Sudbury workers vote on Vale Inco contract offer
RTGAM
TORONTO - The union representing employees at Vale Inco's nickel operations in the northern Ontario city of Sudbury says there is little doubt members will reject a final contract offer by the company and a strike is "imminent."
The more than 3,000 Vale mining and processing workers represented by the United Steelworkers in Sudbury will vote on the company's contract offer Friday and Saturday and will strike Sunday at midnight if the offer is rejected.
However, because Vale already shut down its mining and processing operations in Sudbury for eight weeks starting June 1, the strike won't have an impact until the end of the month.
At issue is Vale's proposal to reduce a bonus tied to the price of nickel, as well as a plan by the company to exempt new employees from its defined-benefit pension plan, which guarantees employees a reliable and steady income after retirement, instead providing them with a defined-contribution plan, which bases retirement benefits on investment returns.
Wayne Fraser, Steelworkers director for Ontario and Atlantic Canada and a member of the union's bargaining committee, said the committee has recommended workers reject the company's proposal.
"We're hopeful that our membership on Friday and Saturday will turn this contract down by a big majority and that that will send a message to Vale to get back to the bargaining table and be a responsible corporate citizen," Mr. Fraser said.
Employees at the company's Voisey's Bay operations in Labrador voted 99 per cent against the same offer on Wednesday and will begin a strike on Aug. 1, and Mr. Fraser said he's seeing the same sort of anger in Sudbury.
"People are very, very upset with the huge amount of concessions," he said. "I'd say a strike is imminent."
These are the first contract talks since Brazil-based Companhia Vale do Rio Doce bought the former Inco Ltd. for $19 billion in October, 2006.
Vale chief executive Roger Agnelli surprised the company's followers when he told reporters Tuesday in Rio de Janeiro that Sudbury is the company's highest-cost operation and isn't sustainable.
Company spokesman Cory McPhee said it isn't the cost of "getting a pound of nickel out of the ground" that makes the Sudbury operations unsustainable at current nickel prices, but rather the cost of running a century-old operation.
"Sudbury is a very mature operation, it's been operating for more than 100 years, and with that comes added costs of doing business that don't contribute to the revenue stream and don't contribute to production," Mr. McPhee said.
He said the ore in the Sudbury mines has gotten progressively harder to get at as the operation ages, making it more costly to mine. As well, the company has had to incur costs to keep up with tougher air pollution standards.
"Those sustaining costs can't be overlooked. That's all part of making the business viable for the long term," he said.
"We're trying to put in place a structure and a foundation that will allow us to both survive the current economic downturn but more importantly be a long-term competitive performer in all price cycles."
However, Salman Partners mining analyst Raymond Goldie, who wrote a book about Inco's operations in Labrador, said Inco was "making good money" less than 10 years ago when the price of nickel was less than half of its current price of just under $7 (U.S.) per pound.
"I can't believe Sudbury has gone from being able to make money below US$3 (per pound of nickel) less than 10 years ago to not being able to make money at a nickel price of over $7," Mr. Goldie said.
Vale's Sudbury operations produce 10 per cent of the world's nickel supply, meaning a strike could squeeze global supplies and rapidly push the price of nickel higher than US$10 per pound, Mr. Goldie said.
"A cynic could certainly say that because the company clearly was wiling to endure a shutdown of its own making in order to get the price of nickel up, it could hardly argue that a shutdown of the union's making would be a bad thing," he said.
Like all miners, Vale has been squeezed by reduced demand for base metals such as copper, nickel, zinc and iron because the global recession has cut the need for stainless steel and other materials used in building houses, commercial buildings, factories and other capital projects.
On Thursday, Vale announced it would cut 60 white-collar jobs in Sudbury. These came after the company cut more than 400 white-collar jobs in Canada in March as part of a restructuring of its operations.
Sudbury has been particularly hard hit by the slump in base metals prices as the region relies on its nickel and copper mines, among others, for a large chunk of its employment. Miner Xstrata laid off 686 salaried and unionized employees at its Sudbury nickel mine in February.
