Vale Inco announced last week that they were reopening the Voisey’s Bay nickel mine near here, so I thought I should provide a bit of background and a timeline, as I will likely be referring to this in future postings.
The mine and ore concentrator at VB was completed in November 2005 by Inco, a Canadian company with nickel mines and operations already in Sudbury, Ontario, and New Caledonia. The VB facility cost a company estimated $950 million, which is quite a sum by Labrador standards, but which, given the proximity to existing processing facilities in Sudbury made it an easy decision—and the mine can produce gross nickel and copper proceeds at two or three times that amount every year. To give one example, the year before the strike (2008), VB produced 77,500 tons of “contained” nickel, and 55,400 tons of “contained” copper, which (in refined form) would be worth $1.43 billion and $562 million, respectively at today’s prices. At the height of the market in 2006-07, the value of this amount of nickel alone (once refined) would be $4.5 billion—produced in a single year. The mine is located about 20 miles south of Nain, along the coast. At capacity it employs roughly 450 people, though only a handful from Nain.
In 2007, Inco was purchased by Vale Inc, a Brazilian mining conglomerate (and now the world’s 2nd largest mining company), becoming a subsidiary called Vale Inco. Vale’s short term planning was poor, though, as less than a year after the purchase, the price of zinc fell sharply, largely as a result of the decline in world manufacturing—zinc is a key ingredient in the manufacturing of stainless steel, but not much good outside of that. As a result, last summer (2009) Vale Inco suspended work in its Sudbury processing plant which serves all of its North American operations, starting on June 1 and lasting for 8 weeks. This happened directly after several weeks of scheduled operation shut down for maintenance, and, perhaps more importantly (though never mentioned by the company) amid discussions with main processor union in Sudbury over contract alterations and desire by the company to remain profitable “in all of the price cycle”. The union (a local of the United Steel Workers) contract expired July 12, in the middle of the shutdown, and without an agreement on a new contract.
Actually the union contract had been set to expire May 31 but had been extended for negotiations by both sides, and negotiations had been going on since May. Again, while never state as such, the shutdown was likely aimed at imposing strike-like hardship on the furloughed workers even before a strike could begin. The USW contract covers 3300 of 4700 workers at the Sudbury site, and is one of the largest employers in the Sudbury area. Price declines were likely the backdrop of the contract negotiations as well. Nickel had fallen from $24/lb in 2007 (when Vale bought Inco) to $4/lb in early 2009. As a result, Vale Inco had wanted to cut 428 jobs and reduce pension, bonuses (previously tied to the price of nickel), and other benefits. USW Local 6500 rejected these cuts, and voted to strike, starting July 13. Voisey’s Bay USW workers followed, and went on strike August 1st. In total, 135 workers at VB mine walked off the job, and as of today have not returned.
Sudbury is actually sort of a mess in general these days. The slowdown at Vale Inco affected FNX mining, another large employer, because their nickel, copper, and other precious metal ore are processed at the Vale Sudbury facility. FNX shut down nickel mining (in 2008) but was still mining copper and precious metals. In the past, it might have been possible for them to shift processing to X-Strata, also in Sudbury, but X-Strata was also planning to shut down (“care-and-maintenance” phase) and cut 638 jobs as well. Sudbury produces 30% of the world’s nickel (with other concentrations in Russia and New Caledonia), and is located about 225 miles north of Toronto, 250 northwest of Ottawa, just above Georgian Bay. The smelter brags of being the tallest smokestack in North America, but seldom mentions the fact that it is world’s largest producer of sulfuric acid laced pollution.
In mid 2009, nickel prices began to recover a bit, and in August Vale-Inco announced it will reopen Sudbury concentrator operation without striking workers, and started “retraining” management and non-striking staff in late August to run the mill. Vale Inco also runs a precious metal refinery in Port Colburn Ontario, not far from Sudbury, that was out on strike too, with 125 workers having walked off in support of the Sudbury strike. Because that plant dealt mainly in copper and platinum (whose prices had remained high), that plant remained running, though at reduced capacity. In September, Vale Inco informed FNX to begin shipments to Sudbury once again, concentrating on copper and platinum there as well. The mill started operations in mid-September. The rationale was clear: in 2009, copper prices were up 140%. Earlier this month (January 2010), Vale announced its intention to reopen Voisey’s Bay nickel mine, and shortly afterward sent a new proposal to striking workers there. Negotiations were short, however, and three days after presenting their proposal, Vale officials called off talks and announced plans to use non-union staff and management to replace strikers at the VB mine. In the same week, they announce plans to reopen the smelter plant (where “concentrate” is refined into commodity level nickel, zinc, cobalt, or copper) in Sudbury.
That is where things stand now, though there are other elements not quite directly related that I don’t have room to go into here. I will try to get some of that up in the next week. As I mentioned in an earlier post…there aren’t many workers here affected directly by the strike. Perhaps two dozen total, though many are not in the union. As is widely recognized throughout the north, Aboriginal hiring quotas are almost always met in the “service” side operations—cafeteria workers, dormitory cleaners, security guards, and so on. These aren’t the high salary mining jobs normally advertised. Many of these positions, while not strike positions, are obviously dependent on operations at the mine, and have been out of work since the strike began in August. In a community where jobs are so scarce, that actually means a lot. In addition, as I wrote about in an earlier entry, a portion of the Provincial royalties from the mine go to support the Nunatsiavut Government here—the new Inuit government that followed the land claims, which in turn had followed the discovery of large nickel deposits at Voisey’s Bay.
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