BUISNESS

When the company goes

In Elliot Lake, civic pride is mingled with despair

BARBARA WICKENS May 27 1991
BUISNESS

When the company goes

In Elliot Lake, civic pride is mingled with despair

BARBARA WICKENS May 27 1991

When the company goes

BUISNESS

In Elliot Lake, civic pride is mingled with despair

For the past two years, Steven and Kimberley Zoldy have spent much of their spare time installing pine panelling in the basement recreation room of their threebedroom bungalow. But now, the Elliot Lake, Ont., couple say that they are unlikely to finish their redecorating. Earlier this month, Steven Zoldy’s employer, Denison Mines Ltd. of Toronto, served notice that it will close its last uranium mine in the Northern Ontario city of 14,000 by June, 1992, because its only customer, Ontario Hydro, plans to cancel its long-term uranium contract. And with unemployment in the primary workforce running at 62 per cent, the Zoldys have little hope of recouping the $11,700 they have spent to upgrade their bungalow, which they bought in 1986 for $53,000. The 35-year-old miner says that he is angry Denison neglected to tell him, when he was hired in 1980, that Hydro’s contract gave the utility the right to cancel its uranium order. Says Zoldy: “All Denison ever said was that they had a contract until 2012. I thought, ‘Great, I can work there until I retire.’ ” Although Steven Zoldy, his wife and their 12-year-old son, Adam, are reluctant to leave Elliot Lake, he says that he is both young enough and skilled enough that he will find work elsewhere after the mine shuts down. But

the future of the city itself is less certain. Founded in 1955, two years after the discovery of uranium, Elliot Lake grew rapidly during the late 1950s as a major supplier of uranium to the U.S. government. In 1959, the city, nestled in the roughhewn wilderness of the Canadian Shield, had a population of 24,000. Later, the demand for uranium to generate electricity from nuclear power gave the community another boost. But the impending shutdown of Denison’s last remaining mine has cast a pall over Elliot Lake. “There is nothing to hope for,” said Geza Virth, a welder who first worked in Elliot Lake in 1957. “You have to wonder how the town will survive.”

Elliot Lake is only the latest of many one-industry communities in Canada to have fallen on hard times. According to Dennis Young, executive director of the Saskatoon-based Canadian Association of Single Industry Towns, there are more than 4,000 “single-industry and resource-dependent

communities” in Canada. For 1,332 of them, the population declined between 1981 and 1986, the latest year for which figures were available. Many of Canada’s mining and forestry companies reduced their operations because of increasing pressures from foreign competition. Declared George Farkouh, the mayor of Elliot Lake: “Elliot Lake is symbolic of what is happening in Canada. We’re the fabric of this country, but because of the globalization of trade, we are no longer competitive.”

Elliot Lake’s biggest problem is that the mining companies that form the mainstay of its local economy have found they can no longer produce 2 uranium at a competitive

price. In the past 12 years, the spot market price of ura-

nium has fallen to about $ 10 a 5 pound from about $50 a I pound. As a result, Denison u has gradually reduced its operations, which once employed 2,100 people. When the company, an affiliate of Torontobased Roman Corp., closes the mine where Zoldy works, the last 1,050 employees will lose their jobs.

Although Denison declines to make public its cost of production, analysts estimate that it is about $35 for every pound of uranium mined. Declares William James, president and chief executive officer of Denison: “No matter how hard our guys work, they just can’t compete.” James adds that the Elliot Lake ore mined by Denison contains only about 1.5 lb. of uranium per ton. In contrast, mines in northern Saskatchewan produce up to 90 lb. of uranium per ton of ore, he says.

Meanwhile, Elliot Lake may soon be hit by more bad news. The city’s other major employer, Toronto-based Rio Algom Ltd., is currently renegotiating its uranium contract with Ontario Hydro. Rio Algom employs 647 at one mine, down from 2,214 workers at three mines in 1990. Rio Algom’s Elliot Lake operations also produce a low-grade, high-cost uranium, which Ontario Hydro may also choose to replace with a cheaper alternative.

Despite the city’s problems, many Elliot Lake residents remain fiercely loyal to their home town. “I’ll do ^ whatever it takes to stay,”

says Dale Rees, 37, a welder 9 who was one of 467 workers I laid off by Denison last Au| gust. Rees, a father of six ~ girls ranging in age from one £ month to 16 years, has alter-

nated his unemployment insurance benefits with a succession of odd jobs. But with further layoffs coming, Rees says that he will likely face increased competition for the limited number of part-time and temporary jobs in the area.

Even so, Rees says that he is determined to remain in Elliot Lake, where he has lived since 1981, when he came to work for Denison. In 1988, Rees and his wife, Adriana, bought a two-storey house in the city for $56,000: he says that the house is now worth about $30,000, less than the value of the mortgage. By contrast, many of his former co-workers bought their houses directly from Denison—and can give their houses back to the company with no further financial obligation.

Although many residents blame Denison for the city’s problems, James says that it was unrealistic to assume that the company would provide lifetime employment.

“Anytime you open a mine, you’re dealing with a depleting resource,” he told Maclean ’s. “These guys had a 35year run. That’s pretty good.”

For their part, city officials are scrambling to find other means of ensuring the city’s survival. Ten volunteer committees have been formed to try to attract, among other things, tourism to the area’s natural beauty, a branch campus of Sudbury, Ont.-based Laurentian University and light industry that can take advantage of the city’s proximity to major transportation routes, including the TransCanada Highway. Says Dianna Bratina, the city’s director of business development, who co-ordinates the committees: “Most people have faith that something is going to happen.”

But most of the hope for broadening Elliot Lake’s economic base appears to rest with the Retirement Living program, sponsored in part by the Ontario government. Established in 1987, the program, which offers affordable housing and such free services as snow shovelling, has attracted about 1,500 retired people to Elliot Lake, mostly from southern Ontario. Under the program, the province buys the housing at bargain prices from Denison and Rio Algom, and then charges rents ranging from $275 a month for a one-bedroom apartment to $450 a month for a three-bedroom house.

The program’s goal is to convince as many as 4,000 retired people to move to Elliot Lake by 1994. But some of those who have already taken part in the program say that they are

sorry they did so. Merle Duckworth, for one, a 72-year-old retired secretary who moved to Elliot Lake from a senior citizens housing project in Toronto three years ago to live near younger people, says that she was surprised to learn in February that Denison was planning to leave the city. “I would never have come if I had known the mine was closing down,” she added. “The brochures don’t tell you anything about that.” For his part, Virth says that he is skeptical that the existing government assistance programs will do Elliot Lake much good. “So you bring in a lot of seniors,” says the

Denison employee. “They don’t eat but one pork chop between two of them. That doesn’t put much money in anybody’s hands.” Virth, whose job appears secure until the mine shuts down next year, has already sent out more than 35 job applications. So far, his efforts have produced only a sheaf of rejection letters. “You read between the lines. They can’t say it, but they’re telling me I’m too old,” says the 50year-old welder. For Virth and others like him, more than the survival of another mining town is at stake.

BARBARA WICKENS in Elliot Lake with CHRISTINE MANORE in Toronto

CHRISTINE MANORE