Chrysler, GM Woes Hit Metal Suppliers

It was a dramatic and disturbing business week in North America during the 17th trading week of the year, as large ownership stakes in GM and Chrysler swiftly wound up in the hands of the U. S. government and the United Autoworkers Union.

Chrysler filed for bankruptcy protection and outlined a plan to sell its best assets to a new company managed by Italian carmaker Fiat, with stakes held by the UAW and the U. S., Canadian and Ontario governments, plus some major U. S. secured creditors.

Teetering GM, meanwhile, is to be divvied up primarily between the U. S. government and the UAW, and is planning an unprecedented nine-week shutdown.

Chrysler noted in its court filings that its “already financially troubled suppliers have agreed to a further 3% price reduction and other measures that will save millions of dollars.” Steelmakers US Steel, AK Steel, ArcelorMittal and Worthington Steel are all on the hook for unsecured claims against Chrysler ranging from US$5 million to US$16 million, as is aluminum smelter Nemak. Chrysler is developing a “troubled supplier” program but it’s not public who is on this preferential list.

• In Ontario’s parliament, the ruling Liberal party introduced, with some fanfare, a bill to amend the province’s 136-year-old Mining Act.

The bill is being met with approval by the mining industry, in that it seeks to set out clear rules for miners as they consult with aboriginal groups, and provides a mechanism for withdrawing culturally significant land from staking, implements map-staking and outlines a better dispute-resolution process.

We’re encouraged to see that the provincial government is putting in a genuine effort to be an active and honest broker between three parties most at loggerheads over this issue: the prospecting and exploration community, who are looking for clear and enforced land-access rules; northern aboriginal groups, who want wider powers to control mining and exploration activity anywhere near them; and residential property owners, such as wealthy cottagers, who want to be left alone and fear intruding prospectors and miners.

There’s lots of work left to do, though, with a second reading coming this summer, and further regulations to be hammered out as the year progresses. The toughest outstanding issues relate to the provincial government’s unwillingness to enforce staking regulations when the situation is politically messy, and the handful of aboriginal groups making the unreasonable demand that they be consulted prior to any claim being staked. (Imagine the conversation: “Oh, yoohoo! Hey, guys, before I go any further, I just wanted to let you know where I found a fabulous gold deposit in the woods. Now promise me you won’t stake it before I do. . .”)

• In Venezuela, the government is clamping down on all forms of gold sales. For miners, 70% of gold mine production now has to be

“marketed within sovereign Venezuelan territory,” according to the newly publishedVenezuela Gaceta Oficial no. 39.169. The resolution further states that 85% of that 70% must be sold to the Central Bank, while the remaining 15% will go to the domestic processing industry.

Companies such as Rusoro Mining downplay the edict’s significance, while other observers believe it hints of more clampdowns to come.

• Was it just last week we warned that Canadian anti-mining groups would use the federal Toxic Release inventory court ruling as a political club against miners by wildly exaggerating the amount of pollution generated by mining?

Well, it’s already started, with the Montreal Gazette, Quebec’s largest English daily, running an economically and scientifically illiterate editorial entitled “No more free rides for the mining industry.”

Writing that it’s “easy for miners to continue spewing toxic wastes into the environment” and under the gross misapprehension that royalties are the only taxes a government collects from miners, the Gaz editorial team simply parroted the quickly googled talking points of radical environmentalists and produced a major editorial in an establishment newspaper that reads like something out of a leftist urban free weekly like Eye Weekly or The Republic of East Vancouver.

It shows the mining industry needs to widen its lobbying activities to better educate the citified and out-of-touch mainstream media as to both the mining industry’s elaborate and onerous tax burden, and its high environmental standards.

Send your Letters-to-the-Editor and other op-ed submissions to the Editor at: tnm@northernminer.com, fax: (416) 510-5137, or 12 Concorde Pl., Suite 800, Toronto, ON M3C 4J2.