TORONTO (miningweekly.com) – Canada's FNX Mining continues to stockpile ore being mined from its operations in Sudbury, Ontario, and can continue to do so for “several weeks” if neccessary, spokesperson David Constable said on Friday.

FNX has an offtake agreement with Brazilian-owned nickel-miner Vale Inco, one of the two big players in the nickel-rich Sudbury basin.

However, ore deliveries from FNX mines have been halted since the end of May, after Vale implemented a planned eight-week shut down, in response to market conditions.

Operations were have to restarted earlier this week, but Vale is locked in a contract dispute with its biggest union in Sudbury, and unionised workers began a strike on July 12. Indications are that the stoppage may be a lengthy one.

Constable said in an interview that FNX continues to hold talks with the other big miner in the area, Xstrata Nickel, on a potential deal to process ore at Xstrata's Sudbury mill.

If no deal is reached with Xstrata, however, and the strike drags on, the company has not ruled out halting its own mining operations and temporarily laying off staff.

All three options are still on the table and the situation is being evaluated “on a weekly and monthly basis...there is not a hard and fast deadline for a decision”, Constable said.

“Clearly if the strike is still on and nothing happens with Xstrata in the next several weeks we will have to make a decision about whether to continue stockpiling.

“But that decision is not imminent, we can certainly continue as we are for several weeks.”

Nickel traded above $22/lb in 2007, but fell sharply, to as low as $4/lb late last year, after slowing global economic activity dampened demand for the metal, which is used to make stainless steel.

The price has since recovered to above $8/lb.

After nickel prices dropped last year, FNX suspended nickel-ore mining at its McCreedy West and Levack mines, but continues to mine higher-margin copper and precious-metals rich areas at McCreedy, Levack and the new Podolsky mine.

The company said in February it expected to ship 679 000 t of ore from its Sudbury operations, yielding 3,7-million pounds of payable nickel, 35,2-million pounds of copper and 58 000 oz of platinum, palladium and gold.

Shares in FNX Mining were up 5,2% on Friday, at C$8,71 apiece by 14:09 in Toronto.

The company is scheduled to report second quarter results on August 14.

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