When Vale's facilities are to reach full refined capacity remains uncertain, however. The company announced in a statement earlier this month that it was confident it would re-establish full operational capacity by the end of September. We do not share in this optimism, for a number of reasons. First of all, Vale operates a lengthy supply chain at its Canadian and UK facilities, and it is therefore understood to take a minimum of two months before the first refined nickel units appear on the market following the start up of previously idled mines. Moreover, not all employees had returned to work by July 30th and Vale's management has confirmed that some additional training of workers is still necessary, further delaying a full re-start. Secondly, a separate strike is still ongoing at the company's Voisey's Bay nickel site in the province of Newfoundland and Labrador. Talks to end the labour dispute collapsed again in late July as, according to the United Steelworkers Union, the bonus scheme on offer was considered less generous than the one accepted by the workers at Sudbury. Vale's management later stated that the union's demands at the most recent talks had still been excessive. Although Voisey's Bay began producing again earlier this year using non-union workers and outside contractors, we believe that full capacity will not be reached until the dispute is settled. For these reasons we consider it unlikely that Vale's refined nickel output is to return to its optimum this year. This implies that refined nickel production at the company's Canadian and UK facilities combined will total 88,500t in 2010 - 52% below 2008 levels.
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