Established in 1980, Northern Ontario Business provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North.
A low Canadian dollar could work in the United Steelworkers’ favour as they enter into contract negotiations with Vale in Sudbury, said a Laurentian University commerce professor.
The current five-year collective bargaining agreement between the United Steelworkers Local 6500 and Vale will expire at midnight on May 31, 2015. Jean-Charles Cachon said the low Canadian dollar should give the Steelworkers more bargaining leeway when it comes to salaries.
The lower Canadian dollar decreases Vale’s operational costs in Sudbury, Cachon said. “As workers are paid in Canadian dollars, any weakening of the Canadian dollar is to the advantage of Canadians,” he said.
“It’s becoming a seller’s market in terms of the job market,” Cachon said. “There are less and less people waiting to work for the mining industry. They (Vale) are probably going to have to pay a premium for employees in the next few years.”
Cachon said he expects the Canadian dollar to stay well below parity as long as oil prices remain low. But while the low dollar might give workers more negotiating room, Cachon said he does not expect Vale to give in without a fight.
“I think they’re going to be extremely tough in their negotiations,” he said. After the third quarter of 2014, which ended Oct. 30, Vale posted a $1.4-billion loss, and its shares fell to a five-year low.
Vale took the financial hit due to low iron ore prices – the Brazilian miner’s primary business.
Cachon said the Chinese have stockpiled iron ore, driving down demand and prices.
“At this moment Vale is struggling financially,” he said.
Vale’s base metals division has remained profitable, and to keep it that way the company will fight to keep its costs in Sudbury as low as possible, Cachon said.
To infuse some much-needed cash into company coffers Vale CEO Murilo Ferreira told investors in early December the company might sell 30 to 40 per cent of its base metals division, which could be valued anywhere from $28 billion to $35 billion.
Capital raised from the sale would help support the company’s other projects, as commodity prices fall.
For the rest of this article, click here: http://www.northernontariobusiness.com/Industry-News/mining/2015/02/Low-dollar-could-help-Sudbury-miners-in-labour-negotiations.aspx