Noranda Income Fund Unit T.NIF.UN

RE:RE:Update on production

[Bigbird9999]

The plant is designed to make SHG zinc.  They have included this in the press release to make it sound like they are doing something special when in fact, it is normal to make SHG.  It would be very concerning if it was not making SHG.

I question how they are defining production.  I find it hard to believe that they are operating the entire plant at +50% rate.  And if they are it is certainly not sustainable without the use of contractors/scabs.  Think about it.   The union has 371 P&M workers that operate and maintain a complex, continuous 24/7 process.  Many of the operators require special training and licences such as stationary engineering tickets to operate the waste heat boilers associated with 4 fluid bed roasters and 3 acid plants. And special training to handle the chemicals and swithch the massive amount of electrical energy that the process consumes.  I suppose they could operate one roaster-acid plant train and produce a limited amount of roasted concentrate, and put it into intermediate storage (they probably have storage for about 40,000 tonnes= about 4 weeks) but it would have been half full when the strike started.  When the bins are full they could shut down the roasters and use the staff to operate the leaching/electolysis plant at some limited rate.

The leaching, purification and electrolysis sections are joined together a single, continuous circulating system pumping about  3000 gal per min (similar tothe blood circulation system in your body.  Just like your body it is imosssible to operate only a part of the system. Unlike most other zinc plants, which have multiple circuits, the CEZ plant has a single circuit and that makes operating it at half rate much more difficult.

The casting plant is independent.  It can melt the zinc that is produced by electrolysis plant (or remelt SHG Zn to produce alloys or specialty products for their existing customers.  For sure they are doing this and supplying their customers.

I think that they would have a tough time operating the plant with 200 or so supervisors, engineers, technicians and clerical office staff with only a few tradesmen (probably limited to the supervisors of the bargaining unit trades).  Many of the non bargaining unit staff are office workders with little to no transferable experience to work in what is a pretty dangerous, and complex chemical processing operation. 

As I previously posted, I believe that they started out with about 25000 t of finished goods inventory and  processed another 2 - 3000 tonnes of WIP to finished goods.  100% production is ~5000 tonnes per week.  If they are shipping this tonnage at 50% of normal rate, they would appear to be producing ~2500 tonnes per week and could continue to do so for about 3 months at which time the inventory of finished goods would fall to zero.

The big question is who will blink first?  May 2,  things are going to come to a head on many different levels.  They are either going to settle or they will be forced to declare force majeure on the supply to their contracted customers.

BB