Inco continues restructuring attempts

Inco (N-T) continues to restructure its Ontario and Manitoba divisions with programs of expanded production, mine closures and workforce reduction.

In Ontario, increased production from McCreedy East in 1998 is expected to help offset lost production from the Shebandowan, McCreedy West, Levack and Little Stobie mines, which will be closed next year.

The company plans to save at least US$30 million annually by reducing, in early 1998, its Ontario workforce. About 500 people, or 7% of the company’s workforce in the province, will be let go, mostly through retirement.

“In the future, you may see lower mine production from Ontario which will be offset by the increased low-cost production coming out of PT Inco (the company’s 59%-owned Indonesian subsidiary),” said Inco President Scott Hand at a meeting with analysts in Toronto. “Our focus is not on volume but on profit. That may mean a smaller Ontario division, but a more profitable one.” In Manitoba, increased production next year from the Thompson mine will offset lost production from the closure of high-cost portions of the Birchtree mine, which is slated to be put on standby.

Next year, Inco will reduce capital expenditures at its Ontario and Manitoba divisions to US$130 million, compared with US$209 million forecast for 1997.

Overall, capital expenditures in 1998 are expected to total US$480 million, down US$80 million from 1997.

Nickel production for 1997 is projected to be 397 million lbs. — 214 million lbs. from Ontario, 101 million lbs. from Manitoba, and 77 million lbs. from PT Inco/Tokyo Nickel. These production levels should allow the company to retain its 27% world market share for nickel.

Nickel output for next year is expected to be 440 million lbs., with increases from all three sources.

Inco’s cash nickel unit-production costs (after byproduct credits) rose in the first nine months of 1997 to US$1.72 per lb., up from US$1.54 for all of 1996. The company predicts costs will be reduced in 1998.

Contrary to a report in the daily press, Inco Chairman Michael Sopko said during the Nov. 18 meeting that Inco will not be taking a writedown on its Voisey’s Bay project in Labrador.