Norsk Hydro closing world's biggest magnesium plant in Quebec

Norsk Hydro is pulling out of the magnesium business and will close its plant in Bécancour, Que., putting 380 people out of work.

The company decided in July to divest its interests in the increasingly competitive global magnesium market — and now it has no choice but to sell the Bécancour plant, Norsk officials said.

The plant, about 150 kilometres northeast of Montreal, is the largest primary magnesium producer in the world. Magnesium is a raw material used to build electronic devices such as mobile phones and laptop computers.

But in the last year, a strong loonie combined with soaring energy prices has cut into the plant's profit margin and it simply can't compete anymore with rising Asian industrial giants, said Bécancour plant manager and president Daniel Roy.

"It is not a question of productivity, it is not a question of the management-union relationship, it is not a situation arising from a lack of vision or bad decisions," Roy said during a press conference Tuesday. "It is simply that we are not able to compete with the Chinese companies at this time."

China is growing into a major player on the global magnesium market because of its capacity for production at bottom-rate prices.

Norsk shopped around to find a buyer for the plant and surveyed 20 different bids, but none fit the bill, Roy said.

"We went through a long list of possible buyers, but none of them had a business plan robust enough to take over the responsibility of such an operation," he said.

The plant closure must be approved by Norsk's headquarters in Norway in late October. The factory will most likely shut down for good in spring 2007.

The closure is unfortunate for workers who have, in many cases, dedicated their careers to the company, Roy said.

'They were very loyal'
"They've been building that plant. Most of them have been working there since the very beginning. They were very loyal, very proud of their work."

Some workers could carry on with the company, as long as they're willing to move. Norsk Hydro plans to open an aluminum operation in Qatar, and is looking to hire, Roy said.

The plant may be retrofitted to become a recycling facility. The union representing workers at the plant will also present a plan for the facilities. There are no plans to tear it down, Roy said.

Norsk Hydro supplies energy and aluminum and produces offshore oil, gas and renewable energy sources. It employs 33,000 people in 40 countries.