CANADIAN PERSPECTIVE: Sudbury angry over Xstrata job cuts

"Xstrata Nickel today [Feb. 9, 2009] announces plans to restructure its Sudbury operations in response to ongoing c...



"Xstrata Nickel today [Feb. 9, 2009] announces plans to restructure its Sudbury operations in response to ongoing challenging market conditions." With those words the Swiss mining giant axed 686 jobs in Sudbury, Ont., and touched off a firestorm of protest from residents and union leaders.


Some of the closures were expected. In November 2008, Xstrata said it would accelerate closure of the Craig and Thayer Lindsley mines that were near the end of their productive lifespans. Operations there ceased with this month's announcement.


The Fraser mine complex will be placed on care-and-maintenance, and the Strathcona mill will run with two work shifts rather than four due to the reduction in feed tonnage. The smelter is expected to operate at a level similar to 2008 thanks to concentrates from the new Nickel Rim south mine and Xstrata Nickel Australasia. Concentrates from the Montcalm and Raglan mines, as well as third-party feed, will also be treated.


Not all the news is bad, just the loss of 686 jobs.


The community is angry because when Xstrata took over Falconbridge, it signed a deal on July 25, 2006, saying it was "…committed not to make any layoffs of operating staff at any of Falconbridge's operating facilities in Canada for a three-year period" and "Any potential layoffs in Canada over that period will be confined to head office, administrative and non-Canadian exploration positions."


On the surface, it would appear that Xstrata has broken the terms of its pledge because three years will not be up until this summer. The company says it has not. Xstrata says there was a clause allowing for reductions in circumstances over which the company had no control. Certainly the collapse of the world's metal markets meets that criteria. An Xstrata spokesperson also noted the $700 million spent in the region and 500 new jobs that the company has created since taking over Falconbridge.


Yes, the loss of nearly 700 jobs is going to be a hardship for workers, their families and the community. With so many Canadian mines suffering from low commodity prices, there are not enough jobs to go around.


But we must remember that a mining company is not a charity. The industry is cyclical, and we are experiencing one heck of a downturn. Mines will not continue to operate if they cannot do so profitably. By conserving their financial resources now, the companies will be around to expand during the next cyclical upturn.


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