This money was taken from Albertans to benefit the multinational conglomerate Mitusbishi. There is no Canadian ownership of ALPAC.
Just as the Province owns most of the mineral rights of the province, it also owns most of the forests. Any "Fair Share" policies directed towards the petroleum industry should of course be directed to the forestry industry as well. I'll get to the specifics of how the petroleum industry and the forestry industry "Fair Share" with Albertans on a future post
This has to be read to believed. I've excerpted some hi-lights from the links below but recommend the reader follow all of them.
In summary, it seems that Hunter and ALPAC are PARTICULARLY SKILLED AT NOT DELIVERING A "FAIR SHARE" to the citizens of Alberta. Interesting that he's chosen to lead the so-called "Fair Share" Panel. That's like sending a robber into an honest bank for a security check!
This is the tip of the iceburg. Just a warmup with more to follow.
Easy Money: The Most Heavily Subsidized Mill in History http://www.wildernesscommittee.org/campaigns/wildlands/boreal/alberta/reports/Vol13No07
Suppose someone asked you to help one of the world's largest corporations establish a pulp mill in Alberta. All you have to do is pay $125 cash up front for each member of your family. After that you pay an annual fee of $28 per person. Your children or grandchildren will carry on the payments for the next 100 years. Would you do it? Guess what? You already did!
Many people are still wondering why Mitsubishi corporation won the right to the largest Forest Management Agreement (FMA) in Alberta history. Competing bids were ignored by the Alberta government as it awarded the single most lucrative forest resource available in the province. So upset was then Chief Provincial Forester Fred McDougall, that he left the government over the issue. McDougall is now the Alberta manager of Weyerhauser.
Al-Pac's FMA covers 73,426 square kilometers, with a productive forest land base of 38,916 square kilometers. The phase three forest inventory pegs the timber volume at 650 million cubic meters. The market or replacement value of this timber is a staggering $8.2 billion based on the formula used to compensate Al-Pac if timber is destroyed by another forest user.
Al-Pac paid not one penny for the right to exploit this massive forest resource.
They pay a small fraction of the market value of timber, and nominal annual fees for ground rent and fire protection.
Why is the timber subsidy so great? The answer is clearly that Al-Pac's stumpage or royalty rate is ridiculously low. The stumpage rate for hardwood timber is 40 cents per cubic meter and $2.09 per cubic meter for softwoods. The average cost of wood fibre to Al-Pac is 74 cents per cubic meter.
Mitsubishi is accustomed to paying much more for its timber.
The fundraising prospectus for the Al-Pac mill showed that Mitsubishi pays $6.48 for a cubic meter of wood fibre at its Crestbrook mill in B.C. No wonder Al-Pac, with a new mill, is able to produce some of the cheapest pulp on the planet.
But the subsidy does not end there. Mitsubishi corporation is experienced at dealing with local governments. They somehow talked the Alberta government into helping to finance the feasibility study for the mill. The government anted up $750,000.00 before the parties even went to the bargaining table. Some negotiations!
The government agreed to pay the full cost of all of the mill's infrastructure. All road access, rail access, utility access (electricity and natural gas, water etc.) was paid for 100% by the taxpayers. This is not a loan; it is a grant of $75 million.
The Getty / Klein government has been famous for its loan losses. Novatel, Magnesium Canada, Pocklington---the list is long and the memories painful. These were mostly loan guarantees. In other words, the taxpayers were on the hook if the company failed to meet its obligations. Most of the pulpmills in Alberta are backstopped in this way.
Al-Pac's deal, however, is more generous than any of these, they were granted an "income debenture". Al-Pac does not have to pay back a cent of that loan until it starts to show a profit on its own books. Who pays the interest in the meantime? The taxpayers of course. Mitsubishi / Al-Pac has received a $275 million "income debenture" from the province of Alberta. They have also been granted another $125 million, on the same terms, as a standby loan should they decide to expand.
But how do we know if Al-Pac is making a profit on its production? Unlike a loan guarantee where Mitsubishi would have to borrow the money and pay back the loan, this income debenture is such that the Alberta taxpayers must borrow the money and loan it to Al-Pac.
Mitsubishi has a "take or pay" contract with its Al-Pac subsidiary. The parent company buys all of the production from the mill, according to the financing prospectus, and sells the production on world markets. Financial analysts contracted by the Western Canada Wilderness Committee say it would be very difficult for the government to establish whether Mitsubishi is taking its profit at Al-Pac, at one of the complex holding companies which constitute the ownership structure or at the marketing end.
Furthermore, with pulp prices continuing near $400 per tonne, it is possible that the mill will never show a profit. Meanwhile, the taxpayers continue to service the $275 million income debenture. So doubtful is the repayment, that it might as well have been given as a grant.
