Xstrata cutbacks create uncertainty: with almost 700 jobs lost and two mine closures, Sudbury businesses are bracing for impact.

• Position: Xstrata PLC

It is hard to say what kind of impact two mine closures and 686 job cuts at Xstrata Nickel will have on the mining service and supply industry in Sudbury, says the head of its association.

"We will certainly have two less opportunities," says Dick DeStefano executive director of Sudbury Area Mining Service and Supply Association (SAMSSA).

[ILLUSTRATION OMITTED]

Despite Xstrata Nickel cancelling supply orders, his membership will not speak out and rock the boat, realizing opportunities lay ahead with the new Nickel Rim Mine coming into production this year.

Xstrata's flagship $1 billion Nickel Rim South project will ramp to 60 per cent of its expected 1.25 million tonneper-year production capacity this year.

"Yes, we will likely see a reduction in volume and productivity," says DeStefano, but Xstrata Nickel is a separate company from Xstrata Copper or Xstrata Zinc. Business activity in one may not be the same as business in the other, not like Vale Inco where all the mineral divisions are under one roof.

Fred Castron, founder of Cast Resource Equipment Ltd. has had little business dealings with Xstrata Nickel, but Vale Inco has become a significant contract.

The company has back orders that will last them through half this year, Castron says and "hopefully, (the economy) will turn sometime later this year."

His mining supply company has laid off eight people and one new contract has been cancelled from Diavick.

"This is a pretty sad situation," he says.

Inco used to make up a large part of the their business, close to 70 per cent in the 1990s, but in 2000-01 that changed to 20 per cent as work began to flow in from other international mining companies.

DeStefano has put out a survey to all its SAMSSA members to determine the short and long term impact of the local shutdowns. The results have yet to be tabulated, but if they are anything like another Sudbury mining supplier Driftech, the impact will be very little.

Mark Allen, who heads up Driftech's underground division, says the community and economy will be affected by this no doubt, but his company doesn't have business

But Marc Boissonneault, vice-president of Xstrata Nickel Sudbury Operations said "we simply can't carry on with business as usual, and these actions are absolutely necessary."

"Essentially, demand for our products has collapsed. We're having to make these changes to structure ourselves to survive the bottom of the economic cycle, so it's about survival in the short-term...