EDITORIAL — Voisey’s Bay becoming a political football — Inco on the ropes

Big corporations, politicians and lawyers are rarely on the receiving end of public sympathy.

Inco, one of the world’s largest nickel producers, is no doubt feeling somewhat battered in its fight to advance the Voisey’s Bay

nickel-copper-cobalt deposit to production and, at the same time, provide a decent return for its shareholders.

In 1996, Inco paid the equivalent of $4.3 billion to acquire Diamond Fields Resources, whose key asset was the Voisey’s Bay deposit in Labrador and a large land package in its vicinity. The major then spent millions on exploration, environmental studies and consultations with local stakeholders. It is prepared to spend hundreds of millions more to develop the project, which will provide badly needed jobs and benefits to a province hard hit by unemployment. And it intends to do all this while meeting the highest of environmental standards.

The Newfoundland government wants Voisey’s Bay to go ahead, but only on its terms — the main one being that Inco must process Voisey’s Bay ore in Newfoundland.

The Innu Nation — the largest local aboriginal group — is now largely on Inco’s side, but other native groups say they will not give their blessing until there is something more in the deal for them. Environmental groups are arguing that more consultation and impact assessment studies need to be done, particularly for the smelter complex, even though more money has been spent studying this project proposal than any other in mining history.

The vast majority of citizens — who are not part of the stakeholder process — can do nothing but wait for the bickering to end so that construction can begin. Meanwhile, nickel prices continue to weaken, along with Inco’s share price.

The Southeast Asian financial crisis has greatly reduced nickel demand, at least for the short term. A number of Australian nickel projects are being brought into production, with each of these new producers hoping to get market share ahead of Voisey’s Bay. Cobalt prices are under downward pressure as a number of projects in the African copper belt are being advanced to production. Copper prices have eroded as numerous projects in Chile and elsewhere are churning out copious amounts of the red metal. And on the exploration front, Inco has not yet found new deposits similar in grade and size to the original discovery, which means the Ovoid (32 million tonnes grading 2.83% nickel, 1.68% copper and 0.12% cobalt) will have bear the burden of paying back capital (and acquisition) costs.

All this means Voisey’s Bay will not be as profitable as once imagined. It will not be able to be all things to all people. It will not be able to correct past wrongs done to aboriginal groups. It will not be a cash cow for politicians, or the solution to an unemployment crisis.

Voisey’s Bay is the best thing to happen to Newfoundland and Labrador for decades. It is a home-grown project that is becoming hostage to home-grown demands, some of which may be unrealistic given the weak fundamentals of the nickel market and Inco’s reduced profit projections. Unnecessary burdens should not be placed upon the project, which is being financed in the private sector.

Stakeholders and the public have every right to take part in the public review process and to demand the highest of operating standards. But Inco has its rights too, including the right to take steps to ensure its survival in an increasingly competitive market. And the first step in that process is for all Canadians to realize that Voisey’s Bay is no different than any other mineral project in this country — it has economic limitations, and thus, a point at which Inco would truly be better off not developing it at all, which would be a disaster for all Voisey’s Bay stakeholders and the province of Newfoundland. It should not be pushed to that brink.