After five years at the helm of
Hushovd’s sudden replacement ends a 27-year career that began in the accounting department at the major’s Nikkelverk refinery in Norway. After years of increasing responsibilities, he was appointed president and chief executive officer in 1996.
“Obviously, people here are somewhat surprised, because it’s something that’s just happened within the last short while,” said Falconbridge spokeswoman Caroline Casselman. “But we’ve been working alongside Noranda for a number of years and have worked together on a number of projects, which will continue and increase going forward.”
Under Hushovd’s reign, Falconbridge underwent an aggressive expansion program that included development of the Raglan and Collahuasi mines in Quebec and Chile, respectively. More recently, the program led to the decision to accelerate development of the Kidd Creek Deep mine in Timmins.
In 2001, Raglan cranked out 24,570 tonnes nickel and 6,915 tonnes copper. Production is expected to rise slightly in the current year, ensuring that the mine continues to account for more than a third of Falco’s annual nickel output.
Collahuasi, one of the largest copper mines in the world, is shared between Falconbridge, with 44%,
In 2001, Falco’s share of production amounted to 193,135 tonnes copper, accounting for two-thirds of its overall output of the red metal. Once metal prices improve, the concentrator will be expanded to provide the company and its partners with even more production.
In a prepared release, Falco Chairman Alex Balogh states: “Mr. Pannell’s mandate, together with his senior management team, will be to continue to implement the solid growth strategy which Falconbridge is currently pursuing. In particular, his mandate includes forging stronger links with potential partners in the mining industry and accelerating the delivery of additional synergies.”
When asked why Pannell was chosen over a more traditional interim president, Casselman responds: “I guess, going foward, his positions at Falco and Noranda will allow him to take a close look at both companies and see where there might be further opportunities to co-operate and improve some synergies.”
Similar reasoning is expressed by Noranda spokesman Dale Coffin, who notes Pannell’s experience in the company’s zinc and copper business and, more recently, in advancing the massive Antamina mine in Peru to production ahead of schedule and below budget.
“Since he’s been back at Noranda, he certainly hasn’t wasted very much time in refocusing the company and making some tough decisions where it was necessary to improve Noranda’s overall share value,” says Coffin. “That meant realigning some of the operations.”
Since Pannell’s appointment last fall, Noranda has closed its Warsaw aluminum plant in Kentucky and taken steps to close its Gasp copper smelter in Quebec. The decisions were costly — the company lost $84 million in the fourth quarter, of which $22 million was as a result of one-time charges — but are expected to pay off down the road.
There remains the issue of Noranda’s creeping interest in Falconbridge, which currently sits at just under 57%. Coffin, however, discounts Pannell’s appointment as a sign of an imminent takeover.
“We will continue to buy shares on the open market as long as the value of those shares is under the value at which Noranda places them,” he says.
Casselman, too, does not believe minority shareholders have any cause for concern, noting that “what’s good for Falconbridge is good for shareholders in terms of improving value across the organization.”
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