Inco won’t renew contract with nickel refiner Sherritt

In the market for new feed for its Alberta nickel refinery is Sherritt Gordon (TSE).

The company’s nickel concentrate purchase contract with Inco Ltd. (TSE) is set to expire at the end of 1989 and Inco has chosen not to renew it. The giant nickel producer supplies about 60% of the nickel concentrate handled by Sherritt’s Fort Saskatchewan facility.

No specific reason was given by Inco for its decision not to continue selling nickel concentrate to Sherritt. The contract will have been in force for about 11 years when it expires. David Graham, Inco’s manager corporate public relations, said not renewing the contract is a marketing decision.

Michael Brown of the securities firm McLean McCarthy thinks Inco needs the feed itself and plans to use the feed it would have sold Sherritt for its own account.

Sherritt has already lined up a new customer, Hudson Bay Mining and Smelting (TSE), as a replacement supplier for part of the lost Inco concentrate.

Hudson Bay has a 60% interest in the Namew Lake nickel-copper mine located south of Flin Flon, Man., which is set to open during the fourth quarter of 1989, and Sherritt plans to refine Hudson Bay’s share of the nickel output. It is estimated the Hudson Bay feed would represent about one-third of the amount Inco is supplying to the refinery.

Outokumpu Mines, owned by Finnish concerns, has the other 40% interest in the Namew project. Its share of the mine’s output is to be processed by Inco at Thompson, Man.