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 Salaberry-de-Valleyfield, Que.
Overall, the fund has cut hourly jobs about about 10% while production has been reduced by 20%.
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 impact its profitability and cash flow, however it has not mentioned any dividend cuts yet.
The length of the layoffs is unknown at this time and will be 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 by products 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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