BC Business
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It was the best of times, it was the worst of times. That’s the famous line from Dickens’ 1859 classic A Tale of Two Cities, but it could just as easily describe the year Russell Hallbauer had in 2008.
Hallbauer, president and CEO of Taseko Mines, started the year on a major roll. Copper prices were at an all-time high and the company’s primary asset, Gibraltar mine near Williams Lake, was generating quarterly profits of $20 million to $30 million, most of which was being funnelled back into the operation as part of a $250-million capital expansion. But things took an ominous turn in June when lenders financing the Gibraltar project began having second thoughts.
“The two biggest banks phoned in the same day and just said, ‘It’s over,’ ” Hallbauer says. “We all just looked at each other and said, ‘Uh-oh.’ ”
Two months later, copper prices began to tumble, choking off Taseko’s revenue stream and forcing the company into full damage-control mode. “In a space of about six weeks starting in August, copper went from $3.20 to $1.70 a pound,” Hallbauer says. “Our cash flow disappeared.”
Co-workers credit Hallbauer, a 30-year mining-industry veteran known for reviving underperforming operations, with moving Taseko from “expansion mode to survival mode” in less than three months. In a desperate effort to preserve cash, the company put the brakes on its expansion plans, renegotiated the terms of payments with its suppliers and contractors and laid off more than 150 workers at Gibraltar.
A year later, it all seems like a bad dream. Copper prices have bounced back to near the $2.50 mark, lenders have renewed confidence in the economy and work on the final phase of the Gibraltar mine expansion is proceeding full steam ahead. In the first half of 2009, the retooled operation produced 39 million pounds of copper, 46 per cent more than the same period in 2008.
The son of Bob Hallbauer, a former Teck Corp. vice-president who helped build the Canadian firm into one of the world’s largest mining companies, Russell learned the industry on the front lines, growing up in his father’s shadow in small B.C. mining towns such as Merritt, Princeton and Tumbler Ridge.
During a 14-year stint with Teck Corp. and, later, Teck Cominco, Hallbauer managed a host of successful operations, including Quintette coal mine near Tumbler Ridge, Elkview coal mine near Sparwood and Highland Valley Copper Mine in central B.C.
When he was hired as CEO of Taseko four years ago, Gibraltar had a reputation as a low-grade “swing producer,” inefficient and prone to shutdowns during times of low prices.
Within two years, Hallbauer modernized the mine’s outdated processing equipment, lowered production costs, improved quality and, through successful test drilling in the area, expanded the operation’s life expectancy from 12 to 23 years. “Gibraltar mine was probably the lowest-grade copper mine in the world, so when I got there it was a leap of faith,” Hallbauer says. “But we were able to unlock value that other people may not have seen.”