Contact: Stephanie Gorson Fried, (808) 262-7128
(9 December, 2002 -- Honolulu) The future of the controversial Canada-based Inco company's Goro Nickel mine in New Caledonia is in question today following the announcement that it was ceasing Goro Nickel operations for the next six to twelve months to conduct a comprehensive review of the project. News of potential 45% cost overruns, the company's failure to secure over $350 million dollars in French government tax breaks and loans by year's end, and analyst doubts regarding the credibility of Inco management sent stock prices tumbling. Inco had previously told investors that French subsidies - dependent upon approval of the company's extraordinarily weak Environmental Impact Assessment - and a Japanese partnership would be in place before the end of 2002.
The company's Environmental Impact Assessment was the subject of a recent Environmental Defense analysis (www.environmentaldefense.org/go/knc), which highlighted French agency assessments of the mine's potential to dump mercury, toxic forms of chromium and aluminum onto the country's fragile reefs. Our analysis also flagged the underreporting of potential health risks to mine workers and the apparent lack of information provided to shareholders about significant financial and environmental risks associated with the mine in Inco's last annual 10K Securities and Exchange Commission report, published in early 2002.
New Caledonia, also called Kanaky, is a territory of France identified by Nature as one of the world's top "biodiversity hotspots" with 75% of its plants found nowhere else in the world, containing one of the world's largest lagoon and reef systems. Foreign contractors had begun constructing the $1.4 billion Inco nickel-cobalt mining facility, slated to use an unproven, dangerous pressure acid leach technology in the midst of botanical reserves in an area adjacent to fragile reef systems proposed for nomination as a World Heritage Site. However, in the face of stiff indigenous and environmentalist opposition to its plans and in the aftermath of this year's failure to obtain French public finance, the company's plans have faltered.
"Given recent corporate scandals, we hope that Inco has not misled shareholders about the risks associated with the Goro Nickel operation. We are gratified to see that the French Ministry of Finance has not rushed to provide subsidies for this controversial operation. The French Development Agency, AFD, however, has certainly gone out on a limb by making the first portion of its planned loans. The time has come for publicly funded agencies to require basic environmental and indigenous rights standards for projects they support," said Environmental Defense senior scientist, Stephanie Gorson Fried. "As these recent cost overruns and scientific assessments show, underwriting the Goro Nickel mine not only produces unacceptable and environmental risks, but it is also a financially unsound use of public funds."