Tuesday September 20, 2005

Don't settle for proposed OMYA royalties, councillor tells Lanark
Product is worth much more: Cassidy

Dave Rogers
The Ottawa Citizen
September 20, 2005

Lanark County will be "getting fleeced" if it accepts a proposed deal to let OMYA Canada Inc. mine a stretch of road for valuable calcium carbonate, says area Councillor Michael Cassidy.

The deal would give the county two to eight cents a tonne in royalties on the calcium carbonate.

However, Mr. Cassidy says the mineral is worth more than $200 a tonne. When processed, the market value of the calcium carbonate turned over to OMYA is likely to be billions of dollars, he said.

Mr. Cassidy, who owns a cottage near OMYA's quarry north of the village of Lanark, said the deal with Lanark County amounts to "21st-century highway robbery."

Under the plan for OMYA to mine a one-kilometre stretch of County Road 9 beside its quarry, the company would replace and pave the gravel road at a cost of $3.6 million.

County council will consider the proposed deal Sept. 28 at the council building on Christie Lake Road near Perth.

County warden Susan Freeman said the royalties Lanark can receive are set under Ontario law. She said mining firms that extract calcium carbonate pay the same royalties to the municipality as companies digging gravel from a gravel pit.

OMYA grinds calcium carbonate, mixes it with water and ships it throughout North America to produce paper, plastic, paint, drywall, antacids, calcium supplements and other products. The company provoked protests with its plan to take water from the Tay River.

It has been mining calcium carbonate at its quarry at Tatlock, north of Perth, for years.

OMYA is looking to expand its quarry to include part of the gravel county road adjoining it.

Peter Harben, an industrial minerals consultant from Las Cruces, New Mexico, said yesterday calcium carbonate is worth about $5 U.S. a tonne when used in road construction and at least $250 a tonne as a filler in fine white paper.

"The OMYA deposit in Ontario is at the upper end of the spectrum of calcium carbonate," Mr. Harben said. "It is rather unusual because it is so white, and without the impurities that would give it a grey colour.

"The finer you grind it, the higher the price. If the calcium carbonate is used to produce white paper that can take ink properly, it could be worth $250 to $300 a tonne. I don't see where they would get a price as low as two cents a tonne," he said.

Mr. Cassidy said OMYA mines about one million tonnes of calcium carbonate a year near Lanark.

The company contributes more than $25 million a year to the county's economy in wages, goods and services, he said.

Mr. Cassidy said the deal with OMYA was discussed privately during the summer and the only opportunity the public will have to comment on it will be at the Sept. 28 council meeting.

"How can it be that county council is endorsing this plan unanimously?" Mr. Cassidy asked. "It is a terrible failure that (the) county has not spent the $10,000 needed to evaluate the mineral resources that lie under the road.

"The mineral is more valuable than ordinary stone and should be dealt with differently. The public consultation process has been nothing but a sham. It is so flawed that it is virtually useless," he said.

However, Ms. Freeman said OMYA must keep its costs down because it faces competition from calcium carbonate producers in the southern U.S.

Ms. Freeman also said the royalties will increase with the amount of calcium carbonate OMYA extracts from under the road.

Initially, OMYA would pay two cents a tonne for calcium carbonate when production exceeds 1.65 million tonnes a year, and increase to eight cents when output is more than three million tonnes. OMYA's current production is about one million tonnes a year.

"The money we receive will go into a trust fund which will be used to maintain County Road 511 north from Highway 7, north to Calabogie," she said. "It is along that road that OMYA trucks run from the quarry to their processing plant in Tay Valley (near Perth). That is really for noise barriers and safety, if the truck traffic increases dramatically."

Ms. Freeman acknowledged some people believe the calcium carbonate is worth more than two cents a tonne, but they don't realize it has to be mined, processed and marketed. She said the Ontario government told the county the profit margins on the mineral are pennies a tonne at most.

The warden estimated that OMYA will extract calcium carbonate from the quarry for 10 to 20 years.

"With spinoff work, OMYA provides hundreds of jobs in Lanark County," Ms. Freeman said. "It is the most important single industry in the county."

OMYA spokeswoman Rita Mezzannotte said some estimates of the value of the calcium carbonate are meaningless.

"There is no way of knowing how much the calcium carbonate is worth," Ms. Mezzannotte said. "It is only worth something if somebody is willing to mine it."