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Snow Lake News Stories


The mining town of Snow Lake has existed for many years, and most people did not anticipate a downturn in the economy so severe that it would mean a mine closure, particularly when mining has been so profitable, not only for the mining company, HudBay, but also for the citizens of the community. However, the world financial crisis in 2008 and plunging commodity prices resulted in an announcement in 2009 that the zinc mine at Snow Lake would be closed. The newspaper articles summarised below highlight the crisis in the mining industry and its specific impact on Snow Lake. Read critically with the following questions in mind. How informative was the article? Did it clarify issues? Did the writer or the reviewer display bias? Were any questions left unanswered? Was the reader left hanging? Was there any new information revealed? How did it add to the topic under consideration?



3 January 2009: “Miners’ fortunes sinking” [Winnipeg Free Press, B6]

According to this Canadian Press article by Krintine Owram, mining was facing a stark future because of the global economic crisis. During 2008 “credit markets tightened, global demand slumped, and prices for everything from zinc and copper to iron ore and aluminium plummeted.” Zinc, for instance, dropped from a high of $1.20 U.S. a pound to only 50 cents, so that an estimated 60 to 70% of zinc mines were no longer profitable. Andrew Martyn, a vice-president at Toronto based investment adviser Davis-Rea Ltd., predicted that as many as five big mining companies could go bankrupt before the end of the second quarter of 2009. Many companies had “scaled back expansions, cut jobs, and shut down unprofitable mines to conserve cash and get through one of the industry’s most difficult periods in decades.” There had been talk of mergers, but with volatile credit markets, financing such ventures was risky. Investors were worried about where the crisis would lead, especially as industrialisation was even slowing in the “surging economies of China and India.”

On the other hand, Peter Hickson, an analyst with UBS Investment Bank, felt there was hope for a turnaround. Temporarily shutting down less profitable mines, like Lundin Mining Corp., First Nickel Inc., and FNX Mining Co. Inc. had done, could lead to a supply shortage and higher prices in 2009. Hickson felt the rebound would begin in early 2009, but Martyn was not as optimistic. He felt there would have to be permanent closures of some mines before prices began to move upward again. It could be a “banner year for potential mergers and acquisitions in the industry as struggling companies put out feelers for buyers,” but according to Martyn, many of those companies would go under, because “none of the base metal companies” was in a position to buy.

Discussion: This was a grim articles for mining towns like Snow Lake, and as the following article reveals, its zinc mine was to be closed as a result of the global collapse in prices for metals

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15 January 2009: “Snow Lake feels brunt of HudBay problems” [Winnipeg Free Press, B4]

On January 9, HudBay announced that it was going to close the Chisel North mine in Snow Lake, which had been the biggest employer in the town of 1000 residents for several decades. According to journalist Martin Cash, it was because zinc prices were depressed due to the global recession that had resulted in an 80 percent drop in the value of HubBay shares. However, it wasn’t the only reason. Apparently, the company had $800 million worth of cash in the bank in 2007, a “war chest” that could have helped it to withstand hard times at Snow Lake as well as develop a new zinc deposit nearby. Instead, it decided to go on a buying spree, first by purchasing a Guatemalan nickel deposit for $450-million from Skye Resources, and then moving on to make a second “proposed” $525-million purchase of Lundin Mining Corp., which owned a “European and African portfolio of mines and deposits.” SRM Global Master Fund, HudBay’s largest shareholder (18% of total), was so upset by the proposed Lundin purchase, that it sued HudBay to force a shareholders’ vote on the acquisition. Cash noted the irony of this suit, especially since SRM, a Monaco-based hedge fund, had agitated strongly in 2007 for HudBay to “do something dramatic with its massive war chest”

Cash concluded his article with a comparison. An offshore money manager like SRM was defending its bottom line, and though Cash didn’t specifically say so, the implication was that SRM had some hope of success. There were other stakeholders, however, whose claim to a company like HudBay was “harder, technically to quantify.” These were the people of Manitoba, taxpayers, who had granted resource rights to HudBay, from which the company had acquired “almost all its wealth - $844 million in unencumbered, retained profits.” It had paid taxes, to be sure, and its employees as well, but it had “also done its share of degradation of the environment in northern Manitoba.” Now its head office had moved from Winnipeg to Toronto. Cash seemed to be moving somewhere interesting with this line of reasoning, but instead ended with a rather enigmatic concluding sentence, “But by virtue of the hundreds of millions of dollars it still has in the bank, it will remain a Manitoba company with deep Manitoba stakes that will not be taken out even with the next acquisition.” 

