With Royal Oak Mines Inc. bankrupt and in the hands of its receiver, attention shifted from the firm’s finances to the 236,000 tonnes of poisonous arsenic powder stored in its Giant gold mine near Yellowknife. The fear is that the arsenic could dissolve in groundwater and contaminate Great Slave Lake, the region’s main source of water. Cleaning up the arsenic — a byproduct of an outdated process to refine gold — could cost $250 million, and local politicians and environmentalists are warning that taxpayers could get stuck with the tab. Jane Stewart, federal minister of Indian affairs and northern development, said Ottawa may play a limited role in a long-term solution, but cautioned that her department “is not in the mining business.”
Already, water is leaking into some of the mine’s arsenic-filled chambers, though it is currently being pumped to the surface and treated. As it stands, the receiver, PricewaterhouseCoopers Inc., plans to sell off Royal Oak’s holdings. Creditors who take control of the mine’s assets would assume environmental responsibility, but they can also petition the courts to avoid that burden. Peggy Witte, Royal Oak’s former chairwoman, told reporters she is confident “a way will be found to deal with [the arsenic].”
MORE MONEY AT HOME
The financial state of Canadian households is improving, with the growth of after-tax income outpacing inflation for the first time this decade, the Bank of Nova Scotia reports. A study by the bank says net income should rise almost 4.5 per cent faster than inflation between 1998 and 2000. As well, household wealth — defined as the value of assets less liabilities — rose at an annual rate of almost four per cent during the 1990s, says chief economist Warren Jestin, co- author of the study. The improvements are partly due to the million jobs created in the past three years and the increasing value of stocks, mutual funds, life insurance and pension funds. While the gains were favourable, real disposable income in 2001 is still predicted to remain nearly two per cent below its 1989 peak. “What we’ve done essentially through the early 1990s is dig a big hole for ourselves and only recently have we begun to fill that hole in,” Jestin says.
The Nasdaq composite index, with its predominantly technology-based stocks, took a roller-coaster ride, suffering its second-biggest drop ever before staging a dramatic rebound. On April 19, the index plunged almost 139 points, or 5.6 per cent. The sell-off was partly due to investor uneasiness spawned by several technology firms that released reports warning of poor first-quarter profits. Two days later, however, Nasdaq posted its biggest single-day gain in 10 weeks in the wake of good profit news by wireless communications firm Qualcomm.
But Mississauga, Ont.-based Bid.com International Inc., which recently was listed on the Toronto Stock Exchange 300 composite index and debuted on the Nasdaq last week, did less well. After hitting a high of $32.35 last month — up from 56 cents in October — stock in the online auction house has suffered repeated losses. These include a 50-per-cent drop on April 21 to close the TSE’s trading day at $13.90. As a result, the Toronto Dominion’s discount broker, Green Line Investor Services, downgraded the stock, announcing that clients would no longer be allowed to invest in Bid.com on margin — a practice in which the brokerage supplies investors with credit to buy the stock on the premise that it will climb.
LINES OF POWER
In one of the largest mergers ever, Deutsche Telekom Ag and Telecom Italia SpA agreed to a $122-billion union. The deal between the German and Italian powerhouses creates the second-largest telecommunications company in the world, with more than 100 million customers in Europe, Latin America and Asia. The new firm intends to expand into the United States.
OUT OF THE WOODS?
MacMillan Bloedel Ltd., British Columbia’s largest forest company, announced a first-quarter profit of $33 million, about double what it made by the same time last year. Some analysts said the profit surge suggests the province’s struggling forestry industry, which lost $1 billion last year, is set for a turnaround. Tom Stephens, MacMillan Bloedel’s president, vowed to turn his firm into a “kick-ass company.”
FUEL FOR THOUGHT
DaimlerChrysler, Ford Motor Co., the state of California and Burnaby, B.C.- based Ballard Power Systems Inc. revealed plans to test as many as 50 cars and 20 buses powered by futuristic fuel-cell technology on California roads. Two prototypes were unveiled: a compact Mercedes-Benz car and a Ford sedan about the size of a Taurus. The cars rely on hydrogen and oxygen to produce electricity without releasing any toxic emissions.
THE RETURN OF INFLATION
The inflation rate rose to one per cent in March, Statistics Canada reported. Some economists said the increase could be the start of an upward trend in the cost of living. The increase in inflation from 0.7 per cent in February also makes it likely that the Bank of Canada will delay further cuts to its trendsetting interest rate. The cost of living rose because of higher prices for clothing, gasoline and heating fuel and travel.
Marc Chouinard, who helped make the BiWay Stores Ltd. discount chain the star unit of Dylex Ltd., has been hired to head The Bay, the struggling department store division of the Hudson’s Bay Co. Industry watchers welcomed the change. In 1998, sales at The Bay’s stores fell two per cent over the previous year and earnings were down 59 per cent over the same period.