MAC: Mines and Communities

Mining recession's human costs

Published by MAC on 2009-02-02

What's been called "the most rapid switch from boom to bust in mining history" is dragging down some of the world's most powerful mining companies, markedly compromising the operations of many junior outfits, and jeopardising numerous mining "developments." This may provide hope to many who've been campaigning for an end to dubious or unacceptably damaging projects.

However the attrition is being felt, in the first instance and most severely, by low-paid workers at the frontline - whether it be at the diggings, employed at smelters, or labouring on the shop floor of those industrial sectors dependent on sales of metals-based products (notably automobiles).

The impacts of this euphemistically-dubbed "downturn" are being felt as much on mostly rural mining-dependent communities, as upon directly-employed workforces themselves.

True, the global picture is not uniform. Along with the overall cutbacks in output and production, a few companies, wioth secured cash, are embarking on modest expansions, or hope that buyers will be prepared to stock pile while awaiting economic revival.

Rio Tinto's strategy to reduce its many billion pounds of bad debt seems to have ruled out major acquisitions for the near future. On the other hand, Xstrata - while also heavily in debt - has just launched a rights' issue, partly to buy out Glencore's Colombian mines.

Nonetheless, any broad optimism seems unwarranted - at least from the workers' perspective.

"Adjustments" made by employers in a bear (buyers') market in the past have, with only a few exceptions, resulted in "temporary layoffs" becoming permanent.

Eyes inevitably turn to China, to revive the markets, but the Chinese government has itself been cutting back strongly on demand, and taking steps to halt output of metallic products in order to balance its own books.

Once closed, mining townships and settlements rarely, if ever, become revived. So far, with few exceptions (such as Jamaica's recent boost to tourism and small businesses), governments states have failed abysmally to take the measure of the unfolding crisis.

[Comment by Nostromo Research]


Mine jobs lost worldwide as recession hits metals

By Steve James

Reuters

29th January 2009

NEW YORK - All over North and South America, miners are losing their jobs as the recession hits demand for metals that enjoyed a boom in recent years.

In Chile, where copper mining is a major contributor to the economy, unions estimated 14,000 jobs have been lost. Peru reported more than 5,000 layoffs and Mexico put the number of out-of-work mine workers at 2,000.

In the United States, Freeport McMoRan Copper & Gold Inc), said it is laying-off 3,000 workers, many of them at its Morenci mine in Arizona, where it is reducing operations to cut costs as copper prices have plummeted.

Canadian government data show payrolls in the coal, metal and non metallic mineral sector fell 11.5 percent in the second half of 2008, as falling metals prices prompted mine closures and smaller exploration budgets.

"People are very, very nervous," said John Rebrovich, a United Steel Workers union official in the Iron Range region of Minnesota, who represents 50,000 mine workers.
"Right now, we're hanging on, but when the steel mills tighten up (on production), they (mines) will cut back."

Rebrovich said the U.S. Steel -owned Kee-tac iron ore mine was recently idled, with half the 325 workers laid off and the rest doing maintenance work at a nearby mine.

The Hibbing Taconite mine -- in singer Bob Dylan's hometown -- has cut production, with 100 workers either taking voluntary lay-offs or early retirement, he said.

Another 477 workers were let go at Cliffs Natural Resources Inc's Empire and Tilden mines and Cliff's United Taconite mine is operating a 32-hour work week.

Carole Raulston, of the National Mining Association, said layoffs were rising in metals mining and also for metallurgical, or coking coal, used in steel-making.

"We think it (labor) will continue to be affected by the general state of the economy," she said.

Phil Smith, spokesman for the United Mine Workers of America, said there were about 1,000 layoffs this month at mines producing met coal. But he does not forecast a wave.
"Not unless the steel market completely collapses," he added.

As for thermal coal, which is used for electricity generation, Smith sees few layoffs.
"Steam coal? They can't hire enough people," he said.

