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Judge Oks GM's move to drop Montana mine contract


MATTHEW BROWN Associated Press Writer BILLINGS

A federal bankruptcy judge granted General Motors Co. Permission Wednesday to cut ties with a Montana precious metals supplier so it can instead use cheaper foreign suppliers. The cancellation of the Stillwater Mining Co. Contract was approved by U.S. Bankruptcy Judge Robert Gerber in New York following a hearing. No appeal was planned, said Stillwater spokesman John Beaudry. He said the only recourse could be through the Obama administration's auto task force, which so far has not responded to calls for pressure on GM's management. Meanwhile, Montana's U.S. senators called the move "appalling" for a taxpayer-subsidized company and asked GM to reconsider. GM backed out of its arrangement with Stillwater and canceled dozens of other contracts to slim down expenses and emerge from federal bankruptcy protection. It will keep using precious metals suppliers based in Russia and South Africa drawing criticism that the government bailout of the automaker is now effectively subsidizing overseas mining jobs. Stillwater itself is majority owned by one of GM's remaining suppliers, Norilsk Nickel of Russia. Stillwater's Montana executives said they'll lose up to $10 million annually without GM a figure they warned could turn into hundreds of jobs lost if metals prices drop. "GM was left with no other decision," said GM spokesman Dan Flores. "Our biggest focus is to repay our federal loan as quickly as we can." Montana's elected officials piled on. "I can remember when GM wanted everyone to Buy American. Perhaps it and its new owners in Washington should take their own advice," said the state's sole House member, Republican Rep. Denny Rehberg. Gov. Brian Schweitzer said he had parked his Chevrolet pickup in protest until the matter is resolved. The state's Democratic U.S. senators, Max Baucus and Jon Tester, asked GM CEO Fritz Henderson to restore the contract, but unlike Rehberg and Schweitzer, steered clear of criticism of the Obama administration. Executives for Stillwater which dominates the economies of two Montana counties say their operations are largely independent of Norilsk. For the last decade, the company's two mines have supplied GM and other automakers with platinum and palladium used to make catalytic converters that filter pollutants from vehicle exhaust. Stillwater argued in court that GM had to honor its sole domestic contract for those metals as the recipient of up to $50 billion in government loans. The contract included a floor price requiring GM to often pay above market prices for Stillwater's metals. GM also had to buy certain volumes every year. In exchange, the automaker was guaranteed a steady supply of materials and a discount if metals prices were high. But with fewer cars being made and cheaper metals available elsewhere, GM said the agreement no longer made sense. Court fillings by Stillwater say the negotiations resulted in two amendments to the contract, last December and again in March. Stillwater Vice President John Stark said those were more favorable to GM and that a third amendment was nearing completion when the talks broke off abruptly and GM dropped the contract.


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