LONDON (Reuters) - Mining group Xstrata Plc XTA.L will restructure its Sudbury nickel operations in Canada and cut 686 permanent jobs there after a collapse in metals prices, the firm said on Monday.
The Fraser Mine Complex will be placed on care and maintenance, the Strathcona Mill will cut shifts, while the Fraser Morgan development project will be deferred, the company said.
“Total production from the Sudbury smelter is expected to remain at similar levels to 2008 as shortfalls arising from the cessation of Sudbury Mines will be offset by concentrates from Nickel Rim South and Xstrata Nickel Australasia,” it said.
Sudbury produced about 70,000 tons of nickel in matte in 2008.
Xstrata said it started a three-day suspension of operations at Sudbury on Monday to begin the restructuring.
Mining firms have been slashing production at loss-making operations and postponing growth projects to cope with a steep fall in metals prices amid the global downturn.
Benchmark nickel prices shed 55 percent last year and have tumbled 78 percent since touching a peak in May 2007.
“The actions announced today aim to reposition our Sudbury complex into the bottom quartile of the cost curve, ensure our operations remain financially robust even during a potentially long period of depressed commodity prices and establish a strong foundation for further growth in the region,” Ian Pearce, chief executive of Xstrata’s nickel unit, said.
The firm said the restructuring will not delay its Nickel Rim project in the Sudbury basin, which remains on schedule to ramp up to 60 percent of its final production target in 2009.
The low-cost Nickel Rim project will help reduce the overall cost structure at Sudbury, Xstrata said.
Xstrata shares fell 1.43 percent to 791 pence by 1010 GMT, while the UK mining index .FTNMX1770 was down 0.72 percent.
Reporting by Julie Crust and Eric Onstad