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ANTANANARIVO, June 12 (Reuters) - The two main trade unions at Sherritt International Corp's Ambatovy nickel mine in Madagascar will not call a new strike over job layoffs for now and are still seeking dialogue, union officials said on Friday.
The row at one of the biggest foreign investment projects in Madagascar comes amid a political crisis after parliament voted last month to sack President Hery Rajaonarimampianina, who has challenged that move.
Rajaonarimampianina's peaceful election victory in late 2013, the first vote since a 2009 coup, had started the nation on a fragile recovery that analysts say may now be threatened.
Workers at Ambatovy mine, 80 km (50 miles) east of the capital, went on strike earlier this year. But Sherritt still achieved its target production rate ahead of schedule and in April reported an 11 percent rise in quarterly revenue.
The firm said on June 3 that about 1,100 Ambatovy employees and contractors had their employment contracts suspended or had been demobilised, reducing overall project headcount by about 12 percent as part of an effort to deal with low metal prices.
"For now, we prefer dialogue. We are not undertaking the strike route yet. We are trying to calm people," said Richard Rakotovao, head of the legal and litigation department at the Svs Union, one of the main unions at the Ambatovy mine.
An official from the other major union, FISEMA, also said the union was not backing a strike. A total of four unions represent workers at the mine.
Rakotovao said the union had spoken to community leaders and the local authorities about the layoffs, and many were angered by the company's action. "We fear a social explosion," he said.
In a statement published in a Madagascar newspaper on Thursday, the firm said the layoffs were so it could "continue operating within a difficult financial situation."
That statement put the number of employees and contractors laid off at 900 but said the project still employed more than 8,000. It was not immediately clear why the number of layoffs published in the paper differed from the June 3 announcement.
Mining is a vital for aid-reliant Madagascar, which boasts deposits of nickel, titanium, cobalt, iron, coal and uranium. But foreigners have been deterred by years of instability.
A new mining law has been bogged down in parliament and it is not clear when it will be passed. (Additional reporting by Josephine Mason in New York and Edith Honan in Nairobi; Writing by Edmund Blair; Editing by Tom Heneghan)