§ 5.22 p.m.
§ LORD ARWYN asked Her Majejsty's Government: What steps they are taking to provide for the situation that will arise as a result of the rapid depletion of world sources of tin? The noble Lord said: My Lords, may I claim your Lordships' indulgence for the courtesy which is the tradition of your Lordships' House on these occasions? We now come down from the problems of aviation to mining from the blue heavens to the darkest depths; but it is another problem caused by the advancement in our standards of living. I am asking what steps are Her Majesty's Government taking to provide for the situation that will arise as a result of the rapid decline of world supplies of tin? A programme on B.B.C. Television on Monday last, and an article in the Financial Times on March 4 last, also drew attention to this subject.
§ The increase in demand is, of course, compatible with the rising standards of living. The world shortfall is already getting near 25,000 tons a year. The gap has been bridged by releases from United States disposable strategic stockpiles. Our old international buffer stocks were exhausted before 1961, and the price per ton of tin has since jumped from £900 to £1,300. Since September, 1962, releases from the United States stockpile have totalled some 51,000 tons, leaving a disposable surplus of only 98,000 tons. Even assuming there is no further leap in consumption, all remaining disposable stocks will be completely exhausted within four to five years. We shall then be faced with this serious and increasing gap between production and consumption, which will cause serious disruption to all tin-consuming industries throughout the world, and particularly in this country.
§ The International Tin Council, who are a very responsible body, also consider the situation to be very serious and have decided to set up two working parties to study production problems, administrative as well as technical. There is a definite danger of international allocations of tin rationing in the near future, and we in this country are in a highly vulnerable position. We produce about 1,200 tons a year and we consume 21,000 tons. This gap of 20,000 tons costs us 469 at present over £25 million a year to import.
§ May I again draw your Lordships' attention to another of the Financial Times statements? It is that 75 per cent. of world tin supplies come from countries which must be regarded at present as politically unstable. I would also point out that there is a rapid depletion of the once rich alluvial deposits of Malaysia, Thailand and Indonesia, which together are at present contributing 63 per cent. of world production. And the progress of industrialisation in all producing countries could eventually lead to the consumption of much of their own tin production.
§ In Cornwall for the 30 years between 1860 and 1890 our average annual production was over 9,000 tons. To-day, I would remind your Lordships, it is only 1,200 tons. We were at that time exporters of tin, producing more than we consumed. The reason for the gradual, and later the rapid, decline in production in Cornwall was not the exhaustion of our resources: it was competition from the very low cost overseas alluvial deposits. In the circumstances, it was not possible for any but the well-managed mines, those with ample reserves of payable ore, to survive. In spite of this disastrous competition, Cornish tin mining has survived without the kind of Government support and encouragement given in other countries.
§ As far back as 1937, as President of the Institute of Cornish Mining Engineers, I drew attention in my Presidential address to the need for a thorough appraisal of our long-term productive capacity. In view of the imminent peril of war it was also necessary to plan for higher production at short notice, in case we suffered from shipping losses, as we did in the First War. In April, 1938, the Institute sent a delegation to the Minister for the Co-ordination of Defence, supported by all the Cornish Members from the other place. All we asked for was Government support to peg the price of tin, in order that we could budget for the increased output which would he required of us, as in the First War. We were shocked by the failure of the Minister concerned to grasp the position. That Minister's record, as many noble Lords will remember, was far from brilliant. He told us, rather curtly, that our 470 total production for three years could be exceeded in one single shipment from Nigeria. Submarines did not exist, apparently, in his pattern of thinking.
§ My Lords, to-day we are worried about the loss of production, not the loss of cargoes; but we are still up against the same attitude and, I suggest, another time limit. Back in 1946, the Labour Government, realising the importance of assessing our own mineral resources, set up the Minerals Development Committee, under the chairmanship of the late Lord Westwood. I had the honour to serve under him. We put in some three years hard work on a detailed survey, which of course included tin as one major item. Our Report of July, 1949, included certain recommendations. If these had been adopted they would have encouraged the production of the tin we now need. But in 1951, there was a change of Government, and we soon realised that we were back to square one. We were most disappointed.