MINERAL WEALTH

The economic downturn is hitting particularly hard in Latin America, where economies depend on mineral wealth. Chile's Sonami mining group estimates at least 14,000 jobs have been lost.

"Mining is concentrated mostly in the country's north, where for many cities it's the only source of jobs, so the impact of the crisis will be very significant for many people," said Alfredo Ovalle, president of the Sonami.

"We think these will not be the final (job cut) figures," Ovalle told a news conference in Santiago.

BHP Billiton Ltd, the world's largest diversified miner, has already cut 2,000 people from its Chile operations alone. That came on the heels of other job cuts announced by Chile's Antofagasta Minerals).

Chile's government has committed $1 billion in capital injection for Codelco, the state-owned copper producer that employs more than 40,000 workers. Codelco is not expected to turn to lay-offs like the private sector.

Peru's National Federation of Mine and Steel Workers says more than 5,500 workers have lost jobs since December, while the Labor Ministry says at least 4,000.

"The mining sector ... has lost most jobs," Labor Minister Jorge Villasante said. "We've asked businesses to reduce other costs instead of eliminating jobs."

Mexico's Mining Chamber says about 2,000 jobs have been lost. Some smaller projects have been cut, but major miners, Grupo Mexico, Penoles and its precious metals miner Fresnillo, and GoldCorp Inc have not announced cutbacks yet.

"We are all worried about the economic crisis ... but we have to look at what prices were like four years ago and what they are today," said mine union official Carlos Pavon.

"Miners (companies) are still profiting. It is true that they have lost money, but the price of copper, for example, is not yet below the cost of production. We have room to negotiate."

(Editing by Andre Grenon)


FACTBOX-Mines and plants hit by low prices, high costs

Reuters

23rd January 2009

LONDON - The global financial crisis and sharp falls in metals prices have forced several companies to abandon or put on hold their plans to bring new mines onstream.

Some existing producers also have shut down or curtailed output at mines and plants as high costs and low prices bite.

Below are details of major projects and facilities affected in recent months, as well as other related news.

Jan 23 - Oxus Gold Plc said it will expand its 50 percent-owned Amantaytau Goldfields project faster than planned, but will slash development costs.

Jan 22 - Bulgaria's KCM said it will cut zinc output by 16 percent this year and and lead output by 9 percent.
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Jan 22 - Sharp falls in metals prices have forced several small mining companies in Mexico to scrap ongoing projects, the country's mining chamber said.

Jan 22 - Japan's Dowa Holdings Co Ltd said it would curb copper output by about 10 percent from its initial plan from February.

Jan 22 - Lundin Mining said to close Galmoy zinc-lead mine in Ireland in May. Last September, company said mine to close on a phased basis over the next three years from end-2008.

Jan 22 - Australia's top gold miner Newcrest Mining lowered its forecast for annual production.

Jan 22 - BHP Billiton may suspend operations at its Yabulu nickel refinery indefinitely after completing a study on its future in the first half of 2009, analysts said.

Jan 21 - African Copper said it will suspend production at its Mowana copper mine in Botswana for at least three weeks while it holds talks to raise up to $15 million for its working capital needs.

Jan 21 - Eramet said will cut its output of manganese ore and alloy in the first quarter 2009.

Jan 21 - Anglo America Plc's platinum-producing unit, Anglo Platinum plans to trim production, a South African union official said. Also said Gold Fields considering laying off about 1,500 workers.

Jan 21 - Columbia Falls Aluminum is to curtail the last operating potline at its 168,000 tonnes per year (tpy) smelter in the United States.

Jan 21 - BHP Billiton will close its giant Ravensthorpe nickel mine in Australia, reduce activity at Mount Keith nickel mine and put Pinto Valley copper operations in the United States on care and maintenance in February.

Jan 21 - Latin American silver and gold producer Hochschild Mining Plc said it is considering closing its small Selene silver mine.

