may or may not pass them over to one of his officials.

The port of St. John's obviously has a great interest in the offshore industry, and now with the St. John's shipyard operating, I know they have been looking at widening the opening of the harbour, the narrows. In discussions with the City of St. John's, they have had some difficulties in determining - because the harbour of St. John's is a federal port but yet just outside the narrows it reverts to provincial waters, as far as they understand - which jurisdiction they have to go to in order to widen those narrows. I wonder, would that fall into your department or would that be government lands?

MR. BLACKWOOD: I am not certain of the answer to that question. I would suspect, in the absence of the minister, that it is not our department's responsibility. Maybe you could restate it.

MR. T. OSBORNE: I will repeat just for the minister. The Port of St. John's obviously has a great stake in the offshore industry and the new operators of the St. John's Dockyard have been looking at widening the opening of the St. John's Harbour, as you are probably aware.

MR. FUREY: The widening of the narrows?

MR. T. OSBORNE: Yes. You are obviously not familiar with that.

MR. FUREY: No, I cannot imagine (inaudible).

MR. T. OSBORNE: I think they have had discussions with the City of St. John's. In discussions myself with the Mayor of St. John's, he was telling me that they have had some difficulty. The Port of St. John's is under federal jurisdiction, whereas just outside the narrows it reverts to provincial jurisdiction. He has had some difficulty in defining exactly what authority would have jurisdiction over whether the narrows would have to be widened.

MR. FUREY: It strikes me that it would be joint jurisdiction, but I would have to check that for you.

MR. T. OSBORNE: That probably falls under government lands in any event, would it?

MR. FUREY: You are saying they want to open the narrows, widen the narrows. I cannot imagine anybody allowing them to do that.

MR. WOODFORD: There was supposed to be some type of agreement with regard to cruise ships coming in, to make it wide enough for cruise ships. My understanding is that it is supposed to be done this summer.

MR. T. OSBORNE: The City of St. John's are looking at it for a couple of reasons. One, as Mr. Woodford has pointed out, is for cruise ships, but also the St. John's Dockyard are looking at getting larger vessels in to obtain more work, which would be of benefit to...

MR. FUREY: By the way, I really encourage you to encourage the dockyard to move more and more towards vessels, because I think Marystown is moving more and more away from that. So you should pick up all the slack that Marystown... Marystown is chasing the heavy metal fabrication work now for the offshore. They are not going to be chasing ships, and repairing ships and building ships and stuff. There is a great opening there for the dockyard.

I cannot answer your questions because it is all brand new to me; but, off the top of my head, if you were to ask me who owns the jurisdiction, because it is land that actually reaches out into the water, I would think there is probably joint jurisdiction there.

MR. T. OSBORNE: Okay. I have just a couple of other questions, and obviously it has been a concern to the Province. The transfer payments, when it comes to royalty regimes, we are losing seventy to eighty cents on the dollar.

MR. FUREY: Yes.

MR. T. OSBORNE: With Churchill Falls - the Lower Churchill, just as an example - are there any discussions with the federal government with that, as well as other mineral finds and so on, to ease up a little on the cuts to transfer payments? Otherwise, we will continuously go through the cycle of always being a have-not Province, because as quick as we get our royalties we are losing the bulk of it to Ottawa.

MR. FUREY: You are quite right. You make a good point and it is a problem that has bedevilled successive governments. I remember Premier Peckford, when I sat in Opposition, saying the exact same thing. How do you get ahead? Mr. Crosbie, himself, called it the turkey trot, two steps forward and three steps back, however that dance goes.

You are right, it is very difficult. You are in the welfare trap. You are in a syndrome and it difficult to get out of the spiral. Yes, there are discussions ongoing but they are led by the Minister of Finance because as royalties come in they are clawed back. I particularly and personally like the Irish model, the European Union. What happens in the European Union is that they transfer equalization on a yearly basis in five-year increments. In other words, they agree that for five years they are going to give Ireland, for example, $2 billion; give it to Ireland over a five-year period irrespective of what happens in the economy. So what happens is, after five years they review the GDP performance and the economic -

MR. T. OSBORNE: It gives them a chance to catch up.

