THINK LEAN AND GREEN: 1990s predictions

“The Canadian mining industry must continue its relentless pursuit of productivity and safety improvements,” said Dr. Walter Curlook, Inco Ltd.’s vice-president of metals production, exploration, mineral resource development and technology. “We have high labor (pay) rates vis-a-vis our competitors, so we must be more competitive.” This “relentless pursuit” of productivity must not regress into mere lip service. “It’s got be there at the management level. It’s got to be there at the first-line supervisory level and it must involve the hourly-rated employees.”

Robert Hallbauer, president and chief executive officer of Cominco Ltd. and senior vice-president of Teck Corp. calls productivity the No. 1 issue. “It all boils down to what it costs to produce a pound of copper.” Base metals prices might seem high at the peaks hit in 1988, but not according to Hallbauer’s long-range view. “People can say metals prices are high now. But look back at the past 80 years and put all prices in 1989 dollars. Even at current price levels, not only are metal prices not high, but they’re less than they were in real dollar terms so many years ago. Copper this time around should have peaked at $3 per lb. We have to offset that by improving the way we produce our metals.”

Noranda Minerals President Keith Hendrick noted that “it is a tougher world, a more competitive world. The one element that will characterize the 1990s is change. We’ll be seeing change occur at a faster and faster rate through this coming decade.” How will that manifest itself at the mine site? “Today, mine managers must be more broadly focused. They have greater skills going in to the job. They need sound technical and human relations skills.” At Noranda, he said, managers gain experience with marketing and financing through annual planning exercises requiring familarity with such things as forward markets for metals and smelter specifications for a given concentrate. “They (mine managers) are becoming complete businessmen rather than just highly skilled production people.”

LAC Mineral’s senior vice-president of operations, Gerald Gauthier, said productivity will be just as important in the coming decade as it was in the 1980s. “We have to maintain a stable and level unit cost.”

But both he and Tony Petrina, president and CEO of Placer Dome, feel that operations people will have to deal more and more with environmental issues. Says Petrina: “To me, the mining industry is not as bad a polluter as it’s made out to be. But it doesn’t help that I think that. The mine manager will have to face not just the issue of complying with environmental regulations but also with communicating with the public.”

To class things under “environmental concerns” is to place a myriad of separate issues under one rather large umbrella. The debates over wilderness parkland; toxic metals; native land claim settlements; and air, water and ground pollution all are environmental in some sense of the word. Curlook said that “society is suspicious of the mining industry. We must demonstrate that multi-purpose use is possible.” Petrina advanced the argument:

“I guess what Canadians have to decide is whether they want the mining industry or not. The average guy in Toronto probably doesn’t care about mining. This so-called wealth (of resources) is only wealth if you don’t set out to kill it by fencing it (as dedicated parkland, for example) or taxing mining companies out of existence.

For the record, our interviewees also had the following to say about the coming decade in Canadian mining:

Walter Curlook (Inco Ltd.)

On “failsafing” operations: “We must destroy the idea held by the general public that mining is less safe than other occupations. We have to learn how to failsafe our procedures and processes.”

On broader trade issues: The drive to higher productivity will probably also be spurred by exchange rate differentials between Canada and the U.S. Curlook sees the Canadian dollar gaining in value over its U.S. counterpart, largely because free trade will promote exchange parity. For each penny gained by the Canadian dollar over the U.S. dollar, Inco would lose $10 million in pre-tax profits. Other Canadian mining companies face similar consequences.

Free trade has also ushered in an era where value-added goods, such as nickel-plated products, won’t be subjected to punitive tariff charges crossing the U.S. border. Inco will push hard to develop more refined products, he said.

On participative management: “We have to pursue employee participation … You hire people for their skill and knowledge and then you go one step further and hire them for their ideas. Something very good develops out of that.” Curlook added that there’s little room for adversarial labor relations.

Gerald Gauthier (LAC Minerals)

On prospects for the manless mine: “I don’t think you’ll see a mine in Canada completely without production people underground in the 1990s. There are areas where we can automate. There are other areas where it might look good on paper, but in practice it won’t work.”

On participative management, Gauthier harbors no illusions.

“I know what would be ideal (i.e. having a workforce deeply involved in decision-making). But you would need some pretty high-calibre people to achieve that ideal.”

Nevertheless, he added, any suggestions or recommendations that come from the rank and file should be “taken as cash.” At many of lac’s mines, a team system has been established where production and development operate as units with leaders. Shift bosses still are the front-line supervisors but now 30 or more workers can be supervised by a single shift boss. Before, the number was closer to 15 or 20.

Robert Hallbauer (Cominco Ltd.)

On environmental issues: He fears that because of extreme public pressure, politicians and government bureaucrats will be gun-shy on environmental approvals for new projects, especially those subjected to intense public scrutiny. “There will be increased costs here, more delays in project approvals because everybody is cautious, especially in branches of the civil service. Everybody is reluctant to say `go ahead’ … no one wants to make a mistake.”

On government generally: With regard to taxation levels, environmental policies, the approvals process and the like, Hallbauer pronounces himself pessimistic over government’s ability to deliver reasonable policies. He does believe that the industry has responded properly, but “I’m not optimistic when it comes to improvements on the government side. People (in mining) say we don’t tell our story. But in my lifetime we’ve put lots of documents before the government.”

Keith Hendrick (Noranda Minerals)

On broad economic issues: Noted that worldwide moves toward privatization and deregulation, abandonment of centrally-planned economies for free markets, and generally a “greater sensitivity on the trading front” should work to the benefit of mining. The three reasonably balanced major trading blocks of Europe (in 1992), North America and Japan will also serve to moderate extreme economic fluctuations.

On mineral marketing: “We (at Noranda) have moved away from being product-driven toward demand pull. We try to develop new alloys and to anticipate customer needs. The industry is trying to respond to what is actually needed in the market.”

Tony Petrina (Placer Dome)

On share ownership for employees: “There may be an appetite developing for it. It’s better for employees to have stock in the bu
siness they’re in and it’s been better for the business. I don’t know if the mining industry is ready for it, but it will happen in other industries in Canada.” He believes more mining companies should offer stock purchase programs to employees.

And a last word from Petrina on (what else?) environmental matters: “The whole environmental issue will have a bigger impact on the industry than anything else.”

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