CANADIAN PERSPECTIVE: Vale Inco adds to jobless woes

March 3, 2009, is another black day in the employment history of the mining industry in Sudbury, ON. That was the d...

March 3, 2009, is another black day in the employment history of the mining industry in Sudbury, ON. That was the day Vale Inco announced it was cutting 261 local jobs as part of its worldwide restructuring that will result in 900 terminations. At its Thompson, MB, operations, the company let 24 non-union supervisors go.


"Unfortunately the tough decisions announced today are necessary in these

exceptional times" said Tito Martins, Vale Inco CEO and president, said in a news release. "The declining nickel price and reduced demand for nickel make it clear that continuing to operate in our current fashion is simply not sustainable. The measures we're announcing today are intended to address the immediate health of the business and help reshape the organization for a long-term, successful and sustainable future."


The announcement comes three weeks after the second largest miner in the area, Xstrata Nickel, announced the layoff of 686 workers. The combined cutbacks are a huge blow to the Sudbury community.


To its credit, Vale Inco released background information about its employment practices in Sudbury and Thompson, MB, since it took over operations in October 2006. The figures are an attempt to put the cuts in perspective in several areas.


Canadian employment — Total employment was up 16% . At the head office in Toronto it was up 40%, and at the technology centre in Mississauga it was up 59%. The net effect is that there will be 700 more Vale Inco jobs after this reduction than there were in October 2006.


Employment programs — In 2007, spending on recruitment, education, apprenticeship and training was up almost 25% than prior to the acquisition. For student employment programs, it was 112% higher.


Exploration — Spending on greenfield projects in Canada rose 162% over pre-October 2006 levels, and three times the number of people were employed in the hunt for not only nickel but also uranium, copper and potash.


Capital expenditures — Sustaining expenditures in Canada were $647 million in 2007 and $729 million in 2008, up 70% and 84% respectively from October 2006.


Environment — In 2007 capital spending on environmental projects in Canada were $88.7 million, 36% higher than before the takeover. In 2008 that amount was $122.7 million, 88% higher.


Community investment — Over the two years since the acquisition, the company made charitable contributions that were $107% higher than earlier.


The numbers provided by Vale Inco make it look like one of the good corporate citizens in Canada. Overall, that's true.


But spending increases during times of high metals prices and profits is easy. The true test will be whether or not Vale Inco can maintain those spending levels for training, exploration, capital projects, environment and philanthropy through lean times.


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