TORONTO (Reuters) - Vale Inco, the nickel mining and processing division of Brazil’s Companhia Vale do Rio Doce, said on Tuesday it will eliminate about 900 full-time jobs in the face of slumping prices, with close to half of the cuts at its Canadian operations.
The Toronto-based nickel miner said it planned to slash 423 positions across all of its Canadian operations, with 261 jobs alone at its Sudbury, Ontario, operations.
The job cuts were focused staff and business support areas including accounting, information technology and other functions, a company spokesman, Cory McPhee, said. The cuts will not affect the core mining and processing areas.
“This is a response to the market,” McPhee said. “We have been monitoring the market, and we did an exhaustive review of our management structure, and this was what the business called for.”
When Vale acquired Inco in 2006, it promised no job cuts at Canadian operating facilities for at least three years.
But McPhee said the cuts announced on Tuesday do not violate the agreement because, with early job additions, the company will still employ 700 more people in Canada than before the acquisition.
“We’re very proud of our commitment to Canada,” he said.
Canadian Industry Minister Tony Clement, speaking in Parliament, initially said he would look very closely at whether the cuts might break the terms of the 2006 deal. Later in the day he said the reductions might be allowed.
When asked about the company’s promise not to cut jobs, he told reporters: “They also said (this would not happen) barring economic circumstance beyond their control. That’s part of the agreement, too. So to be fair there is an issue here, we are reviewing the issue.”
McPhee said the cuts follow a December 2008 move by its parent to cut 1,300 jobs globally as it reduced production and tried to lower costs. But McPhee said those late 2008 moves “were not enough.”
Nickel prices on the London Metal Exchange have dropped about 80 percent to below $10,000 a tonne from a record high of $51,800 a tonne in May 2007 as demand from stainless steel producers has slumped.
Reporting by Susan Taylor, Scott Anderson and David Ljunggren