Competition in Nickel

Ever since nickel became industrially important in the late 19th century, Canada's giant International Nickel Co.

(1956 sales: $445 million) has enjoyed a near monopoly on production. As late as 1951 Inco's mining facilities in Ontario's rocky Sudbury Basin supplied 85% of the free world's nickel and 95% of the nickel used by the U.S. During World War II the scarcity of nickel was so acute that the U.S. began stockpiling--almost entirely from Inco. But the U.S. did not take to dependence on Inco, began to develop other sources. Last week the General Services Administration told Inco that it is "not interested" in the company's offer to supply the U.S. stockpile with up to 150 million Ibs. of nickel over a 2 1/2-year period from the 75 million Ibs. that will be produced annually (beginning in 1960) at Inco's new $115 million development at Moak Lake, Man. Gracefully, Inco President Henry S. Wingate said that the Government action "is very good news to nickel consumers because it forcefully emphasizes that the supply outlook is much improved."

New Competition. The U.S. decision was another in a series of developments that over the past few years has whittled away Inco's monopoly to 65% of the free-world market, threatens the industry's dominant producer with even more competition in the future. The burgeoning demand for nickel encouraged new companies to enter the field. Inco was turned down flat this spring by the Quebec government when it asked permission to develop a rich new nickel find in Quebec's Ungava district, but about three dozen other companies have won concessions in the area, including wealthy

Rio Tinto, Falconbridge Nickel Mines and Iron Ore of Canada.

In March the General Services Administration agreed to buy up to 271 million Ibs. of nickel from Freeport Sulphur Co. by July 1965, thus giving Freeport incentive to build new nickel-producing facilities in Cuba and a $100 million refinery in Louisiana. Freeport's facilities will produce 50 million Ibs. of nickel annually, of which the U.S. will have the right to take up to 30% for stockpiling. The U.S. also contracted with M.A. Hanna Co. (to open a ferronickel mine in Riddle, Ore., which is now producing 11 million Ibs. a year) and with Canada's Falconbridge.

Goal Attained. With all its contracted commitments (including one to purchase 120 million Ibs. within five years from Inco's present facilities), the U.S. is sure to reach its annual supply goal of 440 million Ibs. by 1961. Though nickel is still in short supply and will be for many years, the free world's production is slowly edging up, reached 450 million Ibs. last year v. 1955's 427 million Ibs., and is expected to top 600 million Ibs. by 1960. The price of European and Japanese nickel, which U.S. firms have been forced to buy at up to $2.60 per lb., has dropped to about $1.05 v. Inco's U.S. and Canadian price of 74-c- per lb. In fact, with defense demands taking less of the nickel supply, the U.S. is now diverting to private firms the nickel Inco has already contracted to sell the Government. From now on, Inco will have to take its chance on the free market against growing competition.

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