TORONTO (miningweekly.com) – In a presentation to the Prospectors and Developers Association of Canada convention on Sunday afternoon, TD Newcrest analyst Greg Barnes cautioned that a deal to end the seven-month strike at Vale Inco's operations in Sudbury, Ontario, could put some downwards pressure on the nickel price.

He need not have worried: the Brazilian-owned miner announced just a couple of hours later that negotiations - the first since the United Steelworkers (USW) union began the strike in July - had broken down.

Vale has made a new five-year contract offer, which was rejected by the union's bargaining committee, both sides said on Sunday.

"We are obviously very disappointed as we went to great lengths to end the strike," Vale Inco spokesperson Cory McPhee said in an email to Mining Weekly Online on Sunday evening.

After talks were called off, the USW made what it called an “unprecedented” request  to refer all outstanding issues to a binding arbitration panel, chaired by mediator Kevin Burkett, but Vale Inco vice-president and GM for the Ontario operations, John Pollesel, said that the company could not accept the proposal.

“We are not interested in having a third party make fundamental business decisions affecting the future viability of the business," he said.

The new offer proposed by the company still included a defined contribution pension plan and revised bonus plan – the two big issues about which the company and union disagree, as Vale wants to switch from the current nickel-price bonus to a performance-linked bonus, as well as changing away from defined benefit pension structures for new employees.

The company said that the new offer contained improvements to employee wages and the defined benefit pension plan a cost-of-living allowance roll-in and a new threshold at which the bonus payments would be triggered.

It also tabled a special $3 000 'return to production bonus' that “would reward employees for a successful resumption of operations”.

However, the USW accused Vale of refusing to negotiate, and said that it had proposed a number of compromises from its side, which were not matched by concessions from the company.

“Vale did not come close to reciprocating on the many and substantial changes made by the union," said USW district six director Wayne Fraser.

The union has scheduled meetings on Thursday in Sudbury and Friday in Port Colborne (employees of the platinum-group metals refinery there are also on strike) for its members to review and vote on the new offer from Vale.

Vale Inco and the USW began 'exploratory' mediated talks 11 days ago, and said at the time they would place a media blackout on the proceedings.