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Tuesday, October 9, 2007

Let them eat lobster

Economist.com



Newfoundland diary

Let them eat lobster
Oct 9th 2007
From Economist.com


Attracting funds, from the 1940s to today


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At the Botanical Garden on a hill above St John’s, two areas showcase native species: the rock garden and the peat garden. That pretty much sums up Newfoundland, affectionately known to its inhabitants as The Rock.

This island at the northern terminus of the Appalachian Mountains is attracting a lot of attention these days: mining companies want to capitalise on the boost Chinese demand has given to metal and mineral prices. I am spending the morning with a roomful of miners at the annual Resource Investors Forum, where they describe in glowing terms what they have found and what they hope to find in a bid to attract financial backing.

Mining has a long but sporadic history in the province. Copper production was big in the 1800s. Gold, iron ore, zinc and lead followed. One of the very first postage stamps features the mine at Tilt Cove.

Voisey's Bay Nickel Company
Voisey's Bay Nickel Company

Nickel in the rough


But mining had pretty much died down until two prospectors looking for diamonds in Labrador (the mainland part of the province, which the British transferred to Newfoundland in 1809) stumbled across a massive nickel deposit at Voisey’s Bay in the early 1990s. This discovery rekindled interest in what lies beneath the rock.

At meetings like this a star always emerges, and today’s hot company is Aurora Energy Resources, which has found uranium in northern Labrador. Rejuvenated global interest in nuclear energy has caused the price of uranium to soar, making companies like Aurora very attractive. I wander over to the area where companies have laid out their information booklets only to find that all of Aurora’s material has already been taken. It should have no problem attracting investors.

Roland Butler, whose company, Altius Minerals, helped start Aurora, frets that Newfoundland companies often get a better reception from European investors than they do from their fellow Canadians. He attributes this to a poor perception of the province. That changed a bit after the Voisey’s Bay mine started operation, but raising money abroad often remains easier than attracting Canadian funds.

I will hear this complaint quite a few times in the coming days, with various explanations. Some think that Canadians know as little about Newfoundland as Americans know about Canada: out of that ignorance comes discrimination. Others admit that Newfoundland has a history of financial mismanagement and spectacular boondoggles.

It remains the only British dominion to abandon independence and subject itself to the Crown (which it did in 1934), a condition the British imposed as part of a financial bailout. Newfoundland again found itself in financial trouble in the 1940s: this time Britain nudged Newfoundland and Labrador into the arms of Canada.

Government-funded projects, like a giant cucumber greenhouse that was supposed to use space-age technology to produce vegetables in record time, raised snickers in the rest of Canada when they collapsed in failure. And an ironclad, 65-year deal with Quebec on the purchase of Labrador hydroelectric power confirmed suspicions of financial incompetence when it became clear that Quebec would reap almost all of the profits until the agreement expires in 2041.

All of this explains why the prospect of prosperity from offshore oil and onshore minerals seems so sweet to Newfoundlanders.

Post-forum dinner is at Velma’s Place, a restaurant two streets up from the harbour, which promises traditional food. The décor is basic—formica tables with plastic upholstery on the chairs—but the food is delicious. I forego the cod tongues: just thinking about how they extract them makes me slightly queasy. Instead, I opt for pan-fried cod and scrunchions (fried bits of pork rind), a Newfoundland staple. For dessert there is bakeapple pie, which somewhat confusingly turns out to be made not from apples, but from a local berry. Its name is a contraction of the question “Baie qu’appelle?”: or, “This berry: what it is called?”

Over dinner with a couple from St John’s, the talk turns to why Newfoundland joined Canada. I tell them about placards from the 1948 referendum that I’d seen in the local museum. “Don’t Sell Your Country!” said one opting for Newfoundland to remain independent. It urged voters to choose responsible government and economic union with the United States.

“We are voting for Confederation!” said the opposing camp’s placard, which then listed all the federal programs on offer, including family allowances, pensions and unemployment insurance.” I express the view that Newfoundlanders were bribed to join Canada.

“The privation in the 1930s was terrible,” says the woman. “My father remembers people so poor they had to eat lobster.” This does not sound like such a bad fate to me, I tell her. She assures me that it was a source of shame to eat bottom feeders. “Families that did this would bury the shells on the beach at night so no one would know.”

