Falconbridge May Not Fulfill Contracts During Strike
2005-10-03 14:00 (New York)
By Jennifer Itzenson and Doug Alexander
Oct. 3 (Bloomberg) -- Falconbridge Ltd., Canada's biggest
mining company, said they may not be able to meet customer
contracts at its Kidd Creek metallurgical operation near Timmins,
Ontario, because of a strike with union workers.
Toronto-based Falconbridge involved the ``force majeure''
clauses in supply contracts that allow the company to avoid
penalties for failing to deliver products due to circumstances
beyond its control, spokesman Ian Hamilton said today in a
telephone interview.
The company idled its Ontario copper refinery and zinc plant
on Oct. 1 after negotiations for a new contract covering 615
union members broke down. The disruption helped push copper
prices to a record high in New York.
``We're in process of advising that we are declaring force
majeure on many of the plant's commercial contracts for its feed
stream and its products,'' Hamilton said.
Kidd Creek processes copper and zinc produced by
Falconbridge and zinc concentrate from Agnico-Eagle Mines Ltd.'s
LaRonde mine in Quebec. The operation was expected to produce
130,000 metric tons of refined copper and 135,000 tons of zinc
this year, Falconbridge said in April.
Shares of Falconbridge fell 21 cents to C$30.86 at 1:56 p.m.
on the Toronto Stock Exchange. Falconbridge's 5 3/8 percent note
maturing in June 2015 fell 0.85 cent on the dollar to 97.1 cents
on the dollar, according to Trace, the bond price reporting
system of the NASD. The yield rose to 5.777 percent from 5.66
percent.
Copper futures for December delivery rose 3.15 cents, or 1.8
percent, to $1.759 a pound on the Comex division of the New York
Mercantile Exchange, the highest closing price ever. Copper has
jumped 26 percent in the past year. A futures contract is an
obligation to buy or sell a commodity at a set price by a
specific date.
There are currently no talks planned with the union,
Hamilton said.
``We are implementing contingency plans to do what we can to
meet customer needs,'' he said. ``But given that we don't know
how long this strike may last, we wanted to act prudently by
declaring this force majeure where it's applicable.''
--Editor: Stroth. |
