COAL FOR POWER.

Auckland Star, Volume LXI, Issue 186, 8 August 1930, Page 5

COAL FOR POWER.

AUCKLAND BOARD SUPPLIES.

THE McDONALD MINE CONTRACT,

Referring to the recent contract for coal for the Auckland Power Board, ••Mt. H, R. Mackenzie writes: —

"As chairman of the Renown Collieries, Ltd., the other party in tse McDonald iState mine deal, the Hon. W. A. Veitch asked me to go and see him in Wellington on July 11, Avith ithe Hon. A. J. Murdoch. 1 was informed that the Glen Afton colliery was prepared to supply the Auckland Power Board with slack at 8/ per ton, and the run of the mine at 15/6 per ton. I was asked if my company was prepared to do the same. I said that we were, but informed the Minister that it would be unwise to put all their eggs in one basket, as the coal would cost much more. This is explained as follows: Most of the coal averages 45 per cent of slack, and, by taking all available slack from all the mines in the Taupiri area, the Power Board would only pay 10/ a ton, as they will get enough slack for their wants. By relying solely on Glen Afton, the 800 tons of coal required per day will cost 15/6 a ton at the mines.

"The Minister then asked me what we ivere paying in royalty. I replied 1 / per ton, and that in addition we paid the Government id per ton for crossing a village reserve on our rope road. This land, if privately owned, could be bought for £50, and we have already paid way-leave to the amount of £350. The Minister then asked if, as the McDonald State mine opened on to our property, we would give an offer. Two hours later after consultation with other directors, I made a verbal offer of 1/ per ton royalty. However, as we subsequently learned, my offer was of no account, as the transactions had been finalised.

"To show how well the Glen Afton mine has been treated, I can quote in comparison the Renown mine. It cost the Renown Company £4000 royalty for borings to prove the property, £5000 cash to the owner of the property, and, in addition, about £2000 royalty to open the mine up. This makes a total of, say, £11,000, with still a royalty of 1/ a ton, and |d way leave to the Government. This is shown up against the gift of the Government to Glen Afton of the McDonald State mine, proved and ready to work, at no cost to them and at 8d per ton royalty. I feel confident in stating that any private individual obtaining the concession, on the terms given to Glen Afton for the State mine, would have no trouble in making a profit of £2500 for himself on tre deal.

"Regarding the offer and acceptance by the Auckland Power Board to buy their supplies from the Glen Afton Collieries, Ltd., the value can be worked out, and I will quote the averages of coal of the Glen Afton mine as stated by Mr. Ritchwhite at a meeting of coal owners: Slack, 49 per cent at 8/; kitchen, 33 per cent at 21/6 net; household, 18 per cent at 29/ net. "As the crushed coal will be mostly kitchen and slack, we can work the average out as approximately: Slack 60 per cent and kitchen 40 per cent on 100 tons, with cost: Slack £24, kitchen £43, total £67. The average is thus approximately 13/6, so it can be seen that Glen Afton have made a splendid deal at 15/6 for steam coal.

"It ha s been stated both by the Hon Mr. Veitch and Mr. Holdsworth that the mine owners quoted 10/ for slack and 17/0 for coal for crushing. The 10/ quote for slack is quite correct, but I must gi\ e an emphatic denial regarding the coal for crushing, as Mr. Holdsworth was told that each mine was free to quote at its own price for other coal than slack. Mr.. Veitch ignored the interjection, What about Glen Afton paying no income tax ?' °

"Glen Afton lasfc year apparently made a profit of £24,385. The supplies were: Dairy factories, 39,920 tons; suppliers, 10,132 tons; dealers, etc., 118,948 tons. It can thus be seen that Glen Afton sold 115.948 tons of coal under the same conditions as other mine owners for which they paid no income tax. This means that the Government allows them to compete on 20 per cent better terms than any other coal company. Is it fair to other dairy companies that do not own a coal mine, that the New Zealand Dairy Company are allowed to make a large profit on outside trading, to pay no income tax, and to compete against those in the same line of business?

"The Prime Minister is looking for more revenue by rtaxation. Might I draw his attention to this 118,948 tons of coal sold to outsiders on the same conditions as other coal companies who have to pay income tax, and ask why Glen Afton should not ho treated on the same terms as the other coal companies both in the interests of these coal companies and dairy factories other than those owned by the New Zealand Dairy Company ?"