MSV, workers in tune at Chibougamau operation

The Copper Rand and Portage mines here were officially opened recently under the ownership of MSV Resources (ME) at a ceremony attended by business and government representatives.

“This is a big day for Chibougamau,” Quebec Energy and Mines Minister Lise Bacon told workers assembled at a ribbon-cutting ceremony. “We couldn’t have done it without you.”

Bacon’s buoyancy was understandable: A mining operation closed last November and put up for sale by Westminer Canada has been rescued, along with the 300 jobs that go with it.

The operation would not have reopened were it not for major concessions from employees, and its closing would have been a major blow to Chibougamau, a northern Quebec city of about 9,000 that has been hit hard by the recession. Workers have accepted wage cuts averaging 16%, fewer fringe benefits and elimination of the bonus system (replaced by profit-sharing). These moves will save MSV an estimated $5.8 million annually in labor costs. Under the terms of the purchase, MSV will pay Westminer a royalty of $0.375 per ton of ore milled at Copper Rand, starting on the second anniversary of the sale. For its part, Westminer will contribute $2.4 million toward a $4.3 million environmental fund to provide for eventual restoration of the mining sites.

MSV President Mario Caron said that even if base metal prices remain low, the mine will be profitable if the company sticks to its game plan. The mine had been losing about $2 million annually for the past several years, said Paul

Girard, an official with Corpo-min Management of Montreal (MSV’s major shareholder). But the mine is expected to earn net profits of $6 million to $8 million per year for the first three years, he said.

MSV will produce 45,000 oz. gold and 11 million lb. copper annually at the mines. As well, its concentrator has a capacity of 3,300 tons per day. The company hopes to reduce production costs to about $52 per ton. At current metal prices, MSV expects net revenues of about $64 per ton, representing $35 million in annual sales.

As soon as possible, MSV wants to begin exploring the Copper Rand, Portage and neighboring sites to increase reserves for more than 50 years of production. There are currently enough for three years.

At the reception marking the reopening, politicians praised the “maturity” of workers in accepting pay cuts (which reduce average wages to $17.10 from $21.60 an hour), as well as reductions in holidays, sick leave and overtime. Bacon said profit-sharing is bound to motivate workers and marks a turning point in work relations. A feasibility study, funded by the federal and provincial governments, suggests that the plan could work, she said. Under the plan, employees could earn more than they did previously if the mine meets expectations. Believed to be a precedent in Quebec mining, the profit-sharing is based on a goal of 550,000 tons per year and a formula that sees 30% go to workers on the first $10 per ton of profit, 40% on the increment between $10 and $12.50 per ton and 50% on profits exceeding $12.50 per ton.

The 3-year plan, approved by 90% of employees, also gives workers one seat on MSV’s board of directors and a representative on the operations management committee.

Christian Claveau, national assembly member for the area, expressed pleasure that Copper Rand and Portage are now in Quebecers’ hands. (Westminer Canada has Australian owners.) He said Chibougamau tends to be neglected because mining is more concentrated in Abitibi.

Bacon, who is also vice-premier and is touted as a potential successor to Premier Robert Bourassa, said the government will continue to support Chibougamau because of its strong mining potential.

She noted Soquem is spending about $3 million annually, almost 40% of its budget, in Chibougamau-Chapais. As well, exploration investments for the region reached $12 million in 1992.

Corpomin and Societe de developpement de la Baie James own 33% of MSV’s outstanding shares, while the Quebec Crown mining exploration company Soquem and Kerr Addison Mines (TSE) own 12%. The remaining 55% is in the hands of the public.

— Daniel Kucharsky is a

writer from Montreal.