§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Graham.]
§ 12.17 a.m.
§ Mr. David Penhaligon (Truro)
This is the story of two tin mines in my constituency and some 750 jobs. The background is that in 1971 the Consolidated Gold Fields Company opened a mine not many miles from the village where I live. In 1974 a company called the Cornwall Tin and Mining Company opened one no further than a mile from the first mine, called Mount Wellington. Between them they provided some 750 jobs. In our area they were good and well-paid jobs. They were welcome and represented the whole hope in an area where unemployment is nearly endemic. The last figures I saw gave the average unemployment for my county as 11 per cent.; for men it is over 14 per cent.
I have elicited that there is not a labour exchange within 40 miles of Chacewater, the village nearest these mines, which has today a male unemployment rate of less than 10 per cent. In this area there simply are no other jobs. There is certainly not a single job on offer which pays anything like the national average wage.
My involvement with this matter started about a week or so before the first mine announced its closure when certain things I heard made me put down parliamentary Questions to find out what was happening and whether the Government knew what was happening at the Mount Wellington mine. Eventually there was a meeting in Zurich where the directors announced that the mine was to close.
No more than two or three days later the Consolidated Gold Fields company made a similar announcement that its mine also was to close. The reason given at the time by Consolidated Gold Fields was that the water which had undoubtedly been a substantial problem in Mount Wellington, pouring in at some 8 million gallons a day, would follow the laws of gravity and quickly invade its mine. The cost of pumping this water out was understood to be £500,000 a year.
1596 I must admit that it was this more than anything else which raised by suspicions and made me decide to launch a major attack in this place to find out what was happening.
There is no doubt that Consolidated Gold could have applied for temporary employment subsidy, and, virtually at the drop of a hat, received some £420,000—at an annual rate. It would have given those in the locality some time to judge the matter and negotiate matters instead of looking down a gun barrel, as we have been doing ever since this announcement was made.
Indeed, Consolidated Gold was recruiting labour up to two weeks before its closure and I have long suspected—we shall probably never know—that the truth is that the company has been running this mine for some seven years with considerable managerial difficulties. It has had four or five managers since I have been the Member for Truro.
It is difficult to know whether mining is likely to be profitable; one never knows exactly what one will get until the mineral is dug out. Besides that, the pound is oscillating. But, for all that, last year some £6.8 million worth of minerals were produced—950 tons of tin, 3,300 tons of copper, 3,250 tons of zinc and just over 1.4 tons of silver. The value of this on the metal exchange was nearly £7 million. Besides that, it must be remembered that Mount Wellington was making its own contribution as well. These mines make a significant balance of payments contribution, especially bearing in mind the number of people involved. They have some strategic significance, too, as Cornwall has Europe's only supply of tin.
The absolutely horrifying secondary effects hardly need quantifying. The companies used outside contractors for all the painting, surface digging and building operations. They bought some £1½ million worth of supplies locally. The men themselves had a purchasing power of £2 million to £3 million.
The local reaction was swift and strong. Some 600 miners and their families came to London. They announced that they were prepared to give up next year's increment in pay—a substantial offer in these days of inflation.
1597 The Cornwall County Council, which is not famous for throwing away money, quickly offered some £20,000 to enable the pumps to be run for a more substantial period while the problem could be studied sensibly. No wonder: in my village, if these mines totally collapse, I shall have 40 per cent. male unemployment. In the villages of Threemilestone, Crofty and St. Day the situation will be little better. The issue has not been off the local radio and television screens since it was first announced.
Cornwall has become cynical about the treatment given by the Government to its problems. Large sums of money are going to the steel and car industries. We argue that our problems are no different. This is a basic industry providing basic employment.
We hope that our treatment will be different on this occasion. Certainly I must admit that the Minister has kept me extremely well informed since this saga started. I believe that on this occasion the Government are prepared and willing to give help. I know that they are now negotiating with other parties. There are problems of confidence in disclosing exactly what is happening and during the period of negotiation it is an absolute impossibility to give a blow-by-blow account publicly.
I should like some assurances from the Minister making it clear to people in my part of the country that the local appearance that these mines are lost is not the case, and that there is real and genuine help on the way. One rescue plan mentioned is that the shafts that run from Wellington towards Wheal Jane should be plugged, and that some extra pumps should be installed in Wheal Jane to hold back the water that is bound still to leak. Obviously there would be some ancillary piping and this would cost a capital sum of some £600,000, including a considerable contingency in case some of the estimates have gone wrong. The actual operating cost increase in Wheal Jane is estimated at £100,000.
