Robbing Gnarley to Pay For Jacques

It was Uncle Gnarley
who broached the idea of going to the upcoming mining conference at the old
hotel.   I thought that it was a strange
request from the retired economist, yet, I welcomed the healthy diversion from
all the recent talk about Muskrat Falls.  Knowing that there was bound to be a story, I
asked the question while en route in my new SUV:
“Now Uncle
Gnarley why all the recent interest in mining”?

“Well Nav, truth
be told when I was much younger man I worked in some of the great mines in the
province.  It included the iron mines in
Labrador, the asbestos mine near Baie Verte, and most enjoyably panning for gold
out west.  It is how I self-funded my
education.  Even though I went to economics
school, mining has remained in my blood since then.  But with all this talk about mining and
Muskrat Falls I thought I should go and see what is happening.  You see Nav… 
I am concerned that the mining industry is falling on hard times”

With this I knew
that the air conditioning within my new vehicle would not be sufficient to keep
Uncle’s Gnarley’s face from turning 50 shades of red.  He was building a great head of steam, and my
interjections would certainly be ineffective in stopping his verbal tsunami. 

 “Well you see Nav, it was not too long ago
that a former premier had a rallying call of ‘not one spoonful’ of ore to leave
this province.  Now these were buoyant
days when we insisted that a large mine would be accompanied with a billion
dollar smelter, local benefits and royalties. 
There was never talk about subsidies to mining back in them days.  Any Premier who would suggest such a thing
would be driven out of town in the back of a Mac truck. 

Now Nav, after
hearing the Premiers speech to the Board of Trade, I am fearful that the mining
industry has fallen onto hard times.  She
has said that Muskrat Falls has to go ahead, because it is the only way that
the mining industries in Labrador will get access to competitive industrial electrical
rates.  The mining companies must be so
strapped for cash, and the ore prices so low, that subsidized electricity must
be a pre-requisite for the export of iron ore to China and India.  And Nav… the in-situ storage cost of all that
iron in Labrador is putting a real drain on the provincial treasury”?

Although I was
getting accustomed to the old economist method of prose there were times that
he still confused me.  Sensing that he
had one again had thrown an intellectual juggernaut he continued.

 “Nav… the Premier has changed her message yet
again.  We now have to develop Muskrat
Falls to ensure that Labrador Mining will get access to subsidized power.  The reason we need to develop Muskrat is that
we could never depend on Hydro Quebec to deliver cheap power for industrial
expansion in Labrador.  As Hydro Quebec are
mandated by the United States Federal Energy Regulatory Commission to deliver
power at market rates does this mean that the Premier now wants to deliver power
at rates even less than market value? 

“Have we gone
from a government who said that the people of the province are the primary
beneficiary of our resources, to where you and I must help pay for the
electricity to power the mines.   That is
some New Energy now Nav isn’t it, eh?”

With this I
pulled the SUV into the parking lot.  To
my surprise there was JM.  I thought that
this meeting was a little too coincidental. 
I looked over to Uncle Gnarley, who had a large smile on his face.   

“Well, Nav, I
thought that JM may have something to say about the Premier’s speech, and I
thought: what  better venue to discuss
subsidies to Labrador mining that this great conference”.

After the normal
salutations the three of us proceeded to the nearby coffee kiosk to discuss the
most recent news.  It was clear that this
meeting of the two had nothing to do with mining, but everything to do with
Muskrat Falls.    

JM was the first
off the slip “Well Uncle Gnarley, the Premier gave a very passionate speech
that was sure to enflame the nationalistic fires in the province.   She
gave many compelling arguments for the development of Muskrat Falls.  I believe that we may need to reconsider your
modest proposal?”  It was now JM who lobbed
the loaded question. 

To that Uncle
Gnarley reached into his jacket pocket, and pulled out a silver flask.  He poured a small amount of tonic into his
coffee, “More for flavoring Nav than anything else”.  He then looked at JM, who respectfully
declined the offer.  Uncle Gnarley then
drew a deep breath. 

“The Premier’s
speech was indeed well attended, and it fair to say one of the most important
in her political career.  But it was a
speech that was long on rhetoric, but very short on fact.  We should not be seduced by the former, but we
should wisely wait to be convinced by the latter.  For it is fact, and not emotion, which will
steer us to the right decision.  

I requested this
meeting with you, JM, to get your somewhat educated perspective on the matter”.

After a short
sip of the Jamaica Blue, JM replied.

“In this speech
the Premier has put the focus on Quebec. For Premiers, who need to shore up
popular support, there is no better form of ‘Argumentum ad antiquitatem’.   So alas, the preverbal line has been drawn in
the sand.  We need to bypass Quebec to
ensure that we reach the best possible benefits for the people of the

“Now Gnarley this
is a noble cause, but as I have previously written this may not actually be the
case.  Newfoundland can buy all the power
we could possibly use from Hydro Quebec, and it would represent a lower cost alternative
to the rate payer (Upper Churchill: The Unexplored Alternative).  We could also build Muskrat Falls and then
export the small surplus amounts through the existing wheeling agreement with
Hydro Quebec rather than the more expensive Emera option (Labrador Mining – A Reason to Rethink?).  This would also ensure that we actually do
have power to enable growth in Labrador, without having to go through this
entire process again in 2-3 years.
But in both
instances the Government has potentially made the more expensive decision”.

