Cominco’s earnings fall sharply

A substantial drop in 1990 earnings was reported by Cominco (TSE) largely because of lower zinc and lead production at its smelter in Trail B.C., exhaustion of the Pine Point concentrate stockpile, lower metal prices and a higher Canadian dollar.

Unaudited consolidated earnings for the year were a modest $59.1 million on sales of $1.4 billion. These earnings were calculated before deducting a loss of $4.3 million from the company’s shaqre in Comico Resources International’s (TSE) gold properties in the gold district of Chile which are included in a plan of divestment.

The 1990 results represent a sizable decline from 1989 when Cominco reported a consolidated profit of $214 million on sales of $1.59 billion. The company said its average price for zinc in 1990 was down about US9 cents per lb. from 1989, copper prices were down an average of US8.5 cents per lb., and led prices ended the year at an average of US6 cents per lb. higher than 1989.

Comico said the Highland Valley copper mine and the Polaris base metal operation continued to perform well, with both contributing significant earnings in 1990.

As for the new Red Dog mine in Alaska, output of contained metal in concentrates was reported at 90% for zinc and 86% for lead compared with the project feasibility study for the initial operating year.

But Cominco’s bottom line reflected lead and zinc production problems at the company’s metallurgical operations at Trail. Production was seriously affected by the difficult startup of the QSL smelter, and modifications to the zinc circuits to treat Red Dog concentrates.

The QSL smelter was taken off-line in March of last year, and extensive repairs were required to operate the old lead smelter at reasonable commercial levels.

Revisions to the new QSL lead smelter are still on hold pending definitive process test results expected in the second quarter of 1991.

Lurgi, the process supplier, advised Cominco hat satisfactory physical results were obtained in recent preliminary tests that used natural gas for reduction. While this test work continues, Cominco intends to work closely with Lurgi on the QSL modification plans.

As a backup, Cominco sdaid it will continue to investigate and is prepared to have test work done on other commercial scale lead smelting processes, including MIM’s ISASMELT and SAMIM’s Kivcet technologies. The plant is said to be suitable for either revisions to the QSL process or conversion to other available technologies should the need arise.

In the meantime, operation of the old lead smelter is continuing at about 80% of normal capacity and can be sustained at this level until final revisions are made to the new smelter.