Inco ships first nickel concentrate from Voisey's Bay

Inco has shipped its first commercial nickel concentrate from its massive Voisey's Bay project in Labrador.

The company said Wednesday's shipment came more than six months ahead of its original project schedule.

Inco (TSX:N) said it expects to produce the first finished nickel from the concentrate in the first quarter of 2006. The concentrate is being shipped to Quebec City and will go on to Sudbury by rail.

Production at Voisey's Bay "will ramp up over the coming months," the company said. Annual production capacity during the first phase of the Voisey's Bay project is expected to be 110 million pounds of nickel in concentrate. That includes 5 million pounds of cobalt and up to 15 million pounds of copper, Inco said.

The huge nickel/cobalt/copper deposit at Voisey's Bay was discovered in 1993 by two freelance prospectors working for a small Vancouver-based mining company, Diamond Fields Resources.

Subsequent testing verified that the deposit they'd found was extraordinarily rich.

Inco and rival miner Falconbridge traded bids back and forth, with Inco coming in with the top bid of $4.3 billion.

Development of the deposit was held up, however, by Newfoundland's insistence that the ore be processed in that province, rather than being shipped away.

In 2002, Inco and the province finally worked out their differences and signed a deal. Inco would build a mine and mill at Voisey's Bay at a cost of $710 million, followed by an $800-million processing plant at Argentia.

The Voisey's Bay project has provided hundreds of jobs and will be worth $11 billion to the Newfoundland and Labrador economy over the next 30 years.

Last month, Inco and Falconbridge inked a friendly $12.5-billion merger deal.

Shares of Inco were off 83 cents at $52.27 on the TSX.