Editorial: Vale goes easy on Canadian mines

The week ended Nov. 1, the 44th trading week of 2008, was characterized by some relative calm in the global financial markets after seven weeks of incredible turmoil.

• The autumn collapse in base metals prices continued to take its toll, however, with four more Canadian mine closures being announced: zinc miner Breakwater Resources suspended operations at its Langlois mine in Quebec and Myra Falls mine on Vancouver Island, and junior nickel miner Liberty Mines hit the wall at its Redstone and McWatters mines, near Timmins, Ont.

• Despite the dive in nickel prices, Vale Inco’s high-quality Canadian nickel operations escaped the axe Vale was swinging over many of its worldwide operations, especially its iron ore mines in Brazil.

For Canadian employees in the nickel business, it starkly shows the advantages of being in a larger multinational corporation that is more willing and has the financial muscle to ride out a temporary downturn in metals prices. It’s hard to see how the old Inco on its own could have weathered the dramatic collapse in nickel prices without much deeper cuts to production and staffing.

In fact, Vale Inco is such a small part of Vale now, that the Canadian operations were barely mentioned by Vale CEO Roger Agnelli during his presentations to analysts and media in New York City in early November.

Vale paid $19 billion for Inco just a couple of years ago, when nickel prices traded above US$15 per lb. (at presstime, they were at US$5.40). So you wonder if there’s more than a little buyer’s remorse in Agnelli’s shrug and remark that: “It is necessary to have further consolidation in this (nickel) industry because, historically, you make money with nickel for two or three years, and then you give back for two or three years, so the sum is zero. That’s the reality of the industry.”

• On the back of his Conservative Party’s Oct. 14 electoral win, Canadian Prime Minister Stephen Harper unveiled his new cabinet, and it’s characterized by few changes in the top spots.

But one significant change for miners is newcomer Lisa Raitt, from Halton, Ont., who has replaced Saanich-Gulf Islands MP Gary Lunn as natural resources minister.

Raitt, 40, is the former president and CEO of the Toronto Port Authority, and has been touted as one of the new “star women” to join the Harper government during the current election cycle.

She handily defeated erratic Liberal candidate Garth Turner to win the riding of Halton. She leaned to some extent on the high profile she has garnered in Toronto owing to her battles with the city of Toronto over flights by Porter Airlines out of the port authority’s downtown airport.

Raised in Cape Breton with six siblings, Raitt earned a B. Sc. at St. Francis Xavier University in Nova Scotia, a M. Sc. in Chemistry from Ontario’s University of Guelph, and an LLB from Osgoode Hall Law School in Toronto. According to her website, her father was first a mine worker who loaded coal onto ships, and later a union leader and elected town councillor, while her mother ran a small business. Raitt is married, with two young sons. Her husband Dave is described as an award-winning writer and comedian, and an alumnus of the Second City comedy troupe.

B. C. MP Lunn, first elected to federal parliament in 1997, has been demoted to junior minister of state (sport). On the upside, he’ll be taking on some fun programs that include the Winter Olympics, which are being held in Vancouver in 2010.

• Although there was little time for it to become a major U. S. election issue, America’s coal producers were furious with Democratic presidential candidate Barack Obama for the newly revealed, taped comments he made to the editorial board of the San Francisco Chronicle — comments that, not surprisingly, never made it into the pages of the leftist, pro-Obama paper.

Comments from Senator Obama included “I haven’t been some coal booster” and that under his carbon cap-and-trade system “if they want to build (coal plants), they can, but it will bankrupt them.”

Obama’s indeed making history: It’s probably the first time a major U. S. presidential candidate has called for the bankruptcy of a major sector of the U. S. economy.

Mike Carey, president of the Ohio Coal Association, said Obama’s words show that the senator is “extraordinarily misguided” and that the Obama-Biden ticket “spells disaster for America’s coal industry and the tens of thousands of Americans who work in it.”

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