Employees plan buyout at Balmer

Former employees of Westar Mining’s (TSE) Balmer coal mine here in the Canadian Rockies are learning all about uncertainty. To save their jobs in this picturesque town of 5,000, their union, United Mine Workers, must come up with a buyer for the open pit mine by Sept. 24.

“We’ve started preliminary discussions with a very serious potential buyer,” Ezner Deanne, president of the local union, told The Northern Miner on a recent visit.

“One of our main customers, the Japanese, have committed themselves to take an extra 300,000 tonnes of coal per year from the Balmer mine for the next two years,” Deanne says.

The mine produced 5.4 million tonnes of metallurgical and thermal coal in 1991 but is capable of producing six million tonnes per annum. Total cash operating costs in 1991 were about $48 per tonne while customers paid an estimated $60 per tonne.

The hourly and staff employees of one group, the Balmer Employee Stakeholder Association, are not waiting around for a buyer to surface. They’re trying to recruit 800 former employees to support an employee buyout plan. That’s more than half of the 1,300 Balmer employed four months ago when management locked out the workers. Signing a petition would indicate a former employee’s willingness (but not a financial commitment) to negotiate a non-aligned employee buyout.

“We’re not going to buck heads any more,” says Norman Ritchot, a former pit foreman. “We have the people and the expertise to make this mine go.” (A competing buyout plan organized by the Mine Workers Union would bring in an outside investor for a 33% interest with union members financing the remaining 66% interest.)

One possible scheme devised by the Employee Stakeholder Association would see each employee pay out 15% of his annual salary over the next five years to finance a $100-million takeover, which would be funded by a combination of federal and provincial guaranteed loans.

That’s about the same amount government would expect to pay out over the next five years in unemployment insurance and welfare payments to the estimated 2,000 employees affected by the bankruptcy of Westar announced recently. Once the loan has been paid off, each employee would then take home a bonus of about $12,000 each year. This figure is based on the mine’s projected after-tax profit of $16 million per year.

Reserves are good for 30 years.

At last report, about 400 former employees had signed the petition. “We’re just a bunch of guys who want to work for a living,” Ritchot says. “We’d love to go back to work tomorrow.”