Bidder offered a fraction of Ridley's cost
By Peter O'Neil
Vancouver Sun
Monday, October 24, 2005
'Fire sale' offer by group expected to gain control of port facility unacceptable, MP says
OTTAWA -- The expected winning bidder in the privatization of Ridley Terminals, the coal shipping facility in northern B.C. that cost taxpayers $250 million to construct in the early 1980s, offered $20 million for the Crown corporation in 2003, The Vancouver Sun has learned.
But the offer included only $3 million in cash up front, with the remaining amount to be paid out starting seven years after the deal closes and continuing for the next 33 years in amounts no greater than $500,000 annually.
The offer, from Ontario companies Fortune Minerals Ltd. and Federal White Cement Ltd., was obtained by Conservative MP John Cummins and provided exclusively to The Vancouver Sun.
"This asset has got some value but it's being sold off at fire sale prices. And you've really got to wonder why," said Cummins.
"This is outrageous. To begin these payments in the seventh year, and it ends 40 years later, really rubs salt in the wounds."
Members of the Ridley Shippers Coalition, a group of western Canadian mining firms that oppose the planned sale to the Ontario companies, say the Fortune bid was inferior to at least two offers from their member companies.
They provided The Sun with documents showing that Western Canadian Coal of Vancouver offered $25 million, of which $5 million would be delivered within six months of the deal closing and the remaining $20 million over eight years.
However, the WCC offer was made March 30, 2004, after the original competition was over and coal prices had jumped substantially.
Cline Mining of Toronto offered $9.36 million up front plus a royalty over 15 years of $64 million, which was intended to pay off Ridley's huge debt. No date was included in that document.
The Fortune offer was based on Ridley being cleared of its debts.
Fortune President Robin Goad said the B.C.-Alberta coalition is trying to manipulate the media to advance their self-interests.
He said the leaked Fortune offer doesn't reflect the final terms of the deal he expects to strike with Ottawa, though he said he was forbidden from saying what those terms are because of a confidentiality agreement.
The proposal is detailed in a Sept. 30, 2003, letter sent via courier to former transport minister David Collenette from Goad and Federal White Cement president George Doumet.
Northern Energy Mining Inc. president Pat Devlin, a member of the Ridley Shippers Coalition, urged the government Friday to consider his group's bid to run the terminal as a co-operative that will keep shipping costs low.
He said the Fortune group intends to charge higher fees that will make it a profit but will hurt the ability of Canadian resource firms to compete with Australian exporters.
"Remember, when this was built by the federal government it was never supposed to be a privately run, for-profit business. It was to be a benefit to the province and the country, and Canadian taxpayers paid $250 million for it. So selling it out cheap is only justifiable if it still creates the economic benefit it was originally intended for."
The leak of the deal's terms is the latest in a bizarre business saga that has included a bitter clash between Transport Minister Jean Lapierre and the corporation's so-called "rogue" management team and board of directors.
Lapierre was forced earlier this month to obtain a cabinet order preventing Ridley from signing long-term contracts after he failed to bring the managers and board to heel with a "dressing down" in his office earlier this year.
Lapierre said last week he will go ahead with his plan to obtain cabinet approval to begin negotiating with the Fortune group, despite complaints from industry and opposition MPs.
But Cummins said the federal government is shortchanging taxpayers by selling a valuable asset just prior to a rebound in coal prices that has considerably increased the asset's value.
"I think the government should just pull back from this issue. This whole thing needs a rethink. The government needs to determine what's in the best interests of northern British Columbia."
The issue came up in the B.C. legislature Thursday when the New Democratic Party called on the B.C. government to step in to prevent the sale to Fortune.
B.C. Transportation Minister Kevin Falcon, who acknowledged that Victoria had considered acquiring Ridley from Ottawa, said he's satisfied the privatization plan will result in "equal and open access for all users in British Columbia."
© The Vancouver Sun 2005
Earlier articles on the Ridley Island sale to Fortune Minerals are here