Inco cuts output,capital spending, as nickel price falls

In response to floundering nickel markets worldwide, Inco (TSE) is slashing production, curtailing capital expenditures and introducing other cost-cutting measures.

Shortly after denying rumors of cutbacks, Inco announced that it will reduce nickel output by 40 million lb. to 380 million lb. in 1993. Annual capital expenditures will be cut by US$50 million.

Effective immediately, hiring and staff salaries will be frozen. Executive salaries and directors’ fees will be slashed by 10%.

“Given the uncertain business environment, the company will continue to monitor market conditions on an ongoing basis and determine whether additional measures will be required,” Inco said in a prepared release. Nickel prices have been dropping steadily since reaching a peak of about US$5 per lb. in 1990. Recently, nickel fell below US$3 per lb. as inventories continued to soar.

Inco said the reopening of the Shebandowan mine near Thunder Bay, Ont., scheduled for Oct. 12, will be postponed until market conditions warrant production.

During the Christmas period, the nickel producer’s Sudbury area mines will shut down for three weeks and the smelter will operate at a reduced rate. The nickel refinery will close for the full 3-week period while the copper refinery will continue to receive copper from the smelter.

The Port Colborne, Ont., operations and the mines, mill and smelter in Thompson, Man., will also be closed for a 3-week period. Output from the Thompson refinery will be limited.

In 1993, both the Ontario and Manitoba divisions will shut down for a 4-week vacation.

Inco says shipping and shearing operations will be maintained at a level to satisfy customers’ requirements.

In response to reduced feed shipments from Canada, Inco will also curtail production at its nickel and precious metals refineries in the United Kingdom. This will mean switching from a 2-line operation to a 1-line operation at the nickel refinery at Clydach, Wales.

A series of actions to reduce costs and conserve cash is already under way in the alloys and engineered products businesses in the U.S. and the United Kingdom. Inco has also shut down one of three electric furnaces for major overhaul and upgrading at its P.T. International Nickel Indonesia subsidiary.