I learned today that my former employer has announced a major cutback in production at their Sudbury mining operations. Xstrata Nickel, (formerly Falconbridge Ltd.) has decided to close all but one of their mining operations and reduce shifts in the Strathcona Mill. All of this will mean the loss of 686 permanent, full time jobs. It amounts to appoximately half of the Mine Mill – CAW, Local 598 Bargaining Unit. If anyone doubts the severity of the current economic downturn, this is yet another wake-up call. For a city the size of Sudbury, this is clearly a devastating blow, particularly in light of the fact that each one of these jobs has allowed the creation of at least four spin-off jobs in the region.
During my career, my family and I managed to survive through a number of layoffs, and temporary production shut-downs. The difference was that these downturns always had a temporary feel about them, this one feels like a more permanent scenario.
During my dealings with the company over the years, the company always took great pains to indicate that Falconbridge was essentially an economic house of cards, (regardless of who the owners were at the time). The company carried a debt load, that they apportioned to the various producing mines, (distributable costs), and took pains to insure that it was understood that if any unit fell off the table, so to speak, and had to be closed, the remaining mines would have to make up the slack. It appears as though Xstrata has decided that the older operations are not going to viable in light of the current nickel prices and is going to put all of their eggs in one basket, Nickel Rim South. This property is close to becoming a producing mine, and once in production will without doubt be a high volume, low cost producer. The ore zone has relatively high grades and lends itself to bulk mining methods. This will mean a small workforce going forward, especially as the development phase nears completion.
The announcement by Tony Clement in todays National Post that the company has agreed to invest several hundred million in development of Sudbury Operations, in lieu of living up to no layoff clause in the purchase agreement they made when Xstrata took over Falconbridge looks to me to be little more than smoke and mirrors. This is money they likely planned to spend to rush the one remaining mine into full production. They still have the debt load that they had when they took over Falconbridge as well as the debt they incurred for the takeover from Noranda. They will need to generate cash-flow quickly and Nickel Rim South is now the only game left in town. In my opinion, they have not committed any money that they didn't plan to invest with, or without allowing Tony Clement to make an announcement.
In the future, it is possible that the company will expand again once the price of nickel rebounds and the current recession begins to turn around. There will likely be new mines opening at Fraser-Morgan and Onaping Depth, but these are likely to be quite some time in the future.
In the short term, those people affected by these cutbacks need help. The EI system must be made more user friendly, wait times need to be eliminated, and the time frame for eligibility needs to be extended to at least 52 weeks. Further, Xstrata needs to open up its books and indicate to the Union what its future plans are in the Sudbury District. Over the course of my career with Falconbridge, they showed a disturbing tendency to pull a new discovery and mine out of the hat when times seemed darkest. After the layoffs in 1978, Fraser Mine appeared. When #5 Shaft went down, Craig Mine was announced. After the tough market conditions of the late 1980's, Bill James announced Thayer Lyndsley. Is Xstrata going to follow in the footsteps of previous Falconbridge management and pull another rabbit out of the hat, or is the cupboard in the Sudbury Basin finally bare?
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