CANADIAN PERSPECTIVE: Vale to shut down Sudbury ops for 8 weeks

Brazilian mining giant Vale has announced plans to further trim its nickel output this year. Consequently it is shu...

Brazilian mining giant Vale has announced plans to further trim its nickel output this year. Consequently it is shutting down its mines, mills and smelter in Sudbury for eight weeks beginning on June 1, 2009. The shutdown follows a normal one-month maintenance period in May.


Nor will the employees at Vale Inco's refinery in Port Colborne escape the shutdown. That facility will also be closed for the same period.


The news comes less than two months after the company cut 261 jobs in the region. That has federal Industry Minister Tony Clement promising to look into legal action. He said in a statement that Vale made legally binding commitments under the Investment Canada Act when it took over Inco in 2006. Part of the agreement involved a "no layoff clause" effective for three years.


While that idea sputters through the government bureaucracy, reaction may be coming sooner from the United Steelworkers. Local 6500 and Vale are scheduled for talks on a new three-year contract, the first since the company took over Inco.


The Vale Inco shutdown also leaves FNX Mining without a mill to treat the ore from its Poldolsky and McCreedy West mines. Ordinarily, the ore would be treated at the Clarabelle mill, but the eight-week shutdown there leaves FNX looking for solutions. The company might stockpile ore until the mill reopens, temporarily suspend mining or send ore to another mill. No decision had been made by press time.


Vale has also postponed the start up of the Onça Puma project in Brazil for a year or more, at least to January 2011. This ferronickel producer will have an annual nameplate capacity of 48,000 tonnes of nickel. Vale has not yet received the environmental permit for production.


Vale is probably taking prudent action in light of a nickel price that is struggling to stay above US$5.00 a pound. However, further job cuts or shutdowns will only erode the company's ability to respond if the nickel price begins to rebound. Remember the heady days of $24-nickel two years ago? If wishing could make it so, I would fervently wish for a price of half that much.


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