TORONTO (miningweekly.com) – Brazil's Companhia Vale do Rio Doce will postpone the start-up of its Onca Puma nickel project, in Para state, by “at least one year”, and will halt nickel production in Sudbury, Ontario, for eight weeks in response to weak demand for the metal, the firm announced on Thursday.

The Sudbury mining and processing operations will close from June 1 to July 27, following planned maintenance on the processing assets already scheduled for May, Vale Inco spokesperson Cory McPhee said in an interview.

He declined to comment on how much production would be affected by the shutdown, which will affect about 5 000 jobs.

“Given the uncertainty in the market at the moment, we are not making any production forecasts.”

Vale, the world's biggest iron-ore producer, bought Canadian nickel-miner Inco in 2007.

McPhee said that there are no plans at this point to extend the shutdown in Sudbury beyond the eight weeks, but added that the company will “continue to monitor the market and will take action as necessary”.

Vale's precious-metals processing facility at Port Colborne, Ontario, will also be shut down from June 1, 2009, to July 27, 2009. The metals are produced as nickel by-products.

Nickel traded above $22/lb in 2007 but has since fallen sharply, to around $5,58/lb, as slowing global economic activity dampens demand for the metal, which is used to make stainless steel.

The nickel-rich Sudbury basin enjoyed an economic revival during the metals boom of the past couple of years, during which the two big stakeholders in the region, Inco and Falconbridge, drew international interest and were acquired by big mining names - Vale and Xstrata Resources respectively.

However, as prices remain depressed, mines are being closed, production scaled back and expansion projects delayed.

Vale Inco has cut production and spending around the world in the last four months, and announced in March that 900 jobs would be cut, including 423 in Canada.

In February, Xstrata Nickel said it would put its Fraser complex in Sudbury on care and maintenance, shelve a development project and cut 686 permanent jobs.

The firm had already announced early closures of the Craig and Thayer-Lindsley underground mines, which were nearing the end of their productive lives, as it battles weak nickel prices.

PROJECT DELAY

The Onca Puma project was previously scheduled to come on stream in January 2010, with a nominal capacity of 58 000 t of nickel in ferronickel.

"Given that an environmental permit is still pending, the start-up of Onça Puma will be postponed by at least one year,” Vale said in a statement.

Work continues on a second project, Goro, in New Caledonia, McPhee said, but he declined to provide specific targets on timing or initial output for the operation.

“All we want to commit to at the moment is managing our operations according to the market conditions.”

Still, “all things being equal”, Goro should begin operations this year, he said.

Goro is expected to produce 60 000 t/y of nickel a year when it reaches full capacity.

Last year, Vale Inco announced that it would reduce nickel-in-matte output by 20% in Indonesia by stopping the use of higher-cost thermal power generation, and that the company's utility nickel refinery in Dalian, China, would be kept running at 35% of its nominal capacity.

The Voisey's Bay operations, in Canada's Newfoundland and Labrador provinces, are scheduled to shut down during the entire month of July.

In December 2008, the company also announced that it would indefinitely close its Copper Cliff South mine, in Sudbury, and also deferred a $814-million capital project, to replace the shafts in the mine and the neighbouring Copper Cliff North operation with a single shaft.

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