Vale grant-in-lieu dropping to $4.8 million this year and $3 million in the subsequent three years

Company had been paying $6 million a year to city, school district and local government district for past five years

The amount of money Vale’s Manitoba Operations will contribute to the City of Thompson, School District of Mystery Lake (SDML) and Local Government District of Mystery Lake will drop by about 20 per cent this year from what it has been for the past five years under the terms of a grant-in-lieu agreement approved by council in a 7-2 vote Jan. 2.

In the new four-year agreement, which still has to be approved by Vale Canada’s board of directors, the city, school district and LGD will split $4.8 million in 2018, with about $3.36 million going to the city and $1.44 million to the school district, as the LGD receives only a tiny fraction. In 2019 through 2021, Vale will contribute $3 million – about $2.1 million to the city and $900,000 to SDML – though there is a chance another $1.2 million could be added to the 2019 amount if Vale’s Manitoba Operations have positive cash flow of $20 million at the end of 2018.

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If that benchmark is not achieved, the second, third and fourth years of the new agreement will see the amount contributed to the school district and city by Vale cut to only half of the combined $6 million they paid in the previous grant-in-lieu agreement from 2013 to the end of 2017.

Mayor Dennis Fenske, who was attending the meeting by teleconference from Winnipeg, said he was not satisfied with the deal but that Vale was making a business decision. He said he planned to meet with Finance Minister Blaine Pedersen Jan. 3 to ask the province for assistance in making up the difference from the previous grant-in-lieu.

“It is the best agreement that the City of Thompson could have gotten at this time recognizing that, under the 1956 agreement, I think what Vale is required to give us is only about a million dollars per year,” said Coun. Blake Ellis. “We’re getting more than that. This puts a challenge for our city for the future but I know Thompson and the City of Thompson can meet that challenge.”

Coun. Ron Matechuk, one of two councillors to vote against accepting the new agreement, said that he didn’t have confidence in the negotiating committee when the process began and nothing had changed since. He also pooh-poohed the idea of approaching the province for money to help make up the difference.

“We are going to sit here tonight and accept this offer and then say we made this deal but we don’t like it, we want you to cough up the money now,” said Matechuk. “That’s not going to happen.”

“Remember that Vale’s still taking the same amount of ore out of the ground,” said Coun. Duncan Wong, the other opposing vote. “Why are we allowing them to pay less?”

Deputy mayor Colleen Smook, who chaired the meeting in Fenske’s absence, noted that Vale’s Manitoba Operations are being asked by their parent company to be self-sustaining.

“They have each division standing on their own two feet,” she said. “They could just as easily have taken us and flicked us out the door for lots of money and dollars as they could of keeping us in the fold. I think we’re very lucky to be in the fold.”

Coun. Judy Kolada said that the grant-in-lieu has steadily declined over her 20-plus years on council while other costs have grown.

“I don’t think there’s anybody here who’s making the same wages that they made 22 or 23 years ago so I do believe that it’s unreasonable,” she said, though ultimately she voted in favour of the agreement, saying she didn’t see any point in opposing it.

Coun. Penny Byer said the disagreement over the deal was a consequence of Thompson being too reliant on a single industry and employer.

“Ever since I moved to Thompson one of the things that I could never quite understand is how the city has always allowed itself to be so dependent on its major employer for its sustainability,” she said. “I believe for us to be healthy and sustainable for thee next 20, 30, 40 years we have to learn to stand independent and not be as reliant and as needy of our major employer. I believe that we’re only going to be able to do that if we grow our economy, if we focus on building more commerce in the city, more business, whatever we need to do.”

Byer added that the agreement was an improvement on what Vale had initially offered.

“I believe we had Vale in a state of feeling appalled at what we started off with and what they came back with at first had us appalled as well,” she said. “Now we’ve reached a point that is, I think, given the business climate at Vale, probably as generous as they can afford to be at this time based on their current situation.”

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