February 8, 2010 / 2:40 PM / 8 years ago

Canadian union calls for action against Xstrata

* Asks government to probe Xstrata’s plans to shut plants

* Questions Xstrata’s right to close certain operations

TORONTO, Feb 8 (Reuters) - The Canadian Auto Workers union (CAW) is calling on the Canadian government to investigate international mining giant Xstrata’s XTA.L, plans to close its copper and zinc metallurgical plants at Timmins Kidd in northern Ontario.

While the mine and the concentrator at the site will continue to operate, the plan to shut down the plants on May 1 will result in about 670 job cuts. Xstrata currently plans to shift production from Kidd to smelters and refineries in Quebec.

The union is calling on the Canadian federal and provincial governments to investigate Xstrata’s move.

“Should this investigation conclude that Xstrata has little reason to close the Timmins site, both levels of government must force Xstrata to divest their Timmins assets,” said the CAW in a statement.

Last year, the Canadian government took U.S. Steel (X.N) to court over production cutbacks at its Hamilton, Ontario-based Stelco subsidiary. A court ruling in the matter is expected shortly. [ID:nN17497083]

According to the Investment Canada Act, the government has the power to review a foreign company’s investment in Canada and determine whether it varies from the original application and still results in a “net benefit” to Canada.

If this is not the case, the federal government can take legal action against the company to remedy the situation, or even force it to sell some of its assets.

“Xstrata must not be allowed to extract local resources without creating local jobs,” said CAW President Ken Lewenza.

The union is calling on the government to enforce a moratorium on the proposed plant closures, until the matter is fully investigated.

A spokesman for the company was not immediately available for comment.

Earlier on Monday, Xstrata announced plans to reinstate dividends, reflecting a growing confidence in the strength of commodities demand and its own finances. [ID:nLDE61326M]

CAW-represented workers at Xstrata’s Sudbury mining operations only last week agreed to a new three-year labor contract, after frantic last-minute bargaining averted a possible strike. [ID:nN02101067] (Reporting by Euan Rocha, editing by Dave Zimmerman)

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