Hudbay mine closures will mean major reductions at Flin Flon surface operations

Proposal could keep zinc plant running at reduced capacity

Hundreds of job reductions are expected at Hudbay’s Flin Flon operations by 2019 or 2020, with the company hoping retirements and a proposal to maintain the zinc plant can minimize job losses.

While Hudbay has developed projections around job losses and layoffs, Daniel Weinerman, manager of investor relations and corporate communications, stressed all figures under discussion are preliminary estimates.

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At best, the news will mean a reduction of approximately 500 jobs: Hudbay estimates 200 will come from layoffs, with the rest from attrition as workers leave or retire.

At worst, Flin Flon could lose 800 to 900 jobs, leaving the city with a small fraction of the company’s Manitoba workforce.

“Our goal is to play our part in managing one of the most significant changes for Flin Flon in decades,” said Weinerman. “As a business, we need an economic outcome that supports our business, but we also hope everyone will see we are striving for the best outcome for employees and the community, too.”

Hudbay employees learned of the company’s plans in face-to-face meetings this week.

“There’s no good news here. There’s no good news whatsoever,” said Rene Beauchamp, a long-time Hudbay employee and president of its machinists’ union.

The eventual layoffs will impact workers in both the mining and surface departments. Reed mine, located between Flin Flon and Snow Lake, is slated for closure in late 2018. Hudbay says 777 mine, its only Flin Flon mine, is expected to shut down in 2019 or 2020.

When 777 closes, the Flin Flon metallurgical complex, which includes the mill and zinc plant, will lose a major source of feed.

The mill will then shut down, but Hudbay has a plan that, if successful, would keep the zinc plant running at a reduced capacity, processing ore from the Lalor mine near Snow Lake. At that point, Lalor would be Hudbay’s only northern Manitoba mine.

Weinerman said Hudbay believes it would be more economical to sell concentrate directly from Snow Lake rather than producing metal in Flin Flon, but “for everyone’s benefit” would prefer to find an economical way to keep the zinc plant operating. He said the company believes this is “doable.”

Beauchamp is optimistic the zinc plant will carry on post-777.

“I believe we make the zinc for cheaper than the other companies do,” he said.

But Beauchamp acknowledged other factors will come into play.

“Probably metal prices is the biggest one,” he said.

Hudbay’s “three pillars plan” to maintain the zinc plant calls for increasing zinc output at Lalor, boosting capacity at the Stall Mill near Snow Lake to match expected output from Lalor, and cutting costs at Flin Flon’s zinc plant, oxygen plant and powerhouse.

Beauchamp said Hudbay told employees $15 million in costs savings are required on top of the job reductions.

The company, Weinerman said, is “considering a variety of ways to increase zinc volumes and cost reductions that could lead to a positive outcome.”

Layoffs

Hudbay’s best-case scenario of 200 layoffs would be realized if the three pillars plan succeeds and the zinc plant remains open. Another 300 jobs would be lost at the same time, but the company believes it can avoid further layoffs through retirements and letting vacancies go unfilled, Weinerman said.

Beauchamp said Hudbay cites about 350 employees as eligible to retire by 2020. If retirement numbers are lower than expected, he said, the final layoff number could be higher.

In meeting with company officials, Beauchamp said he was told Hudbay currently has 70 vacancies and that these positions would be the first to go when layoffs begin.

He said he was also told that unless they work in specialized fields, contractors will be let go as employees bump into other positions based on seniority.

The scenario could be much different if the three pillars plan fails. If the zinc plant closes, Weinerman said an estimated 800 to 900 Flin Flon jobs would be lost. This would represent up to two-thirds of Hudbay’s total jobs in Flin Flon-Snow Lake, based on its stated workforce of 1,350 employees as of May 2016.

The zinc plant would close “if we do nothing,” Weinerman said, but “Hudbay isn’t planning to do nothing. We want to secure the future as best we can under the circumstances.”

If the zinc plant is to maintain operations, employees will play a vital role. Weinerman said workers have been asked to identify and implement cost savings, with the company establishing teams to begin this process over the coming year.

“The intention is to put a recommendation to management in 2018,” he said. “So 2017 is about making progress on the three pillars to start showing the outcomes can be achieved. There is a lot going on, but you can also see we’re not at the end of the process; we’re at the beginning.”

Time frames for job reductions and a decision on the zinc plant are not yet known. As Weinerman said, “it’s simply too soon in most instances to say ‘this will definitely happen on this date’ or ‘this many jobs will be eliminated at this time.’”

The company is expected to begin negotiating contracts with its unions this year. Among the issues of concern is the lack of a commitment to allow Flin Flon-based workers to bump into Snow Lake when layoffs begin.

Beauchamp said Hudbay wants to clarify issues around bumping into Snow Lake before bargaining begins. While he believes workers will be able to bump into Snow Lake, he said those discussions will be ongoing, with nothing set in stone.

Lalor mine currently has a projected lifespan of 14 years. Beauchamp said expansion plans at Lalor would, if successful, spur more jobs, though he could not say how many.

While Hudbay plans to close the Flin Flon mill after underground operations cease at 777, the facility will be placed on “care and maintenance,” meaning that although it will not operate, it will be ready for future use should more ore become available.

Hudbay first confirmed in late 2015 that 777 mine would not last beyond about 2020. The company now puts the closure date at some point between 2019 and 2020.

“Ultimately a closure date will be determined based on an assessment of factors, including metal prices, operating costs and grades,” said Weinerman.

“We know people want a specific date, but it too early to say exactly.”

Asked what else the public should know, Weinerman said rumours that surface in these types of situations “tend to focus on bad news and usually exaggerate it.”

“So take everything you hear with a grain of salt,” he added. “Whatever the actual news from Hudbay is, good or bad, when it’s official, Hudbay will announce it.” 

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