Vale Inco to halt Sudbury operations for eight weeks

Vale Inco, a subsidiary of Vale (RIO-N), is shutting down its nickel mining and processing facilities in Sudbury, Ontario for eight weeks starting on June 1, as well as its precious metals processing facilities in Port Colborne.

“The whole Sudbury operation is being shut down in response to the economy and the fact that we have a full product pipeline,” Cory McPhee, a Toronto-based spokesman for Vale Inco, told The Northern Miner. “We want to clear the pipeline and come back in better shape.”

McPhee said there was no intent to prolong the shut-down period beyond July 27, but that any decision would depend on market conditions.

The eight-week shutdown comes on top of a previously scheduled three-week closure in May for maintenance purposes.

In terms of layoffs, McPhee said the two-month shutdown was taking place during June and July, the “prime vacation period,” and explained that where vacation time for some employees would not be enough to cover the closure period, Vale Inco would make it possible for people to access unemployment benefits. He said the company also has a supplementary unemployment benefit plan that can provide additional funds.

FNX Mining (FNX-T), which uses Vale Inco’s nickel processing facilities in Sudbury, said it is considering several possible production alternatives as a result.

Alternatives might include continuing production at its Sudbury operations at current levels and stockpile ore for processing when Vale Inco resumes operations; temporarily suspending some or all production and reinitiating production closer to the lifting of the shutdown; and sending ore to other processing facilities.

Terry MacGibbon, FNX’s chairman and chief executive, said the shutdown at Vale Inco would not delay key development at its Levack Footwall deposit, which is slated to start production in 2010.

Outside of Canada, Vale Inco said the recession had also prompted the company to postpone by at least one year the start up of the Onca Puma nickel project in Brazil’s Para state. The project had previously been scheduled to come online in January 2010.

At presstime in New York, Vale was trading at US$15.27 per share. The company has a 52-week trading range of US$8.80-$44.15 per share.