USW Canada: 23 JUNE 2010 - Steel This Week

Mediated talks aimed at ending a nearly year-long strike at Vale's Sudbury operations have made significant progress and will continue, the mediator said on Tuesday.

The Brazilian-owned mining corporation and Steelworkers began their most recent round of talks on Saturday under the supervision of An Ontario-government mediator. “Considerable progress has been made. The mediation process is continuing,” mediator Kevin Burkett said. The company and union have agreed to a media blackout, while contract talks are being conducted.

The Sudbury strike, which began July 13, 2009 and a parallel strike at Vale's Voisey's Bay mine in New- foundland, are affecting about 10% of global nickel production, along with lesser amounts of copper and precious metals. Sudbury has been running at partial capacity with scabs and outside contractors.

BHP BILLITON MOVING TOWARD SASKATCHEWAN POTASH VENTURE

Global mining corporation BHP Billiton has confirmed its Jansen potash deposit in Saskatchewan is world-class, ahead of it making a $US10 billion development decision that could lead to production in 2015, says Australia’s Sydney Morning Herald.

In late January Potash Corp of Saskatchewan warned that BHP faces losing billions of dollars should it continue with plans for a big entry into the global fertilizer industry by building new capacity at Jansen rather than taking over an existing company. Potash Corp president Bill Doyle, suggested that BHP's push into what for it is a new field is fraught with danger, suggesting it was not unlike the billions of dollars lost by the big oil companies when they ''discovered'' the fertilizer business in the late 1960s, only to pull out when easy returns didn’t materialize.

Doyle said it could be a worthwhile history lesson for companies with no fertilizer expertise, as is the case with BHP. “BHP doesn't walk on water,” he said, noting that new projects would cost much more and might face tough competition from Potash Corp. “The greenfields (new projects) route is too time-consuming and expensive,” he said.

BHP has been rumoured as a potential buyer of the $US 28b Potash Corp; Doyle's comments were read by some at the time as an effort by him to convince BHP to move on the company. But BHP is sticking to the greenfields route. It has since made an acquisition of a small potash leaseholder next door to Jansen and has committed $US 240 million for early planning and development work at Jansen, all on a pre-commitment basis for a full-blown development/

G20 SPLIT ON THE QUESTION OF STIMULUS VS DEFICIT CUTTING

The European debt crisis is creating chasms in the Group of 20 that could complicate Prime Minister Stephen Harper’s push for deficit-cutting measures, reports the Globe and Mail.

Speaking in Toronto last week, finance minister Jim Flaherty acknowledged a gulf has emerged in recent days between countries such as Germany, Britain and Canada, which have pledged budget cuts and countries led by the United States, where President Barack Obama is urging other leaders to be careful about withdrawing stimulus too quickly.

“That's not a settled matter,” Mr. Flaherty told reporters. However, he said, while “different countries are in different fiscal situations,” there are not, “at the end of the day, any divisions with respect to the need for fiscal consolidation.”

Canadian officials have tried to play down differences among G20 members, saying it’s a given that contributions to “sustainable, balanced growth” for the global economy as a whole will vary across nations, depending on whether they have staggering budget shortfalls. Those with less severe deficit and debt problems, as well as booming emerging-market economies that need to do more to stimulate domestic demand, are less concerned about the debt problem.

Statements from Washington and Berlin also tried to downplay the conflict, lest the summit, in the words of one report, turns into a “shouting match.” Nonetheless, the differences appear deeply entrenched. The split came to the surface at the G20 finance ministers’ meeting on June 4-5, when contrary to initial expectations the final communiqué emphasized the need for government debt and deficit reduction rather than stimulus measures to bolster economic growth. The change in tone reflected the impact of the “sovereign debt” crisis in Europe, which threatened to spark a financial crisis even more serious than that which followed the collapse of giant investment bank Lehman Brothers in 2008.

The “euro crisis” was seen by European governments as a directive from financial markets. The task of clawing back the massive debts incurred after the eruption of the global financial crisis in September 2008 could no longer be delayed. A series of austerity programs aimed at drastically lowering the social conditions of the working class had to be launched immediately. Workers in Greece and other European countries have reacted strongly to sweeping plans to cut their wages, benefits and social programs.

However, plans for deep deficit cuts raised concerns in the Obama administration that its efforts to restore America’s economic position by boosting exports would be harmed if European markets dried up. A letter from US Treasury Secretary Timothy Geithner voiced fears that “policy adjustments” in Europe could “undercut the momentum of the recovery.” President Obama then issued a letter to G20 leaders last week, declaring that the “highest priority” in Toronto had to be to “safeguard and strengthen the recovery.”

“A strong and sustainable global recovery needs to be built on balanced global demand,” he wrote. “Significant weaknesses exist across G20 economies. I am concerned by weak private sector demand and continued heavy reliance on exports by some countries with already large external surpluses... In Pittsburgh [at the G20 leaders’ meeting in September 2009], we agreed that countries with external surpluses would need to strengthen domestic sources of growth.”

German Chancellor Angela Merkel has since predicted conflict at the G20, citing the more ambitious austerity plans being put in place in Europe as governments try to appease skittish bond investors. Europeans, especially Germany, “are of the opinion that the reduction of deficits is absolutely necessary to create sustainable economic growth,” Merkel told reporters in Berlin. “There are others who don’t see the exit strategy as we see it; I think there will be very fruitful but also controversial debates on these themes.”

On top of the fiscal fissures, it seems Canada has abandoned any illusion that G20 leaders bent on pushing a bank tax can be persuaded to drop the idea. Germany, France and Britain this week said they will go ahead with a bank tax, an idea Mr. Flaherty called a “distraction” that “gets much more attention than it deserves.” The fact that the bank-tax issue re-emerged after Mr. Flaherty worked so hard to bury it not only shows the weakness of the Conservative government’s position but also suggests the Europeans may be picking a fight – even though they don’t need the G20’s permission to proceed with their plans.

Leaders of the International Trade Union Confederation, which is holding its world congress in Vancouver ahead of the summits this week, have told leaders there won’t be economic recovery without jobs.

ITUC general secretary Guy Ryder, and Canadian Labour Congress president Ken Georgetti met Prime Minister Stephen Harper Friday to relay the message. Ryder said global economic recovery is extremely fragile, unemployment levels still far too high. “I take away from the meeting his repeated phrase — and I welcome it — that between fiscal consolidation and job creation, he said, ‘It’s a balancing act.’”

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If you have any questions, comments or information you would like to make known to Steelworkers in District 3, please feel free to contact Brother Kim Pollock, Canadian Research Representative: kpollock@usw.ca or 694-683-1117 in the Burnaby, BC office District 3