Defending Chairman Dan

The surprising (well perhaps not so for some) decision of Friday, to sack President and CEO of Ridley Terminals Dan Veniez, has started to generate some news copy with the province's news services.

As we outlined in our blog on Saturday, the Globe and Mail was first to post the latest development in the ongoing saga of Ridley Terminals, which had recently seen Mr. Veniez taking a very public profile in his quest to change the business direction and make up of the Prince Rupert based coal terminal.

While his reputation across the Northwest has made him a rather controversial figure locally, for the provincial and national media, his thoughts, commentaries and occasionally bombastic declarations have been the food chain of many a column or profile. And with his forced march out of the coal pile, he once again is proving to be making for some good copy.

The CBC posted a story on it's website today that highlights the political nature of the firing, asking questions of both Prince George MP Jay Hill and Transport Minister Rob Merrifield (he of the you can't quit, you're fired letter decision) but as of yet receiving no replies to their queries.

The CBC piece examines the side of the story that Mr. Veniez is apparently offering up, that of a political move to silence him due to the feedback of coal companies who don't agree with his thoughts that they should pay more for shipping their coal out of Ridley Terminals.

Over at the Vancouver Sun, Mr. Veniez received a most favourable ear as he outlined his tales of battle with the Conservatives. With a rather declarative title of Ridley Terminals chief fails to kowtow, is fired, columnist Don Cayo takes offence with the Conservatives handling of not only Mr. Veniez but how the Terminal is operated. Suggesting that Messrs. Hill and Merrifield would feel quite at home in the NDP with their thoughts on how the Terminal should proceed.

His impression of the situation seems to be that the close relationships between the MP and the Minister, with the coal interests of BC and Alberta is what is at the heart of this turn of events.

Cayo includes Mr. Veniez's most recent correspondence with Minister Merrifield, (prior to his dismissal), cc'd to a list of notables, including Prime Minister Harper, Sheila Fraser and Jim Flahterty to name a few.

It reads with the kind of bravado that many in the Northwest might remember from his days at New Skeena, in fact if you try you can probably picture him with a microphone at the PAC delivering this agenda for the New Ridley.

The closing paragraph outlines his state of mind as he outlines his thoughts on his efforts to move RTI forward according to what he believes was his mandate. `The onus is on you, Minister, to provide clear guidance to RTI's Board, not on us to defend our record of accomplishment and service. We welcome an opportunity for a complete and thorough review of these and other important facts.`
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One might suggest that the Minister provided for his guidance with his letter of dismissal of Friday, but that will be for the pundits (and maybe the lawyers to divine).
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And if we think that Mr. Veniez is going to quietly clean out his desk and walk into the sunset, think again.
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In the Cayo column for the Sun, he suggests that he's more than willing to testify before a Commons committee, after all as we all know on the North coast, the man does enjoy a good dramatic reading it seems. The contents of his letter to the Minister more than sets up that tempting possibility of a public appearance in Ottawa to outline his talking points to federal politiicans.

Interestingly enough, earlier this week NDP MP Nathan Cullen had made statements that suggested he was going to investigate the entire Ridley Terminals situation, though many would suspect that his investigation probably was going to deal more with Mr. Veniez`s fast moving desire to reach privatization.

Now it seems that if Mr. Cullen and the opposition parties want to keep up with the fast flowing curve of point and counter point, they had best expand that examination to much more of than the Veniez angle of the Ridley story.

Regardless, the events of Friday are no doubt going to reverberate across Northern British Columbia for months to come.

By removing what had become a rather troublesome stone in his shoe in the form of Mr. Veniez, Minister Merrifield may have opened up his office to much deeper investigation than he might have planned for.

Mr. Veniez turns his attention to the local populace

He’s been best known over the last month as perhaps Prince Rupert’s most published author, as Dan Veniez’s thoughts on the need to privatize Ridley Terminals has been widely recorded across Canada.

From the National Post to the Globe and Mail to the Vancouver Sun, his oped pieces have become the mainstay of the debate over the issue that has jumped to the top of the list for local discussion these days.

