As Dwight Harper takes over the president's position of the Mine Mill Local 598/CAW there is an urgency and foreboding in his voice as he speaks of Xstrata Nickel's possible shutdown and a need to find other reserves.
Harper, who has assumed Rick Grylls' position as of Feb. 1, said Xstrata Nickel is in a “huge transition” period with older mines closing, new projects starting up and both taking large chunks of cash to support.
Some of the older mines are producing nickel at (US)$6 per pound, well above the current market value of (US)$5.20, he said.
Last week, the European miner Xstrata PLC announced it was raising (US)$5.9 billion from shareholders to cut their debt loans as mineral commodity prices continue to tank and financial markets stay frozen.
"Xstrata's absolute level of debt is now perceived as a potential constraint," said chief executive officer Mick Davis in a Jan. 29 statement, "given the uncertainty that exists over the near-term outlook for commodities."
But push on they must. Nickel Rim reserves are a higher grade and production cost will be well below(US)$5, Harper said, so they need to continue with developments.
“It has taken a lot of resources to reach this next step,” Harper said.
And more is needed. Xstrata is continuing its exploration efforts to find new ore bodies similar to Nickel Rim.
In the meantime it is work as usual at the local operations, but Harper said there may be “some changes down the road.”
“There's been talks of possible shutdowns, just like you hear from Vale Inco,” he said. “Either way, something will be announced within the month.”
Right now the company is going through the federal budget to determine how they can best maximize some of the government incentives.
Harper did say the company has not been so reactionary as to close up immediately after the mineral cycle took a turn for the worse. That might have been a different if the company was still under Falconbridge, he said.
In fact, he attributes a lot of what is occurring now to Falconbridge executives caring more about satisfying shareholders than preserving the company's future through exploration and research.
Harper said the union represents 1,300 members within Xstrata Nickel and when bargaining time rolls around in 2010, he may be faced with a few stumbling blocks, unless of course China and Inida's economies pick up or the company finds new resources.
Xstrata Nickel Sudbury operation's vice president, Marc Boissonneault, did not respond to Northern Ontario Business calls before the article went to publication.
