Saturday, December 20, 2008

Vale INCO Letter - These are Difficult Times

Dear Colleagues,

Over the past number of weeks we have updated you on how the global economic crisis is affecting us at Vale Inco. We have responded to the situation by implementing several immediate, aggressive measures to secure the long term viability of the Company. To date, these actions have included a hiring freeze, reductions in discretionary spending and scaling back high cost, low margin production.

Unfortunately, it has become increasingly clear that more is required for us to operate competitively and efficiently in this fiscal climate, without compromising our long-term growth potential. With these objectives in mind we have taken a comprehensive look at all elements of our business. Based on that assessment, today we are announcing the following measures:

As a means of reducing our workforce, we are offering a voluntary retirement program to eligible staff employees. Further reductions will come through efficiencies in corporate functions – largely among our contract, temporary, casual and probationary employees. Corporate functions include the following departments: Finance, Human Resources, Information Technology, Corporate Affairs, Strategic Planning, Procurement, Legal, Security, Sustainability and Marketing.

Employees affected by today’s announcement are being contacted individually by their direct managers. We will be offering transitional support including financial and career counseling – and will do everything we can to ensure all concerned are treated with empathy and respect.

From a production standpoint, we are suspending operations for a minimum of one year at our Copper Cliff South Mine in Sudbury, Ontario and moving it into care and maintenance mode. The Sudbury leadership team will be speaking to employees today and in the days and weeks ahead. They will be working closely with employees, unions, and our supply and service providers at the mine as this process unfolds and will continue to provide updates as details become available.

We are also suspending the US$814 million Copper Cliff Deep Project in Sudbury for a period of 12 months. These measures follow previously announced reductions in production at PT Inco in Indonesia and a slower than expected ramp-up of operations at Goro Nickel in New Caledonia.

Production at our Voisey’s Bay mine and mill in Newfoundland and Labrador will be reduced by a one-month production shutdown in July 2009. Employees there will be asked to take their annual vacation during this period. Regularly scheduled 2009 maintenance shutdowns in Ontario (Spring/Summer) and Manitoba (August) will proceed as planned.

We are continuing to study whether other measures are necessary to adapt our production profile to market conditions.

These kinds of decisions are never easy and we certainly don’t take them lightly. Unfortunately, they are necessary. Today’s announcement speaks to uncertainties in the near future – but no one can predict how the markets will shift in 2009. Having said that, the analyst community is expressing faith in the future of the minerals and metals market — and the long-term fundamentals of our Company remain solid. We will continue to monitor the evolving global economic situation and inform you of any additional measures that may be required.

We appreciate that it’s hard to stay focused in such a challenging environment, but we must continue providing the quality of service our clients expect and we consistently deliver. Most importantly, we remind you to be particularly attentive to workplace safety and not be distracted from your own safety or that of your colleagues.

The Vale Inco leadership, including your own Manager, is available as always to answer any questions you may have and to discuss individual situations. These are difficult times, but we are confident that with your commitment and professionalism we will come through this economic slowdown and realize our long-term goals. We thank you for all your support.


The Management Committee

Sphere: Related Content

No comments: