A drop in zinc and sulphuric acid demand has forced the Noranda Income Fund (NIF. UN-T) to cut 45 jobs at its zinc plant in Salaberryde- Valleyfield, Que.
Overall, the fund has temporarily slashed its hourly workforce by about 10% as a result of a 20% decrease in production.
In February, Noranda Income Fund said that it would cut production for the month of March in response to weakness in the market, but since then has decided to continue the decreased production for the month of April, too.
Xstrata Canada, the fund’s sales agent, said it was unable to arrange sales or temporary storage for sulphuric acid equal to the rate of production.
The fund notes that the lower production will negatively affect its profitability and cash flow, however, it has not mentioned any dividend cuts yet.
The duration of the layoffs will depend on the fund’s ability to operate at full production.
The plant is known as the CEZinc processing facility, owned by Canadian Electrolytic Zinc Ltd., and is the second-largest zinc facility in the world. It produces refined zinc metal and other byproducts from zinc concentrates bought from mining operations.
Xstrata Canada has an agreement with the fund to supply zinc concentrate for CEZinc until 2017. The fund is paid a processing fee for refining the zinc and earns additional revenue through zinc metal premiums, byproduct credits and metal recovery gains.
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