Vale in Canadian strike deal
“Vale, the Brazilian mining group, has reached a tentative deal with the United Steelworkers union to end a bitter year-long strike by 3,000 workers at its nickel operations in Canada.
The main issue in the dispute has been an annual bonus linked to the nickel price that the union accepted during the 1980s in return for giving up annual wage increases. Pensions and job security were also in dispute. …
The settlement was reached with the help of two government-appointed mediators and announced on Sunday evening local time. Ontario’s labour minister met both sides on Friday.
Details of the five-year settlement were not immediately available. Vale said that it would sign comprehensive agreements with the union on Monday. The deal is still subject to ratification by union members. “
Source: Financial Times, July 5, 2010
- Vale acquired Inco for $17.6bln at the end of 2006. Reports of conflicting management styles, leading to many Inco executives leaving the company, have surfaced since.
- Vale Inco employees started their strike in July 2009 when Vale wanted to change the bonus payment (which is linked to surging nickel prices) and pension plans.
- Vale Inco is responsible for approx. 1/3 of Vale’s nickel output. The operations in Sudbury were stopped at a time of oversupply in the nickel market, thus leading to a small nickel price effect.
- The company has not announced a definite deal with the union yet.
- The strike at the Inco operations has been a serious blow to the revenues of Vale in the past year. Nickel price peaked at almost twice the July 2009 levels in early 2010. Getting the operations in Canada back to full operations was therefore a top priority for Vale’s management team.
- Vale tried to break the strike in various ways, including operations using contract workers. The company will need to find a balance between improving employee relations and restoring competitiveness of the operations.
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