Editorial Flin Flon shouldn’t suffer for apartheid

Hudson Bay Mining & Smelting’s request for help from the federal and Manitoba governments to modernize its smelter at Flin Flon, Man., has raised an unwarranted level of hysteria. Rhetoric from those involved in negotiations and those not directly involved but interested in its outcome has increased dramatically recently, particularly since the federal election was called. But, for the moment at least, one essential ingredient to a satisfactory solution seems to be missing — common sense.

HudBay’s application would normally be a fairly straightforward matter, but because of the company’s South African connections, the question of whether the federal government should support the project has come up. In September, as part of its anti-apartheid policy, the federal government said it would not offer federal loans or grants to subsidiaries of South African companies. HudBay is a wholly-owned subsidiary of Inspiration Resources of New York which is 57% controlled by Minorco of Luxembourg. Minorco, in turn, is 39% owned by Anglo American Corp. and 21% by De Beers Consolidated Mining, related companies both based in South Africa.

Further complicating the situation is HudBay’s hard-line posture in the negotiations. It says that unless the governments provide assistance the company will walk away from Flin Flon.

Given the high stakes involved — not just the fate of a city of 8,000, but the economic well-being of all northern Manitoba — it is appropriate to consider some background to this squabble. First of all, government assistance to help smelters modernize is not new. It has been done at Noranda’s Horne smelter in northwestern Quebec and at Cominco’s lead smelter at Trail, B.C. HudBay’s application should be considered in the light of previous decisions to assist those operations. It is entirely appropriate that governments should assist smelters in order that they meet the higher environmental standards Canadians want. Such assistance need not be a government handout but some form of loan guarantee or other instrument.

Second, it seems highly unlikely that HudBay will walk away from northern Manitoba. That ominous threat, serious as it is, should be considered in light of the operation’s recent success.

When New York interests first decided to finance construction of the metallurgical facility in Manitoba in 1927, there were about 18 million tons of ore reserves in the Flin Flon orebody staked by prospector Tom Creighton and his five companions. Today, ore reserves still stand at about 17 million tons and, with an exploration budget of $7.5 million per year, the company is confident it can maintain that level of reserves for many years to come.

Inspiration is poised to make record profits from Hudson Bay Mining & Smelting’s copper, zinc, gold and soon-to-be-operating nickel mining operations in Manitoba. In 1987 HudBay, which is also debt-free, made $39.2 million for the New York-based parent and in the first six months of 1988 net earnings totalled $11.5 million. In 1989, when the Namew Lake nickel mine begins producing concentrates, HudBay’s profits could soar even higher.

So it seems highly unlikely that HudBay will mine out its proven reserves, close down the smelter and walk away from Flin Flon.

Nonetheless, that sunset scenario is, says Inspiration’s chief operating officer, a “financially attractive” alternative if the federal and provincial government’s can’t come up with a combined two-thirds of the company’s $130-million modernization plan.

Third, while HudBay’s South African connection is clear, it is hardly significant when compared to its connection with northern Manitoba. In fact, not only is it within the spirit of the anti- apartheid policy, it is technically within the federal government’s policy guidelines as well because Inspiration is not a subsidiary (50%-owned) by a South African company.

And finally, but perhaps most important in order to cool off the hysteria surrounding the situation, the federal government should recognize that apartheid has nothing to do with Flin Flon and that South Africa has very little to do with HudBay’s operations there. Should Canadians sacrifice an entire community for a political gesture against apartheid that would have negligible effects? That goes against all common sense. It’s one thing to oppose apartheid, to take diplomatic actions, to cut off imports from South Africa — in short, to take any action that will put pressure on South Africa and make its racist government aware that Canadians abhor apartheid. It’s another thing to make Canadians suffer as the result of an ideological dead end.

Negotiations have been going on for about a year regarding the HudBay facilities at Flin Flon. With good will on both sides, there should be ample room to reach an agreement advantageous for both. This situation has the potential to be a win-win situation, but common sense, not ideological posturing, must prevail.