New Caledonia

The Goro project, located on the South Pacific island of New Caledonia, is one of two Inco nickel projects that will see our company expand by 40 per cent. It is not only the largest development in New Caledonia's history, it is perhaps the largest single mining project ever constructed in the world. Given the scale of this project, it is crucial that we work closely with the local communities to ensure the responsible development of this outstanding natural resource.

In 2001, the go-ahead was given by the Inco Board of Directors to develop the project at a commercial level, consisting of a processing plant and development of the mine. Located south of Nouméa, the capital of New Caledonia, the Goro Nickel operation will employ a combination of trucks, shovels and bulldozers to expose the economic layers of laterite ore. The processing plant will employ a new Inco-developed and patented hydrometallurgical Pressure Acid Leach (PAL) technology to produce 55,000 tonnes of nickel and 4,500 tonnes of cobalt annually.

The Goro project is being designed to have minimal impact on the environment. Inco's PAL technology is unique and has a number of advantages over traditional smelting methods. Mitigation measures have been incorporated since the early stages of project design. It has high recovery levels and is also very cost effective. Most of the waste products from the process are produced not as air emissions, but rather as solids which can be more easily contained.

Our experience in developing projects in Indonesia and Canada will be invaluable from technical, environmental and socio-economic perspectives. Our goal is to develop the Goro project economically while adding value to the New Caledonian economy. In consultation with the project's Communities of Interest, we are working to identify priorities and responsibly address areas of concern.

On the environment, we supported an independent environmental assessment conducted by INERIS, France's leading expert organization on industrial risk assessment and prevention and environmental protection. We accepted all of the INERIS recommendations. We also made the decision to dispose of tailings on land rather than marine disposal.

On a social front, we entered discussions for a Good Neighbour Agreement with representatives of nearby communities. Moreover, we plan to conduct a socio-economic study in cooperation with local communities.

• Unfortunately, in late 2002, development of the Goro project was suspended because of potential increases in the cost for the construction of the project. A thorough review of the project is being conducted and we are taking a step-by-step approach to resumption.

• Continue to hold discussions with our local communities in order to formalize a Good Neighbour Agreement and a Workplace Accord with the unions.

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