Jan 20 - OceanaGold said may slash planned investment in the stalled Didipio gold-copper project in the Philippines due to funding difficulties.

Jan 20 - Rio Tinto Alcan said plans to cut another six percent of aluminium output and will also cut alumina production, shed 1,100 employees to cut costs.

Jan 20 - Anglo American Plc said it has temporarily halted production at Loma nickel mine in Venezuela, partly due to high transport costs.

Jan 20 - Albidon said nickel output for the Dec. 2008 quarter had fallen and lowered its production forecasts.

Jan 19 - Saudia Arabian Mining Co (Maaden) said will delay by three years the start of production at a planned aluminium smelter after Rio Tinto Alcan abandoned the project.

Jan 16 - Norsk Hydro will cut primary aluminium output at its Neuss smelter in Germany by 30,000 tonnes by end-January.

Jan 15 - Alumina Partners of Jamaica, Jamaica's biggest bauxite and alumina producing company, said it will cut production by 50 percent and lay off staff.

Jan 15 - Rio Tinto said had curtailed about five percent of aluminium smelter capacity at end-Q4 2008. Said continued to review production rates at higher cost smelting units, which might lead to further cutbacks.

Jan 14 - Antofagasta Plc said will close its small Lince copper mine in Chile.

Jan 14 - Mexican silver miner Fresnillo Plc said it would trim capital expenditure this year by about 8 percent. ID:nLD489404]

Jan 13 - Mitsubishi Materials (other-otc: MIMTF.PK - news - people ) Corp said will cut copper production by 10 percent from February.

Jan 13 - Rio Tinto said has shelved a plan to extend its Northparkes copper mine in Australia as it slashes capital spending.

Jan 13 - Oz Minerals Ltd said it would put the Scuddles mine at its Golden Grove project on care and maintenance, resulting in about a 25,000 tonnes cut in zinc output in 2009.

Jan 13 - Xstrata said it is restructuring lead-zinc operations at its Mt Isa mining and processing complex in Queensland, Australia. Handlebar zinc-lead mine also to be mothballed from Feb. 12.

Jan 12 - Monterrico Metals, a unit of China's Zijin Mining Group Co Ltd said re-evaluating timetable for developing Rio Blanco copper project in Peru.

Jan 12 - Tajikistan reduced aluminium output 4.7 percent last year and will cut it by 5.0 percent this year.

Jan 9 - HudBay Minerals Inc said will suspend operations at Chisel North zinc mine and Snow Lake concentrator in Manitoba.

Jan 9 - Rio Tinto has all but halted its $2.5 billion expansion of the Kitimat aluminium smelter in British Columbia, union says.


State of world mining bad, could worsen

AAP

21-January-2009

Withering cost cuts across the mining industry have left tens of thousands of people without jobs from the Arizona desert to the Andes -and there is a litany of evidence that the situation is growing worse.

International mining companies also have postponed or cancelled projects and padlocked the gates to mines as consumers have cut spending on cars, jewellery and housing. Global mining giant Rio Tinto announced last week that iron ore production, used to make steel, tumbled 18 per cent in the fourth quarter and said Tuesday its aluminium subsidiary would double previously announced production cuts.

Unwanted copper, gold, bauxite (used in aluminium) and iron ore, is piling up or being left underground as the worst recession in at least a generation saps demand. "Expect inventories to get bigger and expect this continuing process (of cutbacks)," said Andrew Martyn, a portfolio manager who specialises in mining for Toronto-based Davis-Rea Ltd. "It's going to go for quite some time here."

The effect on many communities worldwide that rely on mining has been immediate. Workers are protesting job cuts and others are expected to begin migrating in large numbers in search of work, some across international borders. "A lot of the communities are remote so that when (mines) do shut down, the town actually collapses," Martyn said.