MR. FUREY: Then they review the economic indicators and they adjust equalization after five-year increments.

MR. T. OSBORNE: Lock it in for another five-year period.

MR. FUREY: In Canada, it is adjusted on a quarterly basis. If we grow, lose population, bring in more royalties, collect more taxes, they reduce it on a quarterly basis. At the end of every year they do not examine how the economy has performed and adjust equalization forward; they always adjust it downward, that I can see. Now there are cases, I suppose, where it has gone up based on some anomalies, which is the engine of Ontario driving the economy into such a heated performance that revenues fall back to the Province by virtue of Ontario doing much better, but it is a stupid...

Here I am criticizing it, I am criticizing the hand that is feeding us, but that is what makes it so stupid; it is the welfare trap. It is the lady who called me from Port au Choix who got a job at K-Mart and was delighted. When she went to K-Mart for $5.50 an hour, she had her dignity and she was happy. She called me two weeks later and said, `I had to quit'. I said, `Why?' She said: I am a single mother; I have two kids. They took away my drug card, they took away the allowance - the book allowance, the school allowance - they took away this, this, this and this. I cannot get out of the trap, so I am back in the trap.

That is us; that is Newfoundland.

MR. T. OSBORNE: Precisely. Hopefully there will be some resolve there with -

MR. FUREY: They have to change the formula. They have to change the way they are looking at it. They cannot look at it as a hand-out; they have to start looking at it as a hand-up. Until they change that attitude, we are caught in that spiral. It is vexing and it is terrible and we cannot get out of it. It will require every one of there projects going flat out for ten years to get us even; but the truth is, if they really wanted to help, they would change the formula and we would be contributing in six years. We would be a have Province (inaudible).

MR. T. OSBORNE: We would be out of (inaudible).

MR. FUREY: Think about this: The equalization we lose is equal to what we generate for Quebec on the Upper Churchill contract. If we could take that $850 million into our coffers, we would not have to take the $850 million from Canada, we would be a have Province. Think about that.

MR. T. OSBORNE: On an even keel in one year.

I have just one other question pertaining to the Lower Churchill. The transmission route to the Island, that power, would that be 100 per cent belonging to the Province of Newfoundland and Labrador, or would it have to run through CF(L) Co and we would get our 67 per cent?

MR. FUREY: No, there is 1,000 megawatts reserved from Gull Island for use in the Province. The way we have determined it is to make 200 megawatts available. Although it could be 400 or 600, whatever is required for Labrador, we nominally set 200 because the economics of the interconnect are driven off 800. That block of power would be reserved exclusively for Newfoundland and Labrador. We can take that block of power and run it through the company into the New England marketplace and take the revenue, or we can take the power; it is our choice.

MR. T. OSBORNE: Okay, so either way it is 100 per cent ours?

MR. FUREY: One hundred per cent.

MR. T. OSBORNE: Okay, that answers my question. I wanted to know, if for some reason the power corridor did not come to the Island, would we then lose, I guess, a double wham? I was thinking if it was not ours -

MR. FUREY: I know what you are thinking.

MR. T. OSBORNE: - then we would lose 33 per cent of it going through, plus we would lose our equalization cutback on it again and it would virtually mean that it is...

MR. FUREY: I hear what you are saying.

In the agreements which we are heading for, for September, October and November of this year hopefully, if we can meet those time lines, and we are hoping to do that - I am going to announce some contracts today for the Lower Churchill, as I have told you, to get the field work done on the environmental matters.

That block of power is reserved for our use. If we decide to take the 1,000 megawatts and build an aluminium smelter in Churchill Falls with the group of Germans who are going up there tomorrow or the next day - did I tell you about that? - that may be one use for it. It is a stupid use, but it is one use it could be used for. I could think of a better way to use 1,000 megawatts of power. We may use 100 megawatts to run it up to Labrador City to create a silica production facility up there.