Facts in this case have been difficult to elicit, but as I understand it—and I have been assured on this point by some of those who work for the company—in the quarter before this terrible thing 1598 happened to my county the company was making a positive cash flow. Basically the company has developed and was ready to take the ore from what is called the ninth level in that mine. It had been driving a shaft down to the fifteenth level and had in fact reached a depth of 1,300 ft.
There is now considerable anguish in the area, as the negotiations go on behind closed doors, about the company's action in dismantling some of the facilities underground. There is a suspicion that the rescue operation is getting more difficult by the hour. There is no doubt that some substantial sums of money will be required. The company, Consolidated Gold Fields, negotiated, in June 1976, a loan of £2.5 million I have never been clear why that loan was not taken up, but it was negotiated and has never been used.
Let me warn the Minister that the alternative will be the loss of 700 or even 1,500 jobs. The Department of Employment officials, in an interview, told me that if the mines closed, they might be prepared to use the area for a special temporary employment subsidy scheme. One can imagine the cost and the loss of income tax, rates and national insurance contributions.
Above all, there is the fear of living in an area with 40 per cent. unemployment and of being defeated and demoralised. Because of Cornwall's history, mining is more important than the number of jobs involved. There is all the mythology of mining—"Poldark" and the other series of which people are aware—and these mines represented in my area a feeling that there would be growth in employment. The mines were new and we welcomed the general upturn in the growth of the Cornish mineral industry.
If nothing is done about these mines, I believe that the hope of any outside investment in Cornwall is finished. There will be no hope of persuading any of the large mining corporations to come to my county. The Government, despite my opposition, have saved a considerable amount of money by scrapping regional development grants for the mining industry in development areas. Perhaps some of that money could be used to assist my county.
1599 I wish to put a number of questions to the Minister. Where do we stand in regard to pumping arrangements? I take the view that we are still fighting this battle and stand a reasonable chance of winning so long as the pumps are kept running. Will the Minister let my constituents know precisely what are the future pumping arrangements? How hard are the Government trying to rescue the position? Will he give some idea of the progress of negotiations? I recognise the difficulties, but what progress has been made in real terms?
Will the Minister also say what will happen if the negotiations with interested parties break down? What will the Government's attitude be in that event? Will they keep the pumps going for a period while some other party may be interested in the operation? The important question to which my constituents would like an answer is "When will a decision be known?".
It is not difficult to realise the tragedy that hits a family in such an area when relatively well-paid employment is lost. One can imagine a family's feelings when its income is cut off. In the village of Threemilestone scores of workers who have taken on mortgages in the last 12 or 18 months are now wondering where they stand. They are looking to the Government because they realise that there is nobody else who can give the guidance and assistance required to rescue this mining operation. I look forward with great interest to hearing the Minister's reply.
§ 12.28 a.m.
The Minister of State, Department of Industry (Mr. Alan Williams)
I wish to congratulate the hon. Member for Truro (Mr. Penhaligon) on the way in which he has represented his constituents' interests. I know that he more than any other Member has ensured that he has kept in touch with developments and has put forward any suggestion which he felt contained a possibility of saving jobs.
I share his feelings about the plight of constituents and the difficulties that would be caused in an area such as his constituency if all these jobs were lost. He can be assured by a Welshman who has seen coal mines disappear in so many parts of my own country that we fully appreciate not just the traumatic shock 1600 of losing an occupation—which is often a family occupation, involving grandfathers, fathers and sons—but the effect on the community in which that particular industry is based.
Because I understand the feelings that must prevail in the hon. Gentleman's area, I suppose that I have spent more time on this issue since the situation hit us than on any other—and the hon. Gentleman is aware that my Department is not short of issues that demand Ministers' time. Everything has been accelerated by the decision of the Mount Wellington owners to close their operations. As the hon. Gentleman said, they are pumping out 7 million gallons of water a day. After a short while, when that water reaches the higher levels, it goes through old workings and begins to pour into the Wheal Jane mine, which is itself already pumping 4½ million gallons a day.
The hon. Gentleman rightly indicated that what has happened to the world price of tin, but in particular what has happened in terms of the quality and quantity of tin that has been extracted from the Mount Wellington mine, dictated the decisions of that firm. Because of the link between the pumping operations, the decision of the one firm inevitably precipitated certain decisions for the Wheal Jane operation.
As soon as we were told that the two firms were contemplating closure we entered into discussions with them to try to establish any organisation which would give a chance of survival and viability for the two mines or for either mine. We were willing to support either of the firms or both, or one of the mines or both. There was virtually no option we were unwilling to look at, except the possibility of 100 per cent. Government funding.