As I have
observed in our earlier meeting, Uncle Gnarley provided JM the respect of
letting him finish his sentence.  A social
grace never afforded to myself.  The old
economist then retorted.    

“The Premier
drew the line in the sand, but it will be no more effective than the Treaty of
Paris in keeping the Frenchman out of Labrador. 
In an effort to screw Quebec, we are screwing ourselves”.

This colorful
language was a sure sign that Uncle Gnarley was frustrated.  My look of displeasure at the use of such
excessive language was not lost on the old man. 
It was JM who was the next to speak.

“Gnarley that is
a very rousing thought.  Can you explain further”

“Well you are a
businessman.  You know that Quebec
companies are free to participate in the mining industries no different than
Newfoundland based companies.  They are,
in fact, well entrenched in the iron trough. 
The development of mining in Western Labrador is no less a vehicle of
industrial development in Sept Isle than it is in St. Anthony.  Probably more so.  With the building of rail lines, and ports,
mining developments in Labrador also fuel industry and jobs in Quebec.  It is in Hydro Quebec’s interest to sell
electricity to Labrador mines at competitive rates, as the province of Quebec
will certainly benefit from it no different from Newfoundland. The geographical
embrace that we share, circumnavigates the great political divide”.
JM nodded in agreement
with these words, and realized that this old wet economist although retired was
still at the top of his game.  He
countered with an observation of equally piercing effectiveness.    

“Gnarley this
seems to explain with why no Government of Quebec has really given more than a
token challenge to the loan guarantee provided by the Federal Government.  If Newfoundland provides subsided power to
mining companies, then Quebec are also getting the benefit of great industrial
development, but with none of the risk! 
They also get to keep the Upper Churchill power for export besides.  A very good position for Quebec.  Some would even call it a double windfall”.

My very own
premonition of two weeks prior was unfolding in front of my eyes.  The two great minds were fully in tune, each
trying to outdo the other.  Gnarley, in a
great showman form, had to play the trump card against his intellectual understudy:

“Instead we are
proceeding down the road of releasing the stranglehold of Quebec, to be
replaced by nothing other than a great stranglehold of debt.  Any power directed to Labrador mining at
industrial rates, will be subsidized by the people of the province and may lead
to higher rates to ourselves.   The
province of Quebec will certainly benefit tremendously from the development in
Western Labrador, which will be fuelled by the great hydro dam that our tax
dollars will pay for.  Sure Nav, we see
it now with the scores of Quebec engineers, and tradespeople who are currently
working on the projects because of the skilled labour shortage in the

But it can not
be forgotten that this project will be paid for by you and I.  It as if the taxpayers of Newfoundland and
Labrador will be paying for a make work project on the North Shore”. 

To which JM
mumbled under his breath “It is as if the Premier is robbing Gnarley to pay for

Gnarley reached
again into his blazer pocket “In an odd and indirect way, this is sadly true”.

(Editor’s Note:  This Post was written by “JM” for Uncle Gnarley Blog. JM is the anonymous person who presented a 175 page Submission to the PUB on Muskrat Falls and recently released the Research Papers noted in this Post.  He also wrote “The Balvenie Affair, Parts I and II, both found on this Blog).


Bill left public life shortly after the signing of the Atlantic Accord and became a member of the Court of Appeal until his retirement in 2003. During his time on the court he was involved in a number of successful appeals which overturned wrongful convictions, for which he was recognized by Innocence Canada. Bill had a special place in his heart for the underdog.

Churchill Falls Explainer (Coles Notes version)

If CFLCo is required to maximize its profit, then CFLCo should sell its electricity to the highest bidder(s) on the most advantageous terms available.


This is the most important set of negotiations we have engaged in since the Atlantic Accord and Hibernia. Despite being a small jurisdiction we proved to be smart and nimble enough to negotiate good deals on both. They have stood the test of time and have resulted in billions of dollars in royalties and created an industry which represents over a quarter of our economy. Will we prove to be smart and nimble enough to do the same with the Upper Churchill?


  1. About a month ago, while driving on the TCH, and reflecting on the MF issue, I said to my wife " you know, I think we should join the province of Quebec" She immediately began to cough, in a near choking fit. I continued " before you choke, lets look at the advantages: we are both distinct societies, with a lot of rural communities; in confereration we are both second fiddle to the poputation and political power of Ontario; we share a lot of geography with a common border and common industries and culture like fishing and even sealing, and the great George River caribou herd, and common aboriginal people;and common water water resources for hydro power;and now our schooling encourages our children to learn French, as they should, as too the French learn English; and from my personal experience, in business dealings, the companies from Quebec are the best,better then the USA companies,whoare both ahead of Ontario, in terms of fairness and honesty, apart from the Upper churchill mess.Imagine one province, Quebec,Newfoundland and Labrador.And as a kicker, Quebec would give us Quebec electricity rates, that's almost a 50 percent drop instead of a 50 percent increase. And on top of that, St Pieere should separate from France and join Newfoundland, and we could feed them with a underwater cable for electricity." There was silence for a moment and she then replied "Maybe so." Afterwards I ran this idea by a couple of others. I was supprised there was some reception to this idea. For me, screwing ourselves by screwing Quebec is pigheaded. It may appeal to emotion but not to reason. 47-12-8