SALT LAKE CITY — Kennecott Utah Copper announced Thursday that employee layoffs will take place beginning in May as a result of the large slide at the Bingham Canyon Mine.
The employee layoffs are part of the cost reduction effort being implemented throughout the company. Kennecott is making plans for adapting to a 50 percent decrease in copper production during 2013, according to representative Kyle Bennett.
It is currently unknown how many employees will be laid off or what day the layoffs will take place in May, according to a prepared statement from Bennett.
"It is always difficult when jobs are lost because of the direct impact it has on individuals and families," Bennett said.
"Our workforce is an important consideration in every decision that we make," the statement read. "Since the slide on April 10, we have taken measures to reduce the impact on our workforce by opening options for employees to take voluntary vacation or unpaid leave."
When Kennecott crane operator Jeremy Moore got word of the impending layoffs Thursday, he immediately thought of his wife and two kids.
"Nobody knows what will happen tomorrow, so we'll just have to wait and see," Moore said.
Approximately 2,000 workers will have to wait and see.
To soften the impact on workers after the slide, the company asked them to take vacation and voluntary time, and some did. But the company said it needs to make more cuts as it puts together a long-term plan to get back to full production.
"Everybody's worried. Nobody knows what's going to happen," Moore said. "Nobody knows the numbers, so (there will be) rumors until next week."
United Steel Workers union representative Wayne Holland said his organization will try to negotiate early retirements and other plans.
"What we heard today of course was very bad news. What we're going to be concerned about the next few days is to minimize the effect as much as we can," Holland said.
Right now, communication between the union and Kennecott is good, Holland said. He believes the negotiating process will take at least a couple of weeks, but he plans to keep the workers informed every single day about what's going on.
Kennecott said additional changes may also be made to reduce the operating costs as operating plans are finalized in the coming months.
A tax revenue problem
Along with employee layoffs, the landslide could lower tax revenue, especially for local schools and a fire district, officials said Wednesday.
Kennecott Utah Copper Corp. paid about $53 million in taxes last year in Salt Lake County, said Darrin Casper, the county's chief financial officer.
The company's tax bill depends largely on copper output and prices, he said. Kennecott has halved its production goal for 2013. Market analysts said the worst-case scenario has Kennecott losing sales from up to 165 million tons of refined copper in 2013, although officials are increasingly optimistic Kennecott can recover more quickly.
"The story for me is how well a job Kennecott has done trying to get back up and running," Casper said.
Kennecott resumed ore digging last weekend for the first time since the April 10 slide, but at a greatly reduced level, working along the edges of debris in the mountains west of Salt Lake City.
Casper said any reduction in Kennecott's tax payments will force other county taxpayers to make up the difference, but not until 2015. He said the county could feel little impact with new housing and business driving tax growth year after year. The Internet auction site eBay, for example, is opening a data center Friday in Draper that Casper said will be valued at around $60 million for tax purposes.
However, the Jordan and Granite school districts depend more heavily on Kennecott. District officials said Wednesday they're trying to assess the potential tax loss. Kennecott represents just over 16 percent of the Jordan School District's tax base, said district spokesman Steven Dunham. Granite couldn't immediately specify how much Kennecott contributes to their budgets.
The U.S. Geological Survey has determined the landslide unleashed 128 million cubic yards of rock and dirt into a mining pit nearly a mile deep. It converted a weight figure provided by Kennecott and said it was enough rock and dirt to equal about two-thirds of the material removed for the Panama Canal.
"It was enormous," said Lynn Highland, a geographer with the U.S. Geological Survey in Denver. "I was floored by how big it was."
Company officials said about half of the material ended up in the bottom of the Bingham Canyon mine, burying equipment in piles as high as 300 feet. The rest of the debris clings to the terraced steps of the open pit.
The USGS said removing all of the material would take about 25 million dump truck loads - using garden-variety dump trucks, not the Kennecott mining trucks with 12-foot tires.
The Bingham Canyon mine produced nearly 25 percent of U.S. copper supplies in 2011, Kennecott said.
The landslide was by no means the world's largest earth movement. The 1980 eruption of Mount St. Helens loosened the largest landslide in modern history — 3.7 billion cubic yards, geologists say.
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