FNX Closes Levack, McCreedy West Nickel Mines

FNX Mining (FNX-t) is halting nickel production at its Levack mine and adjoining McCreedy West mine in Sudbury, Ont., putting 307 people out of work.

In October, FNX suspended commercial nickel production at the Levack complex due to falling commodity prices and the economic downturn, but didn’t lay off any of its workers.

Instead, the company said it would continue operations through the fourth quarter to produce 35,000 tons of nickel to be used for metallurgical testing, and that some of the affected employees were to be relocated to other projects in Sudbury.

“Low global nickel prices have made our nickel operations uneconomic at this time,” said FNX chairman and CEO Terry MacGibbon in a statement. “FNX must now adjust in order to not only retain approximately 375 current jobs at our Sudbury mining operations but to prepare itself to thrive and increase its employee levels when commodity prices recover.”

FNX said the suspensions would last indefinitely, until world commodity markets improve.

Production at the McCreedy West copper-nickel-precious metals deposit will continue as will mining at Rob’s deposit and the Podolsky 2000 copper-nickel deposit.

FNX will also continue development work at the high-grade copper-nickel-precious metal Levack Footwall, which is expected to provide development ore in late 2009 before going into production in 2010.

The company says 59 of the job losses are terminations, while the remainder are layoffs, effective immediately.

Hourly employees are being offered voluntary severance packages, which could reduce the number of hourly employees laid off. Other employees will still be transferred to the ongoing copper-nickel-precious metal operations.

FNX says it’s in a good position to weather the recession. It has $151 million in cash, another $140 million in securities and no debt.

“We will concentrate our efforts on only those ores that produce a positive cash operating margin and limit our sustainable capital expenditures to an absolute minimum,” MacGibbon said.