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Strike mandate approved for Vale Inco Sudbury nickel mines

Vale Inco's Sudbury mineworkers have approved a mandate to go on strike should labor negotiations still be deadlocked on June 5th.

TORONTO (REUTERS) -

Unionized workers at Vale Inco's (VALE5.SA: Quote) Sudbury, Ontario, nickel operations have voted to strike if labor negotiations with the company fail, a union spokesman said on Monday.

"There was a mandate vote, and there was 90 percent in favor of giving permission for a strike," said Bob Gallagher, a spokesman for the United Steelworkers, which represents about 3,500 employees at operations at the Sudbury nickel and copper hub in Northern Ontario.

Workers also approved an extending the life of the current contract to June 5 from May 31, said Gallagher, adding that the two sides were in face-to-face talks on Monday.

The timing of the contract expiration could be problematic for the union as Vale has announced it will shut down the Sudbury operations for eight weeks in June and July due to weak demand for the metal.

The shutdown means the company, which took over the Sudbury operations in 2006 when it bought Canada's Inco, could feel less pressure to conclude an agreement quickly.

Nickel prices have fallen by nearly 80 percent since hitting a record high of nearly $25 a pound in mid-2007. The metal, which is used in the production of stainless steel and other alloys, was around $5.70 a pound on Monday.

A prolonged work stoppage could give the metal a boost as it would remove excess inventory from the markets. Vale's Sudbury operations produced 85,300 tones of contained nickel last year.

It could also have an impact on FNX Mining (FNX.TO: Quote), which also mines in Sudbury and processes its ore at Vale's operations.

FNX has said it may suspend its current mining operations or try to find another processor for its ore if the Vale shutdown is extended by a strike.

Xstrata PLC (XTA.L: Quote) which operates the former Falconbridge nickel operations in the region, would be the likely alternative destination for FNX ore, FNX has said.

Brazil's Vale is also negotiating with workers at its Voisey's Bay mine in the eastern province of Newfoundland and Labrador.

"Voisey's Bay is still going forward, they're still talking," said Cory McPhee, a spokesman for Vale Inco.

Workers there have been working without a new contract since the previous deal expired on March 31.

Production at Voisey's will shut down during July.

Voisey's Bay produced 77,500 tonnes of contained nickel and 55,400 tonnes of contained copper in 2008, but it plans to lower nickel output to an average of 55,000 tonnes over the next four years. (Reporting by Cameron French; editing by Peter Galloway)

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