[Thompson, Manitoba MLA] Steve Ashton threatens Vale with provincial mining legislation on smelter and refinery shutdown – by Ryan Flanagan (Thompson Citizen – May 20, 2011)

This article was originally published in the Thompson Citizen which was established in June 1960. The Citizen covers the City of Thompson and Nickel Belt Region of Northern Manitoba. The city has a population of about 13,500 residents while the regional population is more than 40,000.  news@thompsoncitizen.net

“The 1956 agreement isn’t just about municipal services, though we believe that has
to be addressed to protect Thompson’s interest. It’s also about the fact that under
that agreement, Inco as it then was has a preferred position in this province on a
whole series of things. Clearly, if they think they can take the value-added out and
not see any consequences, they’re wrong.”
(Thompson, Manitoba MLA Steve Ashton – May 20, 2011)

Minister says if 1956 agreement isn’t going to be relied on by company, then all bets are off

It’s been more than six months since Vale announced their plans to close their Thompson refinery and smelter by the end of 2015, and more than three months since a group of local stakeholders traveled to Toronto to present Vale senior management with their proposals to reverse that decision, or at least minimize its impact on Thompson.

What’s changed in that time? To hear Thompson MLA Steve Ashton tell it, nothing.

“We’re disappointed, provincially, and I’m certainly disappointed that Vale is still not addressing the direct issue,” said Ashton on May 20. “We continue to believe that the issue here is value-added jobs from the resource, and we certainly have not given up on the smelter and refinery.”

In February, Ashton was part of a group comprised of representatives of the province, the City of Thompson, and United Steelworkers Local 6166 who traveled to Toronto to present Vale Canada president and chief executive officer Tito Martins and his management team with a series of seven proposals – some of which, if accepted, have kept Vale’s Thompson operations as they stand today and some of which would change the focus of the operations but maintain the jobs.

These proposals included allowing for flexibility in regulations around SO2 emissions, through discussions with the federal government, providing a sustainable operating capacity for smelting and refining, accelerating exploration and mine development, creating support for metallurgical processing of magnesium oxide ore, building a new metallurgical facility, granting Vale new mine status for future Manitoba operations, and selling the Manitoba Division outright.

Vale officials were interested enough in one or more the proposals that they sent the group a series of specific technical questions to answer – but the answers must not have been to the company’s liking, as there has been no substantive progress since, and Ashton accuses the company of moving the yardsticks.

“What has been frustrating is that we have addressed the issues that Vale put forward as the reasons behind their intent to close the smelter and refinery,” he says. “We found that we’ve been getting responses that essentially are different from what the original criteria were.”

With progress at a standstill, it appears it will be the province making the next move – Ashton said that he was working with Energy, Innovation and Mines Minister Dave Chomiak to create a new piece of provincial legislation which could be introduced as early as the week of Victoria Day.

“We are going to be introducing legislation to protect not only the province’s interest in the resource and also the various aspects related to that, but also Thompson’s interest related to that,” said Ashton. “In a general sense, it’s going to recognize that Vale has been signaling – and it’s really confirmed by having no movement on the smelter and refinery – that they’re moving beyond the basic framework of the 1956 agreement. If we no longer have that key element, which is the value-added jobs, then we have to look at what that means for the ongoing relationship with the province, with Thompson, and with Vale.”

Ashton would not comment on the specifics of the legislation, but Vale isn’t the only party with leverage if the 1956 agreement ever ends up not in force – among other things, the agreement gives Vale the power to essentially set its own tax rate through the grant-in-lieu paid to the City of Thompson and School District of Mystery Lake.

“We as a province believe it’s essential for them to, at a minimum, continue their commitments to the City of Thompson and the school district,” said Ashton. “The 1956 agreement isn’t just about municipal services, though we believe that has to be addressed to protect Thompson’s interest. It’s also about the fact that under that agreement, Inco as it then was has a preferred position in this province on a whole series of things. Clearly, if they think they can take the value-added out and not see any consequences, they’re wrong.”

The city is responding to the lack of movement in its own way – on May 18, the city and Vale issued a joint news release announcing the creation of the Thompson Economic Development Working Group (TEDWG), a project designed to look at other potential opportunities for Thompson’s economy which will be chaired by the city and will also include representation from local business and aboriginal communities. Vale is funding the group, which is expected to last an initial 12 months for identification and implementation of a strategy.

“What I want this working group to do is go out there and really drill down,” said Mayor Tim Johnston. “Go out there and get the details of some proposals – I want them to be really detailed, looking at what are real opportunities.”

“What I’ll be saying to the working group is that I don’t want [them] to come back and give me some easy answers that we should be doing this or should be doing this, I want the working group to specifically identify what can be real opportunities in terms of creating jobs, and give us a real detailed plan on how we access the resources or the investment to develop those specific initiatives,” he continued. “I don’t want this to be a superficial report that says ‘oh yeah, you guys should be looking at this.’ I want the working group to work on a very detailed action steps for economic diversification.”

TEDWG is expected to hold their first meeting in the week after Victoria Day, at which the process of how the group will accomplish these goals will be discussed. Also involved will be rePlan, a Toronto-based consulting firm which regularly works with municipal governments on similar projects.

