New chairman takes charge at nickel producer Inco

A changing of the guard occurred recently at Inco (TSE) with the retirement of Donald Phillips, 62, from the company’s top job.

Phillips, who had been with the company for 36 years, handed the reins of the Canadian nickel giant over to Michael Sopko at the 76th annual meeting in Toronto. Phillips then boarded a plane for his native Wales the next day. Purdy Crawford, a director of the company, gave Phillips an impromptu farewell on behalf of the board and all shareholders. His “thank you” drew strong applause from the 400 or so shareholders present.

Sopko takes over the $3-billion-per-year corporation, which satisfies a quarter of the world’s total nickel demand, at a time when metals markets are struggling. Nickel prices, in the range of US$3.39 per lb., are falling and production costs in Canada have nearly doubled since 1987.

Inco, which employs 18,369 people in 19 countries worldwide, reported profits of $2.2 million in the first quarter of 1992, compared to a $5.8-million loss in the last quarter of 1991.

“It is our intention to reverse this trend,” Sopko said in reference to the high nickel production costs in Canada. In 1992, the company will introduce new technology and mine higher-grade orebodies such as the Lower Coleman deposit in the Sudbury, Ont., area.

Production began at this new mine in April and has reached a level of 2,000 tonnes per day. Capacity will eventually reach 3,000 tonnes per day. The company’s first new oxygen flash furnace was blown in in October, 1991. This new technology is expected to slash $90 million from the cost of production annually. A second furnace will be on line in January, 1994. Inco’s cash breakeven cost of producing nickel is in the range of $3.15-3.20 per lb., according to Vice-Chairman Ian McDougall.

On the demand side, the amount of nickel which normally goes to military applications is expected to be taken up by the so-called “greening” of markets worldwide. New electric cars, projected to be mass-produced by the turn of the century, will require 25-60 million lb. for batteries, according to Vice-President Peter Salathiel.

“We are also seeing a revolution in nickel demand in China and India,” Salathiel said.