§ The Minerals Development Committee in 1949 had reported favourably on our pleas for tax relief, on our problems in regard to the complexities of mineral rights, and on the need for an intensive geological survey. Their Report also confirmed our conclusions on the danger of the increasing rate of depletion in world tin reserves. This was sixteen years ago. We can assume that in Cornwall most of the good-grade lodes detectable on the surface have been worked out, so that we have to drill for deep-lode formations which do not outcrop on the surface.
§ To start a new modern tin mine of moderate output at least £1 million must be available. But before this sum is spent, a long and costly period of geological exploration is necessary, with drilling on a large scale, followed by the sinking of an exploratory shaft and driving to prove the lodes. All this will cost between £200,000 and £250,000 before spending the £1 million or entering into a long-term lease. Assuming that an attractive yield of ore is revealed, the next problem is to consider the effects of taxation. Even a proved and attractive mineral deposit would have to be abandoned if the tax burden were too heavy. Make no mistake about that. Mining companies are not philanthropists.471
§ From 1951 onwards we have continued our appeals to Conservative Governments. They were made by the Cornish Mining and Development Association, supported jointly by the Cornish Institute of Mining Engineers and the Cornish Chamber of Mines. These are all non-political bodies. They wanted the Government to revise taxation incentives in order to compete on equal terms with the mineral producing countries overseas. The standard reply has always been, with suitable variations, that we were seeking preferential treatment for tin mining which could encourage similar requests by other industries, and that the tax allowance available to the prospector and the mining operator provided all the inducements which the mining industry could reasonably expect.
§ On June 20, 1961, my right honourable friend the Prime Minister, who was at that time Shadow Chancellor, moved an Amendment to the Finance Bill (OFFICIAL REPORT, Commons, Vol. 642, col. 1513) to exempt from the profits tax the profits of a non-ferrous metal mine for 36 months from the day on which the mine was brought into commercial operation. I would recommend noble Lords to read this comprehensive speech. It covers the whole question minutely, with all the relevant details, and it was supported by all the Cornish Members and at least one Devon Member. The Chancellor of the Exchequer seemed impressed, but it all ended as before, and so the industry has had to continue its fight.
A serious reappraisal of the deeper tin lodes of Cornwall by the large international deep mining corporations is now being carried out on selected sites. The head of one of these corporations wrote an article in the Tin International in August, 1964, entitled "The Disincentive of Mining Taxation in the U.K." In it he described Cornwall, not as a depressed worked-out area—a description used by those who know nothing about mining—but as a well-endowed and underdeveloped area that invites intensive and imaginative exploration if the investment climate competes with conditions elsewhere. He quotes Ireland, Sierra Leone, Nigeria, Ghana, Iran and Canada as examples of countries employing these sensible tax-holiday incentives. He also states.
'You people in Britain still live in the potato age. Even Ireland has shown you the way to dig deeper for the riches which lie below.
This is what we in Cornwall have been saying for thirty years.
§ In spite of our taxation obstacles, the big mining corporations are pushing ahead with exploration, hoping that Britain will, before it is too late, see the wisdom of a tax-holiday incentive in mining and equal inducements with other Commonwealth countries. Altogether they have already spent over £500,000 in deep drilling in the tin-bearing rocks of Cornwall. But exploration, in mining terms, is like research in other industries—it is only the prelude to production, financed from a fund expendable anywhere. The results, as I have mentioned earlier, have to be considered with other factors. One of the essential factors is examination of the tax incentives in the country being explored.
