SUDBURY - A small group of striking workers stand by the entrance to Vale Inco's enormous Copper Cliff smelter in the shadow of the now silent Inco Superstack, Sudbury's most visible landmark and the second tallest structure in Canada.

The peaceful setting belies rising tensions in the seven-week long stoppage, stoked by rising nickel prices, waning stockpiles, and Vale's decision to use management and office staff to partially restart the Sudbury mining operations.

"We'll see snow on the ground by the time we settle this – November or December," a 45-year-old machinist who only wanted to go by his first name, Ray, said philosophically.

Like many of the 3,100 striking workers – not including miners on strike at Vale's Voisey's Bay mine in eastern Canada – Ray managed to sock away some money in past few years as nickel prices ran to a record high in 2007 above $24 a pound, driving some workers' pay packages into six-digit territory.

With his wife also working, the lack of income is not about to break his resolve.

But there is also no sign that Vale, which became the nickel-rich region's dominant miner when it acquired Inco in 2006, is prepared to budge from its demands to trim pension benefits and reduce a bonus tied to the price of nickel that produced rich payouts before prices tanked last year.

"We have been very clear that we are willing to return to bargaining when the (union) accepts the fact that change is necessary if we are to create a sustainable business model that is competitive in all economic environments," said Vale Inco spokesman Cory McPhee.

The timing of the strike – at the tail end of a recession that sapped demand for nickel and copper – would suggest the company has few reasons to rush back to the bargaining table.

Indeed, Vale halted the Sudbury mines, mills, refining and smelting operations this spring due to weak demand. The strike merely extended the shutdown.

RATTLING CAGES?

Its decision to restart copper and platinum group metal production – nickel output will remain silent – may also be a sign the company plans to stick to its guns. But some Inco workers suspect it's an attempt to rattle their cages.

Wayne Fraser, regional director with the United Steelworkers union said Vale's decision could put inexperienced workers' lives at risk. He vowed strikers would use "every tactic we possibly know" to stop the restart.

However, on a bright late-summer day, only five or six strikers stood at the entrance at each facility, warming themselves around a fire while they delayed contractors by 12 to 15 minutes, the maximum allowed by law.

Over at the South Mine, picketer Ryan Norrad, 26, said he does not have the same reserves as more veteran miners. He has a wife and three kids but still plans to stick it out.

He conceded the union's leverage had been weak when markets were soft but noted nickel prices have strengthened in recent months. The price has nearly doubled since the beginning of April to $8.40 a pound on Tuesday.

"It's getting better with prices going up," he said.

Market sources say the company declared force majeure last month on nickel shipments, but the company hasn't confirmed this, and said recently it is still shipping metal.

Vale CEO Roger Agnelli said in early July that the Sudbury is its highest-cost operation and unsustainable at recent cost levels. But Fraser said the company bought the Inco operations in 2006 with eyes wide open and with prices much lower.

"Prices of metals are much higher than they were when they bought it three years ago," Fraser told reporters this week.

"These guys make money at $3 nickel."

Analysts say despite the recent price gains, the nickel market is balanced even with the Sudbury operations shut down.

"A restart of operations in the absence of a rebound in demand outside of China could result in renewed inventory increases and a correction in price." RBC analysts Fraser Phillips and Adam Schatzker said in a note on Friday.

For now, workers are watching the restart with suspicion. Aware of the rising nickel price, they also take solace in the knowledge that Sudbury is safe from the fate of industrial centers that have become ghost towns when their operations have moved to lower-cost countries.

"They have to deal with us, because it's where the nickel is," Ray said.