inco digs in down under

Inco digs in Down Under
Geoffrey Newman
September 26, 2005 (The Australian)

THE world's second-largest nickel producer Inco will split its global operations in two and open a head office in Australia as it faces stiffening competition from BHP and concentrates on China's rocketing demand for metals.

The Canadian company, which employs more than 10,000 people, announced a major corporate reshuffle that would divide the company into two divisions: Asia-Pacific and North America/Europe.

Inco, which sells about 60 per cent of its nickel to Asia, will oversee the Asia-Pacific operations from Australia.

Inco is a growing force in Australian mining: in August it finalised a joint venture with Heron Resources to produce 55,000 tonnes of nickel around Kalgoorlie in what will be Australia's second-largest nickel project.

Under the arrangement, Inco will spend $90 million for the feasibility study and must find the required $1.4 billion of debt funding if the project goes ahead.






The company said it expected China to remain a key driver of the nickel market.

"This new organisation supports our aggressive growth and our drive to be the world's leading nickel company," chairman and CEO Scott Hand said. "In particular, it recognises the growing importance of our Asia-Pacific operations as we build the Goro project in New Caledonia, and expand our PT Inco operations in Indonesia."

Mr Hand said Inco made a strategic decision to locate its Asia-Pacific office in Australia. "We are increasingly active in exploration in Australia, both on our own and with other partners, and we are interested in exploring future opportunities in the region."

Inco is also facing a clear challenge from BHP, which recently took over WMC Resources, the world's fifth-largest nickel producer with large operations on Western Australia.

BHP also secured almost 10 per cent of Heron Resources just after Inco had signed its joint venture deal.

BHP is also developing its $1 billion Ravensthorpe nickel project, one of only three significant new nickel mines set to come onstream in the next few years amid global tight supplies. The others are both Inco projects: Voisey's Bay in Canada and Goro.

Nickel have soared from an average of $US6400 a tonne between 1998 and 2000 to a high of $US17,720 in January 2003.

Logan Kruger, former executive vice-president of technical services, has been appointed president of Inco's Asia-Pacific operations, while Mark Cutifiani, former president of Ontario operations, will become president of North America/Europe operations.