Fred Stanford, president of Vale Inco’s Ontario operations, spoke to about 100 members of the Sudbury Area Mining Supply and Service Association (SAMSSA) Dec. 14 about the company’s shutdown plans.
He said the company doesn’t want a strike in 2009, but will shut down production around the time of contract negotiations just in case.
“That plant is a miserable thing to shut down. It does better if it runs steady. It doesn’t like shutting down and being brought into production again. It’s phenomenal the range of things that can screw up when you do that,” he said.
“We are going to shut it down in preparation for a contract acceptance vote. You can’t have all that hot metal sitting about the place if people decide they’d rather spend their time elsewhere. We will shut it down in May 2009, so we don’t have to do it twice in one year.”
Vale Inco had a successful maintenance shutdown in 2007, said Stanford.
Besides inviting Stanford to speak at the meeting, SAMSSA members approved the organization’s financial statements for 2007, elected new board members and presented two members with the first annual SAMSSA Hall of Fame awards.
The winners were Conrad Houle, owner of Tracks & Wheels Equipment Brokers Inc., and Fred Castron, owner of Cast Resource Equipment Ltd.
Stanford also gave members of SAMSSA a quick lesson on the business principles of the Brazilians who now own Vale Inco.
In the 1990s, Brazil went through a period in which the country’s currency inflated dramatically.
That experience made the owners of Companhia Vale do Rio Doce (which acquired Inco Ltd. in 2006) extremely interested in controlling expenses, Stanford said.
“They are extremely disciplined about the management of cash. Like, extremely,” he said.
He warned SAMSSA members to get ready to engage in more competitive tendering processes.
“The purchasing systems are very heavily focused on tendering. Tendering, tendering, tendering, tendering, tendering. Don’t take it personally. That’s just the way it is and will be,” he said.
By the end of 2007, the company will have spent $500 million in one year on capital projects, and that number will increase to $600 million in 2008, Stanford said. Most of that money is being spent in Northern Ontario.
About $300 million of the money earmarked for 2008 will be spent on repairing buildings, replacing equipment and underground development.
Another $200 million will be spent on new mining projects, notably Totten Mine and a feasibility study for Copper Cliff Deep.
The final $100 million will be split between health and safety initiatives and an expansion of the Clarabelle Mill.
Vale Inco is expected to produce about 244 million pounds of nickel in 2007, a number which is “not quite a record, but it’s in the zone,” said Stanford.
2008, however, is expected to be record-breaking for the company, with management looking at 298 million pounds of nickel being produced.