I am sure that most hon. Members will accept that it is very difficult for the Department to accept an offer which suggests that the Government pick up all the bills and that should there eventually be any profit someone else takes it but retains the right to close the operation at any time suitable to him. This would not give security to the workers of Cornwall, because they would still have the threat hanging over their heads.
Therefore, far from the Government's refusing financial support, as reported 1601 in some newspapers, and even on the BBC this morning, we have made it clear that financial support is available. As the hon. Gentleman pointed out, £400,000 a year of temporary employment subsidy could be available in the case of one mine alone. There is assistance available under Section 7 of the Industry Act. But it is a requirement that in giving that assistance we give it for a project that eventually will become viable. One of our difficulties has been that the two companies currently operating have each reached the conclusion in relation to their own operation that it is non-viable in its present form.
This does not preclude—and this is what we are pursuing—the possibility of alternative methods of working. It does not preclude the possibility of its being saved by other owners. As the hon. Gentleman rightly suggested, it is very important to Government to observe confidentiality. Indeed, we have had specific requests from the parties that we are negotiating with that we do not mention their names. I can understand that, and we must respect their wishes.
The negotiations are still continuing. The companies are having evaluation work done, assessing the prospects of the mine. I do not want to hold out false hopes at this stage, but the fact that we are all still working at the matter at least indicates that there is some hope, though I do not pretend that it is great hope.
It has been suggested that one could flood the old workings of the Mount Wellington mine, but it has been made clear that this is not a guaranteed solution. I believe that it is not unfair to say that Consolidated Gold, for example, is far from convinced that that would be a successful formula, if the flooding worked, there would be a £650,000 initial cost, as compared with a running cost of £500,000 a year for the pumping operations.
Up to now, we have not ruled out either solution. We have indicated that we are willing to finance the pumping operation in the Mount Wellington unit certainly for another week. I made an offer to finance it for a month. It is unfair to say that the offer was turned down, but Consoli- 1602 dated Gold felt that it would prefer to finance the first week. It was its decision, not ours. I have assured the parties to the negotiations that it is our intention to try to keep pumping operations going while there is a chance of negotiations being meaningful and successful.
I have therefore committed the Department to financing another week's pumping in the Mount Wellington unit, and the Cornwall County Council has generously indicated that it will finance the pumping operations for the Wheal Jane unit. So the flooding hazard at least will not precipitate the collapse of the negotiations.
There have been suggestions—the hon. Gentleman has heard the rumours—that certain items were being removed from the Wheal Jane mine which would make it virtually impossible for that mine to reopen, certainly in the short term. I pass on the assurance that we have received. We have been assured by Consolidated Gold that it has no intention of removing essential equipment from the mine while there is a possibility of a successful conclusion to the negotiations.
Indeed, only today, as a result of the hon. Gentleman's discussion with me, I sent my regional industrial director to the mine to see for himself rather than just rely on reports. He discussed the situation with the local management. We have had an assurance that nothing critical to the future of the mine will be removed and also that nothing critical to its future has been removed.
The Government remain willing to help. Government finance is available, but it has to be for realistic projects. It has to be on the basis of a project that offers the possibility of viability. I would not expect conclusions within a matter of days. I think that the type of negotiations going on will certainly take most of next week because a considerable amount of evaluation and financial negotiation and calculating has to be undertaken. But I will, as far as confidentiality permits me, keep the hon. Gentleman informed. As he knows, I am flying to America tomorrow, but I have left instructions that I am to be kept informed of all developments while I am away, and I will ensure that the hon. Gentleman has all the information that we can give him during the next week.
§ Mr. Penhaligon
I thank the Minister of State for that reply. Can he say a few words about the guarantee of viability? There are so many moving ends in a tin mine that I suspect that one decides whether it will make a profit or loss before one does the accounts. One does not know what is round the corner. What does the right hon. Gentleman mean by "guarantee of viability"? Certainly a viable situation ought to be credible. But what does "guarantee" mean in this rather unusual context?
That is a fair point. Obviously, in something like mining one can never have absolute guarantees, be- 1604 cause one only needs to get one rift and one has lost one's chances of viability.
When a project is put to us, we assess it to see whether there is a reasonable prospect of viability being achieved, not necessarily in the first year. We usually look at about a three-year period to see whether viability could reasonably be attained on the basis of that project within about three years. If it could, we would then feel that it met the criteria which Government apply.
§ Question put and agreed to.
§ Adjourned accordingly at twenty minutes to One o'clock.