Left to right: Pierre Duhaime, SNC Lavalin; Richard Ross, INMET Mining Corp; Jochen Tilk, INMET Mining Corp.
The Toronto Branch gained increased knowledge of Inmet this past December when Jochen Tilk, president and COO, Inmet, was the keynote speaker, discussing Inmet – Past, Present, and Future.
Inmet Mining Corporation (formerly Metall Mining Corporation) was formed in 1987 through the acquisition of Metallgesellschaft Canada. Initially a holding company, when founded it owned four per cent of MIM in Australia, ten per cent of Teck Corporation, eight per cent of Cominco, and other minority interests.
In February 1989, Metall bought the Copper Range Company, which owned and operated the White Pine mine in Michigan. A merger with Minnova in 1993 brought the properties of Izok, Petaquilla, and Troilus to Metall. That same year, Metallgesellschaft in Germany almost collapsed, triggering a complete restructuring that led to it disposing of its shares in Metall. Shortly afterwards, Metall Mining changed its name to Inmet Mining Corporation.
Unfortunately, Inmet seemed to be on a losing streak, and by 1998 was at the absolute low point in the company history. In March 1999, Inmet’s share price reached its all-time low of $1.50 with a market capitalization of only $58 million.
In response, a new team was assembled to deal with the challenges, and most of the members are still with the company today. Six simple but effective objectives were identified:
Clean up the balance sheet.
Deal with environmental liabilities.
Sort out the situation at Ok Tedi.
Strive for operational excellence.
Look for a sound acquisition.
Earn a favourable outcome of lawsuit over the unsuccessful sale of Troilus.
The company sold a number of noncore interests, and by the end of 1999, Inmet was much more transparent with a smaller asset base but healthier balance sheet. The company negotiated with the State of Michigan over the reclamation of Copper Range’s White Pine mine and entered into a Consent Decree to develop an action plan. After refining the cost estimates for site remediation at WhitePine and other Canadian closed properties, the company bought an insurance policy to cap the remediation liabilities at $30 million – a manageable number.
In June 1999, BHP Billiton announced its plan to exit or shut down Ok Tedi, because the operation’s environmental impact was irreconcilable with BHP’s standards. However, the mine accounts for more than 20 per cent of Papua New Guinea’s