May 23, 1918


Amendment agreed to, and section as amended agreed to. Bill reported and read the third time and passed.


THE ZINC BOUNTIES ACT, 1916.


On motion of Hon. A. K. Maclean (Acting Minister of Finance) Bill No. 109, to provide for the payment of bounties on zinc produced from zinc ores mined in Canada, was read the second time and the House went into committee thereon, Mr. Boivin in the Chair. On section 2-Bounty on zinc produced in Canada when price is less than £41, 8s 6d.


UNION

Amendment agreed to.


UNION

John Gillanders Turriff

Unionist

Mr. TURRIFF:

When this bounty was

granted two years ago it w'as pointed out to the Government of the day that these producers would soon be back for increased bounties or for renewals. We renewed tbe bounty on lead-

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?

Mr. A. K. IMACLEAN@

No.

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UNION

John Gillanders Turriff

Unionist

*Mr. TURRIFF:

I know that the price

of lead has doubled since the bounty was given tiwo years ago. While I am not as well posted on the price of zinc, I have no doubt that it has increased very materially since the bounty was granted. I am aware that the cost of refining zinc is very much greater than it was, hut the circumstances show that the moment you grant increased protection or give (bounties on these products you start to feed these babies and they come back to the Government from time to time. A great many interests throughout the country are trying to make the war an excuse for seeking consideration to which they are not entitled and which they would not otherwise be given. It is well to point out to these industries that while we in the West are satisfied not to bother about the reduction of duties until after the war, if they try, because of the war, to obtain consideration to which they are not entitled, they may look for trouble in the near future.

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UNION

Robert Francis Green

Unionist

Mr. GREEN:

There appears to be some misconception in the mind of the hon. gentleman as to what is intended to be accomplished by the placing of this bounty upon zinc produced in Canada.

I hold no brief for the smelter company which, so far as I know, is the only one producing refined zinc in Canada and which is located at Trail, BjC., but I hold a brief for the operators and owners of the mines that are producing the ore from which the zinc is manufactured. Until the time of the war no zinc was smelted or refined in Canada. The industry was built up practically at the request of the Munitions Board which found it very difficult to secure a sufficient quantity of zinc for the purpose of making munitions. They, therefore, entered into an arrangement with this particular concern to build, equip and operate an electrolytic zinc plant. At the time that this plant came into operation the Munitions Board were paying, the Acting Minister of Finance informs me, forty cents a pound for zinc. But at that particular time, the Munitions Board, having .made this particular arrangement with the smelter to go into the zinc producing business, also made a contract that what zinc they bought from the smelter they would receive at the price of fifteen cents per pound. That means that while the markets of the world were offering forty cents per pound for this particular kind of zinc, this emelter, under its contract, supplied to the Munitions Board all that it produced at fifteen cents per pound. The ordinary zinc of commerce, or prime spelter, is produced not electrolytically but by what is known as the Belgian or distillation process. That is a very much more economical and cheaper process. At the same time it is a process that takes- very much more time for the metal to pass through the various stages before it gets into the finished state. If we in Canada are going to produce from our natural resources the finished product, then we must keep alive this electrolytic process in Canada until one of two conditions is attained, either that the smelter is able to produce zinc electrolytically as cheaply as it is now produced by the Belgian method or that we supersede this method with the Belgian method. We have in Canada vast quantities of zinc ore. We require the zinc in the finished state. In the past any zinc ore that we had in Canada was shipped to the United States and smelted there. This particular industry has been built up, not by the bounty, because as yet it has received no bounty, but by the fact that this company was able to enter into this contract with the Munitions Board.

