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Mayor claims city was deceived.

Mayor claims city was deceived

Elliot Lake saddled with 60-per-cent unemployment, debt

Elliot Lake Mayor George Farkouh sits at the head of the table which dominates his office. He had returned from a trip to Toronto just hours earlier, a trip which involved interviews and meetings aimed at getting the province to provide some short-term aid for his community.

The impact of more than a year of announcements regarding the downsizing and closures of operations owned by Denison Mines Ltd. and Rio Algom Ltd. shows on Farkouh's face. The latest round of announcements has had perhaps the strongest impact.

"I feel quite alone right now," he says. "The feeling in the community is that nobody cares about us."

Ontario Hydro has announced that it is cancelling its long-term contract with Denison because it can get uranium from Saskatchewan mines for less than half the price. The Denison contract, signed in 1977 and originally slated to run until 2012, will now end next year.

With the loss of the company's only customer, Denison president Bill James decided to close the facility next spring, which will throw about 1,060 people out of work. The city of 13,400 already has an unemployment rate of more than 60 per cent after 2,200 miners were laid off by Denison and Rio Algom last summer.

"Mr. James is very philosophical about the matter," says Farkouh in reference to a Toronto meeting held on the previous day. "I don't think he cares about Elliot Lake."

The mayor recalls that the city of 13,400 was built on the promise that Ontario Hydro would buy its uranium. Elliot Lake invested $30 million in its infrastructure, building and maintaining a system which can accomodate twice the city's current population.

This well-developed infrastructure is a selling point for the city's renowned retirement living program. However, the investment has saddled the community with an $8-million debt.

"The debt is being negotiated with the province right now," says Farkouh. "We had certain expectations, and those expectations were well-founded. No one outside of a group of Ontario Hydro executives and key Denison officers knew what was in the contracts. The community was led to believe that its future was secure.

"We were deceived."

To help ease the strain of the layoffs on the city's operating budget, municipal officials have prepared a cost profile of all city operations in order to make cost-cutting decisions easier as the local economy shrinks.

"We know how much it costs to plough a specific street one time and how much it costs to mow the grass at one boulevard once," Farkouh says. "We have the information available to make decisions faster."

Local officials had hoped that the province would pressure Ontario Hydro to increase its purchases of uranium from the Elliot Lake area. However, Northern Development Minister Shelley Martel ruled out that possibility, stating that it would cost the province's taxpayers about $1 billion.

Martel's decision will leave Elliot Lake with just one working mine - Rio Algom Ltd.'s Stanleigh Mine located east of the city.

For Elliot Lake to survive, Farkouh says Ontario Hydro must commit itself to purchasing uranium from Rio Algom for the next five years.

"Rio Algom has to be the primary source for about 50 per cent of Ontario Hydro's needs. That would preserve between 700 and 800 jobs in the community," adds Gary Ross, a former chairman of the city's economic development commission. "It would allow us to get our (diversification) initiatives in place and working. We just want a little breathing room."


Elliot Lake's strategic plan, written by Marshall, Macklin, Monoghan Limited and submitted to city officials last spring, identifies tourism, health care and retirement living as key growth areas.

According to Alex Berthelot, the current chairman of the Elliot Lake Economic Development Commission, progress on the plan has already been made with $10 million in assistance from the province. The money has been put towards an expansion of the local airport and construction of an alcohol and drug rehabilitation centre as well as for a regional economic diversification program and the city's retirement living program.

"Things like the airport expansion are just the tools we need to diversify the economy," Berthelot says, adding that the lack of assistance from the federal government has made the diversification efforts that much harder to accomplish.

The expansion of the airport is necessary to attract more seniors to the area and for the establishment of the city as a base for fly-in mining camps.

Both Berthelot and Ross say Elliot Lake's diversification strategy takes the best elements from similar strategies utilized by such communities as Sudbury, North Bay and Atikokan.

Like the two larger communities, Elliot Lake hopes to use relocated provincial jobs as an anchor for the economy. The target number under the community's strategic plan is 500 government positions.

Berthelot and Ross point out that approximately 15 per cent of the total jobs have already been committed in the form of a Ministry of Transportation training centre. In addition, the establishment of a Laurentian University field research centre will increase the total to about 20 per cent.

"We're looking at smaller offices and, as new government initiatives come up, we're asking them to consider us," says Berthelot.

Among the initiatives being pursued are a proposed French language college, a northern campus of the Ontario College of Art and an Energy Education Centre.

"The facilities (buildings) are already in place," says Berthelot. "They (the colleges) can establish their operations here at almost no cost."

Berthelot and Ross note that a surplus of classroom space is expected in Elliot Lake as miners and their families leave town and are replaced by senior citizens.

Economic development officials predict that a healthy tourism industry could account for as much as 20 per cent of Elliot Lake's economy. The province has already committed $550,000 to turn a fire tower east of the city into a tourist attraction and work is under way on a scenic trail which will connect Elliot Lake to Mississsagi Provincial Park and Iron Bridge.

Additional projects such as a $250,000-upgrading of the local golf course and a cottage lot development along the north shore of Elliot Lake will not only boost tourism, but will also have a positive impact on the community's infrastructure.


Like many other single-industry communities in Northern Ontario, Elliot Lake is no stranger to boom and bust cycles. In the 1960s a slump in the uranium market reduced the local population base to about 7,000.

Elliot Lake officials saw the writing on the wall at least five years ago and attempted to get an economic diversification plan in place only to be stifled by the provincial government.

"Governments, whether provincial or federal, are reactive by nature," explains Berthelot. "They prefer to deal with the present, and the word on the street was that there was a secure job market here until 2012."

Officials point out that Elliot Lake was relatively affluent during the uranium boom days, making it difficult to convince people that hard times were on their way.

PHOTO : Elliot Lake may just be the community Guy and Jean Hollett are looking for to retire to in 1994. The Guelph, Ont. couple is seen here discussing their options with Elliot Lake retirement living general manager Bill Morris.

PHOTO : Alex Berthelot, chairman of the Elliot Lake Economic Development Commission, right, discusses points of the city's economic diversification plan with economic development officer Dianna Bratina and former commission chairman Gary Ross.
COPYRIGHT 1991 Laurentian Business Publishing, Inc.
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Title Annotation:Mayor George Farkouh's views on Ontario Hydro's pullout from Elliot Lake, Ontario
Author:Krejlgaard, Chris
Publication:Northern Ontario Business
Date:Jun 1, 1991
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