Last-ditch effort fails to save Highland Valley copper mine

Last-minute talks have failed to prevent Canada’s largest producing base metal mine, Highland Valley Copper, from shutting down indefinitely.

Situated 50 km from Kamloops, B.C., the mine is a partnership controlled 50% by Cominco (CLT-T), 33.6% by Rio Algom (ROM-T), 13.9% by Teck (TEK-T) (including a 2.5% interest from Highmont), and 2.5% by privately owned Highmont Mining (excluding Teck’s 2.5%).

Five months of negotiations with the union and other stakeholders failed to achieve concessions that might have allowed the large-tonnage, low-grade, open-pit mine to remain open.

Talks between Local 7619 of the United Steelworkers of America and Highland Valley Copper broke off after British Columbia’s job protection commissioner called for a 2-week “cooling off” period. The mediator will now deal with each party individually until he feels that talks can continue.

Labour costs amount to about 40% of operating costs at Highland Valley, and the partners had hoped to reach an agreement with union that would connect wages to the price of copper. The two sides remain at odds over how to achieve this, and how long such a contract would remain in place. The mine employs about 1000 people, 770 of whom belong to the union.

Trevor Phelps, spokesman for Highland Valley Copper, says the mine could continue to operate at today’s prices but that, since copper stockpiles at the London Metal Exchange (LME) are at an all-time high, the value of copper will most likely drop again. Stockpiles at the LME stand at about 767,000 tonnes, the highest in the exchange’s 120-year history.

What the company wants, says Phelps, is a “shock absorber” to cushion it from further drops in copper prices. Such a contingency is worth about $10 million in wage concessions, he says.

BC Hydro recently promised the mine lower electricity rates and has even agreed to tie these to a sliding scale with respect to copper prices.

Highland Valley reported a loss of $10 million for the first quarter of 1999. Production totalled 1.32 million lbs. over the first four months of the year. The cash production cost is US68 cents per lb., which is high by industry standards.

At last report, Highland Valley had reserves of 417 million tonnes grading 0.42% copper and 0.0087% molybdenum. In 1998, the mine produced 170,000 tonnes of copper-in-concentrates, representing 1.5% of global demand.

Although the mine has been shut down, there are, as yet, no plans to dismantle equipment.