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UPDATE 1-Noranda defers 2017 zinc forecasts due to Quebec plant strike
March 1, 2017 / 6:37 PM / 9 months ago

UPDATE 1-Noranda defers 2017 zinc forecasts due to Quebec plant strike

(Adds comment from union president, stock price, updates zinc price)

By Susan Taylor

TORONTO, March 1 (Reuters) - Noranda Income Fund said on Wednesday it was deferring its 2017 zinc production and sales forecasts due to an ongoing 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 fourth-quarter results.

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 pension plan changes in a new collective bargaining agreement.

“We’re waiting for management to call us,” said USW Local 6486 President Manon Castonguay, adding that no meetings are currently scheduled.

Members are “going strong,” she said, adding that “they’re not going to give up what we fought for.”

Operations at the plant, the biggest in eastern North America and managed by a subsidiary of Glencore Canada, 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 up 1.35 percent on Wednesday at $2,861 a tonne.

In the fourth quarter, Noranda said zinc metal production increased to 72,291 tonnes, from 71,971 tonnes in same period last year. Sales declined to 69,196 tonnes from 79,552 tonnes.

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 decline reflects lower net revenue, which dropped 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 costs led to 2016 production of 277,022 tonnes of zinc metal and a 2 percent cut to operating costs, Noranda said.

Noranda units were down 1.3 percent at C$1.52 on the Toronto Stock Exchange Wednesday afternoon. Year-to-date, the units have lost 36 percent of their value. ($1 = 1.3311 Canadian dollars) (Reporting by Susan Taylor; Editing by Paul Simao and Diane Craft)

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