March 23, 2017 / 8:25 PM / 2 years ago

Noranda says zinc output 50-60 pct at strike-hit Quebec plant

TORONTO (Reuters) - Noranda Income Fund (NIF_u.TO) said on Thursday zinc output at its Quebec plant, the second-largest in North America, was at 50-60 percent of normal operating levels as a five-and-a-half week long strike dragged on.

It was Noranda’s first statement on plant output since the strike began. Typical annual zinc production at the plant is 270,000-275,000 tonnes, Eva Carissimi, chief executive of plant operator Canadian Electrolytic Zinc, a subsidiary of global mining giant and trader Glencore Plc, said in an interview.

Production of sulphuric acid and copper in cake byproducts are at similar output levels to zinc, Noranda said, and Glencore was working with customers to minimize disruption.

The strike, which began Feb. 12, is closely monitored by traders as prices for zinc, a metal used to rust-proof steel, continue to climb.

London zinc prices have nearly doubled over the past 13 months and are closing in on nine-year highs, as signs of tightening supply in the global market for refined zinc means the rally may have further to run.

Lower mine supply has pushed down treatment charges - the fees that smelters charge to process ore into zinc - to historic lows of around $30 a tonne.

Noranda has warned that it expects an adverse impact from a new agreement with Glencore Canada starting May 2, which will shift to market treatment charges from a previous fixed rate.

The plant, which had a headcount of 575 before the strike, is being operated by “eligible” employees in management or supervisory roles, for example, who do not run afoul of provincial labor rules, said Carissimi.

The United Steelworkers of America union, which has accused the company of using strike breakers, has said a Quebec provincial judge denied its March 15 request for an emergency injunction to halt production at the plant.

The union is proceeding with legal action and a court date is set for May, said Manon Castonguay, president of the USW Local 6486.

The 371 unionized workers at the facility in Salaberry-de-Valleyfield walked off the job over proposed pension plan changes in a new collective bargaining agreement.

There are currently no talks scheduled.

“We have to ultimately find a way to get back to the table and arrive at a contract that responds to the needs of the union, but equally has to respond to needs of the company, which is going through a major transition to market terms,” Carissimi said.

Reporting by Susan Taylor in Toronto and Ahmed Farhatha in Bengaluru; Editing by Anil D'Silva and Andrew Hay

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