August 26, 2009 / 4:53 PM / in 8 years

UPDATE 1-Vale to resume some Sudbury mining, despite strike

* Plans partial restart of copper, precious metals

* To begin training non-union employees at the site

* Union says move will raise costs, endanger lives (Adds details, background; in U.S. dollars unless noted)

By Euan Rocha and Cameron French

TORONTO, Aug 26 (Reuters) - Vale’s VALE5.SA Inco division will resume production of copper and precious metals at its Sudbury, Ontario, operations, despite an ongoing strike by workers, a company spokesman said on Wednesday.

The decision drew a rebuke from the union, which said that using inexperienced workers in a partial restart will raise the cost of the operation and endanger lives.

Vale will use its approximately 1,200 non-unionized workers to restart two of the five mines in Sudbury, as well as some of the processing and smelting facilities. Nickel production will remain halted.

“We spoke to our (non-union) employees yesterday ... We do intend to resume operations. This week we will be training employees to resume partial production,” said Cory McPhee, a spokesman for Brazilian-based Vale.

He said the Vale has not set a firm timeline for resuming output. He also said the company could employ some “third-party expertise”, but would keep that to a minimum.

The operation has been silent since early June, first due to a planned shutdown caused by weak metal demand, and then because of a strike by 3,100 unionized workers that began on July 13.

Vale, which acquired the former Inco operations in 2006, is also dealing with strikes at its Voisey’s Bay mine in Newfoundland and Labrador, and its Port Colborne operation in Ontario, but it has no plans to restart those facilities yet, McPhee said.

The Sudbury move comes as both the company and union have been at an impasse over contract issues involving pensions, seniority, and planned cutbacks to a bonus tied to the price of nickel that drove wages for many miners above six figures when nickel prices hit an all-time high in 2007.

The subsequent plunge in demand for the metal prompted Vale to cut production sharply. Nickel has rebounded somewhat this year, but metal inventories are still relatively high.

The price of nickel MNI3, used in the production of stainless steel, was at $19,100 a tonne on Wednesday, the same level as last September, before it dove below $9,000 a tonne.

Copper MCU3 was at $6,305 a tonne.

McPhee said Vale was restarting copper and precious metal production in order to satisfy obligations to customers.

Vale has reportedly declared force majeure on some of its nickel and cobalt production, but it has not confirmed this.

McPhee said Vale was still supplying customers, but would not specify if shipments were coming from stockpiles at Sudbury or from other operations around the world.

UNION SEES HIGHER COSTS

Wayne Fraser, regional director of the United Steelworkers, which represents the striking Sudbury workers, said the union has requested a meeting with the company to discuss the planned restart, but it has not yet decided on its course of action.

Fraser said last week that the union would use “every tactic we possibly know” to stop the company from restarting the operations while the strike continues.

He said producing only copper and precious metals while leaving the nickel behind would raise costs sharply.

“Every pound of copper is going to cost them a lot more than what it’s going to earn them on the open market. We think this is another ploy by Vale to snub its union employees in Sudbury,” said Fraser.

Using workers from other departments, such as office and clerical, to produce metal could also be risky, he said.

“Some of them haven’t worked underground for long periods of time,” he said.

“What’s going to happen is, if you try to run these operations, guarantee there’s going to be fatalities.” (Reporting by Cameron French and Euan Rocha)

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