Editorial Inco pays its way

Inco certainly marches to the beat of a different drummer. After declaring a special dividend that will put it $1.5 billion in debt, there were legitimate questions raised about whether the company was spending its new-found wealth responsibly. Government and unions had given Inco the benefit of the doubt during difficult economic times in the early 1980s. Now, with nickel prices high and the company making money almost faster than it can count it, the question is how will Inco spend that money. The special dividend was seen by many as little more than a bribe to shareholders in order that they approve a “poison pill” mechanism the purpose of which seemed to be merely to entrench management in case of a takeover bid. The special dividend just didn’t seem appropriate. Shouldn’t the company be re-investing that money in order to modernize equipment and increase exploration efforts to sustain production in the future?

Inco, in its own style, has answered those questions. After spending $150 million over 10 years on research, Inco has come up with a new process of smelting its nickel-copper ore at Sudbury where most of its production comes from. The object is to reduce sulphur dioxide emissions, the main culprit behind acid rain. The new smelting process promises to cut SO2 emissions at Sudbury to less than half the current level and in line with government requirements.

The $494-million cost of changing to the new process will be borne entirely by Inco. Even though the federal and provincial governments have offered to pay some of the costs of acid rain abatement, Inco has insisted that it pay its own way.

The governments will no doubt heave a sigh of relief at that gutsy decision. They have offered to help pay the cost of doing whatever is necessary to reduce acid rain, but they put a ceiling on their commitment — $85 million each. It looks as though it may take almost all of that to lead Ontario Hydro, the province’s worst acid rain polluter, to the Nirvana of lower sulphur dioxide emissions.

At the same time, Inco has set an example for the worst offenders on the continent, American utilities that burn high- sulphur-content coal to generate electricity. They had long contended that Inco — the largest single source of SO2 on the continent but a small contributor to the over-all pollution — would benefit from government assistance unavailable to them.

Inco’s new process includes a previously announced mill rationalization (N.M., Sept 5 /88), the use of magnetic separation to reduce the sulphur-bearing content of the ore that is ultimately smelted and the use of oxygen flash-smelting furnaces. These changes will allow the company to capture 90% of the sulphur in the ore by the time the project is complete in 1994. That compares to the 70% being captured now. The result is that not only will SO2 emissions be cut from 685,000 tonnes annually to 265,000 tonnes, but less fossil fuel will be used in the more efficient process thereby further reducing pollutants released into the atmosphere.

Inco has similar plans for its operations in Manitoba, although different technology is being studied for use there.

The next step is up to the government of Ontario. The Ministry of the Environment will review Inco’s proposal along with those made by Falconbridge, Ontario Hydro and Algoma Steel, then make recommendations to the government. That will probably not be before the end of March.

Inco has asked the government for speedy approval so it can “get on with the job.” There seems to be little reason why this plan should not get the green light. It’s a solution that appears to be better for the company, better for taxpayers and ultimately better for the environment.