Canada: Taxpayers, Unions, outraged at $1 billion loan to Vale
Published by MAC on 2010-10-10Source: CBC News
Canada's Export Development Corporation has come under fire for granting an unprecedented C$ 1 billion loan to Vale of Brazil.
The Canadian Taxpayers Federation claims the deal won't help the country's workers.
And Leo Gerard, the International President of the United Steelworkers union, finds it "outrageous that the second-richest mining company in the world, that has just forced labor disputes in both Newmont and Labrador and Ontario, would be given access to one billion of low interest loan."
See also: International open letter of those affected by Vale
"If corporate welfare worked at creating jobs, every Canadian would have two by now."
CBC News
4 October 2010
Canada's $1B loan to Vale criticized
Taxpayers federation, union knock Export Development Corporation financing
A union and a taxpayers group Monday both criticized a federal loan to Brazilian mining giant Vale Inc.
The Export Development Corporation, a Crown corporation that provides financial support for Canadian exports, said it is creating a line of credit to help Vale with expansion in Canada and to encourage the firm to expand its use of Canadian suppliers.
The Canadian Taxpayers Federation called for the federal government to scrap the loan and the United Steelworkers described the assistance as an insult to workers.
The loan will include $250 million US for capital projects at the Long Harbor processing plant in Newfoundland and Labrador. Another $250 million will be available for several projects in Ontario.
The loan is also intended to generate opportunities for Canadian firms by rewarding Vale for using domestic suppliers.
The remaining $500 million, the EDC said in a news release, will be available for future purchase of Canadian goods and services by Vale for its operations outside Canada, or to support Vale exports involving signed contracts with Canadian suppliers.
But Kevin Gaudet, the federal director of the taxpayers federation, said that while the loans will help the company, they won't do much for Canadian workers.
"If corporate welfare worked at creating jobs, every Canadian would have two by now," he said in a news release. "This loan should be scrapped and fast.
"Why are Canadian taxpayers lending precious money to a firm that says it already has so much excess cash?"
On Sept. 23, 2010, Vale announced a $2-billion US share buy-back program.
The federation said Ottawa should provide more details about the terms of the loan, including Vale's intended schedule for borrowing money, at what interest rate and whether there are conditions under which the company wouldn't have to repay some of the money.
The firm's operations in Canada have been marked by labour disputes since its $19.4-billion takeover of Inco's nickel mines in 2006.
Union calls loan 'unacceptable'
"It is unacceptable that the federal government, after 16 months of sitting on the sidelines and making unhelpful comments while Canadian communities are ravaged by Vale, is now offering this massively profitable multinational $1 billion in financing," said Ken Neumann, the Steelworkers' national director for Canada.
"It is an insult to the workers in Labrador and to Canadians who think the government should stand up for working families."
The same day as EDC's announcement, Vale and the union for 130 striking members of United Steelworkers Local 9508 in Labrador broke off talks. The workers have been on strike over wages, benefits and seniority since Aug. 1, 2009.
Workers at the former Inco mine in Sudbury, Ont., ended a year-long strike in August.
The Sudbury strike was a bitter one, with the union accusing Vale of bad-faith bargaining over wage bonuses, job transfers, contracting out and pensions, and the company taking the union to court over various alleged incidents on the picket lines.
With files from The Canadian Press