§ Mr. Harris
To ask the Chancellor of the Duchy of Lancaster if he will make a statement on the current position of the Rio Tinto Zinc Corporation plc tin mining operations in Cornwall.
§ Mr. Kenneth Clarke
In 1986 the Government agreed to provide to the RTZ Corporation's subsidiary Carnon Consolidated Ltd. an interest-free loan of up to £15 million and guarantees of commercial loans of up to £10 million. This finance was to assist RTZ to undertake a £31 million capital development programme covering the next five years. It was clear at the outset that the prospects for the tin mines in the longer term were heavily dependent on the course of the price of tin.
Because of severely depressed tin prices in the last year — particularly over the last few months — Carnon Consolidated Ltd. is again facing serious difficulties. I understand that today the company is announcing the redundancy of some 200 of the present 720 staff employed in their two mines.
Over the past few weeks, I have had several discussions with RTZ and my officials have been holding detailed talks with RTZ and the management of Carnon Consolidated Ltd. I am pleased to announce that heads of agreement have today been signed between the parties.
Under the heads of agreement, subject to the parties obtaining various consents, RTZ will sell its interest to a new company to be owned 80 per cent. by present management and 20 per cent. on behalf of employees. RTZ has agreed to provide £10 million in interest-free loans to the new company. The Government have agreed to convert our £10 million guarantees to an interest-free loan in addition to our original £15 million loan which will remain in place.
I am satisfied that, although the inherent risks of tin mining remain, this help is justified to secure the continuation of mining and employment in Cornwall. It will enable the main elements of the modernisation programme begun in 1986 to be completed and will save at least 500 jobs in the two mines.