SUDBURY, Ont. - Hundreds of union workers at Vale Inco's nickel operations in Sudbury are on strike, with picket lines set up early Monday.

More than 2,600 Vale mining and processing workers represented by the United Steelworkers in Sudbury rejected the company's contract offer in voting on Friday and Saturday.

Wayne Fraser, Steelworkers director for Ontario and Atlantic Canada and a member of the union's bargaining committee, said 85 per cent of the members rejected the contract.

At issue was Vale's proposal to reduce a bonus tied to the price of nickel.

In addition, workers opposed a plan by the company to exempt new employees from its defined-benefit pension plan, which guarantees employees a reliable and steady income after retirement.