NEW CALEDONIA Citing the need to control rising development costs, INCO LTD. has pushed back the start-up of the processing plant at the Goro nickel-cobalt project to the second half of 2006. The news was delivered by chairman and CEO Scott Hand in a conference call with investors a week ago. When CMJ profiled the company in its April/May 2002 issue, the cost of the Goro project was estimated at US$1.45 billion. Despite extensive cost-controlling efforts, Inco estimates the price to have risen to US$1.89 billion. The company would like to shave another US$90 million from the budget.
Work at Goro was suspended in December 2002, when Inco realized that capital costs would be 30-45% over the original estimate. A two-stage review was begun, the first stage of which is complete. It focused on an orderly shutdown of construction activities and on opportunities to reduce capital costs. The second phase will involve developing further project cost controls, creating a new construction schedule, outlining a value improvement program, and more detailed engineering studies. When Phase 2 is complete, a new engineering and construction management firm will be selected.
If as expected, the second phase of the review is completed in the next six to nine months, Inco will commit US$6 million and restart work at the site later this year. Then in 2004 it could begin construction on a port, fuel depot, sewage facilities, and a quarry at an anticipated cost of US$60-65 million.
Inco owns 85% of Goro, one of the world's largest laterite nickel deposits. The balance is held by the French government. Inco also reports that there is interest in acquiring 25% from SUMITOMO METAL MINING of Japan.
More information about the Goro project, or any of Inco's mines, is available at www.inco.com.