MSV tests revolutionary profit-sharing plan

At $17.42 an hour, the average wage here for an underground miner is still well above that paid to industrial workers in Canada.

But for the 290 unionized employees of MSV Resources (TSE), it represents a 16.6% pay cut.

That, along with a reduction in employee benefits, was the price members of the United Steelworkers of America had to pay in February, 1993, for keeping alive two gold-copper mines, Copper Rand and Portage, which sit on the shore of Lake Chibougamau.

Other concessions made by suppliers to the mines, including a 10% reduction in concentrate trucking costs and 5-10% cuts in the cost of two main operating consumables (fuel and explosives), were key to the company’s success in turning these operations around.

Key to MSV’s ability to win these concessions was the participation of the Societe de developpement de la Baie James (SDBJ), an organization responsible for infrastructure and economic development in northern Quebec. As a result, SDBJ receives a royalty on each tonne of ore treated by MSV. Between March, 1993, when the new owners took over the reins from Westminer Canada, and December 31, 1993, the two operations churned out 37,578 oz. of the yellow metal and 9.9 million lb. copper, netting the Montreal-based junior $533,000, or 3 cents a share. Copper concentrates are shipped by rail to Noranda’s smelter in Rouyn-Noranda.

Production this year could total 55,000 oz. of gold and 14 million lb. of copper, according to President Mario Caron.

But, as The Northern Miner discovered on a recent underground tour, not all employees are happy with the changes. Development miners, traditionally the highest paid workers in the two mines because of performance incentives, no longer see their work translate directly into bonus cheques. Instead of a traditional bonus system, MSV has introduced a profit-sharing plan whereby all employees benefit when the company is in the black. Under this new plan, believed to be the first of its kind in the history of Canadian mining, employees can earn a share in as much as half of the company’s profits in a given month. The exact percentage of profits distributed to employees depends on the level of profit per tonne of ore treated. This year, about $2 million is budgeted to go to employees. In January (admittedly not a very representative month, because of holidays), MSV posted a profit of $2.20 per tonne on revenues of $74.35 per tonne. Under the new plan, that means 30% of profits were shared by employees in that month; this, considering treatment of about 42,000 tonnes, translates into about $28,000 distributed to employees. (About $150,000 is distributed in a more typical month.) Exactly how much an individual worker receives depends on his job function.

Staff employees receive shares in the company at the end of the year. If profits exceed $12.50 a tonne, half of the company’s profits end up going to unionized employees.

Understandably, the new system has had a dramatic effect on the economics of the operations. The union has set up a committee to check the financial figures the company provides and workers also have a seat on MSV’s board of directors.

Unfortunately, however, the new open management policy has done nothing to improve the safety record at the two mines. MSV has the second-worst safety record in the province, behind the Joe Mann mine, 64 km south of here. “We have commissioned a safety audit,” says Director of Operations Andre Godbout, “and we expect to have a report soon.” Improvements would follow quickly.

In the meantime, MSV is aggressively increasing reserves at Copper Rand and Portage and developing the Eastmain property (T.N.M., March 7/94). The company recently acquired the Cedar Bay property from Campbell Resources (TSE), which adjoins Copper Rand to the west. This could, for the first time in the 45-year history of the camp, lead to exploration of the possible extension of the Copper Rand orebody onto Cedar Bay ground. The same holds true for the Henderson I & II and Portage properties.

Deposits in the Chibougamau camp occur in plutonic rocks on the north rim of a large anorthositic intrusion known as the Dore Lake Complex. MSV operates its own diamond drill machines and has seven units turning around the clock at stations throughout the underground operations. — Patrick Whiteway is editor of “Canadian Mining Journal.” A more detailed report on the Copper Rand and Portage mines will appear in the April, 1994, issue of that magazine.