HudBay may shut down without government help

South African-controlled Inspiration Resources (TSE) of New York is playing hardball with the Manitoba and federal governments over a $130-million modernization plan for the metallurgical complex in Flin Flon, Man.

If the company does not get the $87-million it is seeking from the federal and Manitoba governments to help finance the project, the company says it would give serious consideration to mining out the company’s known reserves in the area and shutting down the smelter, effectively killing this town of 5,000.

This so-called “sunset scenario” has “a fair amount of financial attractiveness to us,” Inspiration’s executive vice president and chief operating officer, Burton Joyce, told a group of financial analysts in Toronto recently.

The comment came in response to a question by The Northern Miner about the alternatives the company has in its negotiations with the federal and Manitoba governments which have been going on for about a year now.

Inspiration has until 1994 to meet provincial government guidelines to reduce sulphur dioxide emissions from the Flin Flon smelter by 25%. And the company, through its wholly-owned subsidiary, Hudson Bay Mining & Smelting (TSE), controls about seven years of known copper/zinc reserves in the area.

“I believe negotiations are progressing well and I’m confident we can strike a deal before Christmas,” Joyce said.

The federal Conservative government stated recently its policy is not to give grants to any corporation with South African interests. Inspiration is 42%-controlled by Mineral and Resources Corp. (Minorco), which is 39%-held by Anglo- American Corp. and 21%-held by DeBeers Consolidated Mines, both of South Africa.

“We are asking the federal government to put up a third ($43 million) and the Manitoba government to put up the same amount,” Joyce said. “Which is pretty small potatoes compared to what Mr. Mulroney has been handing out lately.”

Although the specific terms of a possible financial package have not been negotiated, it would probably be in the form of a loan tied to base met als prices, Joyce said.

In response to other questions, Joyce said “We have no plan to spin off HudBay (from Inspiration’s agribusiness, leasing, coal and gold operations).