Robust commodity prices reflected in Inco results

The strongest nickel and copper markets in five years are being reflected in the bottom line at Inco Ltd. The world’s largest producer of nickel reports third-quarter earnings of $41.4 million compared to earnings of just $3 million in the corresponding period last year. For the 9-month period, earnings totalled $50.2 million.

The large increase in revenues is being attributed to markedly improved commodity prices, high levels of product deliveries and lower unit production costs. For nickel, Inco’s primary business, metal prices on the London Metals Exchange (lme) have increased from $2(US) per lb in June to a high of $2.60 this month. lme copper prices have improved from 75 cents per lb to more than 84 cents , Inco says. Also, unit production costs at Inco’s main operating bases at Sudbury, Ont., and Thompson, Man., have been cut back to those experienced in 1980.

The improved earnings for the period were also helped by high deliveries of nickel and copper — the highest since 1974. For the quarter, Inco delivered 112 million lb of nickel and 40 million lb of copper compared with 74 million lb of nickel and 37 million lb of copper during the same time last year. Sales of primary metals for the quarter totalled $316 million compared to $200 million in the corresponding quarter of 1986.

Production of platinum group metals and gold declined to 93,000 oz from 108,000 oz in 1986. Finished nickel inventories were reduced from 81 million lb at June 30 to 62 million lb on Sept 30.

Despite the turnaround, Inco’s share price has been hurt by the general collapse of global equity markets. After trading to a high of $30.88 just two weeks ago, the issue plummeted to $18 before correcting upwards to $22. Directors have also declared a quarterly dividend of 5 cents (US) per share payable on Dec 3 to shareholders of record on Nov 6.