§ Another important step to regain lost time is to establish the rightful ownership of mineral rights. The present difficulties in establishing ownership lead inevitably to endless negotiations before capital can be invested, even for the initial exploratory programme. Failure to identify the ownership of minerals means that under the present laws a considerable portion of the mineral wealth of the country is sterilised. A simple piece of legislation is required making it compulsory for every mineral owner, within an advertised time, to establish and define his ownership, and to declare his intentions as to development. We should consider most seriously a suggestion made in a memorandum written for the Cornish Chamber of Mines, that a tribunal be set up, roughly on the same lines as the Agricultural Lands Tribunal. I have no experience of that Tribunal, but I am putting this forward as a suggestion. This might not only accelerate the investment of the necessary capital to operate in the revival of our mining industry but also ensure that the rightful owners receive their just rewards. Appeals made to the tribunal would be in cases where the ownership could not be established or when an owner refused to grant a lease on reasonable terms. Noble Lords will know that this takes a long time, and it is most cumbersome. Unless our own production is attended to quickly, I think we are going to be in a jam.473
§ As a final summary, world demand exceeds production, and the United States disposable strategic stockpile, the last reserves, will be exhausted in less than five years. Unless our own production increases we are therefore bound to suffer. Cornwall can produce many times the present output, but it takes five to eight years to develop a mine from exploration to production, and we shall need several mines using the latest techniques now available to us, plus the expertise of those big international mining corporations which are experienced in deep-scale mining all over the world. Our mines are shallow.
§ I must declare my interests, and they are as follows. I have spent many years in Cornwall, and, although I am a mining engineer, I hold no office or any investment in tin or in any tin-mining company, but I am familiar with the problems of the country. I think that your Lordships are entitled to have that declaration before I finish.
§ My Lords, you are now, I hope, impregnated with the key words "tax incentives", "registration of mineral rights", and "equality with other countries"—not the usual "too little and too late" palliatives. There is one other important factor—the revival of tin mining as a basic industry with its ancillaries. Cornwall can be an international metallurgical and geological centre. This is very important in our technological age. This small area has one of the highest concentrations in the world in its range of minerals. The word "toot" has always interested me. It means a short blast. I am more familiar with blasting, but I hope that my first toot on this tin trumpet will sound the alarm, and that Her Majesty's Government will respond by taking early action. I assure your Lordships that we have for a long time been sitting on a tin time-bomb.
§ 5.42 p.m.
§ LORD FRASER OF LONSDALE
My Lords, I must declare an interest, as I am the chairman of a company which refines and smelts tin in the United Kingdom in a substantial way. When I was in the House of Commons, on many occasions in the last twenty years I joined with other Members on all sides of the House in attempting to persuade successive Governments to do exactly 474 what my noble friend opposite has been asking them to do to-day. We were not wholly unsuccessful, though usually we were disappointed.
It cannot be gainsaid that it would be of great advantage to the economy of Britain if we could get some of our own indigenous tin into use instead of allowing it to remain in the depths of the earth. Probably the present high price of tin is the most important factor for bringing out local tin, but if a tax holiday and the legislation which the noble Lord opposite asks for could be facilitated, it would make it even easier still. I think that I am right in saying that only about 100,000 tons of tin is used in the whole world in one year; therefore not a great deal of tin is required to redress the balance. There is new tin now being found in South-West Africa which may prove to be very considerable; and there is some tin being found in Canada. I do not think the situation is quite as bleak as the noble Lord suggests, or that we shall find ourselves without any tin should the American stockpile, or that part of it which they are prepared to release, run out. Nevertheless, it is a serious matter, and British industry needs this tin. No motor car or aeroplane can be made without a little tin. Tin is required for the canning of foods—some foods cannot otherwise be canned than with the use of tin. And so far no very effective substitute for tin has been found.
I join with the noble Lord, Lord Arwyn, in pleading with the Government to do these two simple things. The first is to give a tax holiday. The Treasury are always anxious not to lose money, and it will not lose money this time but will gain it. A new sort of wealth will be brought back to these Islands—a source of wealth upon which we relied in earlier times, but which we have not been able to use recently, except to a very limited extent. Therefore I thank the noble Lord very much for raising this subject and should like to express my appreciation of an eloquent maiden speech. I have known the noble Lord in the other place, but one would think from his manner that he had been here long enough to learn our ways. It will be a pleasure to all of us to hear him again on this and on other subjects.
§ 5.46 p.m.