We may use some power to run it over to Voisey's Bay, because it is good, cheap, efficient power, to reduce the costs of the mine and mill at Voisey's Bay. A block of power in reserve to interconnect to the Island because, as I told you earlier, there is only 150 megawatts of clean waterpower left on the entire Island. Once it is used up, and it will be used up fairly quickly, 150 megawatts is not a lot of megawattage. We are forecasting a growth (inaudible) of 50 megawatts in the next three years. If we use 50 of that, there is 100 left.

If we use up that waterpower, we are shackled and handcuff to the world price of oil for all future requirements on the Island portion of the Province. Think about that, being tied to the price of a barrel of oil to expand your economy; you cannot do it. It is nice while these prices are down the toilet at $14 or $15 a barrel. In fact, our last tanker of crude at Holyrood was $14.50, the cheapest we have had in fifteen years.

You know the price of oil is going back to the moon, and I know it, because that is the way it is. That is the way the cartels operate. That is the way OPEC has fixed it. That is the way it is going to be done. That is not a bad thing, because we went off Hibernia and Terra Nova and everything else, but if we do not do something within the next six or seven years - and that is the magic of the interconnect and that is the sale pitch we are trying to make to Ottawa - if we do not do something, we are tied, our economy is tied, the future is tied, the domestic consumer is tied, into the future, to a price of a barrel of oil, which is completely out of our hands, and we lose control of our economy. That is why it is so important.

MR. T. OSBORNE: Are there any other potential - I know there is a study being done to assess the viability of further projects as well to tie into the Lower Churchill agreement, perhaps. Is there any other possibility of a larger reserve for our Province? I mean, when you think about it right now, 1,000 megawatts may seem like a lot but in ten years' time we may have every bit of that used and we are then purchasing power from CF(L)Co as opposed to having our own reserve. Are there any -

MR. FUREY: Well, of course, Muskrat Falls.

MR. T. OSBORNE: That is what I was referring to, the viability study, I guess, on Muskrat Falls.

MR. FUREY: I am going to announce the request for proposals to look at the final feasibility study of Muskrat Falls, which is an extra 800 megawatts.

MR. T. OSBORNE: Would that be ours, then, or would that have to go -

MR. FUREY: Yes, that is completely ours.

MR. T. OSBORNE: Okay.

MR. FUREY: Now, we may want to bring in a partner to help us build it and construct it and everything else, but it is for our use.

MR. T. OSBORNE: Obviously we have to set our sights long term because if we bring the power corridor to the Island then the power initially will not be cheap power, but in ten, twelve, or fifteen years' time, as we have seen with the Upper Churchill, it becomes cheaper power and then we can attract industry to the Province by way of offering them cheap power, which we have seen in Quebec and so on.

MR. FUREY: You are quite right, and this is why we are asking Ottawa to participate. Why should Ottawa participate? Because it will help us displace thermal energy which is oil-fired, which is Kyoto - it is a negative to the Kyoto Accord.

Ottawa should also help us because it is the right thing to do. They turned their back on us thirty years ago. They turned their backs on us consistently through the piece on the Upper Churchill. Every form of power, every form of energy, has the right of access across this country of ours. Everything - natural gas, oil, you name it - every form of energy that you can think of has the right of unfettered access through every territory in Canada except electricity, because they were not prepared to take the separatists out.

Mr. Smallwood was told by a prime minister: There are funny things in mail boxes in Quebec. Don't ask, Joe. Successive premiers badgered and tried to get access through Quebec for our power but could not get it. Canada turned its back on Newfoundland. We were only seven seats and we were insignificant. That is the truth. Successive governments turned their backs. The government of the United States gave us access through Quebec (inaudible), not Canada. Canada would still be sitting on the fence. Canada owes Newfoundland. It owes us in terms of we are going to contribute to greenhouse gas reduction. They have turned their back on us in the past. They controlled and crippled our fishery. There are a whole bunch of reasons why they should help us with the interconnect, and we are making that case now. If they do help us with the interconnect, the cheap power that you talk about into the future, even at full cost, may be a whole lot cheaper, if they pick up part of the capital cost, and we can use that.

MR. T. OSBORNE: That may make it cheap power tomorrow as opposed to ten years' time.

