Mining giants Vale and Glencore Xstrata are in early talks to combine their mining efforts in Sudbury, according to a report that came out late last week. Both companies have declined to comment, and the news has some worried about what this could mean for Sudbury.
Whatever ends up happening, it’s probably not going to be a merger says a professor of business strategy at Laurentian. Jean Charles Cachon said the companies are too big and too international to merge with each other.
“They have separate systems. A merger of the two firms is very unlikely due to anti-trust regulations in North America and Europe,” he said — but added there are other more plausible outcomes. One is the creation of a third company that will exist just to handle Sudbury mines.
The other is a formal agreement in which the companies will pool some resources, but will remain autonomous. A former executive with Falconbridge said whatever happens, this kind of deal will probably mean some workers are made redundant — particularly as nickel prices around the world are in a slump, and Chinese demand lags.
“It’d be good for business. It would be good for the two mining companies,” Gordon Slade said. “We’re going to end up with less people, for sure.”
Reduced demand can also mean a slowdown of operations in Sudbury in the near future, a financial analyst who follows the mining industry in Sudbury said.
“What happens is that as demand fluctuates sections of the [mining operation on the] deposit might be shut down in periods when the demand is low and prices are low,” Donald Rumball said.
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