My Lords, I am very glad that the noble Lord, Lord Arwyn, thought of making his maiden speech on this particular subject, and I am glad that I follow him, because I have always had the greatest respect for mining engineers. Therefore, to be able to congratulate a mining engineer on his maiden speech in this House gives me great pleasure. I trust that on the subject of other metals and minerals the noble Lord will on other occasions give us the benefit of his great experience.
This subject is of considerable national importance, though I agree with my noble friend Lord Fraser of Lonsdale that perhaps the noble Lord, Lord Arwyn, painted the position in rather too sombre tones. After all, although tin is required for many purposes, a number of other substitutes would soon be found if there were no tin. Nevertheless, it is much more convenient to deal with material one knows all about and to which one's machines are adapted than to allow oneself to run out of tin. When one surveys the fields over which the tin is mined, I think the noble Lord is perhaps a little optimistic in saying that only 75 per cent. of them are politically unstable.
I was interested to hear my noble friend Lord Fraser of Lonsdale say that there was tin in South West Africa (I had not heard of that), and also in Canada. I had always regarded the great hope for the future as possibly Siberia, because we do not know a great deal about that area. If Canada and South West Africa can come to our rescue, so much the better, but we know that Cornwall is stuffed full of metals. They are just not being mined because of the out-of-date taxation system of this country. This applies not only to tin but to copper, arsenic and all sorts of other minerals. They would all be mined on a much greater scale if we could bring our taxation into line with that of other countries which are more enlightened in this respect. Lode-mining in Cornwall is not going to be so easy as dredging up tin in Malaya. Nevertheless, it is within our sterling guarantee area, and therefore is that much more welcome. The Chancellor of the Exchequer a year or two ago made some slight concessions, as a result 476 of which two more mines are being worked in Cornwall than was the case five or six years ago; but, as the noble Lord, Lord Arwyn, said, there could be more.
I join in exhorting the Chancellor of the Exchequer to look at this matter a great deal more carefully than Chancellors have done in the past. I would add something further which nobody has mentioned so far. Mining companies based on the United Kingdom investing in subsidiary mining companies all over the world have been the means of developing and bringing into the world's markets a great many of the minerals of the world. At the moment a heavy cloud hangs over them, because they do not know the intentions of the Chancellor and his economic advisers, intentions which are to be disclosed in two or three weeks' time. But if he wants minerals to be produced all over the world, he had better be certain that he is not dealing some death blow to them in the next Budget.
§ 5.50 p.m.
§ LORD BROWN
My Lords, I should like to join in the tributes paid to the noble Lord, Lord Arwyn, on his maiden speech. I think it is very important that the House should have an opportunity of debating in this way issues such as he has presented to us to-day. Nobody can suggest that tin mining in Cornwall has the opportunity of being a large industry, relatively, in this country; yet it might be a very important one strategically. So we would express our gratitude to the noble Lord for bringing this subject before us. I would also add that I welcome very much his presence on this side of the House, swelling the number of those who have experience of the kind he has exhibited to us this afternoon.
May I preface my short contribution to this debate, by saying that I am chairman of a company which is a very large user of tin. We use about 700 tons of tin each year in the manufacture, largely, of bearings, and I well remember the difficulties in which we found ourselves during the last war when it became necessary very severely to restrict the use of tin in this way. Were this situation to come upon us again, I think it is true that modern technology, as the noble Lord, Lord Hawke, has reminded 477 us, can always provide a substitute; but substitutes can be, at times, extremely bothering and extremely expensive. So I regard the suggestion that has been made as essentially a sound one.
In addition to what has been said already, the production of an increased quantity of tin in Cornwall would certainly help our balance of trade. It seems likely—although I do not know the local circumstances—that if tin mines were opened up there we should find that a certain number of people in Cornwall were contributing to our unfortunate balance-of-trade position and to our economy, whereas if these mines were not opened up, they would not. But certainly every small piece of help that can be given to this long-standing and pressing problem is well worth our support.
It is likely that in the past the necessary attention has not been given to this subject because it is not a large industry, or one that can exert large pressures. There is a school of thought which one finds in various quarters in this country—and sometimes in very unexpected quarters—which always takes the standpoint that any artificial support to a particular industry is a bad thing. These are the people who are living in the past, and who, incidentally, still fall back on the basic argument associated with the international division of labour, deriving from the idea that one should always buy everything from its cheapest source. I think it is necessary for us, as an absolute principle, to stop thinking in that way.
