Threatened strikes at Sudbury remind us that there is no such thing as “the mining industry.”  This frequently used term is just a label that groups together a disparate set of agents seeking resources. Consider the situation in Ontario. InfoMine reports: “Negotiations between Xstrata PLC and the Mine Mill & Smelter Workers union at the former Falconbridge nickel operations in Sudbury, Ont., are back at square one. The union said Friday that its bargaining committee rejected a company offer, the company spurned a counteroffer Thursday night, and ‘as of today everything is off the table.’ “

Behind all the offering and rejection is the fact that Xstrata, which took over Falconbridge Ltd. this summer with an Can$18-billion hostile bid, and Companhia Vale do Rio Doce (CVRD), which won control of Inco Ltd. with an unsolicited $19.4-billion offer, are seeking to share resources and facilities in order to cut costs. Specifically, Xstrata and CVRD want to share operations in the Northern Ontario city where many of the two companies’ mines sit side by side.  Each company hopes to lower transportation costs by processing the other’s ore at facilities closer to their own mines. Xstrata estimated benefits related to a Sudbury joint venture could be worth $80 million.  CVRD chief executive officer Roger Agnelli said a deal to share resources could produce savings of as much as $200 million.

The union is worried about possible dislocation, including layoffs, of workers caused by a joint venture. Then there is the issue of wages and benefits. 

Pehaps the only way to analyze this situation and predict the outcome is to play Sugarscape. At its simplest, this is a set of squares on your computer screen. In some of the squares are piles of sugar. The game starts when you populate the remaining squares with agents that can move, get to the sugar, comsume the sugar, and store up energy. Some of the agents fail to get to the sugar and die from ependiture of energy they cannot replenish. To add spice, the agents are assigned rules for cooperating or outwitting other agents. Watch what happens and see what rules lead to the development of groups of cooperating agents, hierarchies of wealth, and the emergence of strategies to maximize the wealth (control of the sugar piles) of individual agents. 

Watching the action unfold on a Sugarscape network, leaves you wondering if the “mining industry” is no more than radomly scattered  sugar piles to which are attracted explorers, investors, and workers each trying to maximize their benefits—the enjoyment of the sugar in the piles. Get the rules right and wealth emerges; get the rules wrong and the piles are consumed and all that is left behind is a barren landscape of wasted opportunity and a degraded environment. And the agents move on to another landscape—from Ontario to Alberta and the oil sands. 

I do not know if I should be encouraged or depressed by this perspective, assuming it is a correct one. We must accept that those who paid so much have a right to seek efficiencies and cost savings. They are not governments beholdeden to any concept of the common good of the nation’s citizens. We must accept the fear of the unions that salaries will stagnate, jobs will be lost, and people will have to move their families to new places. Although that is so much a part of mining that I am always amazed when somebody is distressed when a mine changes or closes. 

I have never been to Sudbury. A lady of good repute tells me that, in her opinion, Edmonton and Fort McMurry are nicer places. So maybe this is the time for society to step in and promote its own advantages by facilitating the inevitable including making it possible for staff shortages in the oil sands to be solved by recruiting from the nickel mines. The question is which “society” should act: the “mining idustry,” the provincial governments involved, or the federal government?  Or should we just leave all this to another game of sugarscape in which we expand the screen to include piles of oil in addition to piles of sugar?  

To conclude with a quote from the January 20, 2007 Economist: “And, hardhearted though it may sound, most of the gains from trade and technlogy alike come from the way they redeploy investment and labour to activities that create more wealth.  That, like all change can be painful; but it is what makes a country richer.  A policy locking people into jobs that could be better done elsewhere is self-defeating.”  Leave your comment below.