Now, with the communities of the Northwest and Northern BC weighing in on the topic, the issue and Mr. Veniez has gone local.

From the CBC to the Northern View and the Daily News, the privatization issue has become one of the leading stories of the moment.

You can listen in to the audio (click here) from the CBC's Daybreak North Report of earlier this week, examining the plans for the privatization vision and the thoughts of both supporters and opponents.

Likewise, the Northern View and Daily News provide their accounting of events, with articles found below.

And for the full review of the developments on the Ridley story, you can follow these links from the blog with a complete archive of our items thus far on the story.

Mr. Veniez gets some back up
Backlash brewing over Ridley privatization plans
Mr Veniez against the world...
Mr Veniez's Prospectus

Veniez responds to opposition
By George T. Baker
The Daily News
Thursday, June 4, 2009
Pages one and three

Ridley Terminals Inc. Chairman Dan Veniez responded to northern municipal leadership opposition to the idea of privatization of the North coast coal terminal.

He believes that the "wool is being pulled over everyone's eyes" by a consortium of coal producers who want subsidized access to Asian markets.

"Our sole interest is the well-being of RTI, it's people, and the taxpayer. In the past decade, RTI's been run into the ground," wrote Veniez in an email from Asia.

In 2003, Transport Canada officials managed and led a process that lasted more than two years, resulting in its recommendation to sell RTI to a junior coal producer for a total cash consideration of less than $3 million. The terminal had been built in 1982 for $250 million.

The Conservative government put a halt to the idea in 2006 because newly elected Prime Minister Stephen Harper did not believe that a sale represented sound value or the right choice for Canadians.

If this story sounds like a repeat, that's because it is. In January 2006, the Daily News reported that during the last days of the election, a coalition of coal companies were pushing the Prime Minister to follow the lead of then Minister of Industry David Emerson and cancel the sale of Ridley Terminals to a sole company and instead place it in the hands of the port authority or a coalition of shippers.

In a letter to the Prime Minister, the companies, most of which had or still have coal interests in Northeast B.C., said they were discouraged with comments by Transport Canada that Emerson's view is "not one shared by the national campaign or by the federal government itself."

The companies included the Northern Energy and Mines, Western Canadian Coal, Cline Mining, Elk Valley Coal, Hillsborough Resources Limited, Sumitomo Canada Ltd., Teck Cominco, ICEC International Commodities Export Corporation and Pine Valley Coal.

At the time the company that was tipped to take over the terminal was Northwest Bulk Terminals Inc., a subsidiary of Toronto mining contingent Fortune Minerals.

But Veniez said privatization is small part of what he considers to be the real story.

"No one is talking about the central problem [of financial troubles]. This discussion isn't about whether to privatize or not. It's about how should that be reversed to secure RII for the future. And who's going to pay for it.”

But RTI did see some increase in traffic during 2008.

According to the annual report, the company had a seven per cent increase in revenues from 2007 numbers.

But numbers are expected to be much less this year because global demand has softened for all kinds of mined products, including coal.

In it's annual report, RTl noted that there was, "deteriorating economic conditions led to a decreased demand for steel, and subsequently, for coal. Economic activity in Asia, the primary driver of coal consumption in the steel sector for the past decade, sharply contracted after August 2008."

It isn't just RTl who expects a decline in shipments, either. Westshore Terminals Inc. a privately owned coal terminal in Vancouver, owned by B.C. Midas man Jim Pattison, forecasts a drop in shipments, also.

For the first quarter of 2009, Westshore anticipated that its tonnage throughput would be approximately 4.5 million tonnes as compared to 5.1 million tonnes for the same period in 2008.

Privatizing Ridley Terminals is not the core issue, says Veniez
Both the City of Prince Rupert and the District of Port Edward oppose the sale of Ridley Terminals.
By Shaun Thomas - The Northern View
Published: June 04, 2009 10:00 AM Updated: June 04, 2009 11:14 AM

The day after the North Central Municipalities Association (NCMA) and the Northern Development Initiative Trust outlined their opposition to the proposed sale of Ridley Terminals in Prince Rupert, board chair Dan Veniez reiterated his stance that selling the facility is an important step in ensuring the future of the company and its workers.

