Sigma catches its second wind

There is a blight on the famed gold belt of northern Quebec and northern Ontario. There are too many miners and too few jobs.

This is not news to anyone who knows the region; it has been a fact of life for years. There are now many miners, who call Val d’Or and Timmins, Ont., home, working wherever they can find a place for their skills. And that might be in the Northwest Territories or Manitoba or Newfoundland. To show how keenly mining jobs are sought today, mine contractors are able to pick and choose applicants for the few existing development programs, at rates the skilled worker would not have considered a few years ago. For example, the Paymaster development of Placer Dome (TSE), adjacent to the Dome mine in Timmins, is paying $12 per hour with a conditional bonus up to a third of the hourly rate. For shaft-sinkers in Quebec, the rate is $14 per hour plus a similar one-third.

During the last heyday for contract miners, when development was booming at Hemlo, Ont., in the early 1980s, those same men were capable of making $80,000 per year — more than $100,000 for some of the exceptional ones. Contract miners were at the very top of the pile. Their learned skills, intuitive judgment and physical endurance earned them that place. The other side of the coin is that contractors and mining companies can no longer pay those wages. The industry is in a crunch, gold prices are low and so are those for base metals. Mining companies have had to reduce their payrolls; they have had to become more effective, in ways that would not have been conceivable a few years ago, just to remain in business. None better exemplifies the fundamental restructuring that has taken place than Placer’s Sigma mine, in Val d’Or. The Northern Miner recently had the privilege of seeing the system at work.

Andre Carrier, Sigma’s general manager, explained how it used to be. Fewer than 10 years ago, the superintendent and his captains transformed the mine’s scheduled gold production into a working plan: where the ounces would come from, which working places would be exploited, which new places would be developed, what equipment would be used, as well as elucidating the myriad details needed to make the mine function.

The mine captains told their shift bosses what had to be done and in their turn, the shift bosses told their miners what to do. At the same time, the geologists and engineers went about their business. Everything was nicely structured and everyone knew his place.

Overlooking the whole scene was the sharp eye of the union’s shop steward, making sure the union contract was followed to the letter. For example, no miner was to work as a timberman, the timbermen were not permitted to lay track and heaven help the salaried shiftboss if he should be caught helping an hourly-rated miner in his workplace. All of that has long disappeared. “It wasn’t easy to bring about changes,” Carrier said. “There were resistance and skepticism on the part of many union members who thought the changes were nothing more than a management ploy to break the union. But we had to change — the only alternative was closure.”

True to predictions, Sigma’s cash cost for producing gold in 1990 was US$389 per oz., compared with a spot selling price of US$384 that same year. Sigma’s costs had been spiralling upwards for the previous four years and the mine would surely have had to close had the trend continued.

It didn’t. The main components of the new organization were brought into play and the upward spiral was broken. Sigma’s cash cost in 1991 was US$322 compared with a spot price of US$362, and in 1992 it was US$288 compared with US$344. The mine is once more profitable. It can afford new development and, with it, the promise of its second wind.

Wheras the old system separated operations into watertight compartments, now all personnel, hourly-rated and salaried, work together as a unit. Each month, supervisors, geologists, engineers and miners meet in each miner’s working place and hammer out what has to be done. There’s a free flow of information between those who plan and supervise and those who do the work. There is consensus and involvement by all. Authoritarian management has gone.

There has been a bloody side to the reorganization, too. Sigma’s work force has dropped to 299 at the end of 1992 from 409 in 1991, a 27% reduction. Many of the affected employees received the option of early retirement. Many were not of an age to take advantage and so were laid off.