MR. FUREY: Exactly, that is the point. If you get that cheap block of power tomorrow you can drive huge industries and create thousands of jobs. You really can. A magnesium plant is one example.

MR. T. OSBORNE: If the power corridor does not happen, do you feel, as a minister sitting around the Cabinet table, that the Lower Churchill deal will still get approval from our provincial government?

MR. FUREY: You are asking me a hypothetical question. You prefaced it with "if." I always hesitate to march into hypothetical land, as I like to call it. These are all ifs, and if we start speculating we might as well go out and play the stock market, you and I, because it is pure speculation. I feel confident that the total project will go. I feel confident that -

MR. T. OSBORNE: The reason I ask, I guess, is because I feel that the power corridor to the Island is an integral part of that deal -

MR. FUREY: So do I.

MR. T. OSBORNE: - and without that it changes the whole outlook of the deal itself.

MR. FUREY: Not necessarily. If you look at the components of the deal, the deal as structured without the interconnect is a pretty good deal for Newfoundland and Labrador. The deal with the interconnect is a super deal for Newfoundland and Labrador, so do not throw out the baby with the bath water. The baby still looks pretty good. I think we have got to keep moving forward to get that interconnect because it just makes so much sense from every perspective: environmentally, socially, economically. It is good for the country and the country should participate. Let's not prejudge till the study is done. The study is getting underway now. I think there is a meeting in Ottawa today or tomorrow where they are laying out the terms of reference and stuff for Ottawa and making their first presentation on the interconnect.

MR. T. OSBORNE: No, I am not prepared to prejudge yet either. However, the key to our viability as a province is going to have to be industry. Because once that deal is signed, yes we have revenue coming in from the Churchill agreement, we have some revenue coming in from other energy - oil and gas and minerals; however, if we do not get out of the trap we spoke about a few minutes ago in regards to transfer payments, and we do not have enough power here to support industry ourselves, it is going to continue to just be a vicious cycle. We have to reserve enough power for ourselves and have the ability to use that power to create industry in the Province.

MR. FUREY: I agree. You make a good point there. There is no doubt about that.

MR. T. OSBORNE: Thank you.

CHAIR: Thank you. Mr. Barrett, any questions?

MR. BARRETT: Time is running by. I just want to make a couple of comments. I would not want to miss this opportunity to bring some good news from the oil capital of Newfoundland, and talk about the fantastic things that are happening in the district and the isthmus of the Avalon. I guess it is the hub of the oil activity in Newfoundland. What is not on the Grand Banks is happening in the District of Bellevue.

I would like to speak for a short while on the Come By Chance oil refinery. We did have some problems there over the last little while. To give you an indication of the effect it has on the local economy, during the shutdown we had 160,000 person hours of work at an average of $31 per hour. That would give you an indication. There was roughly $25 million spent. That meant that fabrication yards in St. John's and all around were busy, and trucks were coming and going to the refinery over the last month or so. It had a great impact on the economy of Newfoundland and Labrador.

I guess I have to also look at it in terms of the company. What they have done is taken local people and put them through a vigorous training program. They have taken young people from the area, from as far away as Bonavista and Conception Bay, taken them in as operators. They trained the local expertise, the local workforce. It is fantastic, the record they have in terms of taking the young people from the immediate area and training them to work in the oil industry. The problem with the oil refinery is the minute they get them trained they take off to Alberta and other places and in the offshore. A lot of people from my district who have worked at the refinery are on the Hibernia rig and they are involved in the offshore exploration and those activities. The company has done a fantastic job.

I agree with the minister. If we are looking at the safety inspections and audits of the refinery, we are finding the same problem. The wages we pay to our public servants are not comparable to what is being paid in industry. You realize that a person who was on spark watch during the shutdown at the refinery is probably making more than the person who was doing the inspections at the refinery. A young student was being paid $15 or $16 an hour and working ten and a half hours a day, and with overtime was probably making $28 or $29 an hour doing spark watch. We are sending experts into the refinery who are doing the safety audits and all the other audits, and we are paying them a very...

