Inco strike carries multi-million dollar cost

Gary Park, Petroleum News Calgary correspondent

Inco has slashed in half output at the world’s largest nickel mine and estimates the after-tax cost of a drawn out strike at its Ontario operations will run to US$20 million a month.

Since 3,200 members of the United Steelworkers of America walked off the job June 1, affecting 9 percent of the world’s nickel production, benchmark prices on the London Metal Exchange have climbed 4 percent.

But Inco has warned its regional sales offices, which have continued selling nickel from Manitoba, European and Indonesian mines, will soon declare force majeure on sales contracts with nickel, cobalt and copper customers.

Standard and Poor’s Rating Services has warned that a lengthy strike could impact Inco’s BBB- credit rating.

In its scramble to plug the gap, Inco said it plans to develop a new nickel deposit in Indonesia.

Canada’s other leading nickel producers, Falconbridge and Sherritt International, said the world market for nickel was already tight, especially with China leading rapid expansion of the stainless steel industry.