Discussion: This article required considerable reorganisation to provide a readable summary for a lay readership. Translating legal and business information into understandable lay terms can be a challenge, and Cash didn’t do it very well in this particular article. This is certainly evident in his last sentence. How would HudBay remain a Manitoba company with deep Manitoba stakes simply because it still had hundreds of millions of dollars in the bank? Would it cease to be a Manitoba company, if that money disappeared? What was Cash getting at here? And, what did he mean by stakes “that will not be taken out even with the next acquisition”? Did he mean that the mine would remain in Manitoba (an obvious fact) regardless of whether the next acquisition, presumably of Lundin Mining Corp., was made? Or was he saying that the mine had been so profitable in the past, with another promising mine in the wings, that the company would retain it, regardless of whether it purchased Lundin? In view of his previous comparison, what point was he trying to make?

Aside from the confused writing of the article, what does the closing of a mine mean for a small community like Snow Lake? Similar closures have occurred at Leaf Rapids and Lynn Lake. What alternatives are there for these one-industry towns? Is there anything in this article that would give future hope to residents of Snow Lake?

Compare this article to the Canadian Press article of January 3. Since Lundin Mining Corp. seemed to be as troubled as other mining companies, was it sensible for HudBay to attempt to acquire it? Would this explain why SRM Global Master Fund took legal action to prevent the acquisition? If the purchase did not go forward, how would that benefit HudBay? What could it mean for Snow Lake?

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23 September 2009: “Snow Lake prospects golden: HudBay find makes mine a virtual lock at Lalor site” [Winnipeg Free Press, B5]

What a differences a few months can make to a mining community. Snow Lake’s future looked bleak in January, but in spite of the gloom, HudBay Minerals was still doing exploratory work at its Lalor Lake site. This resulted in two new finds, one gold and the other zinc, that some analysts felt were promising enough to justify development. Then, on September 22, 2009, HudBay announced a second gold discovery that pretty much guaranteed a new mine would be established. According to writer Martin Cash, HudBay was “on the verge of committing almost a half-billion dollars to a new mining complex in what is shaping up to be the province’s newest boom town, Snow Lake.” Chris Beaumont-Smith, manager of the province’s mineral resource branch, said, “This will be huge for northern Manitoba.”

HudBay’s stock was already up by 20.6 % at the Toronto Stock Exchange as a result of this latest news, and the company hadn’t yet issued its final report on its previous discoveries at the Lalor Lake site. HudBay CEO Peter Jones was optimistic about the recent discoveries, “among the best” he had seen “in nearly 40 years in the mining business.” Without even including the second gold discovery, those deposits could produce an estimated “3.5 million ounces of gold.”

John Hughes, an analyst with Desjardins Securities, suggested that zinc production (at prices of 80-85 cents a pound) “would pay for the entire development and generate a slight profit.” [Cash added here that Zinc closed at US86.5 cents on the London Metals Exchange on 22 September 2009. Why is that kind of information helpful to the reader?] Gold sales at $1000 an ounce “could mean $3.5 billion in straight profit for HudBay over the course of what is being estimated as a 15- to 20-year lifespan for the new mine.”

There are other positives as well. The new discoveries are so close together than they can be “accessed from one of the expected shafts without a significant increase in the amount of capital required.” There is no need to build a new concentrator. The company already has one at Chisel Lake North, only 15 kilometres away, which is still maintained and in running order, although closed earlier this year.

On September 22, “HudBay shares closed up $1.93 to $11.30 with 8.2 million shares traded, one of the busiest days in the last year.” Over all, the shares are up 87 percent since March, a very good sign.

