* Mulling whether to suspend Sudbury mines for summer
* Falls to loss on weak nickel and writedown (Adds details from conference call, background)
TORONTO, May 14 (Reuters) - FNX Mining FNX.TO will likely keep its Sudbury, Ontario, copper and precious metal mines running if Vale Inco (VALE5.SA) reaches a labor agreement at its Sudbury operations before the May 31 expiration of the union contract, FNX’s chief executive said on Thursday.
FNX processes its ore at Vale facilities, but Vale will shut its Sudbury operations on June 1 for eight weeks to trim nickel output.
On a conference call to discuss FNX’s first-quarter loss, CEO Terry MacGibbon said the company would likely just stockpile its mined ore for the eight-week period if it can be sure that Vale will restart its operations as planned.
He said the complicating factor would be a labor dispute at Vale, which could lead to an extended shutdown.
“If in fact there were labor stoppages that had no end in sight, then it would be more difficult for us to consider the stockpiling process,” he said.
In that case, FNX would either simply suspend operations at its mines, or work out a deal to process its ore at third-party sites, meaning facilities owned by Xstrata PLC XTA.L, which is the other big player in the historic Sudbury mining region.
Vale became the region’s biggest miner when it took over Canadian nickel giant Inco in 2006. At about the same time, Xstrata acquired Inco’s Canadian rival, Falconbridge, and its Sudbury facilities.
FNX, which suspended its nickel production in December after the sharp drop in the metal’s price made it uneconomical, has been mining copper and precious metals.
The company grabbed a foothold in Sudbury in 2002, when it bought up properties and dormant mines from Inco just ahead of a rally in nickel prices.
FNX posted a first-quarter loss due to falling metal prices, much weaker nickel production, and a writedown of its investment in Gold Wheaton GLW.V, a gold company FNX helped launch last year.
The loss compared with a profit of C$24.1 million, or 28 Canadian cents a share, in the year-before quarter.
Excluding the C$31.6 million writedown, the company posted a profit of 6 Canadian cents a share.
Analysts polled by Reuters Estimates had expected, on average, a profit of nil, before exceptional items.
Revenue for the quarter slumped more than 65 percent to C$49 million due to the suspension of most nickel production, and to nickel and copper prices that each fell more than 50 percent year-on-year.
The company’s shares rose 5 Canadian cents to C$6.28 on the Toronto Stock Exchange on Thursday.
$1=$1.17 Canadian Reporting by Cameron French; editing by Peter Galloway