As we get more of these heavy industries - this was always a case at the refinery, I guess -, these major developments in the Province, I think we are going have to really address what is happening in terms of the staff at the Department of Mines and Energy and the Department of Environment and Labour. I do not know, we may have to set up a different corporation. If we can not work it within the public service, we may have to set up some other kind of mechanism so that we can pay those people that are comparable wages to what they would make, at least reasonably, in respect to what they are being paid in industry, if we are going to be able to retain them. We need that expertise. If we are going to develop in this Province we are going to need that expertise, and we need the kind of safety audits and that sort of stuff at major facilities like the refinery.

I have been the Member for the District of Bellevue for nine years. The other morning I came in the office and I heard word that nine bright, well trained, young people from my district had recently acquired the permanent jobs at the Whiffin Head transhipment terminal. These were young people that have gone through our post-secondary institutions over the last three or four years. Bright minds who were hired as the permanent staff at the Whiffin Head transhipment terminal. I have had a good many highlights in the district over the last nine years. It has been a very positive district to work in. There have been fantastic things that have happened over the last nine years. I think one of the most encouraging things I have had in the last nine years was the news that these nine young people have been hired.

These young people are the future of our communities. We hear so often of young people having to move away to get jobs, and all of a sudden within my own district there were nine young people hired. Young people who will settle in the area, young people who will have families, which means that the pupil-teacher ratio and the student enrolment will probably not be so drastically affected as is happening in some of the places in Newfoundland and Labrador.

I guess another success story is the transhipment terminal. We have to give the credit to the people at the Department of Mines and Energy, and we have to give credit to the Premier. There is no doubt that that transhipment terminal was on its way to `Point Tupperware,' Nova Scotia, but this Premier said that only over his dead body would it move.

WITNESS: Point Tupper.

MR. BARRETT: Oh, Tupper, is it? It does not really matter. I was so frustrated with the whole thing I would have called it anything at the time. Tupperware was good enough for me, as long as it was going to Nova Scotia. I did not know where it was. The Premier said that it was over his dead body that it would move out of Newfoundland and Labrador. Sitting on this side of the House, I have great confidence that we will stand up to the test of time, and the smelter refinery will go in Newfoundland and Labrador and the other major developments will go here. I think we need to hang in there.

There is a lot of pressure on the person that sits in the seat that Paul Shelley is sitting in now. People are desperate for jobs. I am glad that last week we supported the resolution that was so ably put by the Member for Labrador West. We need to stand up as Newfoundlanders and Labradorians to those major companies and make sure that we get the maximum benefits for this Province. I think the Whiffin Head transhipment terminal was one of those examples of where the government stood up to the major oil companies and said: You have to bring it ashore here and we have to get the benefits here. Of course, we have to go further and say that further refining and everything else has to happen in Newfoundland and Labrador in terms of our oil industry.

These are some of the positive things. I could talk about National Sea, I could talk about the quarry in Goobies and the one in Terrenceville. For a while there were a great number of communities in my district where there was zero unemployment. When the shutdown was at the refinery there was no person unemployed in various communities in my district, and I think that was a very positive thing that was happening.

It is good news, and I want to compliment the people at the Department of Mines and Energy. Particularly Mr. Lester, who has worked very extensively over the years with people in my district and the community groups, and has been always there to support people in my constituency. He has attended numerous meetings, and probably knows more about the district than I do. There are not many public servants in this Province who know any more than I do about the district. Mr. Lester has been working with the committees over the years and has done excellent work. I cannot pass this by without paying a compliment to Mr. Lester at this particular time because I think he did a great service to the people and to the communities in my district. I want to compliment the people from the Department of Mines and Energy who have worked over the years to help facilitate and help to make improvements that were so necessary in the district.

With that I move that the estimates of the department -

CHAIR: (Inaudible) question (inaudible).

MR. BARRETT: Okay, I guess we are not moving the estimates. Mr. Shelley wants to have a few words to say.

CHAIR: Mr. Shelley.

MR. SHELLEY: No, they are not more questions, it is one comment and one request actually, but they are very important. I left them until last anyway. I think Mr. Fitzgerald asked enough estimates questions. We can go on with those all day.

