And from April 23, The Globe & Mail coverage of the AGM:
GLOBE AND MAIL
THU APR.23,1998
PAGE: B3
ALLAN ROBINSON
Annual meetings
Inco chairman defends actions
BY ALLAN ROBINSON
Mining Reporter
TORONTO: Inco Ltd. chairman Michael Sopko donned a white hard hat yesterday at the nickel producer's annual meeting knowing that he would be in for a tough question period.
As nickel prices slumped, Toronto-based Inco has faced massive layoffs, a plunging share price, and no real progress on the proposed Voisey's Bay nickel project in Newfoundland, now mired in talks with the government and aboriginal leaders.
In the two-hour meeting, Mr. Sopko attempted to deflect the wrath of union and aboriginal leaders, environmentalists, political leaders from Sudbury, Ont., and ordinary shareholders.
Mr. Sopko sent a message to both the shareholders and Newfoundland Premier Brian Tobin about Voisey's Bay: "We wish to proceed with full development of Voisey's Bay, but only if it makes economic sense to our shareholders."
As a precondition to allowing a mine development at Voisey's Bay in Labrador, Mr. Tobin has demanded that the ore should be processed at a smelter and refinery at Argentia, Nfld. Inco has suggested such a facility could cost $1-billion (U.S.). The mine and mill in Labrador would cost $350-million.
The company now says that what made sense when nickel sold for $3.60 a pound and higher over a year ago doesn't make sense now that nickel is trading at $2.47 a pound.
Among the cost-saving measures Inco might be considering is construction of a smelter in Newfoundland and the shipment of material elsewhere, such as Sudbury, for refining.
"Look, Mr. Tobin has the responsibility to come away with the best deal possible for his constituents and he is doing a good job," Mr. Sopko said.
Inco's shareholders were also given a stern warning from Ben Michel, a high-level Innu Nation representative, about the need for an impacts-and-benefits agreement for the native community and an environmental impact agreement. "If there is no significant progress in the talks, rest assured you are going to lose money."
Mr. Sopko told shareholders that Inco, which spent $4.3-billion (Canadian) to acquire Voisey's Bay in 1996, has decided not to take a writeoff for the project because the underlying assumptions on which the investment was made remain largely intact.
Yesterday, in a statement, Mr. Tobin said "our own analysis indicated that there is an economical deal to be done, which would include a mine, mill, smelter and refinery."
Later in a meeting with reporters, Inco indicated that another 400 jobs might be lost at its operations around the world as it struggles to remain profitable.
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Thu Apr.23,1998
B15
Finance and Business
Canadian Press
Low metal prices may force cuts: Inco
TORONTO - DELAYS could continue to dog Inco Ltd.'s massive Voisey's Bay nickel project and more jobs may be cut if low world metals prices persist, company executives warned yesterday.
Frustrated workers, skeptical shareholders and angry Innu, who used Inco's annual meeting to make their concerns public, were warned to expect continued belt-tightening at the world's largest nickel producer.
That follows a year of dieting aimed at transforming Inco into a global model of low-cost mining at time when nickel prices have dropped about 35 per cent.
The restructuring will continue, possibly adding to job cuts that have numbered about 1,600, senior management warned. "It is quite clear that we, at Inco, have to change the way we do business," chief executive Michael Sopko told the meeting.
It could also mean more delays to the already tardy Voisey's Bay project in Labrador, which only 18 months ago was touted as the one of the world's richest base metal discoveries in decades.
While Sopko insisted Inco remains commited to the giant - and expensive - development, he warned that it won't steam ahead at any cost.
"We wish to proceed with full development of Voisey's Bay, but only if it makes economic sense to our shareholders," Sopko said. "This commitment was always subject to technical and economic realities of the project. It was never unconditional."
And there are many more hurdles to cross. Environmental assessments and negotiations with the Newfoundland government and native groups all threaten to stall progress, he said.
"It's not a question of getting a deal, it's a question of getting the right deal," Sopko told a news conference later.
Analysts say they expect Voisey's Bay will be developed, but likely three or four years behind schedule.
While Inco officials said negotiations are going well, an Innu spokesman disagreed, urging shareholders to pressure Inco to bargain "in an honourable way."
Outside the meeting, Penote Ben Michel warned that Innu people will protest to the point of risking arrest if demands for compensation and environmental protection are ignored.
"We feel confident that we can block the project," said Michel.
"We're prepared to go to jail even, to make sure that our rights are protected and the environment is protected."
Inco paid about $4.3 billion for the Voisey's Bay deposit in mid-1996, at a time when nickel prices were much higher than today's $2.48 US a pound. A recent report by Wall Street broker Goldman Sachs concluded the project is not economically viable at current commodity prices.
But Sopko insisted that, despite urging by analysts including Goldman Sachs, Inco isn't prepared to take a writedown on its Voisey's Bay assets just yet.
Such a writedown would reflect the sharp drop in value of the Voisey's Bay deposit because of tumbling nickel prices and would also damage the Toronto company's finances and produce a huge loss.
Tobin's demands
Sopko said Inco won't write down the value of its assets unless the assumptions underlying the Voisey's Bay project change, and that hasn't happened yet.
"There is no permanent impairment of those basic assumptions," he said after the meeting. "For now, no writedown is contemplated."
Newfoundland Premier Brian Tobin said his government agrees the Voisey's Bay development must be economical and provide a return to shareholders.
And while his province is committed to making the project happen, Tobin said from St. John's, "value-added processing must occur in Newfoundland and Labrador as part of any deal."
Meanwhile, angry workers from Inco mines in Northern Ontario picketed outside before moving into the meeting to demand Inco cut more management jobs and fewer workers.
"Employee morale is at an all-time low," warned Wayne Fraser, area co-ordinator for the United Steelworkers of American in Sudbury, Ont. "They're frustrated and disillusioned ... they feel betrayed and productivity has suffered from it." |
