Inco regains lead in world nickel market

The fruits of seven hard years of downsizing, restructuring and rationalization are finally being enjoyed by Inco Ltd. One of the most tangible benefits of the rationalization program has not only been a return to profitability, but the recapture of market share.

“Inco has regained its lead in the nickel industry,” Chairman Donald J. Phillips told a group of industry analysts. “In the first nine months of this year, Inco has delivered 339 million lb of nickel and achieved a one-third share of market.”

Phillips, who was chairing the annual analysts meeting for the first time since becoming chairman last spring, was in a buoyant mood. Fueled by robust demand for nickel — which is running at record levels — and tight supplies, Inco is well positioned to respond to this dramatically improved market. “Inco has been able to adjust its marketing strategies and, thereby, to increase both its deliveries and market share,” Phillips said.

Heading into the fourth quarter with such strong fundamentals, Inco is anticipating another healthy financial performance. During the third quarter of this year, the company realized net earnings of $41 million(US) — the highest profit since the second quarter of 1981.

Although Inco is reaping the benefits of surging commodity prices during the past six months, the company’s rationalization program has also improved profit margins. This being achieved by a spectacular improvement in productivity, largely engineered by executive vice-president Dr Walter Curlook.

These productivity gains, as measured in terms of pounds of nickel an d copper produced per manshift, have increased by 65% since 1980. Today, each manshift produces approximately 240 lb of nickel- copper compared to less than 140 lb in 1982. Also, the workforce has been trimmed from 24,500 employees in 1980 to 13,500 today. The major contributor to productivity has been bulk mining methods. About 80% of the ore extracted from Inco’s mines at Thompson, Man., and Sudbury, Ont., is by less labor- intensive bulk mining methods.

Looking at the economy, Phillips remained cautiously bullish. In fact, following the market crash in October, “we have seen no change in the level of orders for nickel from our customers,” he added. Also, a review of stainless steel producers by Inco shows that demand is remaining strong. Stainless steel accounts for 55% of nickel consumption.

Importantly, Phillips does not expect to see much of the worldwide shutdown capacity brought back on stream, unless prices stay in the $2.50 per lb range for a couple of years — a price scenario which is impossible to forecast.