The Guardian October 3, 2001


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!

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