Growth from within says Xstrata Nickel CEO.

Driving growth from within and finding better efficiencies from its newly-acquired Sudbury assets is the mantra of Xstrata Nickel, says CEO Ian Pearce.

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Though national media reports focused on parent company Xstrata's plc's global acquisition strategy, Pearce says improving and expanding its existing business is a key piece of their growth strategy.

When Xstrata made last summer's commitment to its unionized workers and the Sudbury community of no job cuts for three years, "it's under the premise that we've got to grow the business ... that's a very strong directive," says Pearce, in an interview with Northern Ontario Business.

But that's an almost moot point considering Canada's industry-wide search for finding skilled labour in an unprecedented global boom cycle for base metals, oil and gas.

Some mining analysts predict the mega-mining deals of 2006 will be downsized with smaller deals happening in 2007. There's much discussion about whether junior miners themselves will consolidate to form a mid-tier mining group to be consumed again into a bigger miner.

But Pearce, a former Falconbridge COO, isn't delving too much into industry speculation and theories.

He's concentrating on Xstrata's $18 million investment to move its Fraser-Morgan nickel-copper deposit into production by early 2009. More mine building work continues at its high-grade Nickel Rim South Mine on the eastern Sudbury Basin and there are other promising, yet challenging, projects in the queue, including Onaping Depth.

Pearce says Nickel Rim, Xstrata's new flagship Sudbury property, remains on schedule, is slightly under budget, and has a "fantastic safety record."

Though many local industry watchers remain curious about the so-called Sudbury "synergies" between Xstrata and CVRD--Pearce says talks haven't really progressed that much. "They've (CVRD-Inco) asked us to give them a breather and allow them to get consolidated as a company."

Any discussion about moving ore more efficiently to mill within the Sudbury mining camp, or what form any joint venture structure would take, hasn't been talked about even in a general way, he says.

"We've not gotten into that at all. The last time we discussed that was the last time we were together trying to discuss the Falcon-bridge-Inco deal (in late 2005-2006), and we haven't gotten into that again.

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"They've put out positive statements, we've put out positive statements, now it's just a matter of getting together and making something happen."

Pearce calls Xstrata's growth strategy a "breath of air" that's revitalized the business.

It means more accountability on all levels, right down to the miner working underground.

"The whole way the business is managed is a lot more rigorous and more onerous ... in a positive way and it drives (people's) behaviours."

Lowering Sudbury operating costs assets is a priority, which Xstrata hopes to improve on at its new greenfield Nickel Rim project.

Once Xstrata was identified last summer as the new owner, Pearce says the British-Swiss miner approached the takeover process with clear objectives and timelines. There was immediate clarity to all staff within 30 days on their job status.

And while some industry watchers speculated the Xstrata model involves carving up and selling off assets, Pearce says, "It became apparent to us very quickly that nickel was a business that Xstrata was very interested in."

Managers were promised it was business as usual to run their operations.

"They offer guidance, support and oversight, but it's up to us to deliver what we've set ourselves for in our three-year plan."

Whether that includes greater job flexibility with its unionized Sudbury workforce, Pearce didn't specify.

"We have positive feedback from the union and it's a matter of us working together and finding ways to achieve success."

In mid-January, Xstrata was in first negotiations with Local 598 Mine Mill/Canadian Auto Workers representing 1,000 mine, mill and smelter workers in Sudbury

With nickel prices at historical highs, the union is looking for improvements to wages, pensions and benefits.

In mid-January, Mine Mill/CAW workers voted 98 per cent in favour of a strike when their current contract expires Jan. 31.

The last three contract negotiations in Sudbury with Falconbridge have resulted in strikes and production disruptions.

www.xstrata.com

By IAN ROSS 

Northern Ontario Business