TORONTO, March 1 Noranda Income Fund
said on Wednesday it was deferring its 2017 zinc production and
sales forecasts due to a strike by workers at its Quebec
processing plant, the second-largest in North America.
It is uncertain how long the strike, which began Feb. 12,
will continue at the zinc processing facility in
Salaberry-de-Valleyfield, said Noranda, as it announced
The plant's 371 unionized workers, represented by the United
Steelworkers of America, walked off the job after the two sides
could not agree on proposed changes to the pension plan in a new
collective bargaining agreement.
Operations at the plant, which is the biggest in eastern
North America and managed by a subsidiary of Glencore Canada
Corporation, have resumed "partial production," with
management operating the facility, Noranda said. "Management is
in the process of evaluating its production capacity under this
scenario," it said in a statement.
The company said it expects 2017 financial results to be
adversely impacted by the shift to market terms, with spot
treatment charges near historic lows. Noranda will pay market
prices starting May 3, replacing the previous fixed rate.
Zinc prices have nearly doubled since January 2016 due to a
shortage tied to mine closures and shutdowns. The price of zinc
was nearly 1.6 percent higher on Wednesday at $2,870 a
In the fourth quarter, Noranda said its zinc metal
production increased to 72,291 tonnes, from 71,971 tonnes in
same period last year. Sales declined to 69,196 tonnes from
Noranda posted a C$29.8 million ($22.39 million) loss before
income taxes in the three months to Dec. 31, compared to
earnings before income taxes of C$900,000 in the year-prior
quarter. The drop reflects lower net revenue, which fell to C$83
million from C$91.2 million, and a C$52 million impairment
charge, the company said.
Efforts to boost efficiency and reduce operating costs led
to 2016 production of 277,022 tonnes of zinc metal, a 2 percent
cut to operating costs and debt repayment of C$22.5 million,
($1 = 1.3311 Canadian dollars)
(Reporting by Susan Taylor; Editing by Paul Simao)