Uncertainty in the minerals market has forced a Sudbury mid-tier miner to lay off staff and contractors working on its Victoria Mine project, west of Sudbury, near Worthington.
KGHM announced March 22 that 20 positions are being eliminated and the development of its two-shaft copper, nickel and base metal mine is on a “revised” schedule based on what the Polish-headquartered mining company called “the unfavourable macroeconomic situation on the metals market.”
Northern Ontario Business’ sister publication, Northern Life, received recent emails from sources close to the situation that the company is shutting down “a good chunk” of the development operation.
A release from KGHM on the layoffs stated: “This process will enable the project to optimize its activities in 2016 and at the same time will ensure maximum organizational cost efficiency.”
A tight-lipped Jerzy Wojtaszek, Victoria’s project manager in Sudbury, said in addition to the 20 staff positions, 9 to 10 engineering contractors were left go within the last week, and some contracts suspended.
He couldn’t say whether the layoffs are permanent or cyclical.
“I don’t know whether it’s cyclical (but) we’re not closing the door.”
Last year, KGHM’s chief project officer Warner Uhl told a Sudbury audience of mining suppliers that shaft sinking would get underway in June.
Wojtaszek wouldn’t comment on what was said previously, nor add to Uhl’s claims that the company still had to drill-off the resource with a 600-hole campaign to bring the orebody from inferred to an indicated reserve.
“I don’t have an answer right now. I’m not sure what to say more.”
Dick DeStefano, executive director of the Sudbury Area Mining Supply and Service Association, was sympathetic to the company’s situation.
“Our suppliers are disappointed in the delay but understand the business decision based on the present commodities environment. There are has been some significant benefits up to this date in infrastructure roads and exploration that have benefitted a number of supply and service companies in Northern Ontario. Hopefully we will see this important asset moving forward by 2017 and see a positive and greater impact on much needed services and products emanating from Northern Ontario suppliers.”
The United Steelworkers Local 2020, said there have been no layoffs among any of its members.
In its annual report released on March 18, the Polish state-run miner said it intends to reduce its copper production within the year as the parent company registered a list of US $1.3 billion in 2015.
“The past year was a period of
increasing challenges on the international commodities market,”
KGHM board president Krzysztof Skóra said in a note to investors.
“These challenges were largely due to falling commodities prices
caused by unfavourable macroeconomic conditions. Also of significance
was, among others, the economic slowdown in China and the record low
oil prices.”
KGHM Polska Miedz SA said it will review its
investments and shave costs in its 2020 strategy as the copper
producer projects metal prices and output decreasing amid a global
economic downturn.
