The Inco barometer

If there’s one company that is synonymous with Canada’s mining industry, it’s Inco. That’s not to say that the nickel producer represents all things about Canadian mining. It doesn’t. Looking at Inco gives little indication of how vital the junior mining sector is in this country, for example.

Nevertheless, Inco epitomizes Canadian mining more than any other company. It is solely involved in producing and marketing minerals, it is a world leader in the commodities it produces, the vast majority of its mineral assets are located in Canada and its operations are well removed from the Toronto-Ottawa-Quebec triangle of political power.

If that doesn’t describe a stereotypical Canadian mining company, nothing does.

Because Inco so closely mirrors the fortunes of the industry as a whole, one can look at the issues Inco faces as a barometer of what the industry faces.

For example, the 1970s might be described as the decade of labor relations. More than any other single factor, disputes between labor and management disrupted production and colored Inco’s image with the public at large. In the 1980s, the drive to improve productivity was the issue that most clearly defined Inco during the decade. Those were the same issues that preoccupied the entire mining industry. Inco was simply the most prominent player.

Inco was also able to face both those issues squarely and resolve them, leading the way for others to follow. There were some difficult decisions that had to made, but overall, the changes instituted by Inco improved the fortunes of the company, of the employees and of the communities in which Inco has played such a vital part. As the 1980s came to a close, Inco was a trendsetter in labor relations and its productivity improvements were among the best in the country.

Because Inco’s ups and downs over the years probably mirror the fortunes of the industry as clearly as any company’s, it is worth looking at what the issues Inco is facing today to get an idea of what the rest of the industry will be dealing with in the near future.

The environment is the obvious one. It is an issue that Inco has started to come to grips with in the past two years. The company, for example, has earmarked more than half a billion dollars to reduce its sulphur dioxide emissions. With that commitment made, it has embarked on an ambitious campaign to let the public know that Inco is “onside” with the environment issue.

But perhaps one of the lesser issues that will have a significant impact on Inco’s activities in the 1990s will be that of dealing with shareholders. While it may not be an issue that the general public can get excited about, shareholders’ rights could become a key focus for corporations in all sectors during this decade.

In that vein, Inco was the first Canadian company to institute a “shareholders’ rights plans” to ward off potential takeover attempts without directors’ approval. Such plans have quickly become entrenched in Canadian corporate life, but their effectiveness in actually protecting shareholders’ best interests has yet to be determined.

At this year’s annual meeting, the question of secret ballots came up. Although it was quickly pointed out that shareholders’ anonymity is already protected in votes, the fact that the question arose may portend further demands by shareholders.

And the environmental issue may soon translate into a shareholder issue as well. With environmental limits coming from the ground up, environmental activists among the shareholders may flex their muscles in coming years and demand even more stringent measures to protect the environment.

Inco has always enjoyed a broad base of support from a widely distributed shareholding. That could mean that, if shareholders’ demands to have a greater say in companies’ operations becomes a significant issue in the 1990s, Inco may once again be at the forefront in setting standards on how that issue is resolved.