I am never tired of pointing out to people who decry any form of preferential taxation treatment, or decry any form of import duty, that some of our most successful industries in this country would probably not be in the position they are to-day, had there not been supports of this sort; for example, the motor industry, which still benefits from a 33⅓ per cent. import duty. I have been to Australia once or twice, and I am sometimes amazed at the contradiction of these old economic ideas which is exhibited by an economy that has succeeded in growing a very successful series of second industries behind enormous tariff barriers.
478 I think the argument for this sort of support for the production of tin in this country, for the use of a national asset which has lain waste for many years, the use of which could benefit our balance of trade, is a very strong one indeed. That is particularly so if, as seems probable, the sort of concession on profits tax which has been suggested (and I do not know whether this would be adequate or practicable) is given. And, of course, the consequence to the Exchequer of such a concession would be beneficial, rather than costly, if these companies started making a profit on which income tax could be claimed.
The other suggestion which the noble Lord has made, concerned with the necessity of registering ownership of these mineral assets, seems to be one based on such clear common-sense as to make me wonder why attention has not been given to it before. My Lords, having made this contribution, I should like to sit down with a ringing assent and support for the proposals put forward, and, again, to congratulate the noble Lord, Lord Arwyn, on a very useful contribution to our debate.
§ 5.56 p.m.
§ THE PARLIAMENTARY SECRETARY, BOARD OF TRADE (LORD RHODES)
My Lords, I am grateful to the noble Lord, Lord Arwyn, for raising this subject. It was the noble Lord's maiden speech, and it was a good maiden speech. His is a voice that is rugged, and he is also knowledgeable, but it seemed to me to be a voice that was (shall I say?) across the Bristol Channel from the place that he was really talking about. I hope that he has the opportunity of speaking often in this House, because his type of voice is one which I am perfectly certain this House welcomes.
His Question and his speech were appropriate to the present time, in view of the United Nations Conference on Tin which opens next Monday in New York to draft the Third International Tin Agreement. While it is right that we, as a major tin consuming country, should be concerned about world supplies of tin, I think it is important that we should keep the problem in its proper perspective. No one would deny that at 479 present world demand for tin is outstripping mine production. Of course it is. We must not forget, however, that this situation has not obtained for long. As recently as 1958 the tin producing countries within the framework of the First International Tin Agreement, imposed controls on the exports of tin in an effort to stimulate prices, and those quotas were removed only in the third quarter of 1960—less than five years ago. Since the removal of export quotas the world production of tin has failed to increase significantly, and in all probability is currently almost 30,000 tons a year below the level of production some ten years ago. So we cannot minimise that, either.
So what are we to think? The reasons for this short-fall in production are almost wholly political, and I think that we must recognise that the essence of the problem which we face lies less in the depletion of world sources of tin than in maintaining and increasing production to satisfy demand. Although it is certainly true that the world's richest known alluvial deposits are being fully worked, I do not think we need be too apprehensive. Authoritative opinion maintains that reserves of tin are adequate to meet, under the right conditions, world demand in the foreseeable future.
The noble Lord has referred to the releases of surplus tin from the United States strategic stockpile. He rightly points out that these releases at present bridge the gap between production and consumption. Tin consumers—and, I believe, the producers also, if they have regard to longer-term considerations—must be grateful that the American Government can make surplus tin available for disposal. The American programme for releases gives consumer and producer countries alike a breathing space, and we must concentrate our efforts on seeing that during the next few years a better balance is achieved between production and consumption.
The noble Lord also referred to the work of the International Tin Council, and he is, I know, aware that the United Kingdom is a member of the Second International Tin Agreement, as she was of the First. In discussions in the International Tin Council the producing countries have pressed for increases in the 480 floor and ceiling prices as a means of encouraging investment in tin production. The United Kingdom accepted the decision (I do not suppose we could do much more about it) which was taken last November by the International Tin Council to raise the price range for tin under the International Tin Agreement from £850 to £1,000 per ton to £1,000 to £1,200 per ton. Her Majesty's Government believe that the present price range under the International Tin Agreement should provide a considerable stimulus for increasing world tin production.
