ONEKAKA IRON

Otago Daily Times, Issue 24696, 27 August 1941, Page 11

ONEKAKA IRON

FORFEITURE OF MINING RIGHTS CASE AGAINST COMPANIES (P.A.) WELLINGTON, Aug. 26. The case in which the Crown is proceeding for the forfeiture of mining privileges at Onekaka against the Onekaka Iron and Steel Company, Ltd., Golden Bay Proprietary, Ltd., and Pacific Steel, Ltd., was continued in the Warden’s Court in Wellington today before Mr T. E. Maunsell, S.M. Dr Mackay, accountant to the Treasury and formerly on the staff of the High Commissioner’s Office, London, gave evidence of discussions with Mr Rich, the agent in London for Pacific Steel. In the main plan and variants, he said, a Government guarantee of interest on a loan to establish the industry was always included. Witness made certain inquiries from financial

authorities in London, and as a result concluded that without a Government guarantee a loan would not be successful. London Loan Proposal During cross-examination, witness said if it was known in London that the Government was going to make a State enterprise of it Pacific Steel would have no chance of raising money in London. D. F. Reid, formerly of the Bank of New Zealand staff in London, said that if Pacific Steel was on the point of raising the necessary capital for taking over the assets at Onekaka he had never heard of it. He could not imagine a responsible financial house sponsoring a flotation on the strength of a Government undertaking not to interfere with the enterprise. In reply to a question, Reid said that association with a firm of the high standing of Messrs Brasserts, Ltd., would be an important factor, and, were it known that Messrs Brasserts Ltd., were later associated with the Government, the effect would not be helpful to the flotation of loan moneys by private enterprise. Commissioner’s Evidence George Augustus Pascoe, commissioner of the Iron and Steel Department, said that he first saw the Onekaka iron works in 1935. He visited the plant again in March, 1938, but it had by then deteriorated very considerably. The Department of Industrial and Scientific Research in 1934 sup- ' ported Mr Walter Bromley’s proposal that the Government should contribute towards the cost of obtaining a report on the Onekaka works from Messrs Brasserts. Ltd. This report was considered by the Unemployment Board and discussed by the Minister. The report was lacking in certain essential data and the gaps in the report included omissions in capital structure. There was no provision for capital expenditure for bringing out skilled engineers and operatives, no provision for working costs, and no provision for a collier. In 1936 the door was not closed to Pacific Steel if it could bring forward a satisfactory proposition. It was obvious that with the small schemes the proposed production would be uneconomic. The main reason was that for a successful iron and steel industry it was necessary to have a minimum production. The blast furnace at Onekaka \vas a small one which was not new when installed and would be uneconomic to use in the works. The controls of the furnace were not modern. Witness accompanied the Minister of Finance, Mr Nash, to London in 1936. Early that year, he said. Pacific Steel had been advised that the Government itself would make a close investigation into the iron and steel industry. Mr Nash conveyed to Messrs Brasserts. Ltd., in London, data which had been collected in New Zealand regarding gaps in the Brassert report. Witness received instructions from his Minister to get a Bill ready for’ him in February, 1938. The Bill was passed in the following month. A great deal of prospecting work had been done by the Government at Onekaka. and in July, 1939, a contract had been signed with Messrs Brasserts. Ltd. Improved technique permitted the use of ironsand with ore, but the establishment of the industry had been held up by the war. The present works were only a war emergency effort. Owing to intermittent working, witness was not prepared to accept the statement of the receiver that the production of pig iron at Onekaka could be reduced to a little over £4 a ton. Economic Production Cross-examined by Mr Sim, witness said that production to be economic should be at least 80,000 tons of finished products a year, excluding pig iron. He had no knowledge that the Government’s opinion that 35.000 tons of finished products was uneconomic had ever been conveyed to Mr Watson, chairman of Pacific Steel. It was quite probable that if the Government was going to do the work Messrs Brasserts, Ltd., would be engaged as engineers. There was no relation between the dropping of the Taranaki ironsand concern and the taking over of the Onekaka works. On his return from London in 1937, witness prepared a confidential report to his Minister on the Onekaka iron works to see whether it was possible or desirable to set up a steel and iron industry economically in the Dominion. The Cabinet decided promptly towards the end of February, 1938. to take over the Onekaka works as a State enterprise. The hearing will be continued tomorrow.