HudBay plant costs soar, layoffs loom

The estimated cost of building a new zinc plant in Flin Flon, Man., has jumped to $171 million from $120 million, according to Hudson Bay Mining and Smelting’s (TSE) 1992 annual report.

Although company officials could not be reached for comment, the report says certain aspects of the environmental improvement project have turned out to be costlier than expected.

Hudson Bay also reports that about 600 employees could be laid off over the next 16 months because of mine closures and reduced staff requirements related to the smelter upgrades.

On top of scheduled closures at the Chisel Open Pit and Stall copper-zinc mines near Snow Lake, Man., Hudson Bay has also decided to close the Namew Lake nickel-copper mine at Flin Flon after exploration efforts around the orebody proved disappointing.

The Winnipeg-based company has made closure costs provisions of $7.1 million, including $2.1 million worth of additional provisions for the Ruttan copper-zinc mine at Leaf Rapids.

Hudson Bay, a subsidiary of Luxembourg-based Minorco, is the largest private sector employer in northern Manitoba, with a payroll of more than 2,000. The zinc pressure leach plant, designed to meet a government-mandated emissions reduction of 25%, is expected to start up during the first quarter of 1993.

But Hudson Bay has decided to delay similar improvements at the copper smelter while cost estimates and economics are under review. Originally scheduled to start up in the third quarter of 1993, the copper smelter construction will be delayed for 8-12 months.

The Manitoba, federal and Saskatchewan governments are contributing $55 million, $25 million and $7.8 million respectively to the improvement projects.

Hudson Bay says it is trying to secure a major source of concentrate supply to replace those that will be lost when the Snow Lake mines close. The company has also bolstered its exploration for copper and nickel.