Xstrata cutting 686 jobs at Canadian nickel operations

Xstrata Plc said Monday it is eliminating 686 permanent jobs from its Sudbury, Ont., mining operations.

The cuts will affect union and salaried employees in operational and non-operational roles. The company started a three-day stoppage of operations Monday to allow the restructuring to occur.

The company, which is based in Zug, Switzerland, said its Craig and Thayer-Lindsley mines will both cease operations immediately.

The Strathcona Mill will be reduced to two work shifts from four as a result of reduced feed.

Xstrata also said its Fraser Morgan development project will be deferred. The company said the project  "will be evaluated on an ongoing basis and may be re-initiated when economic conditions allow."

Mining companies around the world have been hit by falling prices for metals and commodities amid the recession.

"Our leadership team is taking proactive and decisive measures during challenging times," said Ian Pearce, Xstrata Nickel's chief executive. "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 company said the moves will not affect the ramp-up of production at its Nickel Rim South project in Sudbury. Xstrata said the development is still on track to produce approximately 7,400 tonnes of nickel this year.

The mine is projected to generate annual production of approximately 18,000 tonnes of recoverable nickel by early 2010.