Vale halts Sudbury mining

ANDY HOFFMAN

Globe and Mail Update

April 16, 2009 at 7:06 PM EDT

Major nickel mining operations in Sudbury, Ont., will come to a standstill for the first time in more than a century this summer after Brazil's Vale Inco announced plans to shutter its Sudbury mines and smelters for two months.

Blaming the devastating downturn in nickel prices and plunging demand for the metal used to make stainless steel, Vale Inco parent Companhia Vale do Rio Doce [RIO-N]said late Thursday it will close its five operating Sudbury mines and its entire suite of nickel processing operations in June and July.

Vale Inco spokesman Cory McPhee said there is no longer sufficient demand for all the nickel the company produces from its Sudbury operations.

“The pipeline is full. We are not selling all the nickel we produce in Ontario and so this allows us to clear the pipeline. …When we return to work we are going to be in a much better position,” Mr. McPhee said.

Companhia Vale Do Rio Doce

About 5,000 Vale Inco employees will be affected. Mr. McPhee said the company will mandate employees to use their vacation time during the shutdown, but will likely have to issue temporary layoff notices.

The planned shutdowns follow Xstrata Nickel's recent decision to shutter its mining operations in Sudbury, save for a development mine that won't reach full production until 2010.

Xstrata laid off 686 workers at its Sudbury operations in February when it put its two operating mines on care and maintenance.

It continues to construct the Nickel Rim South mine in the Northern Ontario city that has been the world's largest nickel mining centre since the early 1900s.

In December, Vale Inco closed its Copper Cliff South mine in Sudbury. It recently said it is cutting 900 jobs including 350 in Canada.

Vale and Xstrata were the respective victors in a heated takeover battle for Canadian mining stalwarts Inco and Falconbridge in 2006 and 2007. The foreign mining giants paid more than $40-billion combined for the Canadian companies.

In order to win Ottawa's approval for the takeovers, both Vale and Xstrata promised not to lay off workers for three years.

The price of nickel reached record highs above $23 (U.S.) a pound shortly after the buyouts. It has since fallen to about $5.50 a pound.

Toronto's FNX Mining Co. Inc. announced the suspension of nickel ore production at its Levack and McCreedy West mines in Sudbury last year.