Although the release only specifically mentioned Vale and the city as taking part in the group, other groups that have been invited to join include the provincial and federal governments, United Steelworkers (USW) Local 6166, and aboriginal organizations such as Manitoba Keewatinowi Okimakanak, the Keewatin Tribal Council, the Manitoba Métis Federation, and the Northern Association of Community Councils.

This is in part, Johnston said, because TEDWG will take a wider look at Thompson’s role with respect to other communities in Northern Manitoba and beyond – one of the major differences between this group and Thompson Unlimited, which has a similar mandate and will be available to TEDWG as a resource. “Thompson Unlimited is very Thompson-focused,” he said. “This [working group] is going to expand on that work – we’re also going to be looking at some of the other key players related to this economic development initiative and including regional players as well.”

Some of those regional players, though, sound less than thrilled about the idea. “With respect for the process today to launch the Economic Diversification Working Group, we have, in the past, participated in discussions with Vale, the City of Thompson, and the provincial government,” wrote USW Local 6166 president Murray Nychyporuk in a letter to USW membership, also dated May 18. “Although ideas were shared and discussed, we believe our community will not recover from the loss of our jobs or any other related employment. We also believe this decision will change the landscape of our community forever.”

Much like Nychyporuk, Ashton didn’t outright rule out participating in the working group, but neither did he sound enthusiastic about the idea. “At this point in time, it does not address any of the main issues facing Thompson,” he said. If the city wishes to proceed with it, that’s fine, I respect that, but for us, the real issue is protecting Thompson and Manitoba’s interests in the immediate sense.”

“If you’re going to be taking 500 jobs out of Thompson, simply trying to find others to fill the gap is really missing the point,” he continued. “Vale has to making commitments to our community, and they also have to do a lot more to be part of the solution than simply hiring Toronto-based consultants.”

Meanwhile, it appears that the release’s claim of the federal government being invited to join the group completely bypassed Churchill MP Niki Ashton, who said she only heard about the announcement second-hand, and then contacted Vale vice-president of corporate affairs and communications Cory McPhee in Toronto to enquire further.

Ashton did, however, indicate that she would be interested in working with the group if asked. “I’m keen to represent our community,” she said. “I do believe that there needs to be a strong federal presence in supporting Thompson through the future.”

Despite the willingness to work with the group, Ashton was similarly critical of the announcement, calling the formation of the diversification working group “duplicating work that’s already been done” and noting that Vale was still making no definitive statements about future investment or employment in Thompson.

“In this press release – which is all we have to go off at this point – there’s no commitment from Vale to maintaining value-added jobs in Thompson in its own operation,” she said. “There’s also nothing concrete to protect Thompson’s tax base – there’s some reference to the grant-in-lieu, but nothing concrete. There’s references to efforts that are duplicated – Thompson for a number of years has been looking at diversification through its different agencies, whether it’s the work of Thompson Unlimited or Community Futures, the work on the jet engine test site or the building of UCN, there’s been a number of efforts to do this. What this release refers to is efforts that are already being done and have been done, rather than Vale saying what it’s going to do in terms of its operations to maintain value-added jobs in our communities.”

Both Ashtons were also complimentary of Public Safety Minister Vic Toews, who is the federal government’s senior minister for Manitoba, for his willingness to work with local stakeholders both to try and maintain the existing jobs and to look for future opportunities.

Johnston was more optimistic about the working group than his provincial and federal representatives, and said that this announcement should not be taken as a sign that the save-the-smelter campaign has fallen by the wayside. “We do not concede in any manner that the political process is or has been concluded,” he said. “Those discussions have to continue. This is just another added process that we’re initiating specifically on economic diversification – I don’t see this as in any way going on a different track than we we’ve been trying to do for the last five months.”

With respect to the working group, which in its press release used language very familiar to anybody who is familiar with the city’s goals – for example, saying that the working group “will focus on initiatives that will strengthen Thompson’s position as a regional service centre with a strong mining base” – Johnston said that community feedback will be another important part of the endeavour, with a new website being created to provide the public with information and solicit the public’s opinions. There will be other ways for the community to contribute as well. “We need to get moving on this part of the work as soon as possible,” said Johnston. “I’m going to bring this group together next week, we’re going to get to the community very soon, and I expect that the group’s going to start working immediately.”

The city’s Sustainable Community Plan, which was first presented to the public last October, will form the backbone of the working group’s direction. “The Community Sustainable Plan was always going to be moving forward with respect to economic development and diversification,” said Johnston. “I think this is an opportunity to move it forward a little bit sooner in terms of getting to those real detailed things, because we’re challenged by this decision.”

“Vale intends to be a major employer in Thompson for many years to come,” said Lovro Paulic, Vale general manager responsible for the smelter and refinery, in the release. “Mining is, and will continue to be, an important driver of the Thompson economy – as evidenced by our plans to invest more than $1 billion extending the life of the mines in Thompson and introducing new sources of ore. We’re confident the resource here continues to offer significant potential. At the same time, it makes sense for all of us to explore other means to secure the long-term success of our community and create additional pillars for economic growth.”