Outlook 2012: [Sudbury] Welcome to KGHM Ltd. – by Jenn Lamothe (Sudbury Star – March 30, 2012)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

On Feb. 20, Quadra FNX Mining Ltd. security holders approved the plan of arrangement with KGHM Polska Mied_ S.A. in which a subsidiary of KGHM would acquire all of the issued and outstanding securities of Quadra FNX.

The March 5 closing date brought a name change for the third largest mining company in Sudbury — now operating under the name KGHM International Ltd — and will focus on growth in copper and other metals.

KGHM International is a Polish company and the world’s ninth largest producer of copper and third largest silver producer; it operates mines in Canada, the USA and Chile and is currently constructing the Sierra Gorda copper-molybdenum project in Chile. They are also actively advancing the Victoria project, the newest discovery here in Sudbury.

Quadra FNX announced plans earlier this year to undertake a $750-million redevelopment of Victoria Mine near Worthington, with construction scheduled to start this year. One of Sudbury’s oldest and most prolific mines, Victoria would employ more than 200 full-time workers by the time it is in full production in 2017.

For now, the company is busy with the planning and administrative process, working through the environmental permitting process and meeting with area residents and other stakeholders.

One of the largest obstacles in the re-opening process has been the roads in the area; in particular, Regional Road 4, which also serves Vale’s Totten Mine, is in a real state of disrepair.

As it stands, the former Quadra FNX employs almost 500 people at the various mines that they currently operate — Quadra was created in 2010 when Quadra Mining Ltd. acquired FNX Mining Co. for about $1 billion. The company owns the Robinson mine in Nevada, Carlota in Arizona, Franke in Chile and the Morrison and Podolsky operations in Sudbury basin.

The sale has been met with mixed reviews. Terry Ortslan, a Montreal based mining-analyst who participated in the early meetings between the companies has said that given market conditions the offer is “very generous” and that KGHM’s cash offer made the deal “very appealing”.

In his opinion, not much in Sudbury will be changing.

Claude Gravelle, MP for Nickel Belt has criticized the deal, because in his opinion, the sale of Canadian resources to foreign interests is never a good thing.

His initial concern is that since KGHM has two smelters in Poland, ore mined here might not be processed here.

The Quadra FNX purchase will help KGHM raise annual copper output from its own deposits by 50% to 635,000 tons by 2018. KGHM estimates it will have 37.4 million tons of copper in deposits.

That’s more than BHP Billiton Ltd., the world’s biggest mining company, or Anglo American Plc after the acquisition, according to a presentation on its website. What it will do for Quadra FNX, a company that has a payroll of $43 million and is the purchaser of about $120 million in goods and services in Sudbury each year, is left to be seen.

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