July 27, 2009 / 9:02 PM / in 8 years

Union sees prolonged shutdown in Vale Inco strike

TORONTO (Reuters) - The union representing striking workers at Brazilian miner Vale’s Canadian operations is not in talks with the company and expects a prolonged shutdown at the nickel and copper mines, a top official said on Monday.

Vale’s operation in Sudbury, Ontario -- the hub of Canadian miner Inco, which was acquired by Vale in 2006 -- have been idled since June due to weak nickel demand.

They had been due to restart on Monday, but are remaining shut as unionized workers declared a strike on July 13 after rejecting the company’s three-year contract offer.

About 3,100 workers are off the job in Sudbury, while 125 workers are striking at the company’s nickel refinery in Port Colborne, Ontario.

Workers at Vale’s nickel mine at Voisey’s Bay, in the province of Newfoundland and Labrador, also plan to strike when the operation finishes a planned shutdown that has kept it quiet during July.

United Steelworkers District 6 director Wayne Fraser said there has been no contact with the company since the Sudbury strike began.

“I don’t think (there will be) anything for two or three months at least,” he said.

Vale spokesman Cory McPhee wouldn’t comment on inventory at the Sudbury facilities, but said the company is currently not shipping any finished metal from the region. Vale operates five mines, a mill, a refinery, and a smelter in Sudbury.

“Right now the operation’s shut down,” he said.

Voisey’s Bay produces nickel and copper concentrate and normally would ship it to Sudbury, or to facilities in Thompson, Manitoba, which are still operating.

Analysts have said the shutdowns should not have much impact initially on the price of nickel, which has plunged from all-time highs two years ago as a slowing world economy led to a glut of supply.

Nickel was worth about $25 a pound in mid-2007, but was trading around $7.70 on Monday.

Vale’s Sudbury operations produced 85,300 metric tons of contained nickel last year, while Voisey’s Bay produced 77,500 tons of contained nickel.

Vale Chief Executive Roger Agnelli was quoted as saying earlier this month that the Sudbury operations are unsustainable at current cost levels.

Fraser said, however, that the operation is still making money with nickel above $5 a pound.

($1=$1.08 Canadian)

Reporting by Cameron French; editing by Rob Wilson

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