Striking workers attend a rally in Sudbury on Jan. 13, 2010Gino Donato
One of the longest and most acrimonious labour disputes in Canadian history may finally come to an end after the union representing former Inco nickel miners in Sudbury struck a tentative deal with the company's Brazilian owner.
If the employees represented by the United Steel Workers approve the terms of a new five-year contract at votes scheduled for later this week, it will bring an end to a strike that has dragged on for nearly a year and enveloped the Northern Ontario city in a war of words between Canadian nickel miners and management of foreign resource giant Vale S.A.
Global commodity markets have kept a close eye on the conflict, as the storied Inco mines still account for about 4 per cent of the world's nickel supply. The strike has also been followed closely in political circles as a test case for labour unrest following foreign acquisitions of major Canadian resource assets.
The potential end of the strike comes as a great relief to Sudbury. Despite successful efforts to diversify its economy and shed its image as a "company town," mining remains its lifeblood and scores of mining contracting firms were affected by the dispute.
Approximately $4-million in payroll was lost each week during the strike, according to Sudbury Mayor John Rodriguez, who recently called the strike "contentious and divisive." Both sides expect some of the 3,000 striking workers to have retired or found other work, leaving it unclear how many will actually go back to work if the deal is ratified.
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Less than three years after paying $19.4-billion for Inco in a hotly contested takeover battle in 2006, Vale's flamboyant CEO Roger Agnelli said last year that the company's Sudbury operations were "not sustainable" unless workers accepted major wage and benefit concessions.
Vale sought to dismantle a bonus paid to employees based on the price of nickel and roll back pension benefits for those who worked in the Sudbury mines and smelting facilities, prompting workers to hit the picket lines last July.
Now the Brazilian company and its Sudbury workers will have to make amends after the longest strike in the company's history.
"We recognize that we will have some rebuilding to do in terms of relations with employees," Vale spokesman Cory McPhee conceded in an interview.
The strike included allegations of threats against management by striking employees and Vale's use of replacement workers at its Sudbury operations, which once represented the world's largest nickel production centre.
The negotiators reached a deal just after 4 p.m. Sunday afternoon. About 3,000 union members walked off the job in Sudbury and Port Colborne, Ont., on July 13 last year.
"It's been a long year," said Wayne Fraser, director of the district that includes the striking United Steelworkers locals 6200 and 6500.
The key terms of the agreement remain unclear. Mr. Fraser would not say whether the deal his executive is recommending includes any concessions, such as a nickel bonus rollback or a shift to a defined contribution pension plan. It includes a back-to-work protocol that spells out a schedule to restart operations, but those details also were not made public.
"My members will see it first," Mr. Fraser said, adding meetings are scheduled for Wednesday and Thursday.
A source close to the situation said the union had accepted some reductions to the nickel bonus and pension benefits but that Vale had not won all the concessions it had sought.
About 120 mine workers at Vale's Voisey's Bay, Nfld., operation remain on strike and have not reached a settlement. They first walked out on Aug. 1, 2009.
Mr. Fraser, who first began as an Inco employee in 1969, struck a nationalist tone in comments Sunday, saying Canada's mining industry is fundamentally at risk under foreign ownership.
"I just think there needs to be a rethinking of the Canada Investment Act and the rules and regulations about foreign ownership in this country," Mr. Fraser said in an interview. "It's a sad day that workers have to walk the picket line for almost a year to fend off the attack by a company like Vale. It's unconscionable that they have to do that."
Vale is the world's largest iron ore producer, with the bulk of its operations in its home country of Brazil. Many analysts and industry experts have questioned whether the iron ore giant fully understood the challenges of underground nickel mining in Canada when it agreed to buy Inco.
Mr. McPhee, however, said the company's foreign ownership had little impact on the strike.
"I don't think it was necessarily significant, other than the fact that we were out longer than expected," he said.
A ratified deal and production restart could flood the global nickel market with excess supply. The restart of Vale's Sudbury operations could push the world market into a surplus, said Tony Robson, a senior mining analyst with BMO Nesbitt Burns.
"Sudbury being out of action has had the world rebalance supply and demand," Mr. Robson said in an interview. "That [deal]could reasonably be expected to drive down nickel prices," which are already low. Nickel closed around $8.50 a pound last week, down from a five-year high of about $24.