Xstrata Rejects Union Offer at Sudbury Nickel Unit

Xstrata Rejects Union Offer at Sudbury Nickel Unit

Xstrata Plc rejected an offer from a labor union at its Sudbury nickel unit in Canada and withdrew an earlier proposal to end a dispute, threatening to halt production as the metal traded at a record.

Both sides will have to renegotiate from scratch to establish a labor agreement, Richard Paquin, chairman of the Canadian Auto Workers Union local 598, said in a phone interview today from Sudbury, Ontario. He didn’t give details of what was offered by either party. Workers have threatened to strike when the existing labor contract expires Jan. 31.

Nickel, used in stainless steel, rose to a record in London today for an eight consecutive trading session amid concern that supply may not be meet demand. Sudbury was acquired last year by Zug, Switzerland-based Xstrata in its C$19 billion ($16.1 billion) takeover of Falconbridge Ltd. The unit’s smelter accounts for 4 percent of world nickel supply.

“You can always expect there to be pressure on both sides given where the price is,” Sylvain Brunet, an analyst at Exane BNP Paribas, said by phone today from Paris. Nickel prices may extend gains, he said.

Xstrata “didn’t say” why it turned down the union’s offer, Paquin said. “We’ll play it by ear. Hopefully, we’ll be able to get back to the table in the morning.”

Marc Gonsalves, an Xstrata spokesman, declined to comment when contacted on his London mobile phone. Ian Hamilton, an Xstrata spokesman in Toronto, didn’t return a call.

Nickel Gains

Nickel for delivery in three months on the London Metal Exchange fell 0.9 percent to $37,800 a metric ton as of 1:22 p.m. local time. Earlier it gained 2.1 percent to $38,950, beating yesterday’s record by $152. The metal has more than doubled in the past year.

Shares of Xstrata dropped 46 pence, or 1.9 percent, to 2,378 pence in London. The stock has gained 65 percent in the past year, valuing the company at 22.4 billion pounds ($43.8 billion).

Sudbury’s smelter produced 63,000 tons of unrefined nickel, called nickel-in-matte, in 2005, Hamilton said yesterday. The smelter processes material from Quebec and other parts of Ontario, in addition to ore from Sudbury’s mines. Sudbury also produced 23,367 tons of copper in 2005, according to Xstrata’s Web site.

Workers at Sudbury voted Jan. 16 to walk off the job when their contract expires, barring a new agreement. The Canadian Auto Workers Union represents more than 1,000 mine, mill and smelter workers employed by Xstrata Nickel in Sudbury.

Source: www.bloomberg.com

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