Overview: How Inco compares today with 1989
Over the decades, Canadian Mining Journal has published a number of special issues about Inco, most recently in June 1988. CEO Scott Hand compares the Inco of 1989 to the company today.
There have been a lot of changes at Inco since then. Ninteen eighty-nine was the year that we made $763 million. That was when you had an enormous increase in nickel prices coming out of the difficult times of the 1980s. So that was probably one of Inco’s best earnings years.
In those years, we were more of a volume-driven company whereas now we’re a profit-driven company–as indicated by a lot of things that we’ve done, such as closing down unprofitable mines, and looking to produce nickel to make money as opposed to just increasing our market share.
That year we established our gold company, Inco Gold, and subsequent to that we bought TVX Gold and formed a semi-public company. Casa Berardi was our biggest gold mine in Canada, and we had Crixas in Brazil.
Since then we have become much more focussed. So eventually we sold the gold business. We got out of gold because we didn’t see the relationship between gold and nickel. People buy gold shares for one reason and nickel and copper and base metal shares for others.
If you look back at 1989, we were also in the alloys and engineered products business, so we were more into downstream products. We no longer own Inco Alloys, nor do we own Inco Engineered Products. Once again it reflects the focus that we decided to bring on the company to concentrate on the mining, smelting and refining of nickel. Of course, we’re still a big producer of copper, cobalt and precious metals as byproducts.
We have also become very much an employee-, people-engaged company. Inco was traditionally more of a “command and control” company. Today I’d like to think it’s a lot less so, and as a result of that we are now seeing lots of successes in our operations. People are more engaged in coming to work, not just using their bodies but their minds to really contribute. We continue to make a lot of change, and generally get from where we were to being a much better company.
Our cash cost to produce a pound of nickel in 1989 was about US$1.50. In 2001 our cash cost was US$1.35. So over that period of time we got costs down enough that we actually beat inflation, and then some. Not bad.
Our costs did go up when we had some of those good times again. In 1997 our costs were $1.71/lb Ni. That was a wake-up call for us. We saw that we needed to do something about it–and we did.
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