Falconbridge has suspended operations at its nickel and pgm producing unit in Sudbury after workers walked out in protest over a new contract offer.

Two months of negotiations between bosses and unions representing 1,050 staff have failed to resolve key wage and benefit issues as well as employee concerns over the use of contract workers.

Falconbridge explained that four mines and a mill had been closed, while its smelter was operating at reduced capacity.

'The company is looking for a way to maximize their short-term profit - but what that does is take away from the long-term security of the individual and the community,' union president, Rick Grylls, told the Globe and Mail.

'We are not going to raise their profits to $305 million or $310 million a year at the sake of the workers.'

However, Falconbridge spokesman, Dale Coffin, explained that the company had agreed to minimise the contracting out of core production and maintenance work and insisted the new offer was 'very fair and competitive'.

The previous contract at Sudbury was only reached after a six month strike three years ago.

Falconbridge is the world's third-biggest nickel producer accounting for an estimated 5 per cent of world nickel supply.

Analyst Greg Barnes explained that strike action allied with increased demand from China had heightened fears amongst already edgy markets that nickel stocks could be 'approaching the critical four weeks consumption level'.