PRODUCTION AT LOSS

Evening Post, Volume CXXXVIII, Issue 135, 5 December 1944, Page 7

PRODUCTION AT LOSS

WESTPORT COMPANY'S MINE P.A. DUNEDIN, December 4.

"Nationalisation of the coal mines is very much in tl.? air at present." said Mr. James Begg, chairman of directors, at the annual meeting of the Westport Coal Company today. "This has never been adopted as a policy by the present Government, but' the Minister of Mines (Mr. Web^) nas left little room for doubt that it is his policy, and to a considerable extent he had been successful in bringing it about. ■

"You twill have noticed," the chairman added, "that the company's shares have advanced in price by about 5s in the last few weeks. The directors do not know of any reason for this rise in price. It may be due to rumours that the Government intends to take over the company's mines, but no negotiations of any kind have taken place with this end in view. The balancesheet and what I have said today give all the information about the company's affairs, and shareholders must judge for themselves what their shares are worth.

"The process of nationalisation," he commented, "requires no legislation or even necessarily tne approval of the Government, and it can be applied to. any other business with equal facility. The Price Tribunal fixes the price of coal at1 the price for which it was sold in 1939, and owing -to persistent increases in the cost of production it becomes difficult to reconcile costs and prices. Costs have been increased by numerous concessions to the miners and others employed in the industry and by steep increases in the cost of stores and l aterials. In theory the Government meets these increased costs by way of subsidy, but in practice the subsidies do not cover the increases.-

"The result has been that privatelyowned mines have been involved in serious losses, and even with actual or prospective insolvency Denniston produces about 500 tons of coal a shift, but a loss of several shillings a ton is incurred. This coal is urgently req. .red, and the position has been placed before the Prime Minister and the Mines Department. The company offered to continue producing Denniston coal at the bare cc 1 of production without any profit whatever to . the company for the duration of the war, but as yet has had no indication that this offer will be accepted. Failing some satisfactory arrangement, the company has no alternative except to continue working at a loss or closing the mine."

Mr. Begg said that if the latter course were adopted the Government would probably take the min6 over, as th coal was required. "Practically, though not in so. many words," he added, "the attitude seems to be, 'You must go on producing coal at a loss or the Government will take over your property.' We do not think that nationalisation of the mines is in the best interests of the community, and* 40 years' experience of State mining in New Zealand has done nothing to alter our opinion."