FNX stops Sudbury nickel production indefinitely

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 some of the affected employees were to be relocated to other deposits in Sudbury.

“Low global nickel prices have made our nickel operations uneconomic at this time,” said FNX chairman and CEO 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 did not say when the mines would reopen in Sudbury; only that the suspensions would last indefinitely until the 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 Levack Footwall, which is expected to provide development ore in late 2009 before going in to producing in 2010.

Of those losing their jobs, 59 positions will be permanent terminations while the remainder of the 307 workers are just being “laid off,” 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.

Nickel closed at US$4.24 per lb., from a peak of around US$24 per lb. in May 2007.

FNX shares were up 8¢ at $2.69 apiece on a trading volume of 3.3 million shares. The company has a 52-week high of $35.80 per share and a low of $2 on Dec.