There are approximately 2.8 million Albertans. Most are struggling to meet the burden of their taxes, debt and living expenses. The amount of subsidy to Al-Pac is staggering: $350 million up front, with a promise of another $125 million.
The annual cost of the ongoing timber subsidy is $78.7 million – 7.1 billion over 90 years.
For this kind of money, it is easy to see why Al-Pac has some of the best and brightest apologists money can buy.
If you live in Alberta, this is your share of the tab for Al-Pac:
Down Payment: $125
Annual Cost: $28/year
Total Cost: $2645
Family of Four: $10,580
Mitsubishi: The money and power behind Alpac
http://www.wildernesscommittee.org/campaigns/wildlands/boreal/alberta/reports/Vol13No07/mitsubishi
"The US Forest Service found that the APC actually kept two sets of invoices to mask their true transactions."
"Revenue Canada filed a suit against Crestbrook Forest Industries for systematically evading payment of $12.8 Million in taxes."
"Mitsubishi recently pleaded guilty to a price fixing conspiracy in Canada and the US. Acknowledging it schemed to raise the price of thermal fax paper by 10%, the company and its co-conspirators agreed to pay $7 Million in criminal fines."
"The tax collectors regard Mitsubishi's marketing agreement with Crestbrook as an illegal form of "transfer pricing". Transfer pricing is a scheme where profits are moved offshore through sales discounts. Al-Pac has acknowledged that its sales agreement with Mitsubishi is very similar to Crestbrook's."
The Last Great Forest: Japanese Multinationals & Alberta's Northern Forests
ALPAC: A Community Perspective
http://www.wildernesscommittee.org/campaigns/wildlands/boreal/alberta/reports/Vol13No07/community
"On March 2, 1990 at the Athabasca Community Centre, the ALPAC EIA Review Board releases its report that recommends the ALPAC project as planned "not be approved." The review has cost Alberta tax-payers approximately two million dollars. At the same March 2,1990 meeting, Alberta's Minister of Environment Ralph Klein accepts the recommendation of the EIA Review Board and agrees to halt the ALPAC project as planned pending further study."
(Note - is this the origin of the hostility of former ALPAC boss and his political allies towards Ralph Klein??????? He is currently being portrayed as being asleep at the switch, but clearly he was acting on the best interests of Albertans to stop ALPAC from even being constructed)
Later in March 1990 Premier Don Getty overrules the Minister of Environment's decision. He now calls the EIA Review Board report "unbalanced, "flawed," and a mirror that reflected public sentiment but no deep investigation.
Canada's Boreal Forests Under Attack
http://www.perc.ca/PEN/1994-12-01/s-gifford.html
Alpac is paying stumpage fees that are at best one-third what CrestBrook Industry was paying in BC. In 1989 the Canadian Pulp and Paper Association revealed that Alberta's stumpage fees were considerably lower than those in BC, Ontario and Quebec. Internationally, Canada has earned a reputation for heavily subsidizing its logging industry through ridiculously low stumpage fees. Alberta's contract with Alpac gives the company an even better deal than the other forestry companies in the province because the stumpage fees are not fixed but are revised each year based on the value for bleached kraft pulp in the United States.The Alberta government has felt the need to subsidize this project with over $475 million in taxpayer dollars.
The Alberta government has also given Alpac a grant of $75 million in road, railway, and utility access. In addition, Alberta has granted Alpac a $275 million income debenture—similar to a loan guarantee, except that Alberta taxpayers must borrow the money, lend it to Alpac and then pay the interest on it. Alpac will not have to pay back this loan until it shows a profit in its own books. With this arrangement, according to financial analysts contracted by the Western Canada Wilderness Committee, it will always be very difficult to prove that Alpac has made a profit. If Alpac decides to expand its plant, it will be granted another loan on the same terms for another $125 million.
There are other examples of political manipulation by Alpac, from the province down to the Athabaska County Council and even the school board, which was threatened with legal action if Alpac was barred from presenting its viewpoint in the schools. Furthermore, Alpac has threatened to withhold research funding from the University of Alberta's Environmental Research Centre unless the Centre fires its associate director John McInnis, who has been critical of this forestry project. Alpac further proposes to oversee proposed research projects in the University of Alberta's Forest Science Department.
Alberta's relationship with Alpac very much follows the path of many Southern countries. These countries are instructed to cut off spending to health and education and invite foreign investors to reap enormous profits by stripping the land of its natural resources, leaving pollution and poverty in their wake. This is hardly something that we would expect to see in one of Canada's wealthiest provinces. But it is happening.
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