As far as travel goes, by the way, I have never criticized it, especially when we see end results. I never have, before politics or during or ever will, as long as there are results from those. I agree that a $40,000 budget is certainly not going to take you anywhere to promote when you have to talk about a big (inaudible), and a big country to travel across.

I just want to make a comment first on the Sam Blagdon Memorial Trail in Baie Verte. As the minister knows, Sam Blagdon was tragically killed a couple of years ago. He was a big part of mining in the Baie Verte area. The people, his friends, including myself by the way, helped build a boardwalk trail through a place where he always walked along the river out there. The first phase is over with. It is enjoyed by a lot of people right now. We are trying to finish it. The previous minister supported us in different ways. There is a request in a letter with your office for some small help in trying to finish that. It is very important, although it is a small amount of money, and I hope that we can follow up on that for continued support from you as minister in that department.

The last thing I want to mention - and I did tell the Chairman I would mention it here today, because I think it is more important this year than any year - is our annual Chamber of Commerce mining conference, which is on June 19-21 in Baie Verte. It is very important I think this year, Minister, more than any other year before, that you would be there. You are saying you will be there? It is good to know that because there are a lot of questions.

MR. FUREY: We are going to do some skiing, aren't we?

MR. SHELLEY: You can help them with the snow maker, yes.

I think it is important for this reason - I say this in all seriousness to you - because there are a lot of questions about what is happening there. I am getting calls for job applications for the magnesium mine. When that happens it is good that you would come as the minister and address the people and put them on the right keel of what is happening. I try to do it, my little bit, as I talk to certain groups, but it is certainly good for that time. Plus of course the positive things in the area at Nugget Pond and the other exploration there. I certainly invite you to that, and I am glad to hear you will be coming to that. That is it for my remarks. Thank you.

CHAIR: Thank you, Mr. Shelley.

MR. FUREY: Thank you. Just a quick comment. Of course my department will be there with a display, and I will certainly be there. I think they have invited me to speak at the luncheon. I think I have already agreed to do that, and I would be happy to do it.

Let me give you an invite. Mr. Blackwood, my director here, is insisting that I go into the wilds of Labrador and see how they operate in the field program for at least one night, amongst the black flies, and in the tent, with black spruce tea and all that kind of stuff. Why don't you come up, as critic, with me?

SOME HON. MEMBERS: (Inaudible).

CHAIR: I do not know how it is that all the black flies are attracted to you two gentleman, because I am not bothered at all by the black fly. (Inaudible) at all.

Before we would accept a motion on the estimates I would just like to make a couple of comments. First of all, I would like to express my appreciation, in a public way, to the Minister for his work and efforts on behalf of the people in my riding with respect to the Iron Ore Company of Canada claims. Also, with respect to Shabogamo Mining. I think that we have sixteen or seventeen local entrepreneurs who have put their thoughts together in trying to promote a project which I think holds some promise for us.

The other thing I would like to say, just quickly, is that the issue of the pellet plant has been an important one, and has taken a great deal of time, but there have been other issues you have taken with respect to the companies. In fact, the supplier issue has been a very powerful one for us. Because for many years IOC, Wabush Mines and CF(L)Co too have been supplied from Sept. Isle and other places. Since January there has been more interest in the industrial park in Labrador West than there has been in its couple of decades of existence. We will see this year, I believe, several new businesses going into the industrial park. As a matter of fact, the tractors are rolling today, there is new steel being hung today in the industrial park, because we have pursued the companies and wanted them to purchase locally. Those are real jobs from real spin offs from real companies, and I think that it is because we have taken an aggressive position, and that is very much appreciated.

On motion, subheads 1.1.01 through 3.1.07, carried.

On motion, Department of Mines and Energy, total heads, carried.

CHAIR: Incidentally, before we close off. The meeting that was scheduled tonight for the Department of Development and Rural Renewal has been postponed. The minister is on business outside the Province. The next meeting to be called will be on Wednesday, May 13, at the Committee room at 7 p.m. for the Department of Industry, Trade and Technology.

The Committee adjourned.