Vale's Birchtree mine was supposed to be placed on care and maintenance in 2012, but the employees kept the mine running with a $100-million challenge to cut costs. Courtesy of Vale

Vale announced on May 16 it will close the Birchtree mine in Thompson, Manitoba, placing the mine on care and maintenance on October 1st. The company cited weak nickel prices, declining ore grades and production issues as reasons for the closure.

Birchtree has 150 employees at the mine and indirectly employs around 50 others in the community.

The mine, which opened in 1966, closed down from 1989-99 and then reopened in 2000, was supposed to be placed on care and maintenance in 2012, but the employees participated in a challenge to cut $100 million in operations costs and keep the mine running.

Despite these efforts, cash flow from the mine has been negative in five out of the last six quarters and the forecast is for that trend to continue and worsen. On the day of Vale’s announcement, nickel was trading at US$9,000 per tonne on the London Metals Exchange; at a high point in May 2014 it was at about US$19,800 per tonne.

The news comes on the heels of Vale’s announcement in March that it will close its Stobie mine in Sudbury, Ontario by the end of the year. Stobie was in operation for over 100 years and currently employs around 230 people.

Additionally, Vale’s Thompson Smelter and Thompson Refinery are set to close in 2018, which will affect 500 employees. The United Steelworkers Canada (USW), whose local branch 6166 represents Vale’s Manitoba employees, hoped to find work for them at the mines in Thompson, but USW Local 6166 President Les Ellsworth admitted the task will now be more difficult.

Ellsworth told CIM Magazine he has promised workers that no unionized employees will be laid off while there are still contractors employed at Vale’s Thompson locations. He said the union will ask Vale to reshuffle workers to the company's other operations in the area, and to provide training programs as needed.

Even with this pledge, Ellsworth said the closure will be hard on the community. “Regardless if there are layoffs or not, these positions are lost, and that’s a big loss to Thompson.”

Vale employs 1,500 people in a town of 13,756 and is currently investing $120 million into its other mining operations in Thompson.