Depts opposed steel expansion

Press, 26 December 1985, Page 1

Depts opposed steel expansion

PA Wellington All but one Government department involved in planning for the Glenbrook steel expansion recommended against Government financial support, according to a Treasury

paper. The paper, prepared for the Labour Government in November, 1984, said that the principal departments involved were the Ministry of Energy, the Prime Minister’s Department, the Trade and Industry Department, and the Treasury. “All departments except Trade and Industry recommended against Government financial support of the project,” it said. “Trade and Industry took a less restrictive view, recommending, in effect, that Government involvement

and financial support should be forthcoming as long as New Zealand Steel’s shareholders were at risk if Government guarantees Were called on.” While the project was expected to make a loss of

$l2 million in net present values at the time of approval in 1981, the (1984) economic analysis put the projected loss at $590 million, the paper said. It said that the economics of the steel mill expansion had suffered from construction delays, lower steel prices, and increases in the cost of supplying coal. The Government announced last week that it would take over New Zealand Steel because of potential losses, which it said could cost the taxpayer up to $lOOO million.