By KELLY LOUISEIZE
The future looks bright for nickel, but, without significant restructuring strategies Inco Ltd. will lose its competitive edge, says the president of the mining giant’s Ontario operations.
In the middle of February, Inco announced adjusted net earnings of $848 million for 2004. This is the third-highest Canadian earnings in the company’s history.
“We set all-time records for nickel production and total revenue,” Mark Cutifani told a Greater Sudbury Chamber of Commerce luncheon March 1.
Sudbury operations alone produced 240 million pounds of nickel and 274 million pounds of copper in 2004.
In the last four years, though, Sudbury operations have seen cash cost for production increase approximately 10 per cent every year.
“We have to get a lot smarter, we have to be sharper in the way we manage the business and we have to develop a much stronger relationship with every employee within the business to create that future.”
By the end of 2005, Cutifani expects to see a 30 per cent improvement in productivity from mining operations. Once the company hits that benchmark, they can then say they are competing ton for ton and person for person with other international mining houses.
Strategies are being established to identify cost-saving opportunities, wasteful practices and, if need be, a reduction in the workforce through attrition, Cutifani said. Rationalizing underground mobile fleets, cutting smelter rebuilds and working to improve the overall effectiveness of the company will improve ongoing operations, he said.
Productivity targets are being set for Sudbury’s milling operations, maintenance, copper and nickel refineries. The company has also scheduled major maintenance shutdowns.
Not what they used to be Most of Sudbury’s mines were developed some 20 to 30 years ago. Inco has increased the mines’ depths year after year, despite their three-decades-old infrastrucutre.
Older and deeper mines have not been able to cope with the escalating costs base. Voisey’s Bay feed will replace those Sudbury concentrates that have proven to be too costly for production, he said.
The project will also buy Inco some time to address some of their more complex issues, he said.
The objective for the Sudbury operations is to deliver 100 per cent of the feed from Sudbury’s new or existing mines by 2012, but it means Sudbury employees will need to work with union and administration on key areas.
“Remember, if we are not competitive on the cost, we have no future,” he said.
Cutifani’s focus this year is going in to be re-establishing a healthy relationship with employees. This will be critical to the company’s future success, he argued.
In 2004, the company shed $63 million from its expenses via cost reductions, with $43 million coming from Ontario operations. The 2005 intended goal is $65 million, with $47 million expected to come from Ontario.
High nickel prices will not sway the company’s focus, Cutifani said. The key to success will be to introduce changes while nickel volume is high, rather than wait for a tight market and make poor judgment calls, he said.
