Pasminco workers in the dark
by Margaret Jacobsen Yet another corporate collapse has occurred with Pasminco, the world's largest integrated zinc and iron producer, joining the growing list. Pasminco's debts are now reported to be $3.4 billion. Share prices had fallen from about $2 a year ago to 5c before it shares were suspended from trading. And don't be surprised if, like the directors of Ansett, HIH and OneTel, some of Pasminco's directors had given themselves a bonus on top of their huge salaries for their fine performance in mismanagement. Pasminco employs about 3000 workers in Australia and fears are held for their jobs and entitlements. As is the usual cavalier practice, no provisions were made to secure 100 per cent of what is owed to workers for their entitlements. Instead the company helped itself to the funds as an interest free unsecured loan. The administrator, John Spark from Ferrier Hodgson, claims that all employee entitlements are safe. However, he also warns that the total debt position could get worse before Pasminco sells off its assets, especially if the Australian dollar falls. A weaker dollar means more return for its locally produced minerals but it also means greater losses because of the company's involvement in foreign currency dealings. The administrator refuses to say what amount the losses are. In the end the assets are only worth what they end up being sold for, not what the administrator thinks they are worth. Pasminco is a victim of the present cyclical crisis of over-production inherent in capitalism. World zinc prices have fallen from a high of over US$1600 per tonne in 1997 to about US$850 per tonne at present. A 14-year low. Unlike many other companies, Pasminco had not attempted to hedge its products on the futures markets. (Hedging is a kind of insurance, where products or currencies are sold in advance at a guaranteed price.) It did however, enter the futures currency market, relying on the Australian currency to rise above US65c in the Australian dollar. The Australian dollar fell, costing Pasminco heavily. Meanwhile in Wonderland Despite the house of cards that is capitalism collapsing everywhere, Peter Costello has exhorted Australians to keep on spending because it is good for the economy. The tens of thousands of recently dumped Ansett, OneTel, Harris Scarfe, Clarks and HIH workers, just to mention some of the well known companies, plus the many thousands of others dependant on these companies for their jobs are probably not wanting to spend what is left of their savings, if any. But Costello wants workers to buy that nice pair of shoes, sign that mobile phone contract and book that overseas holiday. He wants you to shop till you drop to prop up the corrupt and rotten system that has caused all these problems in the first place. No thanks Peter!