The Essence of Sustainability

Inco’s financial performance and our social contribution are inextricably linked. Our business success and financial health enables the company to extend benefits to a broad community of interests. But, especially with industries dependent on public resources, the social licence granted us by that public is essential to our ability to achieve financial success. The public must perceive and receive value for this licence.

The demands on a company's financial resources are extensive. Inco invests significant amounts of capital each year to maintain our existing operations. In 2003, we spent $591 million on capital expenditures, and in 2004, we plan to spend an additional $1 billion on growth and sustaining capital that will also bring benefits to many people. We are currently undertaking a $90 million (Cdn. $115 million) Fluid Bed Roaster Sulphur Dioxide Abatement Project to improve environmental controls at our Sudbury Operations. Most significantly, we have embarked on the largest growth program in the company's history, a 40 per cent planned increase in production. In total, this growth program requires nearly $4 billion in capital investment. The expanded company will place Inco at the forefront of world nickel producers, bring the benefits of nickel to people and position us for continuing prosperity that can be beneficial to all of our stakeholders.

Fortunately, the nickel market is cooperating in the early stages of this capital program. In 2003, nickel prices climbed by 135 per cent, reaching their highest levels in 14 years. The expected cash flow from these market conditions will help us manage our capital program and debt load. But, buoyant market conditions can't blind us to the need for continuing scrutiny of our cost structure, particularly with a historically cyclical commodity like nickel. Nickel prices go up and down. Prudence and responsibility must guide the way we manage our finances in the near term, if we are to sustain our performance over the long term.

Ultimately, prudent financial management might be seen as a form of protection and reassurance for Inco's broad Communities of Interest - our employees, communities, investors, shareholders, partners and customers. It helps secure the direct and indirect economic benefits of our activities - jobs, training, local infrastructure, tax contributions, support for local programs in health care, agriculture, recreation and the host of local initiatives described throughout this report.

The relationship between Inco’s financial performance and the many beneficiaries of that performance is interdependent and circular. Keeping that circle of benefit unbroken is the essence of sustainability.

For economic performance indicators by location, see the Community Development section of this report.

Our Economic Contribution for 2003 (All dollar amounts in millions of U.S.$)   Total Wages, salaries and benefits other than post-retirement 495 Post-retirement benefits 190 External employee training 3 Expenditures for employee health programs 25 Operating, capital and community-related expenditures 1,465 In-kind donations 0.5 Employer tax contributions 35 Indirect taxes 35 Total contribution 2,248.50 Direct contribution to community 1,565   See Glossary for definitions of key terms including: post-retirement benefits; operating, capital and community-related expenditures; indirect taxes; and direct contribution to community. Includes all Inco facilities and operations except for two Inco joint ventures (Taiwan Nickel Refining Corporation and Korea Nickel Corporation).

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