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Stillwater idles East Boulder mine
The Hertzler tailing impoundment site holds much of the 1 million gallons of water pumped from the Stillwater Mine every day, as well as tailings left over from the milling process.

Stillwater Mining Co. suspended operations at its East Boulder mine Monday and sent layoff notices to 526 employees.

Some of those East Boulder workers will be transferred to the Nye mine, though the number was not provided.

The company is permanently cutting its total work force by about 320 workers and 50 contractors. That's 21 percent of its 1,770-person work force.

The company has been one of the region's largest and best-paying employers and blamed the move on a 60 percent drop this year in market prices for platinum and palladium.

The East Boulder miners have been told not to report to work until further notice.

Once Stillwater officials have discussed a restructuring plan with the United Steel Workers Union Local 11-0001, the East Boulder mine will reopen with a substantially reduced work force, the company said.

If the East Boulder mine isn't profitable, or if platinum and palladium prices fall even further, the mine may be shut down permanently, the company said.

Miners were given a 60-day notice of the layoffs as required by the federal Worker Adjustment and Retraining Notification Act. Those who are not recalled will be permanently laid off Jan. 16.

"We regret the adjustments will require reductions and redeployment of some of our employees," said Stillwater's Chairman and Chief Executive Francis McAllister. "While the adjustments are unavoidable under the current market conditions, they are designed to preserve the company's operating options, improve our competitive position and enhance our resilience to market price volatility for platinum-group metals."

Of the 526 employees who received layoff warnings, 413 are hourly and the balance salaried, according to Jim Williams president of Steel Workers International 11-0001. He and 11 other union committee members met with two Stillwater Mining officials late Monday where they learned the news.

"If things don't pick up, it will be a permanent layoff in mid-January. If the mine stays open, it will not be a full crew. They would run the operation with 250 as opposed to 413 (hourly workers)," Williams said.

Stillwater Mining also cut jobs at the Columbus smelter and at company offices in Columbus and Billings. The company used to have all its corporate offices in Columbus, but four years ago moved executives into a building at the Transtech Center in west Billings.

Administrative overhead and general costs will fall from more than $35 million this year to about $20 million in 2009, including exploration and marketing expenses.

Although most of the impact so far is at the newer mine along the East Boulder, one new worker from Butte at the Nye mine, an employee with just 280 hours left to pass probation, was laid off with a telephone call.

Toby Whalen said he was hired Aug. 21 as a "nipper," or man who supplies the miners. While waiting in Absarokee for the bus to travel to his night shift, he got a call from a Stillwater human resources employee telling him not to report for work.

"I don't know where I'm going to go or what I'm going to do," Whalen said. "I put everything I had together so I could move up here and do this job. Like the articles tell you, they are one of the highest-paying employers in the state."

Sweet Grass County, home of the East Boulder mine, receives 40 percent of its tax revenues from Stillwater Mining, which is the county's largest employer.

In Stillwater County, which is home to the Nye mine, the smelter, recycling plant and corporate offices, the company pays $1.2 million, or one-third of the county's total property taxes per year. In addition, Stillwater Mining pays another $1.2 million in other taxes to the county, mainly in metal mines license taxes.

"From all of the commissioners, our thoughts and prayers go out to all of the affected employees and their families, the vendors involved and even those tasked with making these tough decisions," said Stillwater County Commission Chairman Dennis Hoyem.

He estimated that 68 employees working at the East Boulder mine live in his county, which means those wages could be lost. The local schools also will be affected through lower property taxes and the loss of miners' children, he said. A total of 40 children of East Boulder workers are enrolled at the Columbus and Reed Point elementary and high schools, Hoyem said.

While announcing the company's disappointing third-quarter losses last week, McAllister said the company had no credit line and no ability to negotiate one in the dismal economic environment. The company has a cash reserve of $129 million.

"Without any operating chances and at current PGM (platinum-group metals) prices, the company's operations would consume cash at a rate of over $25 million per quarter," he said.

Stillwater Mining also is cutting spending on capital projects from $90 million this year to $40 million next year. However, a second furnace at the smelter in Columbus and a hauling project in the Nye mine will be built as planned.

Overall, the company is cutting its 1,770-person work force by one-fifth, including about 320 employees and about 50 contractors, McAllister said.

Despite the severe cutbacks, McAllister said the company still hopes to mine 490,000 ounces this year.

"We recognize and deeply regret the negative effect of the changes on our displaced employees and on the communities in which we operate," he said.

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Contact Jan Falstad at jfalstad@billingsgazette.com or 657-1306.


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