Dear editor,
The insurance industry has a term that fits the Raven Coal Mine project to a T — moral hazard.
A moral hazard is a situation where an individual or company engages in a high risk venture, makes a short-term profit but leaves the downstream liabilities to someone else.
The classic example is the sub-prime loan situation in the U.S. The Big Banks gave out housing loans to folks who couldn’t afford them. When the loans started turning bad they bundled them together, sold them to investment companies and walked away.
The mining industry has many examples of projects that are moral hazards. They privatize the reward and socialize the downside risks — get in, get what they can, get out and leave the taxpayer holding the bag to pay the piper.
There are three indications that the Raven Coal mine project is a moral hazard.
First, it is an environmental hazard.
That huge waste pile over 16 years will be the size of a 500-storey building spread over an area the size of Canadian football field —you can do the math. It will be with us long after the mine has closed.
Situated up on a hill above Fanny Bay and only five kilometres from Baynes Sound, the pile, exposed to the elements, will leach out toxic substances that will flow downhill, polluting local water tables on their way to the sea.
Second, the project is an economic hazard for the local community and the Valley.
It threatens the 600 sustainable shellfish industry jobs, and, in turn, promises 300 temporary (by comparison) jobs that will likely go to miners coming in from elsewhere. And, it threatens the tourism industry in our valley which is an essential part of our economic future. In the last year friends and family have invited my wife and I to share their timeshares in Maui, Hawaii and Sedona, Ariz.
Can you imagine what would happen to their tourist industries if they suddenly announced that they were supporting the development of coal mines? Can you imagine what would happen to our tourist industry if the same thing happened here?
Third, Compliance Energy itself, as a resource company, is a hazardous risk.
North American and global markets for borderline metallurgical coal are in the tank, especially thermal and the borderline metallurgical coal the Raven mine would produce.
In B.C., the USA and Australia, coal mines have been shutting down for months. Compliance shares have plunged from 55 cents two years ago and are hovering around five cents now.
As of Dec. 31, 2012, their audited statement shows a deficit of almost $7 million. The auditors pointed out that the company has no revenue-generating operations, and, in an unusual Emphasis of Matter, stated that a material uncertainly may cast significant doubt about Compliance Energy Corporation’s ability to continue as a going concern.
This high-risk venture is a classic example of moral hazard. It is the wrong project, in the wrong place, at the wrong time being proposed by the wrong company and shafting too many people.
Is there anybody out there who really believes that this project will provide a long-term benefit to our community and its future?
Mike Bell,
Comox Valley