Strengthening Dollar Weakens Miners

The FTSE 100 index closed down 30.16 points at 5,253.15 points on Wednesday after a volatile session in which it hit 5,305.41 points at one stage. Mining stocks performed well in early trading but slipped back as the dollar strengthened against the euro, softening metal prices.

Dominic Turner
shareprices.com - Wednesday, February 03, 2010

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Antofagasta, down 28p or 3.01% to 901.5p and Lonmin, down 56p or 2.89% to 1,880p, were the worst sufferers in the mining sector but were hotly pursued by Xstrata, down 30.5p or 2.78% to 1,065.5p, which has had more than softening metal prices to think about in recent days.

Xstrata narrowly avoided strike action at Xstrata Nickel in Sudbury, Ontario, earlier in the week when workers voted 93% in favour of a three-year collective agreement, which included an annual cost of living allowance and an improved pension plan amongst other incentives. If the deadline for negotiations – midnight on Sunday – had been reached without agreement, the union representing the workers would have been in a legal strike position.

Vice-president of Sudbury Operations, Marc Boissonneault, was quoted on the CBC News website, saying, "We are very pleased our employees have supported the agreement and shown that they are committed to the success of Xstrata Nickel's Sudbury Operations".

The agreement also guarantees that Xstrata's Frasier Mine will be reactivated in February after being mothballed for a year because of falling demand for nickel. That, in turn, will allow the recall of 100 Xstrata workers, 20% of those currently unemployed temporarily.

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