Price, of course, is not the only factor to be taken into account in considering steps to increase tin production, and it is for this reason that Her Majesty's Government has especially welcomed the creation by the International Tin Council of the Standing Committee for Production, to the two Working Parties of which the noble Lord referred in his speech and of which the noble Lord, Lord Hawke, also made mention. It is our hope that this Committee will help identify those administrative and economic factors which will encourage investment in the main tin-producing countries and lead to a wise and balanced exploitation of the world's tin resources.
I have made several references to the importance of the price of tin in the world supply position, and I feel that I must stress that all the problems of tin producers will not be solved by price increases alone. The high price of tin has already led to a search, not only for ways of using less tin but for ways of not using tin at all. I referred earlier to the fact that the world consumption of tin has not grown as rapidly as was at one time expected. This is due largely to the failure of the consumption of tin for tinplate to expand as strongly as had been predicted, and I would remind your Lordships that over 40 per cent. of the world's tin metal is used for tinplating. On the one hand, new electrolytic processes of tinplate production have reduced by over five times the thickness of the coating of tin used in the older production methods, and, on the other hand, new materials, such as aluminium, glass and plastics, are taking over in many of the fields which were once traditionally dominated by tin. Fortunately, I believe that many tin producers are alive to the danger that if 481 we do not succeed in keeping prices at a realistic level the high price of tin will, to borrow a metaphor from another metal, "kill the goose which lays the golden egg".
The noble Lord has made an eloquent plea for the Cornish tin industry. May I say that in the last century Cornwall, with an annual production of tin approaching 10,000 tons from some 200 mines, accounted for about a quarter of the world's tin supplies, and Cornishmen are quite rightly proud of that record. Today, it is true that Cornwall produces only a fraction of the output achieved in the 19th century, but the two mines in operation have enjoyed heightened prosperity as a result of the current price of tin; and, with an annual output which has continued at a level of some 1,200 tons a year, make a useful marginal contribution to our total consumption of tin. With the increase in price that I have mentioned, their position is possibly even stronger.
Now the noble Lord has argued about a tax holiday. I have been hearing about this tax holiday for mines ever since I came to Parliament in 1945; and we in the Labour Party have, in successive Budgets, Finance Bills, put up our Amendments on this subject. But may I say to the noble Lord: do not expect us to do in six months what the other side did not do in thirteen years. We must have a little time to think round this subject, but we shall be thinking round it. We agree with the noble Lord, Lord Brown, that our own resources are invaluable, and I agree with him that we should be thinking about this matter very seriously indeed. The noble Lord mentioned a tax holiday, and I know he will not expect me to commit myself this afternoon. I hope that his advocacy of this particular form of tax relief will not obscure from mining interests the very substantial incentives which exist already for mining in Cornwall—and they are quite considerable. They are even bigger under the 1963 financial provisions. It is a Development Area; it has the opportunity to take the benefit of the grants and the loans.
My Lords, Her Majesty's Government are following with very close interest the activities of the several mining companies which are investigating the possibilities of an extension of tin mining operations 482 in Cornwall. If those activities are successful—and we hope they are—we shall welcome an expansion of the output of tin from our domestic mines. I believe, however, that it would be entirely unrealistic to suppose that Cornish tin can ever make more than a very limited contribution to total home supplies. We must bear in mind that it is only by international co-operation that we can meet the dangers which the noble Lord foresees. It is the hope of Her Majesty's Government that producing countries and consuming countries alike will approach the forthcoming United Nations Conference on Tin in a practical and realistic frame of mind, and that the outcome will be a New Agreement which will ensure adequate supplies of tin at reasonable prices, both in the long and the short term. I hope that my speech this afternoon has gone at any rate some way towards reassuring the noble Lord, Lord Arwyn, that we are thinking seriously about this problem and hope that a satisfactory outcome can be achieved.