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This article was published 28/11/2018 (418 days ago), so information in it may no longer be current.
Northern Manitoba’s economy received another body blow this week with the announcement that Hudbay Minerals Inc. will shut down its 90-year old mining operation in Flin Flon in 2021.
Hudbay told its Flin Flon employees — about 900 of them — that it would not be economically viable to keep any of its operations there open past 2021.
Flin Flon, which has a population of just over 5,000, was built around the first mine that was founded in 1927. Since then, more than 25 satellite mines have come and gone, as have the owners of the mines. (Hudbay bought the operations from Anglo American in 2004).
The Flin Flon area has been almost totally dependent on the Hudbay operations for its existence. But the Toronto-based company — which now has the bulk of its resources concentrated on a big mine in Peru — had made it clear for some time that its anchor mine in the north, the 777 mine whose headframe is right in the town, had run out of ore and had reached the end of its lifecycle after extending its operations a few times.
What’s new is that it has also determined the zinc processing plant in Flin Flon will also have to shut down by 2021. That will eliminate all the company’s activities in the city.
In addition to the 800 to 900 employees in Flin Flon, Hudbay has another 400 or so in Snow Lake, about 200 kilometres east of Flin Flon, where it operates the Lalor gold-copper-zinc mine that opened in 2012.
In 2015, the company acquired the dormant New Britannia Mine in Snow Lake and is in the process of refurbishing the gold processing plant there, which could add another 80 jobs.
Company officials were not available for interviews Wednesday.
In a memo to the Flin Flon workforce, Hudbay’s vice-president of its Manitoba business unit, Robert Assabgui, said, "We understand that this will have a large impact on our employees and the communities we operate in... Even though we do not have all answers at this moment, the respectful thing to do is to start the planning process for an orderly transition to a smaller mine and mill operation based in Snow Lake."
Cal Huntley, the mayor of Flin Flon, said the company has a good track record of providing retirement packages, and a company official said in an email exchange that about 300 of Hudbay’s Manitoba workers are eligible for retirement.
"Obviously, it is very upsetting to the community," Huntley said. "This was one of the scenarios that was discussed over the past several years. So it was not totally unknown, but it is not the option we were hoping for."
In his message to employees Assabgui said, "Understandably, everyone will want to know what this means for jobs."
But the company does not have the answers to that question. Assabgui said there will be a need for more workers at its Snow Lake operations, which includes a zinc mill and the soon-to-be-revived New Britannia mine operation. The company is investigating the potential of a small deposit near the Lalor mine, called the Pen deposit, but if it is developed, it will be very small.
Hudbay has budgeted US$19 million for exploration in northern Manitoba in the coming year, but it takes many years from discovery of a mineral deposit to the point where a producing mine could be developed.
Huntley said most of the Lalor workforce in Snow Lake are Flin Flon residents. There may be the opportunity for more Flin Flon residents to work there, perhaps replacing underground contractors who have been used because the company was unable to recruit enough full-time workers there.
"That certainly won’t be the case three years from now," Huntley said.
The mining industry in Manitoba has become so hampered, that this week the Mining Association of Manitoba eliminated its executive director position. It said the provincial workforce is becoming so small that membership dues — levied at a certain rate per employee — would not be enough to cover the executive director’s salary.
The Flin Flon closure is the latest a series of challenges faced by northern Manitoba’s economy in the last few years.
In Thompson, Vale closed its nickel smelter this summer and put its Birchtree mine in the city on care and maintenance a year ago. The paper mill in The Pas almost closed a couple of years ago. Hudbay’s small Reed Lake mine was shut down this summer after a brief five years of operation. The disruption in rail service to Churchill, which went on for 18 months until it was restored this week, caused significant uncertainties for the north.
Easily more than 2,000 very high-paying jobs are being eliminated from the northern economy.
Chuck Davidson, the CEO of the Manitoba Chambers of Commerce and the co-chair of the provincial Look North task force on economic development, who hails from Snow Lake, said northerners are amazingly resilient, but they are facing very tough times.
"A big part of the entire Look North strategy was recognizing that we need to start looking at other opportunities," he said. "The mining industry is always going to be a key contributor to the northern economy but are there ways we can diversify? The challenge in northern Manitoba is that they continue to have setback after setback."
Huntley said Flin Flon has been working on a plan to diversify its economy.
"It would have been nicer if we were a little further down that road," he said. "But we have three years. Who knows what can happen over that time."
The provincial government has been tinkering with its minerals branch while exploration has been lagging for several years now. At a provincial mining conference last week, Blaine Pedersen, the minister of growth, enterprise and trade, was optimistic about the industry’s fortunes.
On Wednesday, he said, "The community of Flin Flon has known for a long time that the lifecycle of Mine 777 was limited. In the meantime the Lalor mine... is ramping up. But by no means is this the end of life of Flin Flon."
But Tom Lindsey, the NDP MLA for Flin Flon, said the Pallister government has not done nearly enough to bolster the faltering northern economy.
"Part of the answer is that government needs to do things to at least satisfy some of the concerns with the mining (sector) so they know where they stand," Lindsey said. "But what has the government done to try to encourage Hudbay to keep its operations in Flin Flon? As far as I know, absolutely nothing."
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.