Political firestorm escalates over GM's cancellation of Stillwater contracts

"When a member of Congress asks them [General Motors] to answer some questions on behalf of their constituents, ‘no' is not an acceptable answer." - U.S. Reps. Rehberg, Hastings and Lamborn

RENO, NV - 

As Montana's Congressional delegation pushes General Motors to keep its contract with the sole U.S. PGM miner, Stillwater Mining, GM officials have refused to budge in their decision to cut ties with Stillwater while keeping contracts with miners in Russia and South Africa.

U.S. Senators Max Baucus and John Tester, both of Montana, strongly insisted on a meeting with GM CEO Fritz Henderson to discuss the rejection of a contract with Montana's Stillwater Mining.

GM voided its palladium and rhodium supply agreement with Stillwater, choosing instead to enter contracts with foreign palladium producers.

"We are not alone when we tell you this is a deeply offensive decision," the senators wrote in a letter to Henderson. "When GM accepted billions of dollars in money to keep the doors open, it was with the intent to save American jobs. This repugnant decision flies in the face of the spirit of the auto rescue, mere weeks after the agreement was reached.'

"Representing the hundreds of thousands of Montana taxpayers, we request a face to face meeting to discuss General Motors use of taxpayer funds and reconsideration of its contract with Stillwater Mining Company," the senators said.

Loss of the GM contract is costing Stillwater $500,000 per month according to the senators. The contract will cost the company roughly $5 million to $10 million annually.

However, GM Vice President Robert Socia responded in a letter to the senators that, as auto sales lag, the company needs less of those metals than it used to and can buy them cheaper elsewhere. Socia also disclosed that about half of GM precious metals will come from a Pennsylvania company with an existing contract.

‘We initially approached Stillwater in September 2008," Socia wrote. "Specifically we asked them to amend the price and volume guarantees. Stillwater was not supportive of changing the uncompetitive terms of their contract."

The senators called the letter a "lemon. We're outraged over GM's decision, and this fight is far from over."

In remarks on the floor of the U.S. Senate, Tester said, "By negating Stillwater's contract, General Motors is not investing domestically. They are not investing in American jobs. They are not investing in this country. And it goes against the grain when we see a viable company that recently got in trouble like GM, go against what they told me in committee.

"When General Motors came pleading to the U.S. Senate late last year, they spoke of the fate of their employees, but they also spoke of the fate of small parts manufacturers, miners, dealerships and all other interconnected businesses that are dependent on General Motors," Tester noted.

"Stillwater is one of Montana's largest employers," he said. "GM's actions threaten the well-being of families, numerous small communities and dozens of interconnected Montana-based businesses."

On Tuesday, Montana Congressman Denny Rehberg called for a hearing on the House Committee on Natural Resources to "examine why government-owned General Motors would choose to void a contract with domestic miners in favor of minerals from foreign countries."

The request for a hearing would provide subpoena authority to compel GM representatives to answer questions, which they have thus far refused to do.

"Montanans deserve to know why GM decided American jobs weren't important any more, and why they think it's acceptable to skirt environmental regulations, worker safety and fair labor agreements," Rehberg said.

Rehberg, ranking House Resources Committee member Doc Hasting of Washington State and Rep. Doug Lamborn of Colorado have asked committee chairman Nick Rahall to have representatives of the President's Auto Task Force, General Motors, Stillwater Mining, the U.S. Geological Survey, and the U.S. Department of Commerce appear before the committee.

"We requested that the Committee on Natural Resources hold a hearing as soon as possible, at either the full or subcommittee level, and [this] week if at all possible, to examine why government-owned General Motors would choose to void a contract with domestic miners in favor of minerals from foreign countries," the congressmen said.

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responses to this article

Erm So that would be Stillwater mining that is owned by Norilsk Nickel, the Russian mining concern? I suppose this doesn't detract from the fact that Americans work there, but the fault may be with Norilsk, who are choosing to supply GM from Russia, . .more rather than from Stillwater, where costs are higher. . .less by Sleeper on July 29 2009, 02:41 Find this comment inappropriate? Report it

Politicians This looks quite nasty... these guys sound even more irritating and sinister than our politicians... Glad GM told Stillwater where to get off. by R on July 29 2009, 03:20 Find this comment inappropriate? Report it

USA fiscal disaster Keep it up, GM!. We don't want more of our people here in RSA to lose their jobs as a result of the USA's irresponsible fiscal policies for which the rest of the World has to pay! by JR on July 29 2009, 04:34 Find this comment inappropriate? Report it

GM's Biting the hand that feeds it When a company becomes a nationalized company at it's own request with 60% of the equity provided by the taxpayers after GM's threats of a million domestic jobs to be lost immediately and forever (since GM car buyers would just give up on auto . .more ownership without GM's products available), it loses the right to make whatever momentarily expedient decisions it wants to boost the quarterly earnings. If GM was thinking long-term, it wouldn't have been in decline since 1962 when it had a 54% market share. Ford remains entirely private, it can do what it wants, because it didn't "make the deal" of job preservation in return for enormous, emergency public investment at terms wildly favorable to GM. Losing the CEO in return for dumping pesky bondholders, dealers, suppliers, old plants, union terms, etc. AND billions on terms easier than any other capital provider offers is a deal most companies would jump on when faced with decades of their own bad decisions. If the public ownership seems onerous, try commercial loans, venture capital, and speculator shareholders for burden. . .less by Al on July 29 2009, 07:46 Find this comment inappropriate? Report it

stillwater have you seen the way platnium and pallidium is traded on the stock market. no wonder why gm is broke. by kenny on July 29 2009, 07:54 Find this comment inappropriate? Report it

Mining Industry Revitalization Needed The U.S. mining industry may not be able to sustain six figure incomes for skilled miners. Remember though that Montana has not exactly been friendly to mining of late. For example, Montana practically eliminated gold mining by banning cyanide . .more leach operations. Time to 'Cowboy Up' Montana. Rather than asking for a handout, why don't those legislatures work to loosen the reins on the industry? . .less by savvy_trader on July 29 2009, 21:03 Find this comment inappropriate? Report it

Regulation savvy trader, Please, you know it is not so simple. Ownership and WTO as well are issues. Look smarter. by Rdan on August 12 2009, 08:42 Find this comment inappropriate? Report it

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