Inco to go ahead with Goro (October 19, 2004)

Inco (N-T) will proceed with construction at the Goro nickel-laterite project in New Caledonia, following a review of estimates that put the capital cost of the project at just under US$1.9 billion.

Inco, which had sought a “reliable and acceptable” capital cost estimate, will reactivate the project, which has been suspended since the end of 2002. Construction should resume early in 2005, with a goal of putting the project into production by September of 2007.

An interim update of the expected capital cost of the project, released in May, had put the figure at US$1.85 billion. Increases in construction material and labour costs, as well as the cost of a new tailings storage area, were the principal reason for the increase in the estimate.

The new plan for Goro incorporated several large-scale changes to the project’s design, including a 50% reduction in the area covered by the processing plant.

Inco also received its principal operating permit for the Goro project from the government of the South Province of New Caledonia. As well, a letter of understanding between Inco, the three provincial governments on New Caledonia, and the French government agency Bureau de Recherches Gologiques et Minires (BRGM), which spell out the mechanism for the provinces to take over the BRGM’s 15% interest in Goro. Two Japanese metal producers, Sumitomo Metal Mining and Mitsui, plan to take up a 21% interest in Goro once the BRGM has divested its interest.