A statement issued by several Flin Flon-based unions has alleged misdirection on the part of Hudbay regarding the future of the company’s mining interests in Flin Flon.
The statement was issued to The Reminder by a conglomeration of local unions covering Hudbay employees including United Steelworkers (USW) Local 7106 and International Association of Machinists (IAM) Local 1848.
In the statement, union leaders allege misdirection and underhanded tactics from Hudbay officials regarding the announced closure of most of the company’s Flin Flon operations and the ongoing proposed 1901 mine project.
When the initial announcement of a pending Hudbay Flin Flon closure came in November 2018, union leadership was caught off guard.
“The unions were shocked, as no Manitoba management told us this was coming. We found out in the 2018 third-quarter release from the CEO. We asked for a meeting with [Hudbay Manitoba Business Unit vice-president] Rob Assabgui for an explanation. Instead of explaining why, all he could focus on is how we found out,” read a statement sent by the unions.
During a follow-up meeting with Hudbay officials, union brass were first notified of the discovery of the 1901 deposit near Snow Lake.
The union statement said the group was told the new project “was the size of Reed mine and could supply ore until 2025 for our zinc plant operations.”
“This was welcome news. They started developing toward the ore body, then we were told in late 2019 that [Hudbay] stopped development of 1901 and the size of the ore body was approximately 2.1 million tonnes and only nine per cent zinc.”
By contrast, the ore body for the now-closed Reed mine mined between 440,000 and 465,000 tonnes of ore per year during most of its lifespan.
“The union executives and members are finding it very hard to know when Manitoba managers are being truthful and forthcoming. One minute, 1901 could save the [Flin Flon] zinc plant and our communities, and now, it’s not,” reads the statement.
According to the business update issued by Hudbay containing the most recent closure information for Flin Flon, the development program for the 1901 program would be deferred. Exploration spending for the 1901 project would be cut but a winter exploration program would continue this year. Funding for exploration at the 1901 area came at the expense of funds for exploration closer to Flin Flon.
“In 2020, we do not have sufficient funding to explore in the Flin Flon area. The limited exploration funding will be directed towards 1901 deposit and other gold deposits in the Snow Lake region,” read the update.
In that update, Assabgui is quoted as saying the deposit could possibly extend the life of the Flin Flon zinc plant until 2025 if it was fast-tracked into production.
Leaders from USW Local 7106 met again with Assabgui, according to the statement, with union bosses saying they were told the company did not have money to develop the 1901 project due to moving funds toward the refurbishment of Snow Lake’s New Britannia gold mill.
“When asked what the rate of return on the gold mill investment was, [Assabgui] stated two to three years, which is very impressive. The union then asked where the profits are going from the gold after the return is paid back, as Hudbay could easily fund 1901. He stated the board doesn’t have plans for 1901 and that the next major investment will be Peru,” reads the union statement.
On Feb. 18, Hudbay announced the company had reached a surface rights agreement to allow mining at the Pampacancha deposit as soon as late 2020. The deposit is located in Peru, not far from Hudbay’s existing Constancia mine. In a news release, Hudbay is listed as expecting costs with project development and surface rights acquisition “to be approximately $70 million in 2020.”
Locally, union groups have met together several times a month to create a plan described in the statement as one that will “put pressure on Hudbay to fund 1901, which will save and create more jobs for our future.”
“This is our number one goal as unions and should be for our communities as well,” reads the statement.
Local union leaders have requested a meeting with Hudbay CEO Peter Kukielski and the company’s board of directors on the 1901 project, according to the statement. The statement lists bargaining, currently pegged at taking place in fall 2020, as a vital date for Hudbay operations in Flin Flon.
In meetings and announcements since Hudbay’s latest announcement in January of an April 2022 shutdown date for almost all Flin Flon operations, USW Local 7106 listed “possible strike, 2021” as a topic of discussion. In the statement, the union group stated the notice was in response to 1901’s cancellation.
“They have enough cash to start a mine in Peru but won’t invest in 1901. It’s unacceptable. USW believes that if they disrupt the huge potential in their gold profits, shareholders would ask what the hell is going on in the Manitoba operations,” reads the statement.
“The unions feel they have been backed into a corner and have no choice but to come out swinging.”
While the idea of Hudbay’s pending closure has been scoffed at by some Flin Flonners as a move to gain the company leverage ahead of bargaining later this year or a scare tactic, the unions see the situation differently as per the statement.
“The union presidents don’t believe this is a scare tactic about shutting down surface operations. This is nothing more than corporate greed, plain and simple,” read the union statement.
“Once again, our profits are going out of the country and our members and communities are greatly affected. It’s very hard to stomach hearing how they are struggling financially and how they are stakeholders in our community, yet they fly 68 of their staff employees in and out of Flin Flon that don’t pay taxes or contribute very little from their pockets to our towns.”