Discussion: News articles can sometimes be deceiving, so you often have to “dig” to get the facts. Cash mentioned that 110 people lost their jobs when HudBay “temporarily” closed its Chisel North mine in January 2009. This suggests that the mine was only closed for a short time and that the 110 were back to work again. Well, that’s inaccurate. According to an informed local source, contacted by telephone on September 23, the mine was still not open. Many of the workers, however, were still employed, having gone to work at HudBay’s Flin Flon operation. That’s 199 km away, which is a long daily commute. Google Maps indicates that it takes 3 hrs and 58 mins to drive that distance (evidently in low gear, because most ordinary people can do it in two hrs.). What impact can long commutes have on workers? What other effects result from the kind of economic uncertainty people at Snow Lake have faced this past year?

It appears that Snow Lake may have a reprieve of 15 to 20 years. What could the community do in the interim to diversify its economy and ensure the survival of Snow Lake beyond the life of its mines?

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9 October 2009: “Big dig starts soon up north: HudBay to begin work in weeks on Lalor gold mine megaproject” [The Winnipeg Free Press, B4]

According to a Canadian Press report, HudBay Minerals Inc. is about to begin a “$450-million gold and base metals project” at Snow Lake. Phase 1, which will commence almost immediately, involves “the construction of a three-kilometre tunnel ramp from HudBay’s Chisel North mine to the Lalor mineral deposit, which has significant amount of gold, copper and zinc that the company plans to mine and process over the coming years.”

Company stocks have soared in value since the discovery of what appears to be “a major new copper-gold zone beneath a base-metal zone and a gold zone that had already been identified by the company.” This represents a great turnaround from the spring of 2009, when the fortunes of the company looked grim indeed. CEO Peter Jones has been credited for the change, having returned as chief in March after a 14-month hiatus. Under his leadership, HudBay “sold its minority stake in Lundin for $236 million, announced plans to close its copper smelter in Flin Flon by mid-2010, and focused on aggressive development of the Lalor deposit.”

Phase 1 development of the ramp, or inclined tunnel, will take about 2½ years to complete. It will start “inside the Chisel North mine at a depth of about 400 metres from the surface and will go down in more or less a straight line to the upper layer of the Lalor deposit at a depth of about 800 metre.” “There will also be a vertical shaft dug from the surface above the deposit, initially to a depth of about 1,000 metres,” in order to “hoist large volumes of ore to the surface, for transport elsewhere.” This construction will involve 30-70 new jobs, and the new mine in full production will add 350-400 more.

Discussion: The news continues to be rosy for Snow Lake. Consider the role of CEO Peter Jones. What did he do to help bring about his company’s change of fortune? Why is the role of leadership so important to a company’s or community’s success?

Now that Snow Lake has some breathing space, what should its leaders be doing to prepare for an influx of new people? Is there any reason now to prepare for a future closure? What can a mining community do to ensure that it continues to exist once mines are closed? What economic diversification is possible?

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31 October 2009: “Mine reopening more good news for Snow Lake” [The Winnipeg Free Press, B4]

On October 30, HudBay announced that it would reopen its Chisel North zinc mine in Snow Lake. According to Martin Cash, this will mean “about 100 jobs returning to the town of 1,000 people by the first half of 2010” and “about 30,000 tonnes of zinc concentrate” annually for the concentrator at Flin Flon.

This was more good news for Snow Lake. Only a week earlier, it was announced that Snow Lake’s New Britannia gold mine, which closed down in 2005 with a loss of 250 jobs, could reopen by mid-2011, now that ownership had passed to Alexis Minerals. HudBay was also investing $450 million to “develop the brand-new Lalor zinc/gold mine just outside of Snow Lake.”

As if this was not enough, Snow Lake also received “an award at the 2009 Manitoba Planning Excellence Awards in Brandon for the town’s sustainable community plan that was commissioned last year.” It had also completed a new $7-million water plant in 2007” and was in the pre-design phase for a new sewage treatment plant that could cost $3 million.

Community leaders remain active. One issue is the housing situation as mining revives. Jeff Precourt, the chief administrative officer of Snow Lake, said that they were “attempting to take a creative approach to a looming housing challenge.” Many of the town’s homes are owned by seniors, but if a private sector development of seniors housing were realised, it would free up homes for the expected influx of new families.