United States

The bulk of the layoffs in the United States are in base metals such as copper and zinc, although major companies are scaling back production of metallurgical coal for use in steel manufacturing. Coal companies have slowed production from Wyoming to Australia. Coal jobs are among the highest paying in many rural US communities, potentially creating a dire economic ripple effect. In the past, coal companies have been more recession proof, but the average price per ton for Appalachian coal has fallen more than 35 per cent since the summer.

At least 700 job cuts are likely in Tennessee and Montana by Swiss-based Glencore International AG, a commodities company. Still, job losses have been most severe outside the United States.

Bolivia

Glencore's Bolivian subsidiary recently announced it will layoff several hundred people, triggering labour protests. Thousands of miners who dig primarily for zinc in Bolivia either have been laid off or left their jobs in the Andes, the poorest region in South America's poorest country.

In the mines around the small cities of Potosi and Oruro, the work force of roughly 25,000 miners and refiners has been cut roughly in half. A controlling stake in Bolivia's largest mine, San Cristobal, has been put up for sale by Denver-based Apex Silver Mines Ltd., which is reorganising under bankruptcy protection. Local officials say workers may flood back into villages emptied during a two-year zinc boom that ended in 2007, or they may emigrate to Argentina in search of jobs.

Tens of thousands of mining jobs have been lost in recent months from South Africa to Jamaica as manufacturers shut down. US industrial production plunged by double the amount analysts expected in December, capping the worst year for manufacturers since 2001. "As little as three to six months ago, steel companies were running flat out around the world because China was making factories to ship goods to the rest of the Western world," Martyn said. "That process has come to a grinding halt."

There are no reliable employment numbers available for the mining industry globally because it spans such a broad geographic, economic and political spectrum, but it is clear that the number of jobs already lost is vast.

The fall off in copper, used in everything from housing to computers, has triggered thousands of layoffs in Peru, Arizona and New Mexico. Aluminium producers like Alcoa have also slashed production, along with thousands of jobs. Those cuts have spilled over into mining.

"What all companies are doing that have bauxite and alumina facilities is they're basically retrenching," Argus Research analyst Bill Selesky said. "They may be running them at lower production levels now just to keep up with what's going on. And they won't rehire these people until they actually see an uptick in demand."

Jamaica tourism boost

In a December address, Jamaican Prime Minister Bruce Golding announced a $6.7 million plan to boost tourism and small businesses to help offset the effects of the downturn in the bauxite-alumina industry. Industry analysts speculate some signs of improvement could start appearing in the latter half of this year, though others say it could take up to two years.

"Companies still looking to cut costs are going to be cutting out high cost operations. A lot of that should be still to come," Barnard Jacobs Mellet analyst Patrick Chidley said.
BHP Billiton Ltd., the world's largest miner, is expected to reveal more about the state of production and exploration for the last quarter of 2008 on Wednesday.



Miners hit by cash call fears

Nick Fletcher

The Guardian

29 January 2009

Rio Tinto is not the only mining share to fall on fears it may try and tap shareholders for cash.
There has been talk all week that at least one of the big miners was sounding out shareholders about a possible rights issue. Rio this morning confirmed an equity issue was one option to help it reduce its debt by $10bn by the end of the year, and its shares have fallen 107p to £15.32 as a result. Simon Toyne at Numis suggested a possible 1 for 3 rights issue to raise around $8bn:

"[Today's statement] contrasts with previous commentary that the group had no plans to raise equity. Our negative view on Rio Tinto has been predicated on a negative view of the core commodities (copper, aluminium, iron ore, both types of coal), for which we see further price declines in 2009, which reduces profitability while also reducing likely disposal proceeds on asset sales, both factors increasing the potential size of an equity issue. Based on our current forecasts, which exclude asset sales not yet announced in 2009, RioTinto's closing 2009 net debt is about $37.5bn, which compares with the $29bn implied by the $10bn debt reduction commitment.

