Keep Beijing out of Sudbury – by Stan Sudol

This column was originally published in the National Post on October 01, 2004

Canada’s corporate sector has benefited tremendously from access to the United States economy, the richest and largest in the history of mankind. A crucial component of the wealth of that rich market is the secure and sustained access to essential industrial metals.

The Canadian government must not allow Noranda’s 60% controlling interest in Falconbridge to fall into Chinese government control, a prospect that seems likely if the recent $7-billion bid by state owned China Minmetals goes unchallenged. Falconbridge is the third largest producer of nickel in the world. Nickel, a white-silvery metal, whose unique properties, is a critical component to the health of the U.S. economy, including its military/industrial complex.

Nickel is not an abundant metal in the Earth’s upper crust.  The mining and refining of this vital metal for national defense and industrial applications, is a very specialized business.

Four countries, Russia, Australia, Canada and New Caladonia account for approximately 60 per cent of world mine production. Falconbridge is one of four elite companies – the others being Norilsk (Russia), Inco (Canada) and WMC (Australia) – that account for a little over half of world production.

By far, the two largest concentrations of this metal are found in the Siberian city of Norilsk and Canada’s own Sudbury Basin where Falconbridge got its start in 1928.

It was American entrepreneurs and capital that first developed the immensely rich deposits of the Basin, discovered in the 1880s. Nickel makes steel extremely tough, resistant to corrosion and produces a high-melting point – perfect for warships, tanks and other military weapons.

The American military/industrial complex has always depended on the Sudbury Basin’s secure, stable and abundant supply of nickel. Many geologists feel these mines will still be producing nickel a hundred years from now. The United States does not have any nickel mines and has always been vulnerable to supply disruptions from political, terrorist or military activity.

During the nickel shortages of the 1950s, the U.S. government gave Falconbridge a $40 million subsidy to help develop their nickel mines and ensure diversity of supply.

Nickel is also essential to all facets of industrial production, primarily through stainless steel which uses about 65% of global production. Nickel based super-alloys are an indispensable component of jet engines, missile technology and space applications. Quite simply, the modern industrial economy of the United States would come to a grinding halt without secure supplies of this crucial metal.

If the Noranda-China Minemetal deal is sealed, we will be selling almost 80 years of leading edge technological innovations and top notch engineering talents that have generated billions in wealth creation. The mining sector is one of the few corporate aces in this country. There are few manufacturing jobs in southern Ontario, Canada’s industrial engine, which will not be at risk from China’s low wage economy in the next decade.

Even a Federal government policy paper has expressed concerns about the country’s ability to withstand the increasing manufacturing might of China and suggests we encourage the potential of our mining sector. We are entering a commodity boom that might last for decades.

China is not a free market economy. China is occupying Tibet and has serious human rights abuses that we conveniently overlook. If there is a military conflict between China and the United States over the status of Taiwan, not an inconceivable possibility, where does Sudbury/Falconbridge nickel go?

During the First World War, Sudbury/Inco nickel was sold to the Germans via a neutral United States. The political uproar almost caused the nationalization of that company. Inco quickly stopped shipments and to assuage Canadian anger finally built a refinery at Port Colborne.

We live in a very uncertain world. North Korea and Iran may both be working to develop nuclear weapons, the Iraq war may expand and terrorism is a constant fear. Long-term military conflict would require not only enormous quantities of nickel but security of supply. The optics of Canada, supposedly one of America’s closest allies, selling controlling interest in essential nickel mines, to its most significant economic and military adversary is not very good.

Falconbridge Nickel Mines must remain in Canadian or U.S. control. The military, industrial and economic security of the United States and Canada is at stake.