I wish to say a word or two in connection with the smelting from the point of

view of the operator in my part of the country. The operator there has been demanding, and in my opinion rightly so, that a duty be placed upon raw ores coming into Canada, because this company has within the last two years imported something in the neighborhood of twenty thousand tons of ores from the American side. The company gives as its reason that those particular ores were wanted for fluxing purposes, and I am not going to say that their statement is not right, but as we have those ores in Canada, our people should be protected sufficiently to compete with those ores which are imported from the other side of the line. There is amongst the operators a strong feeling that, in the past, they have not received fair treatment from the smelter; that the smelting rates have been too high; that the smelter has not taken the ore from them when they had it to sell; that the smelter in the main favours its own mines as against those of the country generally. I do not know how much of this is true, but I have, in season and out of season, pressed upon the Government my view that they should hold an investigation under a commission so that this matter may be thoroughly gone into, and if the smelter, which is in a sense a public utility, is not treating the public rightly. If tms is so, then some -action should be taken to make it do so. On the other hand, the managers of the smelter say to-day that if they do not get the protection afforded them by [DOT] this bounty, they will have to close down their emelter.

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UNION

John Gillanders Turriff

Unionist

Mr. TURRIFF:

If the smelter company, which is a very wealthy concern, owned chiefly by the Canadian Pacific, could sell its product at forty cents a pound and it is getting a bounty of only two cents and is selling its zinc -at fifteen cents per pound, why should it close down its smelter!1

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UNION

Robert Francis Green

Unionist

Mr. GREEN:

To-day there is absolutely no market in Canada for electrolytic zinc, unless the smelter can produce electrolytic zinc below seven cents per pound, because the price of prime spelter is seven cents per pound to-day, and prime spelter is the particular grade of zinc that is being used commercially, not only in Canada, but in other places. The Munitions Board have absolutely refused to buy any more zinc from this smelter, giving a-s their reason that large -quantities of this particular grade of zinc were purchased for the Russian Government and paid for by the British Government. This particular zinc was not de-

livered to the Russian Government and is, therefore, on the hand-s of the British authorities and is being used by them, and they are not in the market for any Canadian electrolytic zinc. The -whole proposition is to put this electrolytic zinc on a parity with the prime spelter, so that it can be sold in the same market at the same price.

I was going to say that the Government have agreed to appoint a commission to investigate the whole situation as between the smelter and the producer. That being the case, I think it will be a calamity for the mine owners throughout British Columbia, and possibly in other parts of Canada, if this particular portion of the process that is carried on at Trail should be closed down owing to inability on the part of the smelting company to compete with smelters in other parts of the world.

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L LIB

Frank S. Cahill

Laurier Liberal

Mr. CAHILL:

I want to voice my objection to bonuses or bounties or protective tariffs in any shape or form. I am not in favour of, and I do not believe in, taking the people's money for any special interest, and this seems to be the same old protective tariff proposition. My hon. friends are bringing out the poor mine owner, but really the party which gets the benefit in this case is the smelter, the rich corporation. If this is a case for special consideration and is an industry which the War Purchasing Board are anxious should be [DOT]maintained, it seems to me that the smelter [DOT]company could make a contract with that board- for their products and that we could do away with bounty business. It is not right at this time to be loading up the country with additional bounties.

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UNION

Stanley Edward Elkin

Unionist

Mr. ELKIN:

I notice the minister proposes to change the point at which the price of the smelter will be considered by adding the words "St. Louis." Since this Act went into effect-and I understand practically no bounty has been paid under this Act-the seven, and one-half per cent war tax has been imposed, which at the present price of prime spelter gives an increase on the bounty of three-quarters of a cent or seven and one-half per cent on practically ten cents. It is. an utter impossibility for this .spelter that is made in British Columbia to compete in a commercial way with the ordinary spelter, ond I think we should have a little more information as to how the Minister of Trade and Commerce, who. will administer this measure, proposes to figure the price at which prime spelter shall be sold in Canada.

