Noranda Inc.

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Noranda Inc.

Post Office Box 45
Commerce Court West
Toronto, Ontario M5L 1B6
Canada
(416) 982-7111
Fax: (416) 982-7423

Public Company
Incorporated: 1922 as Noranda Mines Ltd.
Employees: 56,000
Sales: C$9.57 billion (US$8.04 billion)
Stock Exchange: Toronto

In 1922 Noranda was simply a word used to describe northern Canada. Today, the word Noranda conveys images of one of the largest companies in Canada and one of the largest mining companies in the world. A firm with four industry segments: Noranda Forest Inc., Noranda Minerals Inc., Noranda Manufacturing Inc., and Noranda Energy, its mining activities include aluminum, copper, gold, lead, silver, and zinc.

The history of Noranda is a story started by a prospector named Edmund Horne, and a hunch. During the early 1920s, at a time when northern Canada meant very little—the area was mostly wilderness, and most prospectors preferred to stay on the familiar grounds of Ontario—Horne was drawn to the Rouyn district in northeastern Quebec. He visited Rouyn repeatedly, because he believed it “didn’t seem sensible that all the good geology should quit at the Ontario border.” Horne could reach Rouyn only by way of a chain of lakes and rivers.

His enthusiasm was contagious, and soon a group of 12 men had raised C$225 to finance further explorations. The effort paid off when word of Horne’s first strike made it to S.C. Thomson and H.W. Chadbourne, two U.S. mining engineers with a syndicate of investors interested in exploring Canadian mines. In February 1922 the syndicate acquired an option on Horne’s mining claims in Ontario and Quebec, and soon exercised its option. Noranda Mines Ltd. was incorporated in 1922 to acquire the U.S. syndicate’s mining claims.

The next task was to make the area more accessible to miners. Roads were cut through the forests, and often travel required skis and sleding equipment. Some equipment arrived by barge and ski-equipped plane, both of which could travel the lakes and rivers with relative ease. Soon the mine began producing gold, copper ore, sulfur, and iron, and Noranda convinced the Canadian government to lay roads, railways, and power lines. Eventually, the company constructed a mill and a smelter, and a city began to take shape in what was once untamed wilderness.

Not satisfied with this initial success, Noranda Mines began to acquire other holdings. In 1927 it bought 80% of the stock in Waite-Ackerman-Montgomery Mines, which changed its name six years later to Waite Amulet Mines Ltd. In 1927 also Noranda acquired a majority interest in Aldermac Mines Ltd., of Rouyn.

Because it believed strongly that Canadian ore should be processed in Canadian plants, the company eventually acquired or built several processing companies. Canadian Copper Refiners, Ltd., a company in which Noranda Mines held majority interest, was constructed in eastern Canada in 1929, as a joint effort of Noranda Mines, London’s British Metal Corporation, and Nichols Copper Company of New York City. The following year, Noranda Mines purchased a rod and wire mill just east of the copper refinery, and bought a substantial interest in Canada Wire & Cable Company, Ltd., of Leaside, Ontario.

In the early 1930s Noranda Power Company, Ltd., a new subsidiary, was formed. In 1934 this company took over the parent firm’s power rights and leases on the Victoria River, only to transfer the rights to the government’s National Electricity Syndicate under a new agreement four years later. Primarily the 1930s set the stage for a decades-long tradition of growth through acquisitions, as Noranda made its climb to the ranks of Canada’s largest companies. In 1935 the firm bought a substantial interest in Pamour Porcupine Mines, Ltd., located in the Porcupine district of Ontario. It also acquired a 63.75% interest in Compania Minera La India, for its gold mines in Nicaragua in 1937. In 1939 Noranda bought the controlling interest in Aunor Gold Mines, Ltd., which was formed earlier that year to take over additional Porcupine property. The late 1930s also saw the creation of Noranda Exploration Company, Ltd., a subsidiary formed in 1938 to undertake exploration work in Quebec.

By 1936 output of metals in the province of Quebec totaled well over C$30.6 million, thanks to the development sparked by Noranda Mines. From 1926 to 1936, Noranda stimulated the nation’s economy by pouring into it approximately C$71 million in supplies, transportation, salaries, and taxes. By the end of World War II, the area’s mineral production had climbed to C$150 million annually.

