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One more sign Canada is losing its place on world nickel stage Add to ...

In the 1940s, the International Nickel Company, commonly called Inco, launched an ambitious advertising campaign telling the world about an "Unseen Friend."

The Toronto company's high-profile ads ran in major U.S. magazines such as Newsweek and featured celebrities such as Cary Grant and Myrna Loy, who reminded consumers that nickel produced by Inco at its Sudbury mines was used to make everything from appliances to electronics to automobiles.

Those early efforts laid the foundation for what would become the Nickel Institute, a Toronto-headquartered marketing and research group founded in the 1980s and funded by the industry to promote the use of the metal.

Now, more than 25 years later, the institute is preparing to close its Toronto office.

The decision to shutter the Canadian branch plant follows the controversial sale in 2006 of domestic nickel giants Inco and Falconbridge to foreign buyers and is exacerbating mounting concerns about Canada's declining stature in the global nickel industry.

"Nickel has always been a global business, but where the players are, where the production is, where the use is, has changed over time," Peter Cutler, the Nickel Institute's director of promotion, said in an interview from Birmingham, England.

Peter Goudie, a former executive vice president of Inco Ltd. Said the closing is the latest sign of Canada's diminishing global mining stature.

"Canada was once the centre of the nickel industry with strong Canadian companies, with head offices in Canada, being the major players in the industry. . . .The industry has changed, the two major Canadian companies are no longer Canadian. It is not surprising that this is reflected in the decision by the Nickel Institute to close its office in Canada."

The nickel marketing group's departure from Canada comes as Industry Minister Tony Clement faces a barrage of criticism for saying that Sudbury would have faced a "Valley of Death" if Inco had not been sold to Brazil's Vale SA.

Canada was once the world's largest nickel producer, thanks to the mineral riches found in the Sudbury Basin, but in recent years, rising nickel production from Russia, Asia, Australia and other sources has diminished this country's importance to global supply.

In 2005, long-time Sudbury rivals Inco and Falconbridge tried to merge in an attempt to save costs and take advantage of rising prices. But the proposed marriage was tied up by European regulators, which allowed Swiss-based Xstrata PLC to swoop in and take over Falconbridge while Inco was snapped up by Vale for $19-billion.

Less than three years later, Xstrata has closed mines in Sudbury and cut more than 600 jobs in response to plunging nickel demand. Vale has also laid off hundreds of workers and shuttered mines.

Vale CEO Roger Agnelli recently said that the Sudbury operations are high cost and "not sustainable" ahead of a strike by more than 3,000 Sudbury workers who have rejected Vale's demands to reduce compensation.

Former Falconbridge chief executive officer Derek Pannell said that Vale and Xstrata's failure to reach a joint-venture agreement in Sudbury - which would have allowed the companies to share facilities and save hundreds of millions of dollars in annual costs - has weakened Canada's standing in the global nickel market. Both companies have also cut high-paying executive jobs at their Toronto nickel offices, Mr. Pannell noted, further diminishing the region's importance.

"A lot of the things that support head offices, like the legal profession and so on, were to be centred in Toronto. We have, in fact, lost a lot of that and the Nickel Institute, I would suggest, is only one of the symptoms of that loss," he said.

Officials from both Vale Inco and Xstrata Nickel said the companies are still providing financial support to the Nickel Institute, which is now headquartered in Brussels.

"We have very close dealings with the Nickel Institute on a number of files. Most recently, our most significant interaction has been in the European market," said Vale Inco spokesman Cory McPhee.

About half of the 10 employees at the Nickel Institute's Toronto office have already been laid off.

While the office is slated to close in September, Mr. Cutler said that the group will maintain a "presence" in Toronto.

Glenn Mullan, the chairman and chief executive officer of junior miner Canadian Royalties Inc., which has had to slow the development of its Nunavik Nickel Project in Northern Quebec because of the market downturn, said Canada is losing its voice in the international nickel industry.

"It's obviously sad and it's a metaphor for the change that the industry is going through," Mr. Mullan said.

Follow on Twitter: @iamandyhoffman

 

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