MINING REPORTER
A last-minute labour deal between Xstrata PLC and its unionized workers in Sudbury, Ont., has put the spotlight on rival Vale SA and it employees to settle their seven-month-old strike.
While union members are eager to return to work, Vale is less rushed as the strike helps boost nickel prices and stockpiles approach record highs.
BMO Nesbitt Burns Inc. analyst Tony Robson said nickel stockpiles are approaching 50 days of supply, which is nearing a record peak of about 55 days around 1993-94.
Vale also has other lower-cost nickel mines coming into production, which will increase its production over the next few years.
"There's no incentive on Vale's part to settle the strike," Mr. Robson said.
Bank of Nova Scotia commodity markets specialist Patricia Mohr said Vale's production at its strike-hit facilities in Sudbury and Voisey's Bay, Nfld., account for nearly 9 per cent of global nickel production.
Nickel prices were trading around $7 (U.S.) per pound before the strike started last July, and are now around $8.20.
"I think they are as high as they are because of the strike at Vale-Inco," Ms. Mohr said, noting that prices rose to $8.50 last Friday on the threat of a strike by Xstrata employees.
"If Xstrata had gone on strike as well ... more than 10 per cent of world supply would have been taken out of commission," she said.
Vale Inco Sudbury spokesman Steve Ball said talks are stalled because the union will not accept the company's need to make changes to cut costs.
"The competition for nickel supply in the world is certainly getting more fierce and the companies that have a sustainable and healthy business model will ultimately survive when there is a large amount of nickel on the world market," Mr. Ball said.
Myles Sullivan, a spokesman for the United Steelworkers union, which represents Vale workers, said the company wants concessions such as cutting its nickel price bonus and changing its pension plan.
Mr. Sullivan said if Xstrata can strike a deal with its union without such concessions, Vale should too. "They operate in the same community as Xstrata and they were able to give a fair settlement," he said.
Sudbury Mayor John Rodriguez said Vale and its union should use the tentative deal between Xstrata and its Sudbury production and maintenance employees as an incentive to restart talks.
"The message to Vale and to the Steelworkers is get ... back to the table" he said.
VALE SA (VALE)
Close: $27.25, up $1.46