Escalating conflict at Vale Inco

1 09 2009

Vale Inco is currently dealing with a strike that began in July 13th at its Sudbury mine. This week it sent a letter to employees informing them that the company is in the process of training non-unionized workers to work at the mine during the strike. Admitting to hiring scabs lives up to Vale Inco’s tradition of transparency in PR but is likely to backfire.

Vale Inco announced earlier this week that it was in the process of training 1200 non-unionized staff to extract copper from its Sudbury mine. Vale Inco claims this measure is required to able to live up to supply commitments taken with customers. Vale Inco is a supplier of copper concentrate to Xstrata who announced that it would temporarily close down its copper smelting and refining operations in Kidd Creek due to a feedstock shortage.

Vale Inco is hoping to be the white knight to Xstrata’s problems and under current conditions this is extremely convenient. Doing so enables Vale Inco to bypass a labour conflict to improve cash flow by focusing on the most lucrative segments of the Sudbury mine.

During previous labour conflicts, the Sudbury mine was kept under care and maintenance. A manager at the mine told the press that since some operations were conducted in previous strikes it gives a precedent under which Vale Inco could justify mining copper segments. Care and maintenance only aims at keeping the mine dry and ventilated so activities can resume quickly when the conflict is over. Training staff so they can do the work of the unionized workers raise doubts of the legality of the operations.

It is often assumed that parties to a conflict can be brought to negotiate if they reach a mutually hurting stalemate. If Vale Inco is allowed to improve its cash flow during the conflict, it hurts only on one side of the conflict and gives no incentives whatsoever for Vale Inco to resume talks. Meanwhile, the union representatives for the workers are signalling that things could get ugly. Somehow, I am not surprised.