* Company, union in talks ahead of Sunday deadline
* Analyst expects strike at Xstrata operations
* Vale's Sudbury operations on strike since July (In U.S. dollars)
By Cameron French
TORONTO, Jan 29 (Reuters) - Labor negotiations between Xstrata and workers at its main Canadian mining operation look set to go down to the wire ahead of a Sunday strike deadline.
"We are at the negotiating table and we are hopeful that we can successfully conclude a renewed agreement prior to the deadline," said Dominique Dionne, vice-president of corporate affairs at the Anglo-Swiss miner's nickel division.
Talks to renew the main contract at the Sudbury, Ontario, nickel operation began in mid-December. Xstrata acquired the asset when it bought Canada's Falconbridge in 2006.
Unionized workers -- represented by the Canadian Auto Workers -- voted two weeks ago to give the union a strike mandate if a deal was not reached.
Richard Paquin, president of CAW Local 598, said both sides had exchanged monetary proposals and would be talking ahead of the deadline.
A walkout could help support nickel prices, particularly as a strike at rival Vale's Sudbury operations recently entered its seventh month, and a strike at the firm's Voisey's Bay mine in Eastern Canada is in its sixth month.
Vale acquired the Voisey's Bay and Sudbury assets when it bought Canada's Inco in 2006.
Some have suggested a labor deal at Xstrata could provide a framework for a resolution at Vale, but Desjardins Securities analyst John Hughes said he doubts it would have an impact.
"I don't think there's going to be a material pressure one way or another in the event that Xstrata did settle early," he said, adding that he doubts Xstrata will avoid a strike.
"I think it's going to work the other way around, where Xstrata follows Vale's example."
The expiration of the labor contracts has come at an inconvenient time for the workers, as the metal has only partially rebounded from last year's crash.
Spot nickel was around $8.50 a pound on Friday, down from an all-time high of just under $25 a pound hit in May 2007, but up from a low of around $4 a pound in December 2008.
Nickel inventories are high, which has kept demand low and gives producers little incentive to try to meet union demands.
Xstrata trimmed its Sudbury operations last February due to weak demand, cutting nearly 700 jobs.
Its Sudbury smelter produced 64,906 tonnes of nickel concentrate in 2008, along with smaller amounts of copper and cobalt. (Reporting by Cameron French; editing by Rob Wilson)"
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