"As such an equity issue of the order of $8bn in the absence of further asset disposals looks possible. In advance of the terms and execution of such a transaction, and given our downbeat commodity view, we remain negative on the shares (and the sector generally)."
Another name in the frame for a cash call was Xstrata, which has $14bn of debt, and it is now down 71.5p at 613.5p. Of course, there have also been suggestions that major stakeholder Glencore might be looking to sell some or all of its shares, which has also put pressure on Xstrata's share price.

Xstrata and Rio are currently the two biggest fallers in the leading index, with Vedanta Resources close behind after reporting a 98% fall in third quarter profits to $10.1m due to low metal prices, inventory writedowns of $104m and currency losses of $34m. John Meyer at Fairfax said the results were shocking and the company was in danger of falling out of the FTSE 100 at the next index review.


Rio Tinto to Cut 10% of Workers at Kennecott Utah Copper Unit

Jesse Riseborough
Bloomberg

17th January 2009

Rio Tinto Group said it will eliminate about 10 percent of the workforce at its Kennecott Utah Copper unit, the second-largest producer of the metal in the U.S., as the global recession curbs demand.

A total of 241 workers, or 66 full-time and 175 contractor jobs, will be cut, according to a statement posted on the Kennecott Web site. The company didn't announce any plans to reduce output from the mine.

Rio Tinto, the world's third-biggest mining company, announced plans last month to cut 14,000 jobs worldwide to help lower spending by $5 billion as demand for commodities tumbles. Kennecott's Bingham Canyon mine has produced more copper than any other mine in the world in its 100 years of operation and meets about 13 percent of the U.S.'s copper needs, the statement said. ``Rio Tinto must respond, like so many other companies, to this global economic crisis which may continue to deteriorate,'' Andrew Harding, Chief Executive Officer of Kennecott, said in the statement.

London-based Rio announced plans to expand output at Kennecott by 20 percent and more than double the lifespan of Bingham Canyon in May. Kennecott produces about 300,000 metric tons of copper a year, according to the statement.


Australia: Boom to bust

By JAMIE FREED

Sydney Morning Herald

26th January 2009

FAIRFAX BUST TOWN: In recent weeks, a seemingly endless stream of cutbacks and closures - from the smallest miners to the world's largest, BHP Billiton - have rocked regional towns around Australia.

Times are tough throughout the Australian mining industry.

In recent weeks, a seemingly endless stream of cutbacks and closures - from the smallest miners to the world's largest, BHP Billiton - have rocked regional towns around the country.
A collapse in commodity prices and demand is responsible for what industry veterans have deemed the most rapid switch from boom to bust in mining history.

Newly minted mining towns such as Hopetoun, Western Australia - near the site of the Ravensthorpe nickel laterite operation BHP decided to close last week - have never experienced this sort of instant devastation.

But in a quintessential mining town such as Broken Hill, the residents have seen it all before - and the question now is how it will survive the downturn so that it can prosper when an inevitable upturn occurs.

A collapse in the zinc price from US$1.89 a pound in May 2007 to US$0.733 a pound by last August means the town, which sits on the richest zinc and lead deposit the world has ever seen, was hit harder and earlier than its peers. In August, Perilya - the only miner still operating in town and the largest employer by a country mile - sacked 440 workers, more than half its 760-strong workforce, and closed the northern half of its mining operations indefinitely. And with its cash reserves dwindling by the week due to low metals prices, Perilya believes the only way for the remaining southern operations to survive is to sell a 50.1 per cent stake in the company to Chinese smelter Zhongjin Lingnan in return for a A$45.5 million cash injection at a premium to its share price.

The zinc price is now just US$50.4c a pound.

Pending shareholder and Foreign Investment Review Board approval, the remnants of the bedrock that built Broken Hill Proprietary (BHP) and Rio Tinto predecessor CRA will be in the hands of the Chinese by early next month.

That fate appeared sealed last week after rival CBH Resources dropped a long-running, hostile bid for Perilya which would have placed all Broken Hill's mineral deposits under the same ownership for the first time.

