Vale Inco strikers into the seventh month of action

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Vale Inco could have some explaining to do to shareholders about the quality and quantity of nickel it is producing while its 3,000 production and maintenance workers begin the seventh month of their strike, USW union officials said last Saturday.

The 3,000 United Steelworkers Local 6500 members in Sudbury and 130 members at Port Colborne’s USW Local 6200 are on strike over pensions, nickel bonuses and seniority transfer rights.

While Vale Inco has begun smelting nickel concentrate at its Copper Cliff Smelter Complex, Local 6500 president John Fera questioned how much nickel matte is being produced by temporary workers, and how good it is.

Vale sent its first shipment of nickel matte to its refinery in Clydach, Wales about nine days ago.

The smelter is being operated by management, non-union staff, unionised office and technical employees, and replacement workers.

Fera said: ‘We think that Vale is telling us a bit of a story.

‘They talk about production. It’s even worse than that.

‘We think that Vale is telling their investors a bit of a story.’

He added that union members have heard that Vale Inco customers may not be happy with the quality of nickel they are having to purchase in other markets.

Fera noted: ‘The stuff on the (London Metal Exchange) is not of the same quality that Vale and the old Inco or Xstrata was.

‘Both Xstrata and Vale are known for having among the best quality nickel in the world.’

He insisted that Vale’s customers want the best quality nickel.

Stressing that customers plan nickel purchases five to 10 years ahead, Fera added: ‘At some point, I think investors are going to say, “Don’t just tell us, show us”,’ that the nickel being produced by temporary workers is as good as that produced by the striking workforce.

Local 6500 president Fera concluded: ‘When that happens, I think Vale is going to be in a little bit of trouble.’

Meanwhile, Vale SA’s latest financial results reveal huge revenue losses and cost increases from the seven-month strike, which is being prolonged by the inexplicable intransigence of company executives, says United Steelworkers Union (USW) Canada.

Vale’s fourth-quarter and 2009 year-end results show hundreds of millions of dollars in lost revenues and hundreds of millions more in extra costs due to the strike by 3,500 workers at plants in Sudbury, Port Colborne, Ontario, and also at Voisey’s Bay, Newfoundland where strike action began later, on August 1st 2009.

The strike was provoked last summer by Vale executives’ attacks on the Canadian workers’ pensions, profit-sharing bonuses and job security provisions.

Vale’s own figures show the strike is costing much more than the company could gain from its unprecedented demands, the United Steelworkers say.

Vale’s annual profit for 2009 was US $5.3 billion and it is predicting greater earnings this year and beyond.

Prior to provoking the strike in Canada, Vale had earned $4.1 billion in two years from its Ontario operations alone.

Successive financial reports show Vale’s provocation of the strike is costing shareholders hundreds of millions in lost profits and hundreds of millions more in extra expenses.

In the last two quarters of 2009, ‘expenses due to the idling of Canadian nickel operations’ amounted to US $445 million, the company reported.

Lost revenues amount to several hundred million more.

‘These lost profits and added expenses far exceed any savings Vale could expect from its concessionary demands on Canadian workers,’ said Ken Neumann, the United Steelworkers National Director for Canada.

‘This strike is costing Vale far more per quarter than the annual cost of the United Steelworkers’ pension and bonus plans,’ Neumann said.

Meanwhile, Vale executives continue to prolong the strike by rejecting the USW’s standing offer to resume negotiations without preconditions.

‘Vale shareholders must question why Vale executives are refusing to negotiate a resolution to the strike,’ said John Fera, President of USW Local 6500 in Sudbury.

“Ending the strike would add hundreds of millions of dollars to the company’s earnings every quarter,’ Fera said.

He added: ‘From any perspective – including shareholders’ interests – it makes no sense for Vale executives to continue to prolong this strike and to refuse to negotiate a resolution with their workers.

‘However, it appears there are Vale executives who are willing to forego earnings and incur extra costs in order to extend the strike in Canada.

‘Vale shareholders should direct management back to the bargaining table.’

In addition to hundreds of millions in lost profits and extra expenses during the strike, Vale also has spent more than $100 million buying nickel during the dispute.

That included $78 million for such purchases in the fourth quarter of 2009, the company reported.