Discussion: If you were the Mayor of Snow Lake, what would your priorities be in the next five years?

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8 September 2010: “Mining is gold for jobs: Sector expects biggest raises, most jobs” [Martin Cash, Winnipeg Free Press, B6]

The mining industry is booming in Western Canada. According to studies by Manpower Canada on hiring expectations and Hay Group on salary expectations, things couldn’t be better.

Employers in the industry are among the group most likely to hire workers in the fourth quarter and Western Canada has the most firms likely to be hiring, according to Manpower. A survey by the Hay Group showed that mining is the sector projecting the highest average salary increase for 2011.

Martin Cash interviewed Rod Cyr, owner of Rodren Drilling, who said they were “as busy” as they had “ever been” and although he wasn’t hiring any new people, he certainly wouldn’t be laying off any of his current staff of 80 people, who were “out working on jobs throughout the region with crews in Saskatchewan, Manitoba, and Ontario.”

According to Manpower there had been a jump of 16 per cent in “the expectations of mining companies to hire people this year compared to a year ago,” and the Hay Group forecast that salaries would increase by 2.6 - 2.7 percent. The average salaries of Manitoba “range from $72,000 to $100,000 with the more northern sites often paying premium rates.”

According to Cash, HudBay Minerals and Vale Inco were both hiring, and on 7 September 2010, there were 1400 job openings available in the Canadian mining industry. This coincided with a rebound from the recession because of demand from “China and other rapidly developing countries.” Nevertheless, the industry was “facing a skills and labour shortage and needs to add 100,000 jobs by the end of the decade.”

Discussion: Mining appears to be a lucrative option for young people living in Northern Manitoba aboriginal communities that have suffered from severe unemployment for many years. What could be done to encourage students to look at mining as a possible career? What part could Northern school divisions play in making this happen? 

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1 October 2010: “Snow Lake Mine financing plan lifts stock 30%” [The Canadian Press, as reported in Winnipeg Free Press, B4]

The shares of Alexis Mines, which owns the Snow Lake gold mine, went up by 30% on 30 September 2010, when the company announced that it had obtained a “financing package … from Legend Securities Inc., a New York based broker-dealer.” $45 Million would be allocated to “develop and refurbish the Snow Lake mine” and $15 Million to “working capital.”

The preliminary assessment in March 2010 of the deposits at Snow Lake indicated that the mine “could produce 423,000 ounces of gold over an estimated six-year project life at an estimated cost of about US$544 per ounce.”

Discussion: The article noted that the deal was “subject to satisfactory completion of due diligence and a feasibility study.” However, it looked as if the project was now going forward. Why was this good news for the future of Snow Lake?

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2 October 2010: “Production halted at Bucko Lake nickel mine” [Martin Cash, Winnipeg Free Press, B4]

In October, Martin Cash reported that the Buck Lake nickel mine near Wabowden was being shut down “for the second time in less than a year,” putting 150 miners out of work.

The mine is owned by Crowflight Minerals, but it has been operated by a production company called Dumas Contracting Ltd. Now Crowflight wants to operate the mine itself.

Mark Tevisiol, CEO of Crowflight, said that it was updating its marketing plan for 2011 and hoped to have everything ready, so that it could hire miners and get back into production “early in the new year.”

The change could cost up to $20 million, but one of Crowflight’s largest shareholders, King Place Enterprises Ltd., a Chinese investment fund, would arrange the financing.

Crowflight built the Bucko Lake Mine in 2007 at the height of nickel prices (up to $25 a pound), but when it opened the mine in early 2009, the prices had dropped to $4, although they went up to over $10 in 2010. The mine shut down in November 2009 because Crowflight had “taken the wrong technical approach to the ore body and had to revise its strategy.” The changes did not produce the yields that the company wanted, so it had closed the mine again to make adjustments.

Crowflight faced plenty of challenges. It was in conflict with Dumas Contracting over the money it owed the production company, which had put a lien on the Bucko Lake property. It had to buy “a whole range of expensive equipment” and find “a skilled workforce in an already tight labour market in Northern Manitoba.”