In the meantime, Perilya has kept operating its southern operations, which are bleeding cash at current metal prices.

Even a plan to get costs down to between US$60c and US$65c a pound during the current quarter would leave the operation uneconomic - albeit less so than during the September quarter, when its costs were US$1.36 a pound.

When the zinc price plunged last year, Perilya faced some tough choices. It realised that operating the way it had been was not sustainable, and changes had to be made.
After examining 22 options - ranging from ceasing all mining to increasing mining - the board decided the best choice was to process between 600,000 tonnes and 915,000 tonnes of ore a year, down from the previous annual rate of 1.8 million tonnes. It chose the 915,000 tonnes a year option. It was a tough economic calculation to make, but closing the northern operations was relatively easy compared with shutting the southern operations. It would cost A$15 million a year simply to maintain the maintenance and haulage shafts at the southern operations in a state which would allow Perilya to easily restart operations. Placing the southern operations on care and maintenance would mean even more devastation for the town, due to the large-scale sackings involved.

At its similarly-struggling Endeavor mine in Cobar, CBH has already gone through three separate rounds of redundancies and production cuts, and will make more if necessary.

"We're trying to minimise the extent to which we incur losses in the operation," said CBH's managing director, Stephen Dennis.

But when Mr Dennis recently told the Herald he would make more cuts at Broken Hill if the takeover bid was successful, the news sent a shudder through that town.
Perilya's management team is steadfastly committed to making its plan work. Reducing to the 600,000 tonne a year option would lower labour costs but cut down the company's options, and it is not under consideration.

"We haven't set soft targets for ourselves, but we have set ones that are realistic and can be achieved," said Perilya's managing director, Paul Arndt. "We haven't got everything right, but I think we are tracking in the direction we need to. We make this plan succeed, or we do not operate."

Perilya's December quarterly, to be released as early as tomorrow, will report another round of cash losses. But the new mine plan, which is running about six weeks behind schedule, was not in full force until the month of December.

In a presentation on Friday, Arndt revealed Perilya's mine site costs - about half of the total costs of production, which include treatment charges - fell to A$1000 a tonne in the month of December, from more than A$2000 a tonne in September and A$1500 a tonne in October and November.

Those costs could improve further after Perilya completes the current round of pricing negotiations with Korea Zinc, which treats all the zinc from Broken Hill. Some analysts expect zinc treatment charges will fall by about one-third.

Mr Arndt said the cash injection from Zhongjin should last "for an extended period of time" given Perilya expects its burn rate to fall substantially in the March quarter. "At this point, we are not cash positive," he admitted. "It is a very, very tight financial situation for us. At some point, you run out of cash. It is important to make clear to shareholders that there is a point in time that happens [particularly without the Zhongjin deal]."

The goal for Perilya - whose market value once topped A$1 billion but is now just A$30 million - is to limit its losses during the downturn and to position itself for better times. Mr Arndt said that with 12 months' notice, Perilya could be processing 2 million tonnes of ore a year - and in tandem, boosting the fortunes of the historic town: "You can't just turn it on overnight. But we have positioned ourself very well for the upside."

The writer travelled to Broken Hill courtesy of Perilya.


Law firm looking at claims in wake of BHP mine closure

AAP

24th January 2009

A law firm is examining potential claims by small businesses facing ruin in a West Australian town after BHP Billiton closed the local mine.

BHP announced on Wednesday it would close its Ravensthorpe nickel mine, in WA's south-east, at a cost of nearly 1,500 jobs to the local community.

Businesses which have sprung up in the town, and nearby Hopetoun, to support the mining sector and the population, which has doubled, face ruin.

The mine, which has a 25-year life, began operating last year and nearly $30 million of Federal and State funding was poured into the town.

A new school was built, along with new roads and a waste water treatment plant.
Law firm Slater & Gordon said it had been approached to give assistance to small business operators in the region.

