Cars will drive demand for nickel; FNX president paints rosy...

Cars will drive demand for nickel; FNX president paints rosy long- and short-term picture for industry

Harold Carmichael
Local News - Friday, March 23, 2007 Updated @ 10:43:02 AM

Growing world demand for energy-efficient cars is good news for nickel producers, says the CEO of FNX mining.

Terry MacGibbon is also president of FNX, a junior mining company that mines nickel and copper in Greater Sudbury.

"They are forecasting a shortfall in the supply of nickel through to the end of the decade," said MacGibbon, following his presentation Thursday at the Holiday Inn in Greater Sudbury.

"Demand from China and India will remain strong ... Supply is very tight.

"The thing people haven't taken into consideration, the biggest one, and you see it at the federal level, is the push for more energy-efficient cars. A significant amount of nickel and copper is needed for the vehicles' electrical systems.
We think demand is going to be strong."

A geologist, MacGibbon is no stranger to the local mining scene.

He worked more than three decades for Inco (now CVRD Inco).

MacGibbon, who is based at FNX's head offices in Toronto, was guest speaker at a President's Breakfast organized by the Greater Sudbury Chamber of Commerce.

More than 150 people attended the event.

MacGibbon said FNX is enjoying the benefit of record nickel and copper prices and is also successfully growing through the discovering and development of new ore bodies.

"Not only are we enjoying the nickel price, but we are growing the company," he said. "The cost to produce is 77 cents a pound and you are selling it for $23 a pound. It's a good business.

"When we bought the (Inco) properties, there was a certain amount of ore in them.

"We made some discoveries and we were able to increase production. In 2004-05, what we produced in those years, we have replaced. We were able to keep our reserves growing."

One of those reserves is the new Podolsky Mine, a promising nickel deposit not far from the mined-out Inco Whistle Mine near Skead. Production is expected to begin in 2008. At the moment, Levack and McCreedy West Mines (both former Inco properties) are FNX's main base of operations.

FNX had record revenues of $170 million in 2006, including $50.2 million in the fourth quarter.

FNX produced 624,000 tons of nickel/copper ore in 2006, which it sold to CVRD Inco. The production forecast for 2007 is 900,000 tons, a 40 per cent increase. In 2008, the production forecast is 1.4 million tons.

All told, FNX now employs 706 people.

MacGibbon said FNX will be spending a lot of money locally in 2007.

"We are forecasting $173 million of capital expenditures," he said. "Our employment expenditures will be $110 million