Ottawa - Timminco Ltd. will shut a struggling magnesium foundry in Renfrew County, putting the last of 24 employees out of work.
The combined plant and mine, which once employed several hundred, is a victim of the rising Canadian dollar and cheaper offshore sources of magnesium. It had been a mainstay of the Renfew County economy for generations, supplying light-weight metals used to make aircraft parts and other products.
Timminco said it will take a $15 million to $17 million charge to close the operation. "Our magnesium business has significant long-term potential, but current economic conditions require that we further reduce our operating costs significantly," said John Fenger, President of Light Metals at Timminco. "The closure, although difficult, provides us with a path to profitability and potential divestiture or other strategic alternative for the rest of our magnesium business."
It said the action will save the company $5 million in operating costs. Timminco has another plant near Denver, Colorado.
Shutting the plant at Haley, 100 kilometres west of Ottawa, could be the first step toward Timminco getting out of the magnesium business. It has been a distraction to Timminco investors captivated by a new silicon business in Quebec which has driven the shares to record levels, making it the hottest stock on the Toronto Stock Exchange last year.
Timminco magnesium is used in products ranging from light-weight luggage to water heaters. Attempts to diversify into light-weight autoparts products with other companies in the region and across North America failed. Timminco curtailed production at the mine about two years ago and started buying magnesium from lower-cost producers around the world.
It said the closing costs include $10 million in accelerated pension benefits and $5 million to $7 million in severance charges as well as site closing and remedition action.