Perhaps due to the events of World War II, however, the 1940s, and even the 1950s, saw less corporate activity than earlier decades. Still, the company made two major acquisitions, including Castle Tretheway Mines Ltd.’s Omega Gold Mines, which Noranda Mines bought jointly with Anglo-Huronian Ltd. in 1944. Four years later, Noranda Mines and a subsidiary, Waite Amulet Mines, bought more than 500,000 shares of Mining Corporation of Canada Ltd. In 1956 Noranda acquired a sizable interest in Bouzan Mines Ltd.

By the early 1960s the company began to see a flurry of activity, beginning with the acquisition of Western Copper Mills Ltd., located near Vancouver, in 1963. The new acquisition joined with Noranda Copper & Brass Ltd., a Noranda Mines subsidiary, to form Noranda Copper Mills Ltd. Also that year, the company acquired the remaining shares of Mining Corporation of Canada, which continued the firm’s exploration efforts. In addition, Anglo-Huronian, Bouzan Mines, Kerr-Addison Gold Mines, and Prospectors Airways—all Noranda affiliates—merged to form Kerr-Addison Mines Ltd.

In December 1964 Noranda Mines made its most important acquisition, when it merged with Geco Mines Ltd. The new company retained the name Noranda Mines Ltd. Based in Manitouwadge, in northwestern Ontario, Geco was a major producer of copper, silver, and zinc. The following year, Canada Wire & Cable, in which Noranda Mines had an interest since 1964, became a wholly owned subsidiary. In 1966 the firm also bought 80% of Norcast Manufacturing Ltd., which then purchased shares in Wolverine Die Cast Group. Also that year, Noranda Mines formed Noranda Manufacturing, Ltd., a holding company for the various manufacturing subsidiaries. Noranda Mines also acquired a controlling interest in Pacific Coast Company, in 1967.

By 1968 Noranda Mines had become a widely held mining company, with most of its activities centered around Quebec. Employees numbered 5,000. It was also in 1968 that 37-year-old Alfred Powis became president of Noranda Mines. Formerly a financial analyst with Sun Life Assurance Company of Canada, of Montreal, Powis joined Noranda Mines in 1955 as an assistant to the firm’s treasurer. Under Powis’s leadership, the company began its evolution from a regionally based mining firm to an industry leader, with subsidiaries involved in energy and forestry, in addition to mining.

It seems that Powis’s aggressive tactics, including a chain of takeovers, were key contributors to the company’s success. Powis’s success did not come overnight, however. The company first had to weather the impact of several large investments made in the late 1960s. In the early 1970s the mining industry, as a whole, was depressed. Consequently, the company had limited earnings from 1966 to 1972, increasing in that period by only 21%. In addition gross capital employed went from C$500 million in 1967 to C$1.5 billion in 1973. The rate of return on that capital went from 16% in 1966 to only 9% in 1972. Powis worked through the cyclical, industry wide recession, and finally, in 1973, investments began to pay off; and Noranda’s sales climbed 75% to C$121 million, a company record.

Additional investments made in the early 1970s included Tara Exploration and Development Ltd., which owned lead and zinc properties in Ireland, and a move into the fertilizer field with Belledune Fertilizer Ltd., acquired from Albright & Wilson Ltd. in 1972. The year 1974 saw even more acquisitions, including a 55% stake in Fraser Companies Ltd., Alberta Sulphate Ltd., and 38.5% of Frialco, a Cayman Island firm with controlling interest in Friguia, a bauxite mining company in the Republic of Guinea. In addition, Noranda Sales Corporation of Canada Ltd., a subsidiary, bought a 50% interest in Rudolf Wolff & Company, a British trading firm dealing with metals and other commodities, in the spring of 1971.

The mining industry, known for caution, watched Powis march on this unusual acquisition path, then watched sales climb from C$60 million in 1972 to C$155 million two years later. It was during this era that Canadian Business, September 1977, referred to Powis as “the Houdini of the Canadian mining industry.”