As Cash pointed out, this would be a tall order because there were new mines opening.

This week [October 2010] Alexis Minerals announced it has financing in place to reopen the former New Britannia gold mine, now called Snow Lake Gold Mine. HudBay Minerals is building its new Lalor mine near Snow Lake and Vale Inco in Thomson continues to look for workers.

Although Crowflight’s problems were challenging, Ed Huebert, executive vice-president of the Mining Association of Manitoba, considered them nothing more than a “setback.” “‘This is just business,’ Huebert said, ‘These things happen. Companies have to change contractors from time to time.’”

Discussion: Mining is an occupation that could provide a solution to the problem of unemployment in many northern communities. What could government do to promote the hiring of local people? What job training would be required, and who should be responsible for it? What role could community leaders in Northern Manitoba take in promoting ties with mining companies?

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5 November 2010: “HudBay’s profits down, but development up” [Martin Cash, Winnipeg Free Press, B4]

HudBay’s profits were down in the third quarter of 2010. The problem was that the company “couldn’t move as much copper and gold concentrate from its Flin Flon operations … because the railroads could not make enough cars available for shipments, leaving the company with an excess inventory of about 5,000 tonnes of copper and 7,800 ounces of gold contained in the concentrate.” However, as Martin Cash pointed out, this wasn’t necessarily a bad thing, because prices for copper and gold were still going up, and a delay in getting them to markets would only mean more money in HudBay’s coffers.

Otherwise, the company was doing well. New mines were under development, like the $560 million Lalor mine at Snow Lake, which would be in full production in five years. A decision would be made in 2011 on the development of the high grade copper find at Reed Lake, south of Snow Lake. According to David Garofalo, HudBay’s new CEO, “It is literally a stone’s throw away from a provincial highway and HudBay’s experienced team will be able to bring it on stream quick and efficiently.” The company had a “70-per-cent partnership in that project,” as well as a 51 percent share in a Michigan mine, which was doing well. It also owned a “massive nickel mine in Guatemala” which was yet to be developed.

The company also had “$800 million-plus cash on hand,” a “$300-million credit facility” and “$1.2 billion in available liquidity.” Its shares were up on the Toronto Stock exchange. All boded well for the future.

Discussion: Although Cash did not dwell on it, why was the lack of rail cars a serious problem that needed to be addressed? CentrePort is under development in Winnipeg, and the Hudson Bay Railway (HBR) to Churchill is important to the success of the inland port. How could a close collaboration between HudBay, CentrePort, and the HBR be helpful in rectifying this problem? Why would it be mutually beneficial? What role should the provincial and federal governments play?

Considering the importance of the mining industry in Northern Manitoba, why is it important that educational facilities there take a leading role in preparing Northern Manitoba residents to take advantage of opportunities for jobs in this industry?

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18 November 2010: “Smelter, refinery called unfeasible” [Martin Cash, Winnipeg Free Press, B5]

Just when Northern Manitoba was getting plenty of good news in the mining sector, Vale SA, the company that owned the smelter and refinery in Thompson announced (November 17) that these facilities were going to be closed over the next five years. That was the bad news. However, the good news was that it planned to invest “$1 Billion on its mining operations there.”

The problem from Vale’s perspective was that the plant needed to be upgraded to meet “federal standards for sulphur dioxide emissions,” and that upgrade would cost “$1-billion.” Moreover, the Thompson mine didn’t produce “enough nickel to operate the facility at full capacity,” which was necessary to make it cost-effective. To address the shortfall, Vale had been shipping 45% of the ore required for full capacity from the company’s Voisey’s Bay operation in Labrador, but that would stop in 2012, when a “$2.8-billion processing plant” was completed there [actually, the new processing plant was to be at Long Harbour, Newfoundland].

The closure of the smelter and refinery would eliminate 500-600 jobs, but they would be “managed by attrition” with “no layoffs.” A big challenge for the company was “attracting and retaining workers” in Thompson, and in November 2010 it still had “160 positions unfilled.”

