Cominco metals shows profit but fertilizer still in red

The mining and integrated metals business segment of Cominco Ltd. h as benefited dramatically from higher metal prices, productivity improvement and a general cost-cutting program. But the company’s fertilizer business continues to wallow in red ink and its third-quarter operating loss was more than double the previous year’s. It lost $16.4 million in the period compared to $7.7 million last year.

However, the company’s mining and metals business managed a third-quarter operating profit of $9.4 million versus an $8.5-million loss in 1985. Robert E. Hallbauer, president and chief executive officer, is even predicting improved results in the fourth quarter for this division.

Cominco’s consolidated loss for the nine months ended Sept 30 was $11.9 million, which included an extraordinary gain of $41.4 million from the sale of its equity in Fording Coal. These results compare with a consolidated loss of $25.6 million last year, which included an extraordinary item of $9.4 million.

Lower prices and reduced sales volume were cited as the major reasons for the loss in fertilizers. High inventories and low-cost foreign imports had a negative impact on North American fertilizer prices. Fall weather conditions will determine consumption in the fourth quarter and, with average conditions, Mr Hallbauer predicted the division could break even during that period.

The sale by Cominco of its investment in West Kootenay Power and Light for approximately $80 million will generate a gain of $45 million. Application of those proceeds and the removal of West Kootenay’s debt from Cominco’s consolidated balance sheet will reduce its debt by approximately $140 million.

Mr Hallbauer said that a review of the company’s business activities was under way. The review will include an appraisal of the current areas of loss and the carrying value of the company’s assets. “It is anticipated that any provisions or writedowns that result from the re-evaluation will be incorporated in the financial statements at the end of the present financial year,” he added.