This column was originally published in Northern Life, Greater Sudbury’s community newspaper on October 25, 2006
It was the best of times, it was the worst of times, if I may borrow from Charles Dickens.
On Aug. 24, 2006 , the spot nickel price hit its all time high ever, at $15.76 (US) per pound. Last Friday it was just a tad under that record at $15.65.
Inco’s third quarter net earnings of $701 million—the Ontario operations contributed $US356 million to that figure—were the highest ever quarterly profits in the company’s 104-year history. The 2005 third quarter net earnings were $64-million.
And to add the cherry on the cake, the company officially opened its $115-million Fluid Bed Roaster Dioxide Emission Reduction plant in Copper Cliff that will further reduce SO2 pollution from the Sudbury operations by 34 percent to just 175 kilotonnes a year. This is about a 90 percent reduction from the 2,000 kilotonnes a year the company used to emit in 1970.
However, the drama and trauma of the past year’s “nickel wars” have finally come to an end in a way we didn’t expect.
As of midnight Oct. 23, “Mother Inco” will have finally been taken over by the “boys from Brazil,” CVRD the giant iron ore producer. The takeover brings mixed emotions and a general fear of the unknown for many of us, including this columnist.
In an e-mail response, United Steelworkers of America President Leo Gerard aptly said, “Canada is loosing the ability to influence the nation’s industrial policy and economic development by letting its resource base fall under foreign control.”
Industry Canada Minister Maxime Bernier did a great disservice to the people of the Sudbury Basin.
He rubber-stamped the foreign takeover of a trillion-dollar deposit – at present metal prices – that will still be in production a century from now without extracting any real significant concessions for Sudbury, the historic heart and soul of the global nickel business.
Let’s remind the minister that the Sudbury Basin is still the richest mining district in North America and among the 10 most significant globally.
And the Basin is located in one of the most politically stable countries in the world, a major issue for any corporation thinking of investing billions of dollars in new production.
Although Bernier will “crow” about a “no-layoffs for three years policy and other net benefits he supposedly extracted for the country.” Next year, roughly one quarter of Inco’s Sudbury workforce is eligible to retire. Labour shortages are plaguing the entire mining sector world-wide.
In addition, the World Bureau of Metal Statistics estimates there is a 70,000 ton deficit in refined nickel for the first eight months of this year.
Steve Barnett, president of the Nickel Institute recently warned, “the nickel supply gap could extend over the next decade” due to China’s expansion of its stainless steel production. Combine this with that country’s enormous urbanization and industrialization efforts, unprecedented in human history, and Sudbury will see a generation or more of prosperity and significant contributions to CVRD’s financial profits.
Further commitments to increase exploration in the Canadian operations and accelerating development in Newfoundland will benefit the company as much if not more than those communities.
In addition, suggesting CVRD is committed to using local supplier, another factor in allowing the takeover, is a “no-brainer.” Sudbury’s world-class mining supply and services sector is exporting its products and expertise around the world.
The Phelps Dodge boys were so impressed with Sudbury supply and services expertise that they are still going to use them regardless of the failed takeover attempt.
Foreign trade delegates from Chile, China, South Africa, just to name a few countries, routinely come to Sudbury to forge links with the community’s mining expertise and post-secondary institutes.
I am not trying to paint CVRD in a negative light. As far as I am concerned, both the company and the community are starting off with a clean slate.
Fears about CVRD not respecting union contracts, pensions and environmental issues are groundless. CVRD is a global mining giant. The Inco takeover will make it the second largest miner after BHP Billiton and the world’s biggest producer of nickel, The company knows how to operate under the rules and regulations of foreign countries.
Some pundits still lament and say “better the devil you know!” However, let’s remember that up until the mid-1970s, we cursed that “devil” for being an arrogant, American-controlled foreigner and an environmental monster with horrible labour relations.
From the late 1970s to the late 1990s, we cursed that company for the devastating layoffs and again, the terrible labour relations even though, by that time, the corporate identity was thoroughly Canadian.
In addition, the fact that much of Alberta’s oil industry is foreign-owned has had no detrimental affect on the enormous prosperity Alberta gets from its oil.
I have often said that the Sudbury Basin is Ontario’s metallic equivalent to the tar sands.
It just seems that all the net benefits to Canada would have had to happen anyways. Even locating CVRD’s nickel division in Toronto makes business sense as most of the current nickel operations and expertise are located in this country.
The relocation of Inco’s Sheridan Park technology centre to Sudbury would have been the only issue that would entail costs that no company can justify to its shareholders if it were to do the move voluntarily.
This is where our federal government should have stepped in and extracted a significant concession for the privilege of owning a key natural resource and further Sudbury’s global reputation as a centre of excellence in mining research.
They dropped the ball!
Last Monday, Toronto Star business journalist Lisa Wright in an article titled, “Iconic Inco rides off into the sunset” wrote “…the deal will be done and Inco the icon will start to fade in the history books.”
For the rest of the country she is probably right. But here in the Sudbury Basin, for the community and generations of workers, our roots are so tangled with that company that it will be at least a generation before we finally let go.
Goodby Inco and a gracious welcome to – bem-vindos – Sudbury for CVRD and CEO Roger Agnelli.