“In the past decade, RTI's been run into the ground. That's not acceptable. No one is talking about that central problem. We are. How should that be reversed to secure RTI's place for the future? That's the real issue,” he said, adding that “government has been bad at running RTI” and has invested $400 million into the terminal.

“[The core issue] is not to privatize or not to privatize. The core issues are who is going to take care of RTI, and do it justice as an important part of the gateway? Who is going to pay for it? Should the taxpayer continue to subsidize foreign owned coal producers…

As a board, we are doing this as a public service because we care about Prince Rupert and the region. Our job is to protect RTI. What the government decides to do is entirely within its purview. We don't get a vote on that whatsoever.”
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The NCMA opposition, which included the mayors of 25 communities and 20 regional district representatives, said keeping Ridley Terminals public was important for the northern economy.

“Ridley Terminals is key to the continued expansion of family by supporting jobs in our mining, forestry and bioenergy industries. Efficient and cost effective export means that Ridley Terminals must remain a public asset to ensure there is growth and diversification in the wealth creating rural regions of British Columbia," said the NCMA.

"This region will be further insulated from a future recession as long as it has a diversified resource base with the most efficient and least congested public port system in western North America. A publicly operated Ridley Terminals is critical to that vision.”

Look for more on this story in the June 10 issue of The Northern View.

Mr. Veniez gets some back up

It's been a pretty lonely road that Dan Veniez has been on so far, seemingly the only one that publicly at least thinks that the privatization of Ridley Terminals is a necessary and good thing.

As has been chronicled over the last few weeks, Mr. Veniez has been a very prolific correspondent with the nations largest papers, getting his message of privatization out to a wide audience.

His efforts have served to bring together a coalition of sorts of Northern BC residents to offer up the contrary opinion to his desires, a group which most recently put together a very public rebuke to the plans of Mr. Veniez.

It's the organized nature of that opposition that has caught the attention of a well known national columnist with the National Post. Terence Corcoran has posted an article on the National Post website which challenges the nature of the "ground roots" protest, suggesting that a more organized campaign is at work, one sponsored by a rather self interested lobby group the British Columbia and Alberta coal industries.

Corcoran's article outlines some of the history of the Terminal, the attempt by Paul Martin to privatize it a few years ago and fully explores Corcoran's disappointment in the handling of the issue by the Conservative Harper government, which he suggests is running against all that Conservative, free enterprise believers would want or expect.

He examines the recent offerings of the local opponents, both the declaration from local mayors and regional district representatives as well as the recent letter from Houston Mayor Bill Holmberg, and sees the orchestrated moves of a professional PR campaign in place.

On the suggested preference of the local group to see Ridley merge with the Port, Corcoran picks up the ongoing theme of Mr. Veniez that including Ridley as part of a larger Port of Prince Rupert organizational chart would only create more problems than it solves.

It's doubtful that the Corcoran article will hold much sway with those that are firmly against the Veniez privatization bid, but it is interesting that he points some rather disconnected policy shifts from the Conservatives on this file, suggesting that perhaps they are getting used to the concept of government intervention in industry.

He may not be much help to Mr. Veniez in the long run, but at least he's coming along for the ride on his journey. After all nobody likes to travel alone...

Terence Corcoran: Tories back coal giants at Ridley
Posted: June 04, 2009, 7:59 PM by NP Editor

Plan would subsidize Alberta and B.C. coal shipments
By Terence Corcoran

The National Post

In the great scheme of Canada’s economy, Ridley Terminals Inc. is no big deal. With annual revenue of just under $25-million, the Crown corporation operates a bulk-commodity handling facility off Ridley Island in Prince Rupert, B.C., 1,000 kilometres north of Vancouver. FP Comment’s editorial team has never been to Ridley Terminals, and wouldn’t know a bulk handling facility from the Coney Island Cyclone Ride. What we do know, when we see it, is big time corporate subsidy seeking, backroom politics, scheming lobbyists and cabinet ministers throwing their weight around to satisfy the big time corporate interests.

