Inco: we can't meet nickel contracts

Inco: we can't meet nickel contracts

Move could mean company takes harder line

By Carol Mulligan, The Sudbury Star

June 04, 2003

An announcement by Inco Ltd. on Tuesday that it won't be able to meet contracts for nickel, copper and cobalt could mean the nickel giant will take a "harder stance" in negotiations with striking production and maintenance workers, says a mining analyst.

Terry Orstlan, of TSO and Associates in Montreal, said word that Inco was declaring force majeure on some of its sales contracts, because of the labour dispute, "is not actually good news" for Local 6500 of the United Steelworkers of America.

Force majeure is a legal term that means circumstances beyond its control. "Now that Inco has seen the effects of the labour issue, obviously they are going to have a hardened position because all the damage and all the pain is basically out there," said Orstlan in a telephone interview.

Members of Local 6500 set up picket lines at Inco's 12 Sudbury plants at 12:01 a.m. Sunday, after soundly turning down Inco's settlement offer Friday.

Steve Mitchell, an Inco spokesman from Toronto, said the nickel contracts his company can't meet are mostly for nickel product used in stainless steel production, high-grade nickel alloys, alloy steel and in the foundry industry.

Cancellation of the contracts will also affect the feed Inco ships to joint ventures in Asia and to its refineries in Klydach, Wales and Port Colborne. Mitchell said no one should be surprised the company was forced to cancel some contracts this early in the labour dispute. For the last couple of quarters, Inco's nickel inventory has been "historically low." Inco will help its clients find "alternate sources" of nickel, said Mitchell.

"We have a lot of experience in the nickel market, not only as a producer, but also as a trader and purchaser," he said.

A spokesman for Falconbridge Ltd., Dale Coffin, said Inco's rival nickel producer would not be picking up the slack and filling Inco contracts. "We just don't have any more material," he said Tuesday in an interview from Toronto.

Meanwhile, the president of striking Local 6500 Steelworkers said he's "disappointed" about Inco's announcement - and not because of the effect it will have on negotiations.

"As Inco goes, so we go," said Local 6500 president John Fera.

But the situation with the cancelled contracts "certainly could have been avoided" had Inco been able to strike a deal with the 3,300 members of Local 6500, said Fera.

Contract talks began April 7, but broke down May 27 when Steelworkers walked away from the bargaining table in frustration over what they called the lack of progress on the key issues - pensions, wages and vacation time. Last-minute discussions over plans to try to cut the cost of health-care benefits for employees and retirees seemed to be the last straw for Steel negotiators.

Other than some informal talks between the union and the company, there have been no negotiations for more than a week.

Fera said the union is willing to go back to the bargaining table if Inco moves on two points - pensioners' benefits and members' pensions and wages. The Local 6500 president said there was "lots of movement" in the almost two months of contract talks.

"We moved 100 miles and the company moved an inch.

"That's the absolute truth. Concessions were on the table on Day 1 and they never left the table," Fera said.

Those concessions, as the union calls them, are the reason members are walking pickets lines.

Cory McPhee, a spokesman for Inco in Sudbury, said Tuesday that Inco recognizes "this (labour dispute) has to be resolved and we're open to that."

Emotions were still "running high" Tuesday, the second full working day of the strike, said McPhee.

"We remain open to talks."

He agreed members of Local 6500 had helped the company save money in the last three years and said the company had recognized that with the earnings-based compensation program implemented in the last contract.

Under that program, employees earned an average of $10,000 over the course of the contract.

In the meantime, Local 6500 has been staffing picket lines around the clock at the entrances to all of Inco's plants.

On Monday and Tuesday, strikers denied access to non-union and office and clerical staff with another union who tried to report for work.

Fera said the union is keeping those employees out for their own good because the plants are not safe. They are being operated by supervisory staff at a minimum level.

Inco officials, however, have said they have no fears for employees' safety should they report to work.