Lobster has come up in Newfoundlanders’ estimation since then, if not for its taste then for the money it attracts in exports. But cod remains the meal of choice.

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LOOK closely at a time-zone map of the western hemisphere. You will see a small area carved out of the Atlantic zone off the east coast of Canada. There sits Newfoundland, which has its own time zone (NST: Newfoundland Standard Time), three and a half hours behind Greenwich Mean Time and half an hour ahead of eastern mainland Canada.

Being different, sometimes awkwardly so, comes naturally to Newfoundlanders. Latecomers to the Canadian federation—they only joined in 1949 after voting by the slimmest of margins to replace the hated rule of London with that of the equally distrusted government in Ottawa—they feel their history and culture make them at least as distinct as the Francophone Quebec, and entitled to the same special treatment.

That distinctiveness is apparent as I get into a taxi for the 20-minute ride from the airport to downtown St John’s, Newfoundland’s capital. The driver seems jolly enough, given that I am a mainlander. He launches into a succession of what appear to be quite detailed and humorous stories as we wind our way downwards toward the impressive natural harbour at the city’s core. Unfortunately, I catch one word in ten: an impenetrable accent and unfamiliar vocabulary obscure the rest.

Newfoundland English has its roots in 17th century Devonshire, home to the first fishermen hired to net cod on the Grand Banks. Over the last four centuries, linguistic contributions from the Irish and other settlers have produced a version of English that in its purest form is unintelligible to those who “come from away”.

My driver is a purist. By the time he drops me in front of a hotel at the base of Signal Hill, I am no wiser than when we started about his life, his taste in jokes, or his plans. Having not budgeted for an interpreter, I now fret that one might be needed for the week of interviews ahead.




One word I did understand was Marconi. Knowing the story already, I am able to fill in the blanks. Signal Hill is the rocky outcrop where Guglielmo Marconi is thought to have received the first transatlantic radio transmission, sent from Poldhu in Cornwall, 2,850km away. Newfoundlanders are proud of their history, which stretches back to 1000 AD, when the Vikings arrived. Their link with England was forged in 1583, when Sir Humphrey Gilbert took possession of the place for Elizabeth I, having promised her he would “discover and inhabit some strange place.”

I have come here not for the past, but for the future, which is centred on offshore oil. Three fields are already active, producing 10% of Canada’s crude, and the tentative development of a fourth is announced just days before I arrive. With the price of oil nearing record levels, Newfoundland’s 505,000 inhabitants are hoping to become comfortable, if not rich: a novel state for this perennially poor province.

The slight hitch is that this oil is not easily accessible. All four fields are about 350km offshore in an area of the North Atlantic called “Iceberg Alley” because of the massive chunks of ice that break from glaciers in Greenland each spring and drift south on the Labrador current.

My first stop is the Newfoundland Ocean Industries Association, which represents the companies involved in offshore oil, to find out how oil can be extracted in such hazardous conditions.

“We’ve learned some things since Hibernia,” explains Deirdre Greene, the cheery policy director for the association. She is referring to the C$5.8 billion ($5.8 billion) concrete platform that went into operation ten years ago. Designed to withstand the impact of a six-million-tonne iceberg, which the engineers thought might occur once every 10,000 years, the platform was enormous and hugely over-engineered, she says. They have since determined that in water less than 100 metres deep, anything larger than 2.5m tonnes would run aground.

Ideally, the operators don’t want anything hitting their expensive equipment. Even bergy bits—icebergs the size of a house—or growlers, the size of a piano, can cause damage when hurled at a platform by wind and waves. So they watch for bulletins from the International Ice Patrol, which has been monitoring ice movement in the area since 1914 (it was founded in response to the Titanic's sinking two years earlier), and send out the ice wranglers, who use ropes and high-powered boats, to steer them away.

The vocabulary she uses for drilling methods reflects this constant battle. “Stand and fight” refers to a fixed platform that is heavily fortified to withstand impact. “Cut and run” is for floating platforms that can more easily disengage from wellheads on the ocean floor.

Having mastered the relatively shallow waters, the oil companies are now exploring in the Orphan Basin, where a depth of 2,500 metres presents new challenges. “You can get 30-metre-plus waves and cathedral-sized icebergs,” says Ms Greene. “You may have heard of it because it’s where the perfect storm occurred.” I leave the office thinking Newfoundlanders must be a hardy lot if they willingly set to sea in those conditions.

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