In this case, the corporate interests include the B.C. and Alberta coal industries, whose coal production flows through Ridley Terminals. The political players include two Conservative cabinet ministers, House Leader Jay Hill and Transport Minister Rob Merrifield. Being Conservatives of the bold free-market mold allegedly found in Alberta and parts West, one would expect Hill, Merrifield & Company to be staunch defenders of commercialized and privatized service delivery through Ridley at market rates.

Alas, Messrs. Hill and Merrifield have no such interests as far as Ridley Terminals is concerned. Both have begun to oppose plans for proper commercialization of Ridley and to throw their support behind the idea of turning the Crown corporation, a vast sinkhole of taxpayer money over the years, into a vast sinkhole of more taxpayer money.

Instead of privatizing Ridley, our Tory MPs — along with a phalanx of coal lobby-orchestrated local governments — have cooked up the idea of turning Ridley over to the Prince Rupert Port Authority. The effect of this would be to turn Ridley Terminals into a subsidized transport link for the coal industry.

It turns out, to no surprise, that Mr. Hill is the MP for Prince George, where some coal mines operate. And Mr. Merrifield’s Alberta riding, Yellowhead, is the home of a very fat coal industry, including Coal Valley Mine, operated by Coal Valley Resources of Edson, a subsidiary of Sherritt International of Toronto. Sherritt has big plans to expand Coal Valley, and a subsidized Ridley would help keep their shipping costs down.

Both Conservative cabinet ministers are part of what has now become a campaign to head off attempts by Ridley’s board of directors, chaired by Daniel Veniez, to bring commercial discipline to the Crown corporation and, if possible, to privatize it. Mr. Veniez has written two commentaries on Ridley’s situation; they can be found here and here.

Ridley was built in 1982 on a whim by the Trudeau Liberals at a cost, in today’s dollars, of $550-million, to support the coal industry. Since then, tens of millions more were spent operating the place, with little attention paid to turning it into a non-subsidized commercial operation. In 2006, Paul Martin’s Liberals had had enough, and were prepared to dump Ridley for $3-million.

Prime Minister Stephen Harper apparently had a better idea. In December, 2007, he stepped in and appointed Mr. Veniez as chairman of the terminal operation. A new Conservative-appointed board was brought in, apparently with the objective of turning Ridley into a commercial operation. As Mr. Veniez sees it, the mandate was to bring new discipline to Ridley. The board, he reported in Ridley’s 2008 annual report, “decided to be aggressive in following through on the Prime Minister’s foresight. Renewal was urgently needed.”

It would appear, from accounts, that Ridley has been shaken up. But Mr. Veniez says much more needs to be done, including spending tens of millions on equipment upgrades, funding a $10-million hole in a defined benefit pension plan and finding cash to improve operations. Mr. Veniez believes the best plan is to privatize Ridley to bring full commercial standards to the terminals and expand the base of commodities and reduce dependence on coal.

All of this has driven the coal industry into a rearguard action against Mr. Veniez, both in terms of his current operating methods and his plans to privatize. One report mentioned a privatization offer in the range of $130-million.

The focus of opposition activity is the Ridley Terminals Users Group, a cabal of major B.C. and Alberta coal mine operators, including such giants as Husky Energy, Suncor Energy, Tech Coal and Coal Valley Resources, headquartered in Mr. Merrifield’s riding. The listed federal lobbyist for Ridley Terminal Users Group is Philip Cartwright, of Global Public Affairs in Ottwas.

With Global Public Affairs leading the campaign, a sudden un-spontaneous groundswell of opposition is sweeping local governments in and around Prince Rupert. “Privatizing Ridley Terminals the Wrong Thing,” said Bill Holmberg, the Mayor of Houston, B.C., in a letter to local newspapers. Another letter from a collection of local governments has been circulating, carrying all the earmarks of a professional PR job run out of the lobby of the big coal lobby.

One coal-lobby canard is the claim that Ridley is a natural monopoly that should be treated as a government-run service for the benefit of all communities and industries. But there is no evidence that Ridley is a monopoly, since it clearly competes with coal ports in Vancouver and other parts of the world.

