Talks involving workers and bosses at Falconbridge's leading nickel and pgm producing unit in Sudbury, Ontario have failed to resolve many key issues despite a series of talks.

After seven weeks of negotiations, and with just two weeks left before the current labour contract expires, the Canadian Auto Workers union told Reuters that they were "not very optimistic".

CAW spokesman stated: "It's not good. I thought we would be further along. There are still a lot of issues outstanding."

He added that management and union representatives had reached an impasse over key wage and benefit issues and over the use of hired contractors.

The Sudbury site produces nearly five per cent of the world's nickel and the labour dispute has helped drive nickel prices to their highest levels since 1989.

Mr Mitic also confirmed the union was now preparing for strike action. However Dale Coffin, a spokesman for the Falconbridge plant, was confident an agreement could be reached.  "We are satisfied at how things are progressing and we are still working towards Jan. 31, the end of the current collective agreement," he said.  However,Coffin would not say when Falconbridge would present its contract offer to the union. At the last round of negotiations in 2000, the company presented its offer the day before the old contract was to expire, Mitic said. Talks collapsed and a seven-month strike ensued.