Although this involves no direct layoffs, Angie Robson, manager of corporate affairs for Vale's Ontario operations, confirmed that the employment of 85 workers would be affected.
“Those employees working at Frood will be deployed to other areas of the operation, and all commitments under our collective agreements will be honoured,” Robson wrote in a statement issued to the media.
The company said current market volatility, declining metal prices and falling demand are to blame for what it calls the “decisive action” it must take globally and in Sudbury to ensure the Base Metals divisions can ride out the “challenging economic cycle.”
The issue at Frood is its age. After a century of mining, the ore is of lower value and declining grades, both of which make it more expensive, particularly in a climate of lower metal prices.
“We are actually mining at a loss” given the current metal price, Robson wrote.
Frood also requires high capital investments in order to sustain production, the statement read.
“So, while the grades are going down, our mining costs there are increasing,” she said. “This is not sustainable in any cycle, but especially in the current context.”
Although the company said it is “strongly committed” to Sudbury, given the current situation, Vale said it will continue to make what it called “disciplined operational decisions” to keep the company profitable.