April 13, 1999
(Mines and Energy)

Government comments on Barclay report

Finance Minister Paul Dicks, acting premier, responded to the news release and report issued today by the Town of Labrador City regarding the IOCC pellet plant issue.

A comparison of the Barclay and Hatch reports shows that Barclay has no significant differences with the capital and operating costs as presented by Hatch. The major difference is that the analysis provided by David Taylor, a member of the Labrador West Committee does not include interest charges and misinterprets the application of the Federal Investment Tax Credit. The Rate of Return, of nine to 10 per cent, as presented in this report is therefore wrong.

In addition, government conducted a thorough financial analysis of the project prior to and after receipt of the Hatch Report. These showed that it would cost $230 million more to locate the plant in Labrador City rather then Sept-Iles. To subsidize this difference would cost the taxpayers of Newfoundland and Labrador $15-20 million per year - close to $400,000 for each of the 50 jobs that would be created.

Mr. Dicks stated that government, in particular the Minister of Mines and Energy, is willing to meet with the committee and Mr. Barclay to discuss the report. "However, we see nothing in the Barclay Report which would cause government to revisit its position on the pellet plant issue or to question the fundamental conclusions reached by Hatch Associates."

Media contact: Carl Cooper, Communications, (709) 729-4890.

1999 04 13 4:25 p.m.