The government of British Columbia has agreed to purchase $55 milli on in Cominco preferred shares which will enable the company to replace its obsolete lead smelter at Trail, B.C.
Cominco already has an ultra- modern zinc refinery there and the installation of two flash smelting furnaces for lead will make its Trail metallurgical complex the most modern and cost efficient in the world.
Besides improving working conditions and alleviating some serious environmental problems, the development should reduce or eliminate cash losses from lead while increasing cash flows by $20 million-$30 million per year through reduced operating costs.
The federal government has agreed to increase its original offer to buy Cominco preferred shares by $10 million, bringing the total federal participation to $79 million. Earlier this year, President W. G. Wilson said the final decision to proceed with the project would be dependent on the provincial government’s ability to alleviate the impact of water licence fees.
Chairman M. N. Anderson tells The Northern Miner that his company had asked for a water licence rebate of $8 million-$9 million, adding the decision by the provincial government to buy the preferred shares is compatible with that request. Cominco will issue the preferred shares to the province over a 5-year period and they will be redeemable and bear interest at a floating rate tied to metal prices. The agreement with the federal government is similar, he noted.
Cominco’s board of directors has approved the $171-million first phase of the project which will start immediately and cost a total of $260 million when fully completed. Another flash smelting furnace will be added in the second phase and the balance of the project will be funded internally, he said.
Cominco had spent $500 million modernizing its Trail metallurgical complex before the price of zinc and lead collapsed a few years ago. Because the two metals are associated geologically, Mr Anderson said Cominco had no choice but to upgrade its lead smelting operation. While admitting the company would rather be out of the lead business, he said the mutual occurrence of the two metals made that impossible.
Mr Anderson claimed it took “a new premier to do it,” alluding to the recent election of Bill Vander Zahm as head of the Social Credit party and his subsequent elevation to premier.
The decision to proceed with the construction program will come as a relief to workers in Trail and also in Kimberley, B.C., the home of Cominco’s Sullivan mine. Mr Anderson said the modernization will help preserve jobs at both locations and improve Cominco’s competitive position in the lead market “by reduced cost of production through greater productivity, lower costs and improved working conditions.”
Cominco and Lornex Mining recently announced the combining of their operations in B.C.’s Highland Valley to create one of the largest copper producers in the free world. The $83-million project will see the companies develop the higher grade and metallurgically simpler Valley orebody which lies on Cominco ground. The combined rate will be 120,000 tons per day with the modern Lornex mill handling the majority of the feed. Given the grinding characteristics of the Valley orebody, the over-all throughput could be higher, some people contend.
The project will be funded from revenues and will not increase Cominco’s already heavy debt load. The company has been moving aggressively to consolidate its position in the base metals sector in anticipation of a price recovery for its metals output.