10 Mar

Vale to Suspend Operations at Stobie Mine

Hello everyone:

I am writing to inform you that after more than 120 years and more ore produced than any other mine in the history of Sudbury, operations at Stobie Mine will be suspended later this year with the mine placed on care and maintenance.

As you know, our Base Metals business has been challenged for many years now due to the prolonged downturn in metals prices and ongoing challenges in the market. This has driven us to look closely at every aspect of our business globally to try to remain cash flow positive. This is especially challenging for us in Ontario, given the age of our assets and the huge capital requirements to sustain our operations into the future.

Operations at Stobie have been under review for some time, prompted by a number of factors including market challenges and declining grades and volumes as we approach the end of Stobie’s natural mine life. More recently, seismicity at the mine and its impact on our people’s safety has become a key factor, as we are now restricted in the areas we can safely mine at Stobie.

The decision to place Stobie on care and maintenance is a necessary but difficult one given our long and proud history at the mine. The reality is, however, that continuing to mine at Stobie no longer makes economic sense in today’s challenging price environment.

Stobie Mine represents a true success story in mine longevity. It began as an open pit operation in 1890, with underground operations beginning in 1914. More than 375,000,000 tonnes of ore have been mined out of the Frood-Stobie complex over the years, more than any other mine in the Sudbury Basin.

A specific date for the transition to care and maintenance has not yet been established. A Transition Team will design and guide the process for Stobie in a safe, orderly and fair fashion in accordance with the requirements of our Collective Agreements.

While we will do our best to minimize impacts to our people as much as reasonably possible, it is expected this decision will result in workforce reductions within our operations. I commit that I will provide you with more details as the process becomes clearer.

In the context of today’s announcement, there are a number of things I want to emphasize.

First, I know today’s news is not easy for anyone. Moving forward, we will work closely with employees, union representatives, and our supply and service providers to ensure everyone is treated with respect and dignity throughout the transition process.

Second, the announcement to suspend operations at Stobie is in no way a reflection on the many employees that have called Stobie Mine home. We have an excellent team at Stobie; and the reality is after more than 120 years of operation in the pit and underground, our grades are low and the revenue we are generating in the current price environment is no longer sufficient to cover our ongoing operating costs.

Finally, and most importantly, I know that today’s announcement is bound to cause distractions within our operations. However, we must all work together to ensure we continue to put safety first in everything we do. Nothing is more important than getting home safely, and we must stay focused on taking care of each other and ourselves.

You have my commitment to continue to keep you informed as things evolve. As always, I want to thank you for your ongoing support and commitment through these challenging times.

Sincerely,

Stuart Harshaw

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