MONTREAL - Some 1,800 workers will be laid off for the summer after a subsidiary of Rio Tinto PLC (NYSE:RTP) announced plans to close a Quebec metallurgical complex and mine in a bid to save $25 million because of uncertainty in its markets.
QIT-Fer et Titane, for Quebec Iron and Titanium, closed some of its operations in the early 1990s, but this will mark its first total production stop in its 60 years.
The company said Monday its operations in Sorel-Tracy, Que., will be suspended from July 12 to Sept. 8. The Havre-St-Pierre mine is expected to resume Aug. 31.
A previously scheduled shutdown at the end of 2009 will also take effect one week sooner than anticipated, on Dec. 11.
The company's products are used for white colouring inn plastics and paints. Its specialized metal and metal powders go into the manufacture precision parts used by the auto industry.
It employs 2,000 overall and the summer shutdown will affect all but the company's essential services staff.
The shutdown is the latest evidence of how a global economic slowdown, sparked by a meltdown in the U.S. housing and mortgage industries, has hurt Quebec resource and manufacturing companies.
In January, Rio Tinto Alcan announced it would close the Beauharnois smelter near Montreal and reduce output at the Vaudreuil alumina refinery in the Saguenay region, affecting 300 jobs in Quebec.
Company president Jean-Francois Turgeon said the closure, which represents 17 per cent of its annual production, will have minimal impact on QIT's clients and suppliers.
Turgeon says the company's goal is to ensure its future business and continuing contribution to the financial health of the regions in which it operates.
"We have opted for solutions that will minimize the consequences to our employees," he said during a news conference in Sorel-Tracy, about 70 kilometres northeast of Montreal.
Turgeon said he couldn't rule out extending the closure, but said the decision was taken based on the best information the company has about market demand, which fell 30 per cent since the end of the last quarter of 2008.
Union leaders said the decision comes as little surprise given market conditions.
"We're crossing our fingers and hope there won't be more bad news in the future," said Roland Labonte of the metal workers union affiliated with the Quebec Federation of Labour, which represents about 300 miners in Havre-St-Pierre.
Alain Lampron, president of the Confederation of National Trade Unions metal workers, said it will meet with the company later this week to get more details about its analysis of the situation.
"There is nothing funny about this decision, but I would rather see temporary measures than permanent ones like in some cases," he said in an interview.
Lampron, whose union represents about 1,200 workers at the Sorel-Tracy facility, said he hopes the shutdown will re-establish the company's financial health that result in better days ahead.
Tony Robson of BMO Capital Markets said QIT is susceptible to downturns because it tends to be at the higher cost end of the mineral sand and titania slag market.
He added in an email that the company is also suffering from disruptions from one of its feedstock sources, QIT Madagascar Minerals, owned 80 per cent by Rio Tinto.
The QIT subsidiary, part of the Rio Tinto PLC mining group that also owns the Montreal-based Alcan aluminum company, makes titanium dioxide feedstock and iron, steel and metal powders.
About 90 per cent of its products are exported, mainly to the United States and Europe.
