Tensions in the six-week-old labour dispute between Vale Inco and the United Steelworkers in Sudbury notched up significantly Aug. 25 when the company confirmed it will will use some non-unionized staff to partially re-open the 153 ore body at Coleman Mine and Garson Mine ramp and crush ore from them at Clarabelle Mill.
Vale Chief Executive Officer Roger Agnelli told reporters in Sao Paulo, Brazil the company plans to restart Sudbury "as soon as possible."
Copper and precious metals will be extracted and concentrated from the ore and then sold, said Vale Inco, while nickel will not be processed. Copper was selling for about $2.85 a pound Aug. 26, while nickel was selling for about $8.82 per pound on the London Metal Exchange (LME).
There are no plans at this point to operate the Copper Cliff smelter, the company says. Vale Inco smelts and refines its own nickel in Sudbury, but sends its copper concentrate -- often found alongside nickel -- to be refined at Xstrata Copper's Kidd Creek smelter and refinery in Timmins, Ont. Xstrata said Aug. 26 it will close Kidd Creek for between seven and 10 weeks as of Sept. 7 because of reduced availability of copper concentrate to process -- in part because of the Vale Inco strike, as it supplies about 20 per cent of Kidd's copper concentrate.
Unionized office, clerical and technical workers at Vale Inco have also been told to get ready for underground work, the Sudbury Star reported, with up to 50 of them possibly being deployed underground to mine, according to Dan Serre, Local 2020 unit chair. The 330 office, clerical and technical staff represented by USW Local 2020 have a separate collective agreement, which remains in force.
To work underground in a mine workers have to have "common core training," which some of the Local 2020 members have, while others don't as of yet.
Normally, Local 2020 workers are engaged in engineering, mine planning, underground surveying, ground control and geology work in the mines. At the moment, they are essentially cleaning the mines in care and maintenance mode. Refusal to go underground and mine could result in discipline up to and including termination the company has indicated to workers, Serre told the Sudbury newspaper.
Limited outsourcing of jobs will also likely be required for essential work and to train existing employees to do that work, Vale Inco said.
About 3,100 USW Local 6500 members in Sudbury voted 85 per cent in favour of strike action and have been on the picket line since July 13 with no new bargaining scheduled. The strike came near the end of what was to be a scheduled two-month production shut down - from June 1 to July 27 - at all Vale Inco operations in the Sudbury Basin.
In the late 1970s, the Steelworkers waged a lengthy nine-month strike against Inco in Sudbury from Sept. 15, 1978 until June 7, 1979. That landmark strike remains the biggest in Canadian history in terms of total lost work days. There were about 15,000 Steelworker miners at Inco at the time of the 1978 strike compared to about 3,100 -- a workforce one-fifth the size of the one 30 years ago -- today.
The Steelworkers and its predecessor union, the Mine, Mill and Smelter Workers, have represented employees at Vale Inco since the 1940s. This marks the first attempt by the company to re-open its mines during a labour dispute.
More than 4,900 grievances were filed between 2006 and 2009 by Steelworkers in Ontario against Vale Inco under the three-year collective bargaining agreement that recently expired. More than 1,700 of the grievances - 34 per cent - were about contracting out.
United Steelworkers Local 6200 at Vale Inco in Port Colborne, Ont. is also on strike in the current dispute after workers there voted about 95 per cent in favour strike action, which also began July 13. Local 6200 has about 120 members in Port Colborne. The Port Colborne Refinery was commissioned by Inco in 1918 as what was then an American company's response to provincial and federal government pressure during the First World War for it to have a Canadian nickel refining operation.
In December 1928, Inco would become a Canadian company after the board of directors followed the advice of their Sullivan & Cromwell legal counsel, John Foster Dulles - who would later go onto Cold War fame as U.S. secretary of state - and exchanged shares between the former New Jersey parent and the Canadian subsidiary to keep U.S. anti-trust regulators at bay.
International Nickel Company was first incorporated in New Jersey in April 1902. It was a combination of R.M. Thompson's New Jersey-based Orford Copper Company, American Samuel Ritchie's Cleveland, Ohio-based Canadian Copper Company, and the other major American refinery, the Joseph Wharton Company.
For $10 million, J. Pierpont Morgan, one of the late 19th and early 20th century's legendary robber baron industrialists, and the financial interests behind U.S. Steel acquired Canadian Copper Company, Orford Copper Company and the Joseph Wharton Company and formed the International Nickel Company. The impetus for founding Inco was simple; the Steel Manufacturers Syndicate, known as the "steel trust," needed a stable, profitable and guaranteed supply of nickel.
The legal architect in the 1902 creation of Inco was the Wall Street firm of Sullivan & Cromwell, who for generations thereafter had a senior partner on Inco's board of directors.
Of the 450 workers at Voisey's Bay, 120 United Steelworkers Local 9508 members are on strike against Vale Inco at its fly-in Voisey's Bay nickel mine in northern Labrador. Their most recent three-year labour agreement expired March 1.
Output from Voisey's Bay, which can produce 50,000 tons of nickel ore a year for processing at Vale Inco's Sudbury and Thompson operations, was halted July 1 because of the global recession.
Vale, the world's second-biggest nickel producer after OAO Norilsk Nickel, shut down most of its Sudbury operations on May 1 for maintenance and completely halted production on June 1. Vale Inco's Canadian operations include six nickel mines, a mill, a smelter and a refinery in Sudbury; the refinery in Port Colborne; a nickel-cobalt-copper mine in Voisey's Bay; and in Manitoba two underground operations - Thompson Mine and Birchtree Mine - as well as Thompson Open Pit.