The idea of turning Ridley over to the Prince Rupert Port Authority, the favourite anti-privatization scheme, would appear to solve no problem and create a couple of big ones. Who will run Ridley once it is owned by the Port Authority, and who will fund Ridley?

On this subject, Prime Minister Harper might want to consult Lisa Raitt, his natural resources minister, once she gets over her current troubles. Ms. Raitt headed the Toronto Port Authority, and she would know that Ridley would be in better hands if it were not in government hands. Or is the Harper government, having bailed out the auto giants, now in the perpetual business of subsidizing industries?

Backlash brewing over Ridley privatization plans

Dan Veniez apparently has not had much success with his recent media campaign to sell the merits of the privatization of Ridley Terminals, at least as far as a large number of Northern officials are concerned.

The Chairman of Ridley has been a rather busy writer over the last two weeks, composing informational pieces for major Canadian newspapers such as the National Post, The Globe and Mail and the Vancouver Sun, each one a carefully designed recital of his thoughts on the privatization issue and how in his opinion that is the best solution for the future of the Terminal. (see past Podunk items here, here and here)

It would seem that while it may be selling well in the boardrooms where the major papers are read, out in what Mr. Veniez used to refer to as the "Heartland" the sales pitch isn't doing so well.

The Northern Development Initiative Trust, a Prince George based economic development corporation has issued a rather strenuous defence of the status quo when it comes to the privatization issue, prefering to see Ridley Terminals remain in public hands as part of a wider strategy of Northern Development.

The rebuttal to Mr. Veniez's recent editorial offerings was posted to the Initiative Trust's website and features the names of close to fifty Mayors of Northern Communities and Directors of Regional Districts from 100 Mile House through to the Queen Charlotte Islands, all it would seem in agreement that public ownership is best.

In their declaration, the NDIT contributors praise Conservative MP Jay Hill for his leadership on the issue and suggest that he and other federal and provincial politicians are taking the right path in the quest to keep Ridley public.

They even go so far as to suggest that the future of Ridley Terminals will be best served if it is "enveloped" by the Port of Prince Rupert, a scenario that Mr. Veniez did not find workable in one of his recent tracts provided to the National media.

The growing support against the privatization agenda of Mr. Veniez, could be the makings of a major showdown between the Chairman and those that don't find his vision for the future to be in the best interests of the employees, the customers and Northern communities.

We imagine that Mr. Veniez will be quick to counter their assumptions with more of his thoughts on the issue, no doubt to be delivered through his media contacts at the major newspapers.

Mr Veniez's prospectus

"RTI needs to be in the hands of those willing and able of securing it well into the future"-- Dan Veniez, Chairman of Ridley Terminals,offering up his positioning statement to the National Post on the fate of the Terminal.

Well, one thing seems certain, Dan Veniez sure likes to write!

Earlier this week we reported on the latest developments over at Ridley Terminals, as the Chairman Dan Veniez vented to the Globe and Mail about some political interference (in the Chairman's mind) from the BC Caucus of the Conservative Party, led by House Leader Jay Hill.

Mr. Veniez subsequently followed up his thoughts with an article in the Vancouver Sun and now over at the National Post website, he's back with a full review of his concerns and where he sees the Terminal going (if only that pesky Mr. Hill would stay out of his business we suspect).

The full article resonates with many of the kind of comments that Mr. Veniez has used in the past from his days as Chairman of New Skeena Forest Products, substituting the "Heartland" with the "Pacific Gateway" , outlining how investment and modernization will be required and how brighter days are ahead despite the current economic malaise.

The full prospectus for Mr. Veniez's vision of a healthy, prosperous Ridley Terminals was found in the Thursday edition of the National Post's Financial Post section.

A Termial Sale
Ridley Terminals must be privatized in the manner that best serves Western Canadian coal producers
By Daniel D. Veniez
The Financial Post
Thursday, May 21, 2009

The potential privatization of Ridley Terminals Inc. (RTI), which I head, should not be an ideological issue. I and the other directors are volunteers (as all directors of federal crown corporations essentially are) with business experience. We’ve been appointed by the federal cabinet to protect Ridley Terminals, not to turn it into a political football. This is all about finding the right way to secure the future of the terminal and the people that depend on it, including those in mining communities whose jobs are at risk. We strongly encourage a private sector solution to this ignored crown corporation, which has long been a drain on the taxpayer.

