TORONTO (CP) -- Nickel giant Inco Ltd. [TSX:N; NYSE:N] plans to spend $34 million over the next few years to develop another deposit at its Thompson mine in Manitoba, as the company tries to extend the life of its operations in that province.
Toronto-based Inco employs more than 10,000 people worldwide including 1,550 in Thompson, about 700 kilometres north of Winnipeg, where the company has smelter and mining operations.
Although no jobs will be created, current jobs will be sustained because of the development, Inco spokesman Steve Mitchell said Monday.
Among the products made at Inco's Manitoba operations is plating grade nickel, which is used to put a shiny finish on hubcaps, fenders and bathroom faucets. It is currently the company's top export to the voracious Chinese nickel market.
Inco announced Monday that it will spend $34 million between 2006 and 2008 to develop the ore body at its Thompson mine.
The announcement is ''great news for the community, the industry and Manitoba's economy,'' said Manitoba's mining minister, Jim Rondeau.
The company has been depleting its ore reserves in the area, Salman Partners Inc. analyst Raymond Goldie said Monday. ''Once you've got a smelter, as they have in Manitoba, you've got to keep it fed.''
Analyst Kerry Smith of Haywood Securities said Inco's 27 million tonnes of reserves in Manitoba could sustain its operations in the province for about 13 to 15 years.
In addition to extending the life of its operations, the new deposit will help to reduce Inco's costs, Smith said. The company's smelter in Manitoba has more capacity than Inco's existing mines could provide, he said. That forced Inco to buy concentrates on the open market to keep the smelter full.
Production from the new deposit, called the 1-D ore body, along with nickel concentrate that will be brought in from Inco's Voisey's Bay project in Labrador - which is scheduled to begin production later this year - will significantly decrease the need for Inco to buy third-party concentrate and ''will have a very positive impact on costs at Manitoba next year,'' said chief operating officer Peter Jones.
''We've been studying it for some time, and the business case looked good,'' Mitchell said. ''We're eager to extend the life of this operation, and so that's why we decided to go ahead.''
Inco also expected to boost exploration at the Thompson mine, as the company continues to look for further deposits.
''We are aggressively working to add to our resource base at our existing operations, at our development projects, and through grassroots discoveries,'' Jones said.
In addition, the company intends to reassess old drilling results at its Thompson mine using newer technology.
On Monday, shares in the nickel giant gained C59 cents, slightly more than one per cent, to close at C$50.19 on the Toronto Stock Exchange, with more than 1.2 million shares changing hands.
(c) The Canadian Press 2005