The five-compartment production shaft, T-1 on Pip 456, was originally sunk to 2,106 feet in 1958 and levels in T-1 were established below the 400-foot level at 200-foot intervals. Deepening of the T-1 shaft began in 1965 and was completed to 4,427 feet by 1969. Below 2,400-foot levels were developed at 400-foot intervals.
The sinking of the T-3 shaft on Pip 476 started in March 1965 and completed 15 months later to a depth of 2,607 feet. It was put into operation in 1967.
There is extensive lateral development between the 1,600 and 4,000-foot levels of T-1 and between 2,000 and 2,400 feet in T-3.
Thompson Mine produces nickel, copper, cobalt and has associated gold, silver, platinum, sulphur, selenium and palladium deposits.
Birchtree Mine opened in 1968 and was deepened within the last decade. In addition, Manitoba Operations has a 15,000-ton per day capacity mill; a smelter, which produces 1,400 anodes per day; and a refinery, which produces more than 130 million pounds of 99.9 per cent pure electrolytic nickel annually.
Vale Inco started a one-month scheduled shutdown Aug. 1 in Thompson, meaning the company at the moment is mining no nickel anywhere in Canada. USW Local 6166 in Thompson has a binding three-year collective agreement with Vale Inco, signed last September, with more than two years to run on it through Sept. 15, 2011. Mining and refinery operations in Thompson are set to resume Sept. 1 as planned after a one-month maintenance shutdown, the company says.
Vale has no plans at the moment to resume operations at either its strike-bound Port Colborne refinery or Voisey's Bay mine and processing sites, the company says.
Vale Inco Steelworkers in Sudbury earn an average wage of $29 per hour. Striking workers collect $200 per week from the Steelworkers in strike pay.
About 75 percent of Vale's nickel production comes from Canada. Sudbury produced 85,300 tons of nickel and Voisey's Bay 77,500 tons in 2008. Canada was at one time the world's largest nickel producer, but in recent years, increased nickel production from Russia, Australia and Asia, as well as other areas, has diminished our importance to global supply.
Vale Inco's John Pollesel, vice-president of production services and support for Canada/UK Operations and general manager of Ontario operations, sent an e-mail to employees Tuesday telling them of the company's decision.
A possible Sudbury restart by Vale Inco "would be a huge mistake," Leo Gerard, international president of the United Steel Workers in Pittsburgh said last week. "It would be unacceptable, putting lives at risk."
"Training of selected employees is beginning this week to facilitate the process and help us to continue supplying customers, generating cash flow and providing meaningful employment for staff," Pollesel said.
"We are a mining and processing operation. We have customers who are highly dependent on us and who rely on our ability to supply them. We have more than 1,200 staff employees in Sudbury and Port Colborne for whom we can provide value-added work, and we need to continue the change process.
"Today, a decision has been made to resume partial production. Training of selected employees is beginning this week to facilitate the process and help us to continue supplying customers, generating cash flow and providing meaningful employment for staff." Pollesel said Vale Inco intends to start production and two mines and run ore through the smelters, but for the copper that can be extracted from it and at about 10 per cent of its capacity.
Wayne Fraser, director of District 6 for the United Steelworkers, said Vale Inco resumes any form of production while Steelworkers members are on strike, it would mean "war in Sudbury."
Fraser said Vale Inco, or Inco, has never operated the production side of operations during a strike, and, "they're not going to do it now."
"Again, we did not want a strike, however we find ourselves in one regardless and no one can predict how long it might last. By continuing to supply and keep our customers in this period we are helping preserve the business and maintain jobs for not only staff and many members of our community, but also for our production and maintenance employees when they return to work," Pollesel said.
Federal Industry Minister Tony Clement, from the nearby riding of Parry Sound-Muskoka, made his first visit to Sudbury Aug. 24 to meet with Sudbury Mayor John Rodriguez, a former NDP MP, since Clement said last month it was a good thing the Brazilian mining giant Vale bought Inco in 2006 because otherwise Sudbury would have become a "valley of death."
Hundreds rallied in nearby Copper Cliff to express their anger over Clement's comments, and two NDP MPs called for his resignation.
Clement later admitted his comment was "bone-headed."
Vale SA, also known as Companhia Vale do Rio Doce, the Rio de Janeiro-based mining giant and parent company of Vale Inco in Canada, recently reported that its profits plunged 84.2 percent in the second quarter of 2009 as the global economic slump reduced demand and prices for the iron ore it produces aside from nickel.
Vale Inco has also declared "force majeure" on nickel deliveries from Sudbury. Force majeure, or "superior force" in French, is a legal concept and procedure designed to relieve Vale Inco from contractual obligations to deliver nickel due to the strike. A common clause in contracts, it essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as a war, strike, riot, crime, or an event described by the legal term "act of God" (e.g., flooding, earthquake, volcano), prevents one or both parties from fulfilling their obligations under the contract.
According to Veja, a Brazilian Portuguese-language weekly magazine, President Luiz Inácio Lula da Silva mused recently about the possibility of the Brazilian government taking control again of Vale SA.
Lula was said by Veja to have asked officials inside his government to find a way to ensure the government controls Vale through Previ and BNDES Participações SA, the investment arm of Brazil's state development bank, the São Paulo-based Veja said. Created on June 1, 1942 by the Brazilian government, Vale was privatized on May 7, 1997.
Valepar SA, the company that controls Vale, is owned by Previ, the employee pension fund of state-controlled Banco do Brasil SA; Bradespar SA, an industrial holding company; Mitsui & Co, Japan's second-largest trading company; and BNDES Participações SA.
