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Sudbury operations 'non sustainable': Vale Inco CEO

Vale CEO Roger Agnelli has said the company's Sudbury Inco operation is the "highest-cost operation and it's not sustainable," according to reports from Bloomberg.
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Despite having a deal at hand, mediated talks have broken off between Vale and the Steelworkers Local 6500.

 
Vale CEO Roger Agnelli has said the company's Sudbury Inco operation is the "highest-cost operation and it's not sustainable," according to reports from Bloomberg.

Amidst concerns of a July 12 strike looming at the Sudbury operation, company spokesperson Cory McPhee says the comment was largely a reference to the Vale's desire to move away from defined-benefit pension plans.

"Some companies have actually gone under because of their inability to fund these plans and ... it makes more sense to go to defined-contribution," says McPhee. "That's the way the entire world is going, and he considers that the best for our employees and the best for everyone concerned."

The Sudbury operation employs approximately 4,800 people, while there are nearly 15,000 pensioners. No numbers were available as to the amount paid out annually.

He adds that the sustainability issue is not about operating costs, but rather "sustaining capital," where growing levels of cash are required to achieve the same level of production. This is particularly true of a "mature" camp such as Sudbury, he says, where mining activity must go deeper, leading to growing costs for ventilation and to access and retrieve ore.

There are also billions spent on conforming to increasingly stringent environmental emission standards.

McPhee says Agnelli's comments are not meant to be interpreted as questioning the company's long-term commitment to Sudbury.

"We're trying to just take a look at the business from a very holistic point of view and see what's required to keep the company viable for many, many years to come. We plan on being in Sudbury for a long, long time; we've been there for a century and we plan on being there for many more years."