If we were to take the prime .spelter at St. Louis and permit the British Columbia smelter to compete with it, that will perhaps be very good business from the manufacturer's standpoint, but this spelter that is made in British Columbia is not a good spelter for ordinary commercial purposes, and it seems to me that before we add three-quarters of a cent to this bounty, making it two and three-quarters cents per pound, we should know how the Minister of Trade and Commerce proposes administering this measure. If he is going to figure the price at St. Louis plus the freight and plus the duty of seven and one-half per cent, figuring the price of prime spelter in Canada at eight or nine cents per pound, that is not a serious matter; but if he is going to figure the price at St. Louis, without adding the war tax of seven and one-half per cent whicl ^ame into effect since this Act was passed, >

shall really be giving these people a bounty of two and three-quarter cents per pound instead of two cents.

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UNION

Alexander Kenneth Maclean (Minister Without Portfolio)

Unionist

Mr. A. K. MACLEAN:

dn this respect the Act is just as it was when it was introduced two years ago. In this Bill, as in the Act now in force, the bounty is payable if the standard price at London or, as in 'the amended Bill, at London or St. Louis, is nine cents per pound, I suppose, of course, the duty .and freight will have to be taken into consideration., but that would not operate in favour of the Canadian producer.

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UNION

Stanley Edward Elkin

Unionist

Mr. ELKIN:

It gives the producer a

further protection of three-quarters of a cent per pound on to-day's prices, and of one cent per pound on the prices of a few months .ago, )In other words you are protecting this industry by way of bounty to the extent of practically three cents per pound. That is going pretty far in the case of a smelter.

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UNION

Alexander Kenneth Maclean (Minister Without Portfolio)

Unionist

Mr. A. K. MACLEAN:

This company

at the instance of the British Government and the Munitions Board of Canada, was induced to enter into the manufacture of electrolytic zinc in order that the British Government might have a supply for the manufacture of munitions here and fn Great Britain, and for some of the Allied countries. The company made an investment of $2,500,000, and it was agreed between the Government and this company, as an inducement to the latter to enter into the manufacture of this high grade zinc, that the company should receive a bounty under certain conditions as to price, of

two -cents' per pound for two years, payable only after the war. When the company commenced to make the investment, it naturally anticipated that, during the war period at least, it would have in the Allied countries a market that would consume its entire production.

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UNION
UNION

Alexander Kenneth Maclean (Minister Without Portfolio)

Unionist

Mr. A. K. MACLEAN:

Yes. This company eventually produced a great quantity of zinc which was purchased by Great Britain and Russia. When Russia withdrew from the war, that market was, of course, closed to the Consolidated Mining and Smelting Company which, at the beginning, always anticipated it would have this market. Great Britain was also expected to be a continuing purchaser of the product of this company. For -some reasons, largely financial, Great 'Britain is- obliged to purchase zinc in the United States. Now the smelter company is in the position that it made an investment of $2,500,000 to manufacture this high-grade zinc expecting that it would always have a customer, but now it finds itself without a market and it will have no market unless it can reduce the cost of production of electrolytic zinc to the cost of production of ordinary zinc, that is about seven cents per pound. In 1916, an Act was passed by which it was agreed to pay this company a bounty of two cents per pound whenever the price fell below the standard London price, but 'that bounty wasi not to be paid until after the war. The purport of -this Bill is to [DOT]allow the payment of thiei bounty at once if earned under the conditions stated in the Bill. IThe amount is limited to $400,000. My hon. friend from Victoria (Sir Sam Hughes) was, I think, a member of the original Shell Committee that induced the company to go into the business.

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UNION

Samuel Hughes

Unionist

Sir SAM HUGHES:

The original Shell Committee had the honour of establishing the zinc industry. At that time the British authorities were paying from forty-two to forty-five cents per pound for zinc in the United States, and under the contract entered into the zinc was to be supplied at fifteen cents per pound. Unless I am misinformed, the price in the United States is not fifteen cents per pound to-day.

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UNION

Alexander Kenneth Maclean (Minister Without Portfolio)

Unionist

Mr. A. K. MACLEAN:

The price in the United States as fixed by the Government is twelve cents per pound, but the Consolidated Mining and Smelting Company cannot sell at twelve cents, they must sell at nine cents to compete with the other

companies producing the lower grade of zinc.

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May 23, 1918