Inco reviewing its plans for Goro

Facing sudden significant cost overruns, Inco (N-T) will be reviewing its Goro laterite nickel project in New Caledonia.

The company is beginning a six-month engineering review of the project, in which it will be looking for ways to squeeze Goro’s capital cost and bring the expected return from the project back up. Goro, which has a reserve of 54 million tonnes grading 1.53% nickel and 0.12% cobalt and an additional measured and indicated resource of 99 million tonnes grading 1.4% nickel and 0.14% cobalt, had been scheduled to go into production in late 2004.

The review is expected to delay production at least six months and could hold it up for a full year.

Contractors have told Inco that Goro, which had been expected to cost about US$1.45 billion, may cost between 30% and 45% more than that. A large part of the additional cost is related to earthmoving at the large laterite operation.

Inco has already spent US$350 million on Goro and has committed to spending a further US$300-350 million. President Scott Hand said the committed expenditures were mainly on items the company still expected to go ahead with, so ongoing work is not being halted.