During a 45-minute nationwide teleconference Wednesday, top executives of Stillwater Mining Co. said they intend to resume operations at the East Boulder Mine as soon as they can reach an agreement with the miners' union about laying off workers and restructuring operations.
On Monday, the Billings-based producer of platinum and palladium announced a restructuring plan that will cut costs largely by eliminating an estimated 320 company jobs and 50 contract jobs at the East Boulder Mine and the Stillwater Mine at Nye.
On Monday, 526 employees were told not to report to work unless called back and were given 60-day layoff notices. That means they will continue to receive their base pay and benefits until Jan. 16. An undisclosed number of new employees still on probation were laid off permanently, apparently without the 60-day financial cushion.
"We need to cut our production costs by 25 percent," said Stillwater's chief executive and chairman, Frank McAllister.
At today's depressed prices, Stillwater Mining's revenues fall $80 million a year below its operating costs. Stillwater Mining has $129 million in cash reserves but no line of credit to borrow against.
Prices for the rare metals used primarily in automobile catalytic converters and jewelry have collapsed, falling more than 60 percent from record highs set earlier this year.
Talks are under way with the United Steel Workers Union Local 11-0001, but union officials did not immediately return phone calls. A call to Stillwater Mining also was not immediately returned.
Sweet Grass County Commissioner Rick Reed in Big Timber said a company official told him Wednesday that some of the workers given layoff notices have been called back to work at East Boulder.
"Of course, they have to have a skeleton crew up there to keep the lights on. That's good news," Reed said.
An unknown number of the East Boulder employees who got layoff notices, especially the skilled miners, are expected to be called back to work at East Boulder or be transferred over to the Nye mine.
Layoff notices were sent to more workers than will actually lose their jobs because federal law requires companies with more than 500 workers to warn them of potential jobs cuts or a plant closure.
"This decision has not been taken lightly, and we sincerely regret the impact on these miners and their communities," McAllister said.
Stillwater Mining lost $14 million in 2005 and 2007; it made a profit of nearly $8 million in 2006.
Despite cutting capital expenses for next year, Stillwater Mining will finish installing a second furnace at its Columbus smelter. The smelter processes ore from the two mines and platinum and palladium recycled from catalytic converters.
However, falling auto sales and hoarding by suppliers because of lower metal prices have cut into the supply of catalytic converters to Stillwater Mining, he said.
The company's biggest challenge will be to bring costs down at the East Boulder, said the chief operating officer, Greg Struble.
This restructuring plan calls for mining up to 120,000 ounces of platinum and palladium from East Boulder next year. If the target is met, that would be a 22 percent cut from this year's levels.
Achieving the objective depends on how soon the company can reach agreement with the union, Struble said.
"Beyond the 18- to 24-month horizon, metal prices will continue to dictate whether we can continue operating there," he said.
Contact Jan Falstad at email@example.com or 657-1306.
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