Montana Fights To Keep GM Mine Contract

Gov. Brian Schweitzer asking Obama administration to force General Motors to honor contract with a platinum mine instead of buying the precious metal overseas.

BILLINGS, Mont. (AP) -- Gov. Brian Schweitzer said Friday he wants the Obama administration to force General Motors Corp. to honor its contract with a Montana platinum mine, instead of going overseas to buy the precious metal used to control vehicle pollution.

Schweitzer said the administration was showing bias against Montana at a time when other U.S. jobs were protected with a "buy American" clause in the $787 billion stimulus act.

GM wants to cancel its contract with the Stillwater mine as part of the bankruptcy reorganization that infused the automaker with $50 billion in government loans. Those loans were not part of the stimulus money.

"When it comes to Montana they say buy anywhere but Montana," he said. "What are we going to do if we have a mine strike in South Africa? Shut down the car industry?"

Platinum and two other metals produced by Stillwater Mining Co., palladium and rhodium, are used to make catalytic converters that control pollution in car emissions.

The Columbus company is the only platinum and palladium producer in the country. It is highly dependent on sales to GM and Ford Motor Co., although company officials have declined to offer specifics.

With the metals mined in just two other countries, Russia and South Africa, Schweitzer says GM's cancellation would put the United States at a strategic risk and hurt the mining industry.

GM defended its decision to cancel the Stillwater contract, which the carmaker said was "uncompetitive." The contract set a floor price that meant GM at times bought metal at prices above those on the open market.

"We will continue to make difficult decisions that best position the new GM for long-term viability," said a statement provided by GM spokesman Dan Flores.

All the palladium produced by Stillwater's mines currently goes toward filling its automaker contracts.

The company employs 1,322 people at its two mines near Nye and a smelter and refinery in Columbus. Its majority shareholder is Norilsk Nickel of Russia, which controls 53 percent of Stillwater's stock.

Stillwater had been drafting a challenge to GM's contract cancellation to file in federal bankruptcy court. But with GM emerging from bankruptcy protection Friday, it was unclear if that legal avenue remained open, said Stillwater spokesman John Beaudry.

"Stillwater Mining Co. very much appreciates the governor's support on this issue," Beaudry said. "Our legal people are actively involved in our objection to the (GM) petition to void our contract."

Prices set in Stillwater's automaker contracts require GM and Ford to continue paying a set amount for platinum and palladium even when market prices drop lower. At recent palladium market prices, that provision was shielding the company from the equivalent of $57 million in lost annual sales, according to one of Stillwater's filings with the Securities and Exchange Commission.

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