The future makes strong demands on American copper
On the last Friday night in January, Alex Jacobs stood before a town meeting here and told the townsfolk that the Cypress Bagdad Copper Company mine was shutting down.
Those words from the general manager came as quite a blow because this is a pure company town, with virtually no income except the mine.
Up a rolling and pitching desert highway through the rocks and saguaros, Bagdad is so isolated that it is nearly impossible to live here and work anywhere else.
The mine closing also came as quite a blow in Phoenix, where C. J. Hansen, president of the Arizona Mining Association, felt that he had lost one of his best mines.
American copper mines are in economic crisis. Everybody from the out-of-work miners in Bagdad to copper company managers are taking stock these days of what their career strategies should be. The business has changed.
Copper prices have been falling since 1980. Arizona, which produces two-thirds of the nation's copper, is working at about 70 percent capacity, with half the work force it employed in 1981. Sixteen of 27 copper mines are shut down.
Under the old market conditions, copper companies could slow production when demand fell to keep prices at a profitable level. American companies no longer have that control of the market.
Government-owned mines in Chile, Peru, Zaire, and Zambia keep producing at full tilt, regardless of copper prices, to create jobs and keep much-needed foreign currency flowing in, American businessmen lament.
Exaggerating the problem is the commodity trading market. Where copper prices used to be a straightforward measure of demand, Mr. Hansen explains, now commodity speculators set prices: ''When times are good, prices are too high, when they're bad, prices are too low.''
Now, they are low.
The miners of Bagdad generally appear to have a keen grasp of the copper business. Few here blame Cypress Bagdad or its parent company, Amoco Minerals in Denver (where the decision to close the mine was made), or its parent company, Standard Oil of Indiana, for the closing.
Some feel that Amoco Minerals knew what was coming and could have told the miners sooner. But otherwise, there is little resentment in this town of about 2 ,600 people. Cypress Bagdad was the only nonunion mine in Arizona, and the workers had generally good relations with the company.
Now, families are beginning to pack up and leave town, where some of them have lived for generations.
Of 750 employees, the company has kept 150 of the most senior to maintain the mine, continue leaching the ore already mined, and to plan for eventual reopening.
The mine will open again when the price of copper rises high enough and shows enough stability to make the mine pay.
Mr. Jacobs told the town that it could be two months or two years, though probably not longer than that.
Up to six weeks ago, life was stable and comfortable here. The three- and four-bedroom ranch-style homes are only about six years old, and the company rents them for $70 a month and less.
There is a suburban-looking shopping center at the center of town, two restaurants, a cable television company, and 11 churches. The movie-house operator has already closed shop and moved out.
Starting wages amounted to roughly $23,000 a year, and with the low expenses here, the miners had a fair amount of disposable income. Much of it went toward boats, campers, four-wheel-drive vehicles, and second cars.
John Davis, a technician for the company until the closing, is also pastor at Christian Life Assembly Church. His church was just moving into its new building when the closing was announced.
About 70 families have left already. Mr. Davis expects that that if the mine has not reopened by the time school is out in June, there will be a major exodus.
''At first, most people were going to stick it out,'' Davis says. ''But since the last TV report (which apparently portrayed a bleaker picture than the townsfolk had sensed themselves), there's been a moving van in town nearly every day.
''I've gone three weeks now without making a penny.''
In the local trailer-turned-coffeeshop, the talk is of heading for Las Vegas, of learning computers, and of thinking through what one really wants to do in life.
It all lies in striking contrast to the discord farther south at the Phelps Dodge mines.
In what could be the most intractable labor confrontation in the country, 13 unions, including the United Steelworkers of America, have been on strike since July 1 at four Phelps Dodge mines.
Phelps Dodge refused to follow the lead of other copper mining companies such as Kennecott, Anaconda, and ASARCO Inc. in agreeing to new contracts and instead wants to eliminate cost-of-living allowances and reduce entry-level wages.
As labor sees it, the Phelps Dodge move was a deliberate effort to precipitate a strike and break the unions. Managers in the copper business see Phelps Dodge as primarily a mining company that doesn't have the outside finances of the other companies to pay for union demands.
''It's hard to find anybody not to be sympathetic with,'' says Alex Jacobs of the Phelps Dodge strike.
Last year the US imported 498,000 tons of copper, nearly one-third of what Americans used. The Arizona Mining Association would like the United States to limit imports to around 350,000 tons (a quota recommended by the International Trade Commission in 1978) on the grounds that the foreign producers are subsidized and not realistic competitors.
One of the frustrations to American copper-industry officials is that the US participates in international loans to foreign copper companies when the market is already badly glutted.
The Inter-American Development Bank recently approved a $268 million loan to the Chilean national copper company over Reagan administration protests. The World Bank is currently considering a $70 million loan to Zambia for its copper company.
The only long-term solution to the straits copper miners are enduring is more aggressive marketing, says mining association president Hansen.
Copper mining firms have let their markets get away from them, he says - the most flagrant example being the penny: 95 percent copper in 1981, now 5 percent.
''We just have not done a marketing job.''
Hansen is optimistic about the copper-consuming potential of the solar heating industry, electric vehicles, sprinkling systems, and nuclear-waste storage. The Swedes keep nuclear wastes in copper cannisters, Hansen notes, and they contend that when packed in granite or basalt, the cannisters will last a million years.
''The long-term outlook is good, but it's going to be tough to survive in the short term,'' Mr. Hansen says.