The prices of nickel and other metals prices will recover, especially when more electric vehicles are built, mining analysts say. When they do, work at Levack Mine’s Morrison deposit will resume.
Until then, KGHM Sudbury will keep the deposit in a care and maintenance mode, company officials say.
“It was very difficult,” Steve Dunlop, KGHM Sudbury general manager, said about meetings with employees held Wednesday to break the news. “Our concern is certainly with our employees. We are a fairly tight family. All of our workers have 10-plus years and the staff (members) have also been with us for quite a long time. It was very difficult.”
Slumping world nickel prices have prompted KGHM Sudbury to halt production at its Morrison deposit, putting an estimated 120 employees out of work as of late March when the mine goes into care and maintenance mode. A total of 87 of the affected 120 employees are members of United Steelworkers Local 2020.
Dunlop said the layoffs will result in KGHM Sudbury losing about half of its local workforce; the remaining 125 people will handle care and maintenance duties at the Levack Morrison Deposit and production at the adjoining McCreedy West Mine.
The general manager blamed low world nickel prices for the layoffs.
“We’ve been uneconomical for a little while now,” said Dunlop. “Our economics are based on the world price, global nickel prices.”
The general manager said the Morrison Deposit was providing nickel and copper, while the McCreedy West Mine is producing those metals, plus precious metals, which command much better prices.
“That’s what is keeping McCreedy West going,” he said.
KGHM Sudbury has an agreement with Vale that sees Vale’s Sudbury operations process the ore and pay KGHM Sudbury based on what is produced.
A Polish-owned company, KGHM Sudbury had already cut 22 jobs from its Morrison Deposit, also due to low metal prices. In addition to the McCreedy West Mine, KGHM Sudbury also has the Victoria Mine project near Fairbanks Lake, which is still in the development phase.
Dunlop said that should world nickel prices rebound, production can resume at the Morrison Deposit.
On Thursday morning, nickel was selling for about US $5.19 pound on world nickel markets. In early January, the price had fallen below $5 pound despite world nickel stocks continuing to fall over the past year.
As of Thursday morning, there were 201,378 tonnes of nickel in London Metal Exchange warehouses, well down from the record 389,154 tonnes set on Aug. 31, 2017.
Stan Sudol, a former Sudburian now living in Toronto, who operates a website entitled The Republic of Mining, which is dedicated to mining industry news and developments, said the pending shutdown of operations at the Morrison Deposit is a bit of a surprise for him.
“A lot of the byproducts (from the deposit) are platinum-group metals and copper,” he said Thursday. “I never suspected they would look at shutting it down. But, each mine in the Sudbury Basin has its own profile “¦ It’s horrible for the 120 people who are out of a job, but the situation they (KGHM) are into with care and maintenance, they are ready for an upturn (in nickel prices).”
Sudol said these are volatile times in the mining industry largely due to the current trade dispute between China and the United States serving as a dark cloud over metal demand and activity. Nickel being a key element of stainless steel production, he said, has consequently slumped.
What will soon impact on world nickel demand in a big way, Sudol said, is growth and demand for electric vehicles.
“You are going to see a lot of demand with both nickel and copper needed for those vehicles. The demand for the Class 1 nickel produced in Sudbury is going to skyrocket. How fast that is depends on the transition to electric vehicles. It’s anyone’s guess, but it’s going to happen.”
Sudol said that as a bonus for Greater Sudbury, copper and cobalt are also required in the production of electric vehicles, both metals also being mined here along with nickel.
“One of the best jurisdictions to dig Class 1 nickel out of the ground is the Sudbury Basin and you still need an amount of copper for electric vehicles,” he said.
As for where nickel prices are headed in 2019, Sudol said prices will be all over the map.
“In the long term, because of electric vehicles, (the outlook) will be brighter, but in the short term, it will be lower,” he said.
Myles Sullivan, United Steelworkers’ northeastern Ontario co-ordinator, said the best ore in the Morrison Deposit had already been mined and what remains is just not economic at current world prices.
“I feel really bad for the members and their families who are impacted, especially right in and after Christmas when the bills come in,” he said Thursday. “But, with the nickel and copper prices being depressed for so long “¦ the writing was on the wall. The best part of (the deposit) is mined out. There is still ore there, but not (economic) at these prices.”
Sullivan also said there is ore that can be mined at Levack Mine and the Morrison Deposit, so when metal prices rebound, the laid-off workers can be recalled to mine it.
The co-ordinator also said that with just less than three months of work left before the layoff, it is important for the affected workers not to let their guard down when it comes to workplace safety.
“We want the members to get home safely to their families after each and every shift,” said Sullivan.
