TORONTO (miningweekly.com) – The situation in Canada's nickel-rich Sudbury region remains “challenging”, FNX Mining vice-president for investor relations Dave Constable said on Monday.

“We don't know tomorrow morning whether things will change drastically on the strike line,” he said at a mining conference hosted by Desjardins.

All FNX's mines are located in the Sudbury, Ontario, region, and the company has a 'must deliver/must take' processing agreement with Brazilian-owned nickel-miner Vale Inco, whose workers in Sudbury downed tools in July this year and remain on strike.

FNX did sign an agreement in August with the other big miner in the area, Xstrata Nickel, to process about 150 000 t of ore and the rest of the ore being mined went onto stockpiles.

Vale has since restarted its mill and some mining using nonstriking management and office workers, which meant that FNX could restart deliveries of its stockpiled ore, but increasing tensions between Vale and its striking workers.

The company and the union have been in and out of court since operations resumed, because Vale says that the union is breaching strike protocol by delaying traffic in and out of its operations for too long.

However, Constable said that FNX would be able to ride out any changes in the situation in Sudbury.

“We're flexible right now, we have the cash, we have the ability to do stockpiling for a while,” he said.

“And we certainly have the ability to fall back and send some material in the short term to Xstrata for processing.”

FNX stopped mining nickel ore last year in response to low prices and demand for the metal.

Both it and Vale are focusing on copper- and precious-metal-rich ore, but the company will continue to assess whether to restart nickel mining, said senior vice-president for corporate development and technical services Catherine Farrow.

However, she said that the company is very aware of the high levels of nickel inventory held around the world, which is currently estimated at more than 300 000 t.

For the most part, FNX views the global recovery as “tentative”, and the company is hesitant to ramp up nickel-ore-mining until it has more confidence in the supply and demand outlook.

“It won't be hard to start up again, but we need to be very careful and very prudent as to how we go about that,” she said.

OPPORTUNITIES

Both executives said that FNX is looking for growth opportunities in Sudbury and elsewhere, echoing previous comments by CEO Terry MacGibbon, who said last month that the company has emerged from 'survival' mode and is not ready to relook at growth.

There will be a “significant number” of business opportunities in the future for FNX to take advantage of, Farrow predicted.

The company raised C$144-million in October, bolstering an already strong balance sheet, she said.

“Basically we are in growth mode, even though we know we've got another year of shaky ground in terms of global recoveries, we think there are some pretty exciting business opportunities out there.”

Shares in FNX Mining slid 2,72% on Monday, to C$11.09 apiece by 14:49 in Toronto.

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