You would have to be living on some unconnected deserted island in the South Pacific - not including New Caledonia - not to know that the "story of the year" was the foreign takeovers of Inco and Falconbridge.
That is not the way anyone in this city envisioned the final
outcome in January when the spot price of nickel was trading at
about ($US) 13,500 a tonne versus last week's price of just a
little over 35,500.
By the end of January, there were concerns the "metallic
marriage made in heaven" was starting to go wrong when Inco had
to extend its offer for Falconbridge to June 30 due to delayed
government approvals from the United States and the European
Union.
The regulatory holdups were destined to become one of the major
causes of the merger's failure.
On May 8, Vancouver-based Teck-Cominco made a hostile bid for
Inco on condition that the Falconbridge merger was dropped. On
May 16, Xstrata made a hostile cash bid for the 80 percent of
Falconbridge that it did not already own.
On June 26, Arizona-based Phelps Dodge, in a friendly deal,
agreed to buy both Inco and Falconbridge, allowing the original
merger to go ahead in a (US) $40 billion deal, the largest in
Canadian corporate history. Intense opposition to this deal
surfaced from Phelps Dodge shareholders.
In the interim, Xstrata, Phelps Dodge, Teck-Cominco, and Inco
all increased their various bids, but the final knockout punch
came from Xstrata on July 19 with a cash (Cdn) $16.3 billion
offer. Inco admitted defeat and abandoned merger efforts with
Falconbridge.
On Aug. 11, CVRD, the world's biggest producer of iron
ore,  unveiled a (Cdn) $17 billion cash offer for Inco
trumping competing cash/share offers from Phelps Dodge and
Teck-Cominco.
By Sept. 24, Inco told its shareholders to tender to CVRD's
offer and the end of an era in Canadian mining comes to a close
as the two iconic nickel miners fell under foreign control.
Obviously, in hindsight, mistakes were made by Inco and
Falconbridge.
However, the biggest culprit has to be the federal Martin
Liberals and Harper Tories. No other major industrial power in
the world would have allowed a trillion-dollar natural resource
like the Sudbury Basin to fall under foreign control.
The most capitalistic country in the world, the United States,
blocked a proposed Chinese takeover of a small oil producer,
Unocal Corporation, due to national security reasons.
Both the Liberal and Tory disinterest in this issue and their
abysmal lack of support for Inco - by pressuring the European
Union to speed up regulatory approvals - were nothing short of
scandalous.
But this is all water under the bridge. The deal is done.
Sudbury will benefit from the financial clout of the larger
CVRD Inco and Xstrata Nickel with the rapid development of new
mines in the Basin.
To date, both CVRD and Xstrata have shown great respect for
their skilled workers, and both appear committed to honouring
past agreements and intend to use local suppliers. On December
18, Xstrata Nickel announced a $5 million investment in the
Centre for Excellence in Mining Innovation (CEMI) at Laurentian
University. There is no doubt both these companies will be good
corporate citizen.
But for the generations of workers, whose roots run deep in the
Sudbury Basin, the heart and soul of the global nickel
industry, it is the end of an era. For them, it will take a
little time to adjust.
Stan Sudol is a Toronto-based communications consultant
and policy analyst who writes extensively on mining issues.
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