Northern Life, Greater Sudbury’s community newspaper, gave Republic of Mining.com permission to post Bill Bradley’s article. www.northernlife.ca
Greater Sudbury’s economy will now be further affected by the growing world economic crisis.
In early November, Xstrata Nickel announced it will cease operations at Craig and Thayer-Lindsay nickel mines, affecting 250 employees. Early retirement options are being pursued by the company and union.
Now the city’s largest employer, Vale Inco, with over 5,000 employees, is stopping production at one mine and mothballing a development project due to slumping prices and demand, said Vale Inco spokespersons Thursday.
Vale Inco announced production cutbacks at its Greater Sudbury operations Thursday morning.
However, for now, the shutdown of the Copper Cliff South Mine and the one year postponement of the Copper Cliff Deep project will not involve layoffs of any Vale Inco employees, said Cory McPhee, director, Vale Inco communications and public affairs.
“Copper Cliff South Mine is our highest-cost production unit in 2009. It has no reflection on our highly dedicated and skilled workforce. We are going into a care and maintenance program where we can revisit the operation if market conditions improve. It is not a permanent closure,” said McPhee.
South Mine’s 365 employees will be redeployed to other Vale Inco operations, said McPhee.
“There are opportunities for those redeployed elsewhere such as the Totten Mine,” he noted.
Staff are eligible for early retirement if they have over 29 years service.
“Globally, across Vale operations, there are 350 eligible for early retirement. Most are in Sudbury operations because the facilities are older,” said McPhee.
Early retirement is an individual choice. Incentives, such as lump cash settlements, may make it attractive for many individuals, said McPhee.
The downside is that mining contractors and the mining supply and service sector will be affected, said McPhee.
“We will be setting up meetings with our supply and service providers shortly,” he confirmed.
The other targeted site is much smaller in scope.
“The Copper Cliff Deep project has fewer workers because it is a development project,” said McPhee. “There are less than 100 workers there.”
Up to 1,000 workers in the city’s mining supply and service sector could be laid off over the next six months, said Dick DeStefano, executive director of the Sudbury and Area Mining Supply and Service Association (SAMSSA), recently at their annual general meeting.
DeStefano said there have already been 300 layoffs in the local mining cluster, though some of his member companies are still healthy and growing.
Vale Inco is making the cutbacks as the price of nickel continues its free fall to close to $4 a pound. Nickel prices hovered at $4.04 per pound Thursday morning.
McPhee would not comment on what the nickel price has to be before mining is profitable again.
“That is proprietary information. I can say that recently nickel prices have dropped, demand has weakened and inventories have risen. Today’s announcement is a reaction to the pressure of those market forces.”
Vale Inco has also cut back production at other mines and facilities, said McPhee.
“In Indonesia, we are cutting back production by 20 per cent, and running our Dalian China nickel refinery at only 35 per cent capacity. We have laid off 1,500 workers in Brazil, but they are not involved with our nickel operations,” he said.
Newly ramped up nickel operations in two sites in New Caledonia and Brazil have been slowed significantly. Voisey’s Bay, Newfoundland operations will be shut down entirely for the month of July, added McPhee.