Inco projects flat year for nickel

The world’s largest single producer of nickel, Inco (TSE), expects 1993 to be a flat year. The company also sees future growth occurring outside Canada.

First-quarter results for the Toronto-based company, which turned out 472 million lb. of the metal in 1992, (TSE), support that prediction. After taking a $14.1-million after-tax hit for restructuring its alloys and engineered products business, the company swallowed a net loss of $22.6 million on the quarter — down from a profit of $2.2 million in the first quarter a year ago when the company realized US$3.59 per lb. for its nickel. Prices now sit at US$2.70 per lb. on the London Metal Exchange. Demand for nickel is expected to grow in 1993 by about 3%, and the balance of the 1990s looks promising. Legislated vehicle exhaust emissions in Los Angeles, Calif., for example, could potentially create demand for some 25-50 million lb. nickel annually by the year 2000, according to Executive Vice-President Peter Salathiel.

During the next 10 to 15 years, Inco expects to expand production capacity to maintain its 25% share of world markets for the long term, according to President Scott Hand.

However, most of Inco’s growth (including a planned 100 million lb. every six or seven years) will likely occur in countries other than Canada. Open-pitable laterite deposits in countries where labor accounts for 15% of costs are much more attractive than 7,000-ft.-deep underground sulphide deposits in countries where labor accounts for half of unit costs, Chairman Michael Sopko said at the annual meeting in Toronto.

Inco has invested heavily in such countries as Indonesia, Guatemala and New Caledonia. In fact, properties there now hold more of the company’s nickel reserves than those in Canada.

To their credit, Canadian operations account for the largest drop in unit production costs in the company, down 5% in 1992. And Inco expects a further 7% drop this year.