I THINK MINING

  I write this piece on the 21st floor of one of the many very tall buildings in Toronto’s financial district.   I have spent the past two days talking to people in the local mining industry.  In between talking, I have of course also had to do some work to justify the costs of the flight and the hotel–and the plea from my daughter for $1,500 to pay for summer school.  Here are some impressions gleaned from the talking to local folk; these impressions are organized around the themes of strikes and foreign investment in Canadian mining.

    We grew loud and hoarse arguing last night in a small Italian restaurant when I asked the mining geologist from Sudbury about the strikes and the non-mining in that town.  In heavy French-Canadian accents, I was told the strikers are holding out, not for money, but in an attempt to preserve the Canadian way of mining–to retain the benefits of a long and hard process leading to decent treatment as miners, and as Canadians.  The speaker told me that the foreigners who came and bought up the Sudbury mines are seeking to impose Latin ways of treating miners on Canadian miners, and “that it is just not decent to treat people as they do in Brazil.” 

He claims the Sudbury strikes are a bellweather event, the outcome of which could change the course of foreign investment in Canadian mining.  He propounded that both the Canadian and Chinese governments are watching the strike most carefully, for “if you think this is a fight about decent treatment of miners by foreigners, wait until we have the first strike against a Chinese-owned mine in Canada.”  

The cynic retorted: “They will bring their own miners, just as they do in Africa.”  We needed another bottle of wine to cool tempers after that statement.

   Today I lunched with a fellow blogger who hails from Sudbury and mining parents who participated in the strikes of the past.  He confessed confusion: sympathy for the strikers, distress that they will have to change, anger at foreign investors, concern about the low price of nickle, and fear of writing about it all, lest he offend the many sensitive parties involved.  I leave town tomorrow, so the invective will have to be hurled at me across the time zones. 

Then I opened my e-mail and found this from Robert Laboucane:

• In 2008, Ontario’s mineral production was valued at more than $9.6 billion.
• Ontario’s 27 metal mines – all located in Northern Ontario – accounted for $6.6 billion of that total.
• The minerals industry is Canada’s largest private-sector employer of Aboriginal Peoples.
• Northern Alberta Aboriginal Business Association has 86 aboriginal businesses doing a half billion dollars of business each year.
• 74 per cent of Canadians believe racism is prevalent in Canada.
• PetroChina spent nearly $7 billion last year acquiring refineries and oil assets in Australia, Canada, Singapore and Central Asia.
• Houston-based ConocoPhillips on Monday confirmed the sale of its stake in Syncrude Canada to Chinese refining giant Sinopec for $4.65 billion US.
• Last year PetroChina floated a $1.9 billion stake in Athabasca Oil Sands Corp. which went public with an initial public offering last week.

    For folk far away for Toronto and Sudbury, here are extracts from the best summary of the situation and the issues that I could find–I leave you to formulate your own opinions on these sad matters of changing times & mores:

The increasingly bitter strike at Vale Inco’s nickel mining and processing operations in Sudbury, Ont., has become the longest in the company’s century-long history.  More than 3,000 workers have been on strike in Sudbury and at Vale’s smaller operations in Port Colborne, Ont., since July 13, now beating the dubious record of eight months, three weeks and two days set during a strike at Inco in 1978-79.

Without a dramatic change in either the union’s tactics or the company’s outlook, observers say it’s difficult to imagine how or when the strike will be resolved.

Vale – a Brazilian company that bought Canada’s Inco Ltd. for $19 billion in 2006 – said in a recent conference call that stainless steel production declined in 2009 for the third year in a row. Since nickel’s primary industrial use is in stainless steel, this has consequently hurt demand for the base metal.

And even if demand for nickel improves enough that Vale sees a reason to increase output at its Canadian operations, it has already proven it can do so without the help of its striking workers.

In Sudbury, the company is using non-striking union members and non-unionized contract employees to restart some operations. To date, Vale has restarted its Sudbury mill and smelter and is operating portions of its Coleman mine and Garson ramp. The company is also working to resume full production at Coleman as well as its Creighton mine.

This doesn’t mean the union has no control over the strike, but it needs to mobilize the broader labour movement in order to exert more political pressure, said Charlotte Yates, a labour analyst and dean of social sciences at McMaster University in Hamilton.

“There has to be some kind of change, and that either has to be that the labour movement mobilizes behind the union and begins to seriously think of strategic disruptive ways of bringing attention to the strike… or there needs to be some kind of political pressure exerted so the government feels compelled to get involved in some way,” Yates said.

But Ottawa has so far refused to get involved in the dispute, despite the union’s accusations that Vale is a foreign entity trying to change Canada’s labour culture.

Lynn Meahan, press secretary for Industry Minister Tony Clement, said the dispute is a provincial labour issue that falls outside Ottawa’s jurisdiction.

“The strike is a labour dispute between Vale Inco and its union, and these labour relations are governed by a well-established legislative framework which Vale and the union must respect,” Meahan said in an email.

Virtually no progress has been made in talks between the company and union since the strike began. Mediated talks fell apart in mid-March after Vale’s Ontario workers resoundingly voted to reject a new offer by the company. And talks at the company’s operations in Voisey’s Bay, N.L. – where workers joined their striking colleagues on Aug. 1 – broke down almost immediately in January.

At issue are proposals by Vale Inco to reduce a bonus tied to the price of nickel and to exempt new employees from its defined-benefit pension plan, moving them instead to a defined-contribution plan. Defined-contribution pension plans are dependent on market returns and don’t guarantee a steady income the way defined-benefit plans do.

PS:  This posting is critically and very intelligently reviewed, commented on, and the subject substantially expanded on at this link Canadian Mining Review.