Vale to restart some Sudbury production despite strike

February 3, 2010

Source: Reuters

Brazilian miner Vale will restart one nickel mine and boost production at another at its Sudbury, Ontario, operation despite a seven-month strike at the complex, a company spokesman said on Wednesday.

Vale will restart its Creighton nickel mine and run it up to full production, and will also move to full output at its Coleman mine, which has had partial production since October. The company's Garson mine has also been running at partial output since October.

Processed ore from the operations will be used to feed Vale's Copper Cliff smelter in Sudbury, which recently began operating at 50 percent capacity with nonunion workers and has been eating through stockpiled ore.

"We're just looking longer term that a source of feed will be needed," said Core McPhee, spokesman for Vale's Canadian nickel and copper operations, which the company acquired when it bought Inco in 2006.

Vale will staff the mines using workers provided from a contractor, he said.

More than 3,100 workers at Vale's operations at Sudbury and Port Colborne, Ontario, went on strike in July. On Aug. 1. workers at Vale's Voisey's Bay mine in Labrador on Canada's East Coast also went on strike.

Vale's move to partially restart the Sudbury operations last year increased tensions between the company and the United Steelworkers Union, which represents the workers.

The union was not immediately available for comment.

NO TALKS

The two sides have not returned to the bargaining table since the strike began, and they are far apart on several issues, include reforms to the company's pension plan and proposed changes to a potentially lucrative worker bonus tied to the price of nickel.

That bonus boosted miners' salaries well into six-figure territory when nickel prices jumped on 2006 and 2007, eventually hitting a record high of just under $25 a pound in May of 2007.

The lack of progress at Vale contrasts with labor relations at rival Sudbury nickel miner Xstrata, which averted a strike when it reached a last-minute deal with unionized workers early on Monday.

That deal included modifications to workers' nickel-price bonus and a negotiated restart of the company's Fraser nickel mine in Sudbury, where operations were suspended a year earlier due to weak nickel demand. Workers ratified the new three-year contract on Tuesday.

Nickel was hit hard by the 2008 economic downturn, and the price bottomed at around $4 a pound in December of that year. Nickel was trading around $8.20 a pound on Wednesday.