Threat of strike could send prices for nickel soaring

The current contract of hourly-paid workers at two Inco Ltd. (TSE) installations in Ontario expires May 31 and the possibility exists that a strike could send already high nickel prices through the roof.

Members of the United Steelworkers of America who work at Sudbury and Port Colborne — about 6,500 workers are involved — are nearing the end of a 3-year contract at a time when the metal is in short supply. Nickel hit a record $10.84(US) per lb on the London Metal Exchange towards the end of March, after averaging $2.21 in 1987. At presstime, nickel was selling at $7.93.

The price of nickel “will go up substantially” should the Inco workers strike, said Julian Baldry, senior mining analyst with Nesbitt Thomson Deacon in Toronto. Baldry said Inco supplies about 20% of the Western world’s nickel supply from its Sudbury operations.

Inco currently supplies about 34% of the Western world’s nickel supply from all of its operations, up from about 30% in 1987.

“The market is driven by people who absolutely must have this material,” Baldry said. One of nickel’s main uses is in the manufacture of stainless steel.

Describing the Sudbury employees as an older and stable workforce, Baldry suggested that if the workers take a stand on an issue such as indexed pensions, Inco is likely to fight against inclusion of such an arrangement in the new contract.

Garry Patterson, vice-president of union local 6500 in Sudbury, had no comment about the on-going Inco negotiations. He said union leaders were expected to report May 27 to the membership about the details of the contract talks.

Meanwhile, at presstime, another Canadian producer of nickel, Falconbridge Ltd. (TSE), continued to negotiate with the government of the Dominican Republic over an export tax on ferronickel mined by Falconbridge which has effectively stopped shipments of the material from that country.

Falconbridge supplies about 13% of the Western world’s nickel market from all of its operations; its Dominican Republic mining and processing facility accounts for about 5% of the company’s annual nickel output.

The contract of about 1,800 hourly-paid workers at Falconbridge’s Sudbury operations will expire Aug 21. The employees, members of the Mine, Mill and Smelter Workers union, will also be completing a 3-year contract.