For the three months ended Sept. 30, the major earned $36.6 million ($33.6 million, or 19 cents per share, after dividends) on revenue of $545 million, compared with a loss of $10.5 million on $410.4 million in the corresponding period of 1998. The major realized an average price for nickel and copper of US$2.91 and US80 cents per lb., respectively, up 44% and 4% from a year ago.
Collahuasi, which contributed $16.2 million to net earnings, entered commercial production earlier this year and is said to be operating within feasibility projections.
Falco owns a 44% interest in Collahuasi, with the remainder divided between
On the opposite foot, the Kidd Creek division in Timmins, Ont., lost $5 million, compared with earnings of $17 million in the year-ago period. The mine encountered ground control problems, which have since been alleviated, as well as a 26-day strike at the metallurgical site. Kidd Creek is now expected to produce 131,000 tonnes zinc and 126,000 tonnes copper cathode for the year, off 10% and 3%, respectively, from original projections. Miners are making up for some of the shortfall by focusing on high-grade areas.
The company’s integrated nickel operations, encompassing the Sudbury, Ont., division, the Raglan mine in northern Quebec and the Nikkelverk refinery in Norway, generated $31.4 million in the recent quarter, or $27.9
million more than a year ago. The increase reflects higher metal prices and precious metals revenue, both of which offset lower sales volumes and the restructuring of the Sudbury operations into separate mining and smelting units.
“The reorganization of the businesses ensures the ongoing competitiveness of the units,” says Falco President Oyvind Hushovd. “Production at the smelter improved over the second quarter, and the buildup of Raglan and Sudbury concentrates is expected to be worked down during the balance of the year.”
The reorganization resulted in the elimination of 53 jobs and will see another 147 disappear next year. This will trim Sudbury’s total workforce by one-third, to 1,600 employees.
Having overcome problems in the mill, Raglan operated at an annualized rate of 900,000 tonnes during the quarter, or 24% better than in the first half of the year. Concurrently, unit costs dropped 20% to US$1.30 per lb. nickel, with sales of byproduct precious metals helping to push up earnings.
“We essentially operated on plan,” says Warren Holmes, senior vice-president of Canadian mine operations. “And we expect to be operating at the 1-million-tonne rate at this time next year.”
Though up from 1998, the Nikkelverk refinery operated below design capacity during the quarter, reflecting a shortage of matte from Sudbury. Including previous quarters, the plant is now expected to have cranked out 75,000 tonnes of refined nickel by year-end; full capacity of 85,000 tonnes annually should be reached in 2000.
In the Dominican Republic, production by subsidiary Falcondo was adversely affected by power failures in the plant. This resulted in the loss of 1,000 tonnes of production, resulting in 6,784 tonnes of ferronickel being produced at US$2.11 per lb. nickel. Nevertheless, Falcondo added $7.8 million to its parent’s bottom line, up $9.5 million from the third quarter of 1998.
Falcondo has received certification from the International Organization for Standardization for its newly adopted environmental management system, making it one of few nickel operations to have earned such distinction.
Summing up the quarter, Hoshovd says Falconbridge has resolved its problems and that better times lie ahead: “The outlook for the nickel market has improved since the beginning of 1999, with the year now forecast to have a deficit of about 20,000 tonnes. We are particularly optimistic for the near-to-medium term.”
The company expects nickel demand to grow by 5.6% in 2000, owing to a similar growth in
the stainless steel industry and lower availability of scrap metal. Australian operations are expected to supply little of the excess demand.
On Sept. 30, Falconbridge had $114 million in cash or cash-equivalents and working capital of $518 million.
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