Lawyer Tim Hammond said he was examining potential claims.

"When did BHP know that the Ravensthorpe project faced imminent closure?" Mr Hammond said.

"If, as a result of their intimate knowledge of global mineral prices, BHP should have known of the risk of the closure of the mine, but instead actively encouraged businesses to set up in Ravensthorpe and Hopetoun, business operators may have a claim for compensation, having relied upon the representations of BHP and, as a result, suffering disastrous consequences."


Protect jobs, not BHP's profits!

Margarita Windisch

Green Left (Australia)

24th January 2009

On January 21, BHP-Billiton announced the sacking of 3400 workers across Australia.

The response from the federal Labor government has been underwhelming. Calling an immediate press conference, federal treasurer Wayne Swan described BHP's actions as "a tragedy" and a "sobering reminder" of the evaporation of the mining boom.

Apart from the immediate impact on the sacked workers, BHP's decision will also devastate regional towns in WA and Queensland.

In the 2007-08 financial year, BHP registered profits of $15.4 billion. While the company has been hit by the global slump in commodity prices, its profit outlook for 2008-09 still remains rosy, with an expectation of $13.3 billion, according to the January 20 Herald Sun.

BHP-Billiton is hardly on the brink of collapse. The company has made billions over the years on the back of workers. It also received millions of dollars of public money in the 80s from the federal Steel Plan.

The federal government should insist that BHP open its books.

BHP workers and the communities affected should be part of deciding what is a "reasonable" profit - not BHP shareholders.

Where BHP has been affected by the global resource slow-down, it should be obligated to share the necessary work around all existing workers, without loss in pay.

For years BHP has had its hand in the pockets of tax payers. It's time BHP gave that money back to the community, instead of putting workers on the unemployment queues.

[Margarita Windisch is a national co-convenor of the Socialist Alliance.]


Chile: BHP putting Escondida Mine expansions on back burner

Metal Bulletin (New York)

22nd January 2009

BHP Billiton is delaying decisions on the future of two large-scale expansion projects at Escondida, the world's largest copper mine.

The Chilean projects, which are still in the approval stage and have not yet been included in the company's capital expenditure estimates, include the development of a plant to desalinize seawater and the construction of a third concentrator at the mine.
"What we're doing is deferring the decision to do them and that's pretty much in line with our disciplined approach to capital spending," a company spokesman told AMM.

According to BHP, the deferred water treatment plant, previously slated to cost $3.5 billion, will be half the size originally planned when it is built at a still-undetermined date. The smaller desalinization plant will provide enough treated water for existing operations but not for potential expansions, as previously intended; however, the company will have the option to increase the plant's capacity if necessary.

Additionally, BHP is delaying a decision on the development of a third concentrator, forecast to cost the company some $3.25 billion.

"The economy has been tricky as of late, but these aren't off the table forever," the spokesman said, noting that more information on cost reductions will be available when the company announces its financial results early next month.

Copyright © Metal Bulletin Ltd. All rights reserved.


Chile: FMC union - More layoffs will trigger strikes, protests/

BN Americas

23rd January 2009

Continued layoffs in Chile's mining sector will cause workers to go on strike this year, copper miners federation FMC president Pedro Marín told BNamericas.

"If the layoffs continue, 2009 will be marked by strikes, work stoppages and protests," Marín said.

Marín recently met with mining minister Santiago González to discuss ways to avoid further dismissals.

According to Chile's private miners association Sonami, in 2008 some 12,000 workers were let go from member companies of the association due to the global financial crisis.

Sonami has been conducting an ongoing study of layoffs among its members.


Brazil - Union, CSN to lay off 900 workers

BN Americas

22nd January 2009

Brazilian steelmaker CSN is planning to lay off 900 workers, a spokesperson with the South Rio de Janeiro metal workers union told BNamericas late Thursday.