Ridley Terminals is the only federal Crown corporation of its kind. It is a bulk commodity terminal that employs 87 people in highly skilled, well paying jobs. It is a strategic asset that forms part of a critical transportation hub in Prince Rupert, B.C. — Canada’s northern Pacific gateway.

Thirty years ago, the federal government invested almost $250-million to build Ridley Terminals, thinking that this would facilitate the development of coal mines in eastern British Columbia. No commercial contracts were in place with coal producers to support this thesis or justify an investment of this magnitude. It was the “Field of Dreams” rationale to government planning: Build it, and they shall come.

The results were less than stellar. Volumes for what was originally designed as a 24-million tonne facility never exceeded five million tonnes. The few customers who did come felt that RTI was in business to subsidize their operations. For a variety of reasons, RTI never disabused them of that notion, and over the years, RTI made a practice of subsidizing its services. The taxpayer consistently funded operating losses and a high-cost operation. This company has taken major writedowns. Some customers were the beneficiaries of interest-free loans on multi-million dollar accounts receivable, going back several years. Others came to expect access to RTI at significantly below reasonable and fair market rates, without any contracts being in place for price or minimum tonnage.

We have ended that practice, much to the consternation of special interests and their friends. RTI stopped entering into agreements that were not demonstrably in the economic interests of RTI, and therefore, the taxpayer via the government.

In 2003, Transport Canada officials managed and led a process that lasted more than two years resulting in its recommendation to sell RTI to a junior coal producer for a total cash consideration of less than $3-million. After the 2006 general election, in one of his first acts as Prime Minister, Stephen Harper halted that proposed transaction. We believe that his decision was absolutely the correct judgment for three fundamental reasons:

1 The price did not represent close to fair value for an asset in which the people of Canada had, by then, invested over $400-million;

2 Any eventual privatization of RTI should not be to a producer, who might give itself preferential access, but to a professional terminal operator whose core mission and economic interest is to actively and aggressively promote the widest possible access, and;

3 RTI will require major investments to modernize and eventually expand. The future of such a critical part of Canada’s Pacific gateway should only be entrusted to an organization with the operational competence and financial depth to secure its long-term competitive future.

With the turnaround of business operations well underway, the government should now review its policy choices. For 15 years, at least, RTI has served no discernible public policy mandate or purpose. In fact, government ownership has been an obstacle — not a help — to securing RTI’s long-term future.

Several years ago, the Prince Rupert Port Authority (PRPA) proposed the amalgamation of RTI and PRPA. A few senior government members appear to favour the idea. While at first blush this appears to be a sensible notion, we are unconvinced that this move would be in the best interests of the Crown or RTI’s employees. First, the PRPA is not an operator, but a landlord, and a government one at that. Port Authorities should have less, not more, control over commercial operations for which they have little or no managerial capacity. The PRPA — and entities like it — should be less involved, not more, in activities that are clearly better suited to the private sector. Second, the idea of an amalgamation with the PRPA means that the government of Canada is giving away a valuable Crown asset to an organization outside its control — free of charge.

The federal government is in the position to investigate a variety of positive strategic alternatives to create long-term value for the Crown, and protect those that depend on Ridley Terminals. There are a variety of plausible — and indeed highly attractive — alternatives to continued taxpayer ownership of RTI. Our board will recommend a course of action to ministers: Ultimate responsibility rests with cabinet.

One point we are clear on is that Canada’s Pacific gateway needs a modern, productive and cost-effective bulk commodity terminal in Prince Rupert to service the needs of Western Canadian producers. Despite the groundswell of pessimism gripping many of the world’s economies, Canada remains in the envious position of having an abundance of natural resources that the world will continue to need for generations to come. This downturn will not last and port capacity will need to grow. RTI needs to be in the hands of those willing and able of securing it well into the future.

Financial Post
Daniel D. Veniez is chairman of Ridley Terminal Inc.