GM Gets OK To Drop Montana Mine Contract

BILLINGS, Mont. (AP) -- A bankruptcy judge on Wednesday granted General Motors Co.'s request to drop its precious metals contract with a Montana mining company so it can use foreign suppliers instead.

Stillwater Mining Co. attorney Garry Graber said the cancellation was approved following a hearing in U.S. Bankruptcy Court in New York.

"They could possibly appeal but they are assessing that right now," Graber said.

GM said it wanted to cancel the contract to slim down its expenses as it emerges from federal bankruptcy protection. The Detroit company is keeping its two other precious metals suppliers, based in Russia and South Africa.

For the last decade, Stillwater has supplied GM and other automakers with palladium and rhodium, which are used to make catalytic converters that filter pollutants from vehicle exhaust. In court filings, Stillwater had argued GM was compelled to honor its sole domestic contract for those metals as the recipient of up to $50 billion in government loans.

It's uncertain how the cancellation will play out for miners.

Columbus-based Stillwater employs more than 1,300 people and runs the only mines in the United States producing the metals, about 90 miles southwest of Billings.

The GM contract accounted for about 11 percent of Stillwater's 2008 revenues. That's only about one-third of the size of Stillwater's contract with Ford Motor Co., which is set to expire at the end of 2010.

Stillwater already had gone through a belt-tightening last year as prices for the metals it mines plummeted. To become more efficient, the company reduced its work force by about 16 percent.

With metals prices still low, company officials have warned that hundreds of jobs were on the line with the GM agreement.

Stillwater in May reported a first-quarter loss of $11.6 million on revenue of $85.8 million. That's down from a 2008 first-quarter profit of $2.8 million on revenue of $186.4 million.

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