July 11, 2009 / 8:55 PM / 8 years ago

UPDATE 2-Union workers at Vale Inco's Sudbury mine to strike

* Vale Inco’s Sudbury workers reject company’s offer

* Union workers to go on a strike, as of July 12

(Adds details, background, by-line)

By Euan Rocha

TORONTO, July 11 (Reuters) - Union workers at Vale Inco’s Sudbury nickel mine in Canada rejected the company’s final contract offer and will go on strike at midnight Sunday, the United Steelworkers union said on Saturday.

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.

Members of the USW’s Local 6500 voted overwhelmingly to reject the company’s contract offer and will go on a strike, as of midnight on Sunday. The Local represents about 3,300 workers at the site, which is one of the world’s largest nickel mines.

“Our members have negotiated forward-looking and long-term contracts that have been positive for our members, the community and the company,” Wayne Fraser a member of the union’s bargaining committee, said in a statement. “It’s just wrong that Vale is now trying to eliminate all that.”

Eighty five percent of the miners who voted rejected the company’s proposal, the union said.

“We find the results unfortunate and disappointing but not entirely surprising,” said Vale Inco spokesman Cory McPhee, adding that there were no immediate plans to return to the bargaining table.

The union has urged the company to return for talks.

John Fera, president of Local 6500, said he was pleased that members supported the union’s bargaining committee but disappointed that members were forced to take this action.

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

Strikes at both sites would likely have a limited impact initially, as most of their operations have been halted through the end of July because of weak nickel demand. The two mines are among the 10 largest nickel-producing mines in the world.

Analysts say the strikes will not have much of an effect on the price of nickel -- a metal often used in the manufacture of stainless steel and cast iron -- because the 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 union agreed in late May to extend their current contract by more than a month to July 12, giving them more time to reach a deal. Union members in Sudbury at the time also voted to authorize a strike if labor negotiations failed. 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. (Reporting by Euan Rocha; editing by Todd Eastham and Bill Trott)

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