Inco announces plans for new nickel plant in China

TORONTO, May 5, 2006 -- Inco Limited has confirmed plans to proceed with the construction of a new plant in Dalian, Liaoning Province, China for the production of UTILITY®* nickel, a refined form of nickel product for the special needs of the stainless steel industry. The new plant is intended to supply stainless steel makers in the fast-growing Chinese market.

Construction work on the U.S.$63 million facility is expected to commence in the third quarter of 2006 and commissioning is expected to take place in the first half of 2008.

“With China poised to become the world’s number one stainless steel producer, this new facility puts us in the right place, at the right time, with the right product,” said Peter Goudie, Inco’s Executive Vice-President Marketing. “Inco’s strategy is to continue expanding its presence not just as a nickel marketer but also as a local manufacturer in the world’s fastest growing nickel market.”

“Inco is committed to being close to its customers,” he continued. “This investment underlines Inco’s firm belief in and commitment to China’s growing demand for stainless steel and nickel.”

The new Dalian facility will be Inco’s fifth processing plant in China. Inco currently operates a nickel shearing and packaging facility in Dalian, in northern China and, together with joint venture partners, a nickel salts refinery in Kunshan City, near Shanghai and nickel foam plants in Dalian and in Shenyang in northern China. Through these operations, Inco has acquired significant operating experience in China and knowledge of the Chinese marketplace.

The new UTILITY nickel plant will have a nominal capacity of 32,000 tonnes per year. Feed for the new plant, consisting of intermediate forms of nickel, will be supplied by Inco’s Goro nickel project in New Caledonia and other sources.

Engineering and construction contracts have been awarded to POSCO E&C (Beijing) Co., Ltd., a Beijing-based engineering company. Technology and support will also be supplied by Korea Nickel Corporation.

UTILITY nickel was developed by Inco for use in stainless steel applications and is a trademark of Inco Limited. It is currently manufactured by Korea Nickel Corporation (in which Inco holds a 25% interest) and Taiwan Nickel Refining Corporation (in which Inco holds a 49.9% interest).

The new Dalian plant will be built, owned and operated by Inco New Nickel Materials (Dalian) Co., Ltd., a Sino-foreign joint venture company in which Inco indirectly holds a 97% equity interest. Inco’s domestic Chinese partner, Ningbo Sunhu Chemical Products Co., Ltd., holds the remaining 3% equity interest. Inco is currently in discussions with Sumitomo Metal Mining Co., Ltd. and Mitsui & Co., Ltd., Inco’s partners in the Goro Nickel development project, regarding their potential investment in the project.

Inco has also signed a letter of intent with Taiyuan Iron and Steel Corporation (“TISCO”), China’s largest manufacturer of stainless steel, regarding the possible construction of a second UTILITY nickel plant in China. The two companies have agreed to study the feasibility of building a UTILITY nickel plant which would be located at or near TISCO’s facilities in Taiyuan, Shanxi Province, China. Besides the Taiyuan project, Inco and TISCO are interested in exploring other possible joint venture opportunities in the future, both within and outside China.

* Registered Trademark of Inco Limited

IN 06/14
May 5, 2006

Contact Information

Steve Mitchell

Media Relations

Inco Limited

Contact via E-mail