Editorial: Layoffs pile up across the industry

The last couple of months have seen deep rounds of layoffs in the mining industry, as companies worldwide struggle to cope with low commodity prices, a resurgent U.S. dollar and thin financings.

The U.S. is ground zero for the recent wave of mine shutdowns and job losses, with its numerous coal mines and a high-flying greenback that translates into higher domestic wage costs compared to foreign competitors with fallen currencies.

The thermal coal market in the U.S. has been particularly hard hit by proposals under the federal government’s Clean Power Plan, which aims to cut emissions at fossil-fuelled power plants. Twenty-five states are lining up to sue the federal government to stop the plan, which they say is a job-killer due to the closing of coal mines and increased electricity rates that will drive out businesses from their states. State governments such as West Virginia’s are already taking an axe to their annual budgets, as tax revenue from coal mining shrinks.

Two formerly substantial thermal coal miners, Alpha Natural Resources and Patriot Coal, are now under bankruptcy protection, and have issued layoff notices at several Appalachian mines.

The slumping global steel market has translated into weaker demand and falling prices for metallurgical coal, iron ore and molybdenum, with resulting mine layoffs.

In U.S. met coal, the Walter Energy bankruptcy auction has taken a turn, with the possible selling of its Alabama assets for US$1.3 billion. Most Walter Energy operations have continued since the bankruptcy reorganization was announced in July, though there have been layoffs at subsidiary Jim Walter Resources. Cliffs Natural Resources has also cut hundreds of staff at its met coal mines in Wyoming and Alabama, as have its met coal competitors in Wyoming.

The pains in U.S. iron ore are centred in Minnesota and Michigan’s Upper Peninsula, with more than 1,500 layoffs at various firms.

U.S. molybdenum miners haven’t escaped the whirlwind, with the iconic Henderson moly mine in Colorado eliminating 210 jobs and leaving 350, as mine production is scaled back 45%. Freeport-McMoRan has also chopped jobs at many of its U.S. copper mines, including 450 people let go at the Sierrita copper-moly mine, as mining rates are cut in half. Worldwide Freeport is letting go of 10% of its workforce.

But the biggest job losses in copper are in Chile at state-owned Codelco. The world’s largest copper miner has laid off 4,000 workers, with Codelco CEO Nelson Pizarro calling it “painful but necessary.”

The metallurgical coal mines of Western Canada are hurting too, despite the loonie’s drop into the low- to mid-US75¢ range. As we reported last week, Teck Resources has laid off 1,000 employees.

Grande Cache Coal in the remote town of Grande Cache in northwestern Alberta gave the bad news to its workers in November that the company would suspend indefinitely its Grande Cache underground coal mine on Christmas Eve, leaving 220 people out of work. Earlier this year, the miner laid off 250 people by closing its nearby open-pit mine coal and plant. Grande Cache Coal was bought by Japan’s Marubeni and Winsway Coking Coal Holdings for $1 billion in 2012. In October 2014, Up Energy Development Group bought a controlling interest in Grande Cache Coal from the two companies for just $2 (yes, that’s right: two dollars!).

Among suppliers, Vancouver-based Finning International, the world’s largest Caterpillar heavy equipment dealer, announced in mid-November it is cutting 1,100 jobs in Canada and abroad, or 8% of its workforce. For all of 2015, Finning will have eliminated 1,900 staff worldwide, including 1,100 in Canada. Finning is also shutting 11 more locations in Western Canada as it moves away from its previous business model of having a substantial bricks and mortar presence near all its clients. In its latest quarterliess, Finning said equipment sales dropped 27% between the second and third quarters.

In Decatur, Illinois, Caterpillar is cutting 5,000 salaried employees this year and says 10,000 might be eliminated by 2018. Another 2,000 have taken early retirement.


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