What goes up, however, must come down, and in 1976, earnings dropped to C$47 million. Demand for the two biggest contributors to the company’s sales, copper and zinc, began to lag. The automobile industry was replacing zinc die castings with plastics. Copper too was being replaced by various substitutes, from aluminum for power lines to glass fibers for communication cables. In addition, many of the firm’s earlier investments had been financed with short-term loans, which seemed like a good idea when business was booming. Although Powis acknowledged that money was tight at Noranda Mines in 1977, he defended his decision to load up on short-term debt, telling Canadian Business, ”We put restraints on at the end of 1974 when we could see that things were getting grim. Those clamps have stayed on.” Powis also indicated he was prepared for the tight zinc market.

To help wait out the cyclical downturn in the mining industry, the company diversified, concentrating on other business segments, such as manufacturing and forestry. As Powis stated in Iron Age of July 22, 1974, the future of Noranda will be “where our nose takes us. . . .We originally got into manufacturing so we could have a home for our products.” In addition, the company invested millions of dollars in efforts to covert some old saw mills into profitable lumber plants. That marked its entry into the forestry industry.

In 1981 Powis lost a long-running, highly publicized battle with Brascan, Ltd., a Toronto holding company owned by Edward and Peter Bronfman. Brascan became Noranda Mine’s largest stockholder, and Powis, who became answerable to the Bronfmans, stayed on as chief executive officer. Brascan added C$500 million to Noranda Mines’s bankroll, and Noranda Mines returned to its acquisition path.

Noranda Mines first picked up Maclaren Power and Paper Company in 1981, a newsprint, pulp, and wood-products company in Buckingham, Quebec. The following year it bought 49.8% of MacMillan Bloedel, Canada’s largest paper company. The minority shareholding was sufficient to give Noranda Mines control of MacMillan Bloedel. While the acquisitions were intended to decrease the company’s concentration on the lagging copper market, the expansion of the early 1980s initially resulted in decreased profits. In 1980 the firm had record earnings of C$408 million. In 1983 it lost C$117 million, and interest payments on the acquisitions and expansion loans totaled C$169 million in 1983.

Powis, and Adam Zimmerman, president of Noranda Mines, shared an optimism that began to pay off in the mid-1980s. Sales of zinc, fine paper, and other products began to recover, and, just as Noranda Mines finished a C$300 million addition to its aluminum smelter, demand for aluminum skyrocketed. By 1983 copper accounted for only 12% of sales. The diversification was paying off, and to reflect that diversification in 1984 the company changed its name from Noranda Mines Ltd. to Noranda Inc.

In 1986—after a C$253,900 loss caused by strikes and other labor problems in 1985—the firm’s net income stood at C$43,300, and total revenue was C$3.55 billion. In 1987 as various labor strikes came to an end, company officials predicted the firm would see its highest earnings since 1980. Also in 1987, the company was restructured, dividing its various business segments into four subsidiaries: Noranda Energy, Noranda Forest, Noranda Minerals, and Noranda Manufacturing.

In 1989 after a heated battle between Powis and former protege William James—who had left Noranda and became chairman of Falconbridge, Ltd., a rival mining company—Noranda bought 50% of Falconbridge. Ownership of the multi-billion dollar company is shared by Trelleborg A.B., a Swedish-based conglomerate. The move not only gave Noranda half of Falconbridge, but ownership of Kidd Creek as well, a Timmons, Ontario, copper and zinc mine that Noranda had long coveted. Although most of Noranda’s assets are located in North America, Noranda markets its products to a global market. The firm’s goal is to be a premier diversified natural-resources company. Under the leadership of President David Kerr, the company remains committed to a sensitive environmental policy, a commitment necessary for any business to be well-received in the decades to come. This effort, as well as several major acquisitions, favorable long-term market conditions, and changing global markets will no doubt play a part in helping Noranda reach its goals.

Principal Subsidiaries

Noranda Minerals Inc.; Noranda Forest Inc. (81%); Noranda Manufacturing Inc.; Canadian Hunter Exploration Ltd.; North Canadian Oils Ltd. (54%); Norcen Energy Resources.