At a meeting with financial analysts in Toronto, nickel miner Inco (TSE) revealed that recently announced production shutdowns are expected to cost the company US$80 million.
The shutdowns at the company’s two divisions are scheduled to begin in late December and continue for eight weeks in Ontario and four weeks in Manitoba. Operations will resume in Manitoba on a 4-day work week and continue on that basis until a 4-week vacation shutdown in July. The Ontario division will also take a 1-month summer vacation.
Shutdown costs are expected to total US$80 million, of which US$70 million will be incurred in the first quarter. These figures include such things as depreciation, municipal taxes and employment costs.
As a result of the shutdowns, nickel production in the first quarter of 1994 will be reduced to 65 million lb., down 40 million lb. from the first quarter of this year. Further cutbacks will be made if market conditions warrant. Even with the production cutbacks, Chairman Michael Sopko believes Inco will still be able to maintain its 25% share of the world nickel market. Inco officials said that despite uncertain market conditions, the outlook for nickel is becoming positive once again. London Metal Exchange (LME) inventories have started to drop and Russian exports to the West are expected to fall by 40,000 tonnes in 1994.
Nevertheless, Sopko said the company will be closely monitoring its financial position and will limit 1994 capital expenditures to US$150 million.
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