CANADIAN OVERVIEW

Canadian production of nickel in 2007 is estimated at a

record $10 billion, not including semi-manufactured items

or electric accumulators. Imports of nickel materials are

estimated at $0.7 billion (includes feed materials to Canadian

metallurgical processing facilities, but does not

include imports of nickel intermediates from the leaching

operation at Moa Bay). The Canadian dollar averaged

US$0.93 in 2007.

CVRD completed the US$17.7 billion purchase of Inco

Limited in January 2007 and created CVRD Inco Limited,

a subsidiary based in Toronto responsible for all of

CVRD’s nickel business. In November, CVRD Inco was

renamed Vale Inco Limited. Glencore International

assumed responsibility for marketing Xstrata’s nickel and

cobalt output from all Xstrata operations in all countries.

Other purchases completed in 2007 affecting Canadianlisted

nickel companies included: Sherritt International

bought Dynatec and its 45% interest in the Ambatovy project

in Madagascar; Norilsk Nickel bought LionOre Mining,

with mining and technology assets located in Africa

and Australia; Lundin Mining bought Rio Narcea Gold

(nickel mine in Spain); and Belvedere purchased the Hitura

mine in Finland from Outokumpu.

Vale Inco submitted an environmental impact statement to

the Province of Newfoundland and Labrador for the Long

Harbour nickel processing plant. The company planned to

inform the Province by mid-2008 of its decision on whether

to build a hydrometallurgical plant to process nickel-cobalt

concentrates from the Voisey’s Bay operation or a matte

processing plant to refi ne matte. Voisey?s Bay produced38 400 t (22 100 t) of fi nished nickel in the fi rst nine

months of 2007, some of which was exported to Europe for

smelting and refi ning, and 808 t (378 t) of cobalt.

Vale Inco reported production of fi nished nickel as123 300 t (118 400 t) in the fi rst nine months of 2007 from

Canadian sources derived 51% from Ontario, 17% from

Manitoba, and 31% from Voisey’s Bay. Production in

Ontario was lower than estimated due in part to plant problems

in the United Kingdom, where some Ontario smelter

output is processed. Vale Inco will develop the $400 million

Totten mine in Sudbury that will start up in 2011 and

produce an estimated 173 000 t of nickel plus by-product

copper and platinum group metals over 20 years. The Copper

Cliff Deep project was under study; if implemented, it

could be in operation by 2013 to service the Murray mine,

the Copper Cliff North mine, the Copper Cliff south mine,

and possible development of the Kelly Lake deposit.

Xstrata?s production from Canadian operations in the fi rst

six months of 2007 was 30 500 t of nickel in concentrates

(28 400 t) and Xstrata’s Sudbury smelter produced 33 500 t

(29 300 t) of nickel and 1125 t (1100 t) of cobalt in matte

that was sent to the company?s refi nery in Norway for fi nal

processing. The Raglan expansion of operations from

1.1 to 1.3 Mt/y of ore will be completed in late 2008; a further

expansion to 2 Mt/y of ore to produce nearly 50 000 t/y

of nickel in concentrates could start in 2011 depending

upon exploration results and expansion studies. For the

2007 calendar year, the custom feeds at Xstrata’s Strathcona

concentrator included 1500 t (1100 t) of payable

nickel in 125 000 t of ore (136 000 t) from First Nickel?s

Lockerby mine and 50 000 t of ore from URSA Major’s

future Shakespeare mine, containing 124 t of nickel in

concentrates.

From January to September 2007, the North AmericanPalladium concentrator handled 3.8 Mt (3.4 Mt) ore to

produce about 1025 t (804 t) of nickel in concentrate. The

company renegotiated the smelting and refi ning contract

with Xstrata for its palladium concentrate, which contains

by-product nickel, platinum, copper, gold, and cobalt; the

contract expires in March 2010 but can be extended.

Liberty Mines commissioned a concentrator at its Redstone

mine in July; ore was being processed at 420 t/d in

November. Nickel-cobalt concentrate from Liberty was

sold to Jilin Jien in China. The contract was renegotiated

in November. With shipments to Jilin Jien capped at 20 t/d

of concentrate until November 2010, Liberty sent the

excess to Xstrata’s Sudbury smelter, which paid for

by-product copper, cobalt, and platinum group metals.

Liberty got permission from the Ontario government to

proceed with the McWatters mine; McWatters was scheduled

to produce about 1250 t/d in the third quarter of 2008

and will send its ore to the Redstone mill.

FNX combined its Levack mine and McCreedy mine intoone operation called the Levack Complex. In the fi rst nine

months of 2007, FNX sold 0.62 Mt (0.42 Mt) of ore containing

4050 t (2785 t) of payable nickel and 52 t (29 t) of

payable cobalt, plus copper and precious metals. In the

third quarter of 2007, FNX decided to proceed with commercial

development of the 2000 deposit at the Podolsky

site. Probable reserves were 0.35 Mt at 7.78% Cu, 0.67%

Ni, and 5.1g/t total precious metals. Shipments of preproduction

ore started in the third quarter of 2007 and commercial

production will begin by mid-2008.