Vandals force shutdown of Inco project: About 50 people hit Goro mine

Vandals force shutdown of Inco project: About 50 people hit Goro mine

by Wendy Stueck, Globe and Mail

4th April 2006

VANCOUVER -- Inco Ltd. has been forced to stop work on its huge Goro nickel mine in New Caledonia after about 50 people attacked and vandalized the project over the weekend, adding to the nervousness of a commodities market already twitchy over potential shortages.

The project is to remain closed until local authorities are able to clear the road leading to the site, Inco spokesman Steve Mitchell said yesterday.

"We have temporarily halted work until New Caledonian authorities can remove these people from the site and ensure safe, unhindered access and ensure the safety of our people there," Mr. Mitchell said.

Although Goro is not expected to be in production until late next year, some London-based analysts said a delay in the project could prolong a current shortage of the metal, used primarily in making stainless steel.

Several new mines, including Goro, are scheduled to come into production before 2010.

Salman Partners Inc. analyst Ray Goldie said the delay would not likely have any impact on the market unless it continued for weeks or months.

Nickel futures rose $750 (U.S.) to $16,000 a ton on the London Metal Exchange, the highest price since June, as metal prices continued to set a blazing pace. Copper climbed to a record high and prices for zinc, tin, aluminum and lead also rose.

Mr. Mitchell could not say when work would resume, but said local authorities had removed some equipment on the access road to the site and made several arrests.

No Inco employees were injured in the attacks, the latest in a string of smaller protests targeting the mine in recent months. About 1,600 employees work on the project, but only about 200 of them were on site over the weekend, Mr. Mitchell said.

He said the group responsible for the attacks is a small one that opposes development of the mine, which he said has significant local support.

Catherine Coumans, a spokeswoman for Ottawa-based MiningWatch, said the weekend's actions are supported by indigenous leaders and communities from all over New Caledonia, a French Overseas Territory in the southwestern Pacific that is estimated to hold about one-third of the world's known nickel supplies.

The $1.9-billion Goro project is a key element in the growth plans of Inco, which is in the midst of a friendly takeover bid for Toronto-based Falconbridge Ltd.

That transaction, which would create the biggest nickel producer in the world, is under review by competition authorities in the U.S. and Europe. Falconbridge is also developing a project, Koniambo, in New Caledonia.

Inco was forced to put development of Goro on hold in late 2002 after cost estimates for the project ballooned. After a sweeping review, the company resumed work on the project in 2004.

On the Toronto Stock Exchange yesterday, Inco shares closed up $1.43 (Canadian) at $59.65