"The problem with CSN is that they are showing a tremendous amount of inflexibility," the spokesperson said. "They don't even want to negotiate."

The source said the union wants to meet with the Brazilian labor minister to discuss how to avoid the dismissals.

According to the spokesperson, the union is also seeking legal alternatives to curb layoffs.


Jamaica: alumina industry struggling

Metals Bulletin (New York)

28th January 2009

The situation for the Jamaican bauxite and alumina industry worsened this week as one producer took a huge write down on its refinery there, a second producer shut down production for 11 days and the debt-ridden government said it is considering selling its minority share of a third operation.

Norsk Hydro ASA, Oslo, Norway, said Wednesday that it will take a 1.4-billion Norwegian kroner ($210-million) impairment charge in its aluminium metal business area, primarily linked to the part-owned Alumina Partners of Jamaica Ltd's (Alpart) and the Neuss primary aluminum plant in Germany.

Company-wide, Hydro said it will write down the value of assets and inventories by approximately 3.5 billion Norwegian kroner ($520 million), which will affect its fourth-quarter results. The impairments are a result of deteriorating market conditions and high input costs, the company said.

The Jamaican bauxite and alumina industry has fallen on difficult times. Spot alumina prices have fallen to a low of about $170 per tonne f.o.b. from a peak of around $430 per tonne in early July, as global demand for aluminum products has decayed.

Hydro confirmed that Alpart -Jamaica's largest bauxite and alumina producer, owned 65 percent by United Co. Rusal, Moscow, and 35 percent by Hydro -halved its 1.6-million-tonne capacity earlier this month. Hydro's share of the production cut is about 290,000 tonnes per year.

"There has to be huge stockpiles (of bauxite and alumina) piling up down there because at these prices, and with the current demand, there's is no one to sell to, which means Alpart and the rest (of the Jamaican facilities are) losing money," said one U.S.-based aluminum trader.

"It's going to be very interesting to see what is going to happen in Jamaica over the next couple months."
In addition to the production curtailment, Alpart said last week that about 250 temporary or seasonal employees will lose their jobs. On Monday, the company sent out a letter to nearly 200 workers asking them to work fewer hours.

A spokesman for the National Workers Union (NWU) said that about 120 more layoffs may be on the way, but that the union is working with Alpart management to reduce the number of workdays instead of implementing additional layoffs. The company has laid off about 400 employees since last October.

Elsewhere on the island, Rusal's West Indies Alumina Co. (Windalco) unit has suspended mining for 11 days, starting Tuesday, due to the current demand downturn, said market sources.

Last month, Rusal said it would curtail about 420,000 tonnes per year of alumina production at its Windalco plants. The company said it plans on cutting around 4 percent of aluminum production and 9 percent of alumina production globally, which equates to 180,000 tonnes a year of aluminum and 970,000 tonnes of alumina.

Rusal owns the Windalco's Kirkvine and Ewarton plants in the Caribbean nation, which have a nameplate capacity of 1.2 million tonnes a year, but are now running at a rate of about 780,000 tonnes, the company said.

Additionally, Jamaican Prime Minister Bruce Golding said that the government is in discussions to sell its 45-percent minority stake in the Jamaica Alumina Co. (Jamalco) refinery in the south-central parish of Clarendon, according to the state-run Jamaica Information Service (JIS).

Alcoa Inc., Pittsburgh, has a 55-percent stake in the 1.4-million-tonne Jamalco refinery, with the Jamaican government owning the remainder. Golding told parliament that discussions are merely exploratory in nature but that the government is fielding offers. He did not say what an adequate purchase price would be.

The Jamaican government is currently attempting to renegotiate a forward-sales alumina and bauxite agreement that runs through 2011 with Swiss commodities trader Glencore International AG, the JIS previously said.

Golding claims that the previous People's National Party administration's agreement from 2005 made few allowances for increases in energy or production costs (AMM, Nov. 4).

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