Low prices, high dollar hurt Cominco

A net loss of $41.3 million was reported by Cominco (TSE) for 1991, compared to a profit of $54.8 million in 1990. The company attributed its drop in earnings primarily to the worldwide decline in metal prices — particularly zinc, lead and copper — and to the high level of the Canadian dollar.

Cominco’s mining and integrated metals business segment reported an operating profit of $12.5 million last year, compared with a profit of $134 million in 1990. The average price for zinc was down about US18 cents per lb. in 1991 from the previous year, lead was down US11.5 cents per lb., and average copper prices were down by about US14.7 cents per lb. Prices for gold, silver and most specialty metals produced by the company were also significantly below 1990 levels.

A net loss of $16.3 million was reported by Cominco for its 1991 fourth quarter, compared to a profit of $2.9 million in 1990.

Within the next several months, Cominco is expected to release details of recent test work aimed at determining the best process for its new lead smelter at Trail, B.C. The company’s new QSL smelter has been shut down since March, 1990, when major process and mechanical difficulties were identified. (Current production is from the old lead smelter.)

Cominco representatives plan to visit Metallgesellschaft’s QSL smelter in Stolberg, Germany, this month to review operating results with representatives of Metallgesellschaft and Lurgi AG, the QSL process supplier. The company is also assessing alternative technologies such as the ISAMELT and Kivcet processes. A decision on the lead smelter issue is expected in the second quarter of 1992.

In the meantime, Cominco is continuing initiatives to restructure its Trail smelting complex. About 500 jobs will be lost by the program which is aimed at reducing annual costs by about $50 million. The initiative includes efforts to reduce energy, transportation and other costs, and efforts to reduce the Water License Tax and other taxes imposed by municipal and provincial governments.

Cominco also reported that its Red Dog mine in Alaska is expected to produce the same amount of concentrates as 1991 when metallurgical recovery problems in some parts of the orebody resulted in reduced concentrate production. “With the current state of the concentrate market and the expected reduction in world refined zinc production, it is an appropriate time to be producing at less than design capacity,” the company noted. “Unless markets improve during the coming year, further production cutbacks in both concentrate and refined zinc production might be necessary.”

Earlier this year, Cominco announced it would be participating in the development of the Louvicourt copper-zinc-gold deposit near Val d’Or, Que. Cominco and Teck (TSE) jointly entered into an agreement-in-principle with Aur Resources (TSE) which will result in Teck and Cominco earning a 25% interest in the deposit. Teck and Cominco also jointly own about 21.2% of Aur.