China Demand Keeps Xstrata Business in Sudbury Booming – by Bill Bradley

Northern Life, Greater Sudbury’s community newspaper, gave Republic of Mining.com permission to post Bill Bradley’s article. www.northernlife.ca

Demand for nickel is booming and will continue to do so well into the future, said Mike Romaniuk, vice-president Ontario Operations, Xstrata Nickel. He was a speaker at a luncheon for the Rotary Club earlier this week at the Howard Johnson on Brady Street.

Close to $400 million is expected to be invested in Sudbury operations. In 2007, 300 workers were hired and another 400 are expected to join the company this year, said Romaniuk.

Why the good times?

In China, they are building the equivalent of a Greater Toronto Area city every year, he said.

“I was there three years ago and saw a sign in the dirt saying a new city of 15 million to be built at this site within three years. They did it. Cities like that require a lot of nickel in their infrastructure and consumer products. That’s why we are prospering,” said Romaniuk.

Fueled by demand in India and China, all Xstrata facilities are running full out.

“I am overjoyed at the strength of the metals market. This is the best it has ever been,” said Romaniuk.
“I am confident we are good for the next 15 years and possibly the next 30 years with another  major discovery,” he said.

That good news is also good news for the Sudbury economy, said Romaniuk. “Mining jobs pay something
like 50 per cent above the average wage in Ontario. This is a very well-paid workforce.”

Employment at Xstrata has risen from 1,443 in 2006 to 1,900 today and is projected to pass 2,000 this year.

“Just go to our site at Nickel Rim South and you will see 600 workers there each day helping to develop the mine. During our shutdown at the smelter, between 850 and 1,000 workers were doing maintenance each day.”

A major source of pride for Romaniuk is the lost time injury figures for employees are dropping. “In 2007 we had 27 injuries during the shutdown of our smelter. This year it was eight.”

Let the good times roll

Nickel Rim South, under development since 2001, is expected to come online by the end of 2009. “We have invested $500 million in the mine and expect to finish off with a total of $900 million before we have received a penny of revenue. Nickel Rim South (will have a) production
of 12,000 to 15,000 tonnes of nickel, 50,000 tonnes of copper and hundreds of thousands of ounces of precious metals per year,” said Romaniuk, vice-president Ontario Operations, Xstrata
Nickel.

Fraser Morgan, a smaller operation underway, is expected to produce 7,000 tonnes of nickel per
year. Already $70 million has been invested with another $180 to $200 million (U.S.) possibly on the way.

Another significant investment to be approved at head office is $170 million for expansion of the Strathcona Mill. That will lead to more production at the smelter, from a record 65,000 tonnes last year to 85,000 tonnes of nickel.

Possible trouble ahead

But there are some troubling signs on the horizon-high energy costs, possible government mandated controls on greenhouse gas emissions as well as lack of housing for new employees.

“Rising energy costs are a worry,” Romaniuk noted. “Our operation in Sudbury is the biggest user of electricity in this province. After labour, energy is our biggest expense. We are raising the possibility that if the province tries to shut down the coal fired plants we and residential consumers may be without power during some peak periods.”

“It is not only the cost of energy but how governments approach the issue of controlling greenhouse gas emissions. We need to make them understand that we are a small user compared to the total number of residential users in southern Ontario who crank up their air conditioning after they get home from work.”

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