Vale Inco strike hitting nickel inventories

Posted By HAROLD CARMICHAEL, SUN MEDIA

Posted 3 hours ago

The strike at Vale Inco is beginning to bite" into nickel inventories according to one analyst, prompting a Timmins-area nickel miner to re-activate one of its two dormant mines.

Liberty Mines Inc. announced Wednesday its McWatters Mine is going back into production. The mine had been in care and maintenance mode since October.

Gary Nash, Liberty Mines' president and chief executive officer, said with the strikes at Vale Inco operations in Greater Sudbury and Voisey's Bay, and the closure of 40 other nickel mines around the world, the price of nickel is back to a point where nickel mining is viable.

Liberty Mines has two operating mines, one mine in development and several nickel/copper and nickel/cobalt projects in the works in the Timmins and Gogama areas.

Nickel analyst Terry Ortslan of TSO & Associates in Montreal said the strike by United Steelworkers of America Local 6500 in Greater Sudbury will have a creeping impact on world nickel supplies.

The strike will start biting into inventories very soon," he said. By September, we are going to see a dramatic change starting in the inventories.

I think it's going to occur in the mid-late fall. You will see quite a different picture in inventories. The bottom line is the longer the strike, the bigger the impact will be."

Ortslan said the global stainless steel industry is a big consumer of nickel, and which traditionally slows down during the summer months, will help lead the return of demand for nickel.

The stainless steel (industry) is good, but it's not going to be going like gang-busters until 2010," he said.

Ortslan said he expects world nickel prices to gradually increase in the months ahead.

Even in the slow times in the summer, you are seeing good price activity," he said. It's an indication the market is not all that weak."