Maritime Steel loan application rejected
The government of Nova Scotia has rejected a $1.1-million loan application by a steel foundry because it's too risky.
Percy Paris, the Economic and Rural Development and Tourism minister, told reporters that loaning public money to Maritime Steel Foundry in New Glasgow, N.S., could not be justified.
"It's largely due to lack of customers or future customers — the potential of future customers," he said.
"I think it's probably a large part of the reason why this was is very, very high risk."
The new owner of the Maritime Steel Foundry, Abbas Jafarnia, had been counting on receiving a $1.1-million loan from the province to keep production going.
It's the second time Jafarnia's loan application has been rejected by the province — he was turned down for a $2-million loan application in June.
Paris said a cabinet committee rejected the loan request this time because it concluded the market for steel products is unsustainable.
"I know that there have been projects that we've taken on that were high-risk in the past," he said.
"This far exceeded that high-risk factor that I wanted to sign off on when it came to taxpayers' money."
Jafarnia became the foundry's new owner in July after the Nova Scotia Supreme Court approved a $1.25-million bid for the company.
The foundry was placed in receivership in December 2010 owing more than $17 million to its parent company, Cameron Corp. Ltd.
With files from The Canadian Press