Noranda (NRD-T) is closing its 80%-owned Magnola magnesium plant is in Danville, Que. The troubled plant will be idled for at least a year, possibly longer depending on magnesium prices.
Layoffs will begin at the end of April. The plant currently employs 380 workers. About 10 will remain during the shutdown period, and equipment and infrastructure will be maintained so that operations can resume when market conditions improve.
“Although we believe in a positive future for magnesium, we are facing reality head on and adjusting to developments that have occurred in the marketplace, including increased production from China,” says the plant’s president, Robert Sippel.
As a result of the shutdown, Noranda will take an after-tax charge of $630 million against earnings in the fourth quarter of 2002. The company will take another, $28-million after-tax charge in 2003 as a result of shutdown costs.
Noranda figures the closure will boost operating results and cash flow by around $100 million a year.
Earlier this year, Noranda CEO Derek Pannell said his company would consider offers for Magnola, especially from its joint-venture partner, provincially owned Societe generale de financement du Quebec.
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