Inco reports more vandalism at Goro nickel site

Inco reports more vandalism at Goro nickel site

By Scott Anderson, TORONTO (Reuters)

7th April 2006

- Inco Ltd. said on Friday that there had been a new round of vandalism at its Goro nickel site in New Caledonia as a group of locals stepped up its opposition to the massive construction project.

The company said the latest attacks had damaged water lines and a radio communications tower. It gave no new estimates for the cost of the damage and said it would provide figures when it releases first-quarter results on April 1.

Earlier this week it pegged the cost at about $10 million.

"While the police had cleared the access roads to the site, groups of people have remained in the area and have continued to engage in sporadic vandalism," company spokesman Steve Mitchell said.

National Bank Financial analyst Ian Howat said the strife was not likely to affect his Inco earnings outlook in the short-term.

"I don't see it having much impact on their earnings for the next year or two. It wasn't supposed to be up and running until late 2007, so I haven't even put anything into my forecast until 2007. I was taking a wait-and-see approach," he said.

"Sometime in the future it will (have an impact), depending on how long it lasts."

Inco, one of the biggest nickel miners in the world, suspended construction of the $1.9 billion nickel mine on the South Pacific island of New Caledonia this week after the first attacks damaged trucks and excavators and blocked a number of access roads.

The group, headed by the Kanak organization Rheebu Nuu, says it is worried about the project's social and environmental impact including protection of nearby marine ecosystems.

"Rheebu Nuu has been struggling for years to have Inco heed their requests for negotiations about the social and environmental impacts of Inco's massive project," environmental group MiningWatch Canada said on its website.

"They seek a negotiated and legally binding settlement regarding social and environmental impacts, much as that signed with Inco by the Innu of Labrador."

Mitchell said Inco, which is developing the big Voisey's Bay project in Labrador, planned to host a round-table discussion with the major stakeholders of the mine and the opposition group in hopes of coming to a solution.

He said construction would not resume until the local government could ensure that the area was secure.

Inco, which owns a 69 percent stake in the mine, wants to complete construction by late 2007. It forecasts production will build up to an annual 60,000 tonnes of nickel and up to 5,000 tonnes of cobalt.

Inco shares were down C$1.35, or 2.2 percent, at C$60.06 on the Toronto Stock Exchange on Friday.

($1=$1.15 Canadian)