CVRD gets approval for Inco nickel acquisition

CVRD gets approval for Inco nickel acquisition

October 22, 2006 Filed Under: Lead Mining, Mining Services, Nickel Mining  

As the world’s largest iron ore miner announced that it had received Canadian approval to acquire Canadian nickel miner Inco, Brazilian Indians who had held CVRD’s Carajas mining complex hostage for three days left the site.

CVRD President and CEO Roger Agnelli was pretty much on the mark when he predicted Monday that Brazilian miner would close the $17.1 billion all-cash acquisition within days or within the week. As the Canadian Minister of Industry approved the acquisition Thursday, CVRD announced it had received all the required regulatory approvals to complete the takeover.

To demonstrate to the Ministry that the foreign acquisition would benefit Canada, CVRD agreed to base its global nickel division CVRD Inco in Toronto. A Canadian COO will be appointed to head CVRD Inco, along with a senior executive team comprised largely of Canadians. There will be no layoffs at Canadian operating facilities for at least three years with total employment at these operations not dropping below 85% of current staffing.

CVRD also pledged to accelerate the Voisey’s Bay Development Agreement by 12 to 18 months, in order to provide substantial economic benefits to Newfoundland and Labrador. The company also agreed to increase exploration and research and development expenditures in Canada for the next three years.

In a news conference earlier this week, Agnelli said CVRD Inco will also explore potential synergies in the Sudbury Basin operations of Swiss mega-miner Xstrata, which recently assumed control of Canadian miner Falconbridge. Originally Inco and Falconbridge had planned a friendly merger to take advantage of potential Sudbury synergies.

Meanwhile, some 200 protestors of the Xikrin Tribe Thursday left the Carajas mining complex in the eastern Amazon jungle in the Para State of Brazil after occupying the town and the mining facilities for three days. Armed with bows, arrows, and sticks, the protestors seized buses transporting miners and held 600 hostages for two hours. Rail transport of iron ore was also suspended.

CVRD said production would resume Thursday at the complex made up of four mines. The Indians had stopped daily mining and defied a court order to leave. Tribal members interviewed on Brazilian TV said they wanted better roads and more money from CVRD.

The mining company had also refused to negotiate with tribal leaders, saying the Federal Indian Bureau Funai is responsible for all negotiations with indigenous peoples. CVRD maintained that the mining complex is not on Indian land. Previously, CVRD had agreed to protect 1.2 million hectares of land and the indigenous people on them in exchange for the right to mine 412,000 in the eastern Amazon.

Amnesty International has identified several areas of concern where Funai has been unable to significantly help indigenous communities in Brazil. The human rights NGO claims Brazil has failed to guarantee their right to land, as well as aggravating the severe economic and social deprivation felt by many indigenous communities.

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