Vale Inco wields axe on Canadian nickel ops

What Vale announced as an "adjustment in its nickel operations," will result in...

What Vale announced as an "adjustment in its nickel operations," will result in a shutdown of its Voisey’s Bay nickel operations during the month of July 2009.The Brazilian mega miner has also decided to permanently shut down the Copper Cliff South mine in Sudbury, and also postpone the start-up of the Copper Cliff Deep project for 12 months.The miners of Vale Inco will be offered a voluntary retirement program internationally. "Vale Inco will pursue other initiatives to reduce costs," a press release stated.Vale Inco spokesman Cory McPhee told the Financial Post, "We’re announcing moves today that we hope will have an impact. But we don’t have a crystal ball for 2009, and further [cutbacks] are entirely possible."In a brief analysis published Thursday, Haywood Securities advised, "These cutbacks will provide some relief to an over-supplied nickel market but further cutbacks worldwide are required.”We believe it is likely that Vale could mine and mill 12 months of production in 11 months as this announcement today makes no mention of any smelter production cutbacks at Thompson or Sudbury, where the Voisey’s Bay concentrate is treated, Haywood metals analyst Kerry Smith suggested. Vale also gives no guidance on Voisey’s Bay production and historically the mine has produced more than our estimates..."Haywood estimates that Voisey’s 2009 production will decrease 8% from their current estimates of 140 million pounds of nickel, 105 million pounds of copper and 6.9 million pounds of cobalt.On Wednesday Vale announced it was firing 1,300 employees in Brazil and internationally, which is roughly 2.1% of its 60,000-person workforce. The company is also giving 5,500 workers paid leave from this week until February and additional 1,200 employees are being retrained for other jobs within the company.During a press conference in Paris, Fidel Branco, Vale’s managing director of iron ore sales, said, "We have a credit crisis, contraction in the economy, huge destocking in raw materials and demand is really dull."