Nickel climbs as strike shuts down Inco

Gary Park, Petroleum News Calgary correspondent

Nickel prices are predicted to rise as 3,400 Inco workers shut down the world’s largest mine in Ontario amidst the hottest market in years.

Bitter negotiations ended in a strike June 1 that union and company officials have warned could be prolonged, wiping out 9 percent of global production.

The core of the dispute is disagreement over pensions, after faltering stock markets left Inco with a US$805 million pension shortfall last year.

The company’s offer of an increase in its contributions to US$140 million this year from US$67 million in 2002 was rejected by 95 percent of Local 6500 of the United Steelworkers of America.

In addition, the union wants a “significant” increase in the average miner’s pay of C$25 an hour, plus bonuses tied to operating profits.

Inco is now left with only 55 million pounds of nickel to carry it through a strike, the lowest level since 1994, and only 25 percent of last year’s production.

With prospects of a strike looming, spot nickel prices have climbed to 52-week highs over the past month on the London Metals Exchange topping US$4 a pound.

An Inco spokesman said that with the two sides so far apart no talks have been scheduled.