Vale still intended to spend “as much as $1 billion developing new nickel resources in the area as well as $150 million to upgrade tailings containment.” It planned to “develop the 1-D project, part of its main Thompson Mine, and reopen the Pipe-Kipper open-pit operation that was closed several years ago.”

Discussion: From a business point-of-view, did the decision by Vale SA make sense? What steps had the company taken to ease the economic impact on the City of Thompson?

The company admitted to having difficulty recruiting and retaining workers in Thompson. One of the reasons was that Thompson was isolated and cold in the winter, workers came from outside the area, and they were generally separated by long distances from their families. Consequently, they often worked for a while, then returned to their homes. However, there is a large potential workforce in the communities surrounding Thompson. They have lived in the North all their lives, and Thompson is not far from their families back home. How could that potential workforce be harnessed? What training programs would be needed? How could they be implemented?

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18 November 2010: “Plan to cut mine jobs blasted: Provincial leaders rush to Thompson, say Vale’s actions may violate deal” [Martin Cash, Winnipeg Free Press, B5]

Martin Cash summarised the reaction of the Manitoba government, which was clearly on the defensive in the wake of Vale’s announced closure of the Thompson smelter and refinery. Provincial leaders were upset that they were not consulted by Vale before the decision was made, and Premier Selinger announced that Energy and Mines Minister Dave Chomiak and Thompson MLA Steve Ashton would be going immediately to meet with Thompson officials and the mine workers.

The closure was described as “unacceptable” and possibly contravened a “54-year-old agreement with the province.” Chomiak claimed that Vale’s decision “appeared” to “violate a 1956 agreement negotiated with former mine owner Inco that included development of the Kelsey hydro dam to power the operation.” He added that the province “believed” that the agreement included the smelter and refiner processing facilities.

Steve Ashton, Thompson’s MLA, asked, “How does Vale think they can walk in and unilaterally wipe out what has been in place for that many years at a time when nickel prices are at historic highs? … This is not the way we do things in Manitoba.”

Cash noted that “Manitoba was the only jurisdiction to come out on the short end of the Brazilian mining company’s announcement it would spend $10 billion in Canada over the next five years to beef up its mining properties in Canada.” As one industry observer noted, “Ontario and Newfoundland and Labrador were successful in extracting concessions from Vale, but Manitoba was not.”

Union leaders were unhappy as well. Murray Nychyporuk, president of the United Steel Workers of America was “disappointed and frustrated.” From his perspective, “This was a corporate decision without any human element taken into consideration.” He was somewhat sceptical of Vale’s promise to manage “the workforce reduction through attrition,” and added that there were “20-year veterans in the smelter because they do not want to work in the mine.”

Discussion: This article suggested that the government was unprepared when Vale SA made its announcement. How do you know?

Evidently Ontario and Newfoundland and Labrador had been in negotiations with Vale SA. Is it reasonable to ask why Manitoba had not?

Keeping in mind the Manitoba government’s decision to locate BiPole III on the west side of Lake Winnipeg at an additional construction cost nearing [and possibly surpassing] $1-billion, and Vale SA’s decision to close its outdated Thompson smelter in favour of a brand-new processing plant at Long Harbour, Newfoundland, consider the irony in Steve Ashton’s comment concerning Vale’s decision, “That’s not the way we do things in Manitoba.”

Mining operations open and close, and miners often have to move on, painful as that can be for their families, as in the case of Lynn Lake and Leaf Rapids. However, there is a new processing plant opening at Long Harbour, Newfoundland. Is it an option for Thompson’s smelter workers to transfer to that new facility?

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19 November 2010: “Thompson’s loss of jobs Canada’s gain: Clement” [Mia Rabson and Larry Kusch, Winnipeg Free Press, A12]

The issue of the impending closure of the smelter and refinery at Thompson was raised in the House of Commons by Churchill MP Niki Ashton. In response to her question, Industry Minister Tony Clement said, he was “sorry for Thompson but a $10-billion investment in mines is good for the rest of Canada.” Vale’s investments in Sudbury, Ontario, Long Harbour and Voisey’s Bay, N.L, and Saskatchewan would result in 1,000 permanent jobs.

