March/April 2009

Taking proactive measures

Xstrata Nickel restructuring not to affect Nickel Rim South project

By A. Gordon


Xstrata Nickel Rim South

In response to the ongoing economic downturn, Xstrata Nickel recently announced a restructuring of its Sudbury operations that would see some of its older operations suspended or closed in an effort to safeguard the viability of others — most significantly, Nickel Rim South.

“Our leadership team is taking proactive and decisive measures during challenging times,” said Ian Pearce, Xstrata Nickel CEO. “The continued decline of the economic environment and deteriorating commodity markets, coupled with high operating costs, particularly at our older mines, are negatively impacting our Sudbury operations. The actions announced aim to reposition our Sudbury complex into the bottom quartile of the cost curve, ensure our operations remain financially robust even during a potentially long period of depressed commodity prices, and establish a strong foundation for further growth in the region.”

The restructuring will see the Fraser Mine Complex placed on care and maintenance and the reorganization of associated support and administrative functions. Work shifts will be reduced from four to two at the Strathcona Mill as a result of diminished feed. Additionally, the Fraser Morgan development project will be deferred, but may be reinstated if ongoing evaluations determine that economic conditions make that feasible.

This most recent news follows an announcement in November 2008 regarding the accelerated closure of the company’s Craig and Thayer-Lindsley end-of-life operations.

“Our Sudbury complex is an important part of Xstrata Nickel and we remain fully committed to continuing to operate at Sudbury for many years to come,” commented Pearce. “Nickel Rim South remains a top priority and development work on the project continues without interruption.”

Located in the Sudbury basin, Nickel Rim South stays on schedule to ramp up to 60 per cent of its ultimate 1.25 million tonne per annum capacity in 2009. It is earmarked to become a low-cost cornerstone operation in the region, generating 18,000 tonnes of recoverable nickel by early 2010. Xstrata Nickel has invested $627 million for the project’s first phase, which came in on time and on budget. It has also approved the remaining project capital expenditure of $300 million for the completion of mine and infrastructure development.

In the coming year, total production from the Sudbury smelter is expected to remain comparable to that of 2008, as shortfalls from the announced operation suspensions will be offset by concentrates from Nickel Rim South and Xstrata Nickel Australasia.

“We are making these tough decisions to sustain our business in the immediate and longer term,” said Marc Boissonneault, vice president of Xstrata Nickel Sudbury Operations. “Ultimately these actions will result in more robust and viable operations at Sudbury that continue to create value and jobs for the local community over the medium and long term.”

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