Xstrata holds firm on decision to cut Timmins jobs

Premier Dalton McGuinty has come away empty-handed after a last-ditch effort to stop mining giant Xstrata from axing 670 jobs in the Timmins area.

McGuinty met with Xstrata officials Thursday evening during a “sober” session to revisit a business decision made by the Swiss-based firm to reduce operations, according to Northern Development Minister Michael Gravelle, who was also in attendance.

“There is no question a decision like this will have a massive impact,” Gravelle said. “At the end of the meeting Xstrata felt they weren’t in a position to change. It was a tough meeting.”

Once Xstrata closes its copper and zinc metallurgical operations the spin-off job losses could number an estimated 4,000 throughout the province, union groups say. This is expected to devastate Timmins, which has a population of 45,000.

Xstrata’s move is a blow to the premier’s Open Ontario initiative to drive down the province’s $21.3 billion deficit. The north has felt the downturn in the economy particularly hard – thousands of jobs have been lost and nearly 60 mills closed, political opposition claim.

The Liberals hope to retain northern industry by introducing $150 million in energy breaks. The government is also banking on the development of the ore rich Ring of Fire area 500 kilometres north of Thunder Bay to stimulate job growth. But pay-offs from the ring are years away.

Xstrata is not pulling out of Timmins entirely – the mine at Kidd will stay open, said Louis-Philippe Gariepy, Xstrata Copper Canada’s corporate affairs manager. The mine employs 600 and another 180 employees at the concentrator will also be kept on, he added.

What is now taken from the Kidd mine will be processed at the concentrate then shipped to facilities in Quebec, Gariepy said. The Canadian mining giant Noranda merged with Falconbridge in 2005. The combined company was then acquired by Xstrata, which operates in 19 countries.

There are a number of reasons why Xstrata is leaving Ontario, Gariepy said in an interview from Montreal. Those factors are “fierce Asian competition”, the strength of the Canadian dollar and a reduced outlet for Xstrata by-products.

Another big problem is the increased environmental expenditures coming into force in Ontario over the next few years to meet air quality regulations, he added. Increased electricity and gas costs are also issues.

This is the second meeting McGuinty has had with Xstrata officials, said Gravelle. The premier also met with the global CEO of Xstrata Mick Davis awhile ago but to no avail. McGuinty’s also met with northern mayors, Canadian Autoworkers union head Ken Lewenza and NDP MPP Gilles Bisson (Timmins-James Bay).

Bisson, who was at Thursday’s meeting, said he was shocked to hear Xstrata is leaving because of Ontario’s environmental policies. “What does that say about corporate responsibilities?”

Bisson argues Xstrata is making money from the Kidd mine but the problem is refining costs are too much in Ontario so they are moving to Quebec. He fears what is also pulled from the Ring of Fire will be sent out of province to be processed.

Gravelle said the premier has made every effort to work with all the parties to see if there is a solution. “Forced shut downs are devastating for communities,” Gravelle said. “There is no way you can replace these jobs, it is very, very tough.”

I am not sure how this will affect the proposed smelter location, obviously high electricity and gas charges are of some concerns.