July 11, 2009 / 6:35 PM / in 8 years

Strike looms at Vale Inco's Sudbury operations

TORONTO, July 11 (Reuters) - Union workers at Vale Inco’s Sudbury nickel mine in Canada are expected to turn down the company’s proposed contract offer and hope it will force the company back to the bargaining table.

Negotiations between Vale Inco -- the nickel mining and processing division of Brazil’s Companhia Vale do Rio Doce (VALE5.SA) -- and its union broke down this week as the two sides failed to agree on bonuses, pensions and other issues.

The outcome of the vote, which began on Friday, was expected later on Saturday. The union’s bargaining committee has recommended that its members reject the offer, a move that would result in an immediate strike.

“We’re hopeful that our membership on Friday and Saturday will turn this contract down by a big majority and that that will send a message to Vale to get back to the bargaining table,” said Wayne Fraser, a member of the union’s bargaining committee, according to the Canadian Press.

Miners at the company’s Voisey’s Bay nickel-copper operations have already voted to authorize a strike, which will likely take effect by the end of July.

However, strikes at both sites would likely have a limited impact, as most of their operations have been halted through the end of July because of weak nickel demand.

And analysts say the expected strikes would not likely have much of an effect on the price of nickel -- a metal often used in the manufacture of stainless steel and cast iron -- as the global economic slowdown has caused an oversupply in global markets.

“We have (nickel) stocks running flat right now, but closer to their record high levels,” said Catherine Virga, senior base metals analyst with CPM Group in New York. “From where the market is right now, I don’t necessarily think we will see a lot of price reaction immediately (in the event of a strike).”

The company and the United Steelworkers union Local 6500, representing some 3,300 workers at the Sudbury nickel operations, agreed in late May to extend their current contract by more than a month to July 12, giving the two sides more time to hammer out a new deal.

Union members in Sudbury also voted in May to authorize a strike if labor negotiations fail. At that time, the contract was scheduled to expire on June 5.

CVRD acquired the Canadian operations through its acquisition of Inco in 2006. CVRD Chief Executive Roger Agnelli recently told media in Brazil that Sudbury is the company’s highest-cost operation and is not sustainable.

Vale Inco spokesman Cory McPhee said the results of the vote were expected late on Saturday and the company is bracing itself for a strike. (Reporting by Euan Rocha; Additional reporting by Chris Kelly in New York; Editing by Eric Beech)

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