Ms. Ashton was not pleased. She accused Clement of not being “committed.” After all, “Manitobans are just as Canadian as people in Sudbury, in Long Harbour and Voisey’s Bay.”

Clement responded. “The context of this … is that the announcement that is so affecting her community in a negative way is also part of a larger announcement where thousands of jobs will be created throughout the rest of the country … . I know she has to defend her people … but this is good for Canada in the overall.”

Rabson and Kusch then went on to explain that the Thompson smelter and refinery would be closed “because there is a shortage of mineral reserves for it to process … and it [Vale] could not meet tough new federal sulphur dioxide emissions standards that would require it to cut emissions from the Thompson smelter by 88 percent in five years.”

Ashton felt Clement should be taking the lead in bringing Vale to the negotiating table in order to “figure out how to save the smelter and refinery.” Premier Selinger indicated he wanted to meet, but it was “premature to discuss any incentives the province may offer Vale SA not to close the refinery.” When the meeting occurred, Selinger said, “We’ll sit down and see what they have to offer and what their thinking is and also put the case forward for why Thompson is a good place to do business.”

Opposition Leader Hugh McFadyen was critical of the government for not anticipating Vale’s decision. “He cited a 2005 Free Press article that said Thompson would only be processing ore from Newfoundland until Vale’s smelter there was completed.”

Discussion: Niki Ashton wanted to save the smelter and refinery at Thompson, but she never explained who was to pick up the bill for this. If Vale were to do this at a loss, how long do you think it would be before it went bankrupt? And, if it went bankrupt, what are the chances that anyone else would keep the smelter open at a loss?

If Premier Selinger were to offer “incentives” to Vale SA to keep the smelter open, who would pay for them?

Rabson and Kusch imply that Vale could not meet the tough new emissions standards at Thompson. In fact, they could have surpassed them. But why would they do this, if they were already in the process of building a new plant in Long Harbour, Newfoundland, that met current emission standards? Rabson and Kusch did not say.

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19 November 2010: “Mining sector losing lustre: Conference kicks off with gloom from north” [Martin Cash, Winnipeg Free Press, B6]

The Manitoba Mining and Minerals Convention got off to a gloomy start with the announcement that Vale SA was closing the smelter and refinery at Thompson. Cash used this as a starter to discuss the other side of the mining industry in Manitoba. In spite of the good news stories at Snow Lake and other places in Northern Manitoba, the mining industry of Manitoba was facing “challenging” times ahead.

Mining exploration was down in Manitoba. Four years ago, the Fraser Institute ranked the province as No. 1 in the world “for mineral exploration and development.” Now it was No. 11, still a “solid ranking among the 51 jurisdictions,” but worrisome. “Even with strong base metal commodity prices,” mineral exploration had “dropped off dramatically in 2009-2010, and spending totals for 2010 were “the worst in the country.”

This appeared to be happening because of concerns about “levels of certainty and confidence in the provincial regulatory environment.” Cash reported on two of them.

  1. Delays because of aboriginal land claims. “On that score, some industry players say there are long delays when it comes to the duty to consult First Nations whose land claims are in mineral resource exploration and development areas. For some reason the process has become more time-consuming in Manitoba than elsewhere in the country [emphasis added].”

    Cash explained that the province “was grappling with the right model to use in its duty to consult First Nations on mineral exploration projects,” and the mining industry had “embraced” that process, “but for some reason the process in Manitoba was “more cumbersome than elsewhere.”

  2. Creation of additional parks in Northern Manitoba. “Ed Huebert, executive vice-president of the Mining Association of Manitoba Inc., was beside himself after this week’s speech from the throne when the provincial government noted one million hectares of land have been permanently protected over the last 12 months and new protected areas will be added in the coming day.”

In spite of these problems, Cash ended his article on a positive note.

  1. HudBay Minerals had reopened the Chisel North mine and was developing the Lalor zinc/gold/copper mine at Snow Lake.

  2. Alexis Minerals was reopening the New Britannia mine, now called the Snow Lake Mine.

  3. Reed Lake was on the verge of development by HudBay and VMS Ventures.

  4. San Gold was finding more gold discoveries at Bissett and beginning to mine some of them.

  5. Victory Nickel was still “hopeful about its Minago property near Grand Rapids.”

  6. “Rolling Rock Resources Corp. had recently signed a memorandum of understanding with the Red Sucker Lake First Nation, an important step toward the potential development of its Monument Bay Project.

  7. “A more expeditious model for consultations with First Nations might be available in the near future.”

Discussion: Why does the addition of more “interested parties” to the decision-making process create delays?

Huebert feared “new battles to be fought” over the Mining Association of Manitoba’s efforts “to preserve some potential exploration properties on the east side of Lake Winnipeg where the province wants portions to be recognized as a UNESCO World Heritage Site.” In view of what has happened so far on the east side, are his fears justified?

Elements of the environmental movement would be happier if there was no development in Northern Manitoba at all, in spite of the fact that most of its aboriginal inhabitants live in abject poverty and unemployment. How have the environmentalists used the stereotype of aboriginal people as the keepers of Mother Earth to promote their causes [anti-trapping, anti-roads, anti-mines, anti-development]?

How can aboriginal people fight back to ensure an economic future for their children in Northern Manitoba?

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20 November 2010: “Asleep at the wheel” [Editorial, Winnipeg Free Press, A16]

The Winnipeg Free Press editorial opened with the revelation that Mines Minister Dave Chomiak was going to Toronto to speak with Vale SA officials about the closure of Thompson’s smelter and refinery. It was, in the editorial’s view, more of the “frantic to-ing and fro-ing that Mr. Chomiak and Premier Greg Selinger have been engaged in since news broke Wednesday [November 17] that Manitoba’s third largest city was going to take a very hard economic hit.”

The newspaper was of two minds on the “hand-wringing and dashing-about.” It could be that the government needed to be seen as “‘doing something’” in the “face of bad news,” but it was more likely that “the government was caught completely off guard by the news.”

Like Opposition Leader Hugh McFadyen, the editorial raised the question: “Has the government been asleep at the wheel?” It wasn’t as though there weren’t signs of a closure for some years, which the editorial listed as follows:

  1. “Seven years ago Inco Ltd., which was subsequently bought by Vale for $20 billion, threatened to shut down all operations in Thompson because the price of nickel had fallen so low that the Thompson operations were no longer viable.”

  2. “The smelter and refinery in Thompson were only viable because Vale was bringing in ore from Labrador, where Vale [was] building a $2.8-billion smelting and refining operated to service its massive nickel find at Voisey’s Bay.”

  3. The Winnipeg Free Press had pointed out in 2005 that the Thompson smelter would shut down as soon as the new smelter was completed, a fact that the Opposition knew, if the government did not.

  4. HudBay’s smelter at Flin Flon had to close because the company could not meet modern emissions standards, so it should have been no surprise when Vale decided to close the Thompson smelter for the same reason.  

Regardless of who knew what when, the editorial was clear on what had to be done in response to Vale’s announcement.

What is needed immediately is for Mr. Chomiak to make a realistic assessment of the prospects of saving the 500 jobs without throwing money at Vale. Simply put, if it will cost $1 billion to meet new environmental standards, that means saving 500 jobs will cost $2 million each.

It appears that a better expenditure of the $1 billion is the one Vale plans – to sink it into new mining operations that will at least protect 1,000 of the 1,500 jobs Vale currently supplies. Vale also has said it will reduce manpower slowing over five years and attempt to do so through attrition.

That … is enough time for the government to find new ways to replace old jobs. It’s also, sadly, the same amount of time the government has had available to prepare for this eventuality, but instead got caught sleeping at the wheel.

Discussion: Is there enough evidence to conclude that the government was “asleep at the wheel?” If it wished to influence Vale’s decision, when should it have started the process?

Vale SA chose to build its new smelter at Long Harbour, Newfoundland. What criteria did it consider in making that decision? None of the articles explain this beyond cost effectiveness. However, the Internet can provide the interested reader with possibilities. Long Harbour has docking facilities for the world’s largest ships and ready access to markets in Europe and the eastern seaboard of the United States. Could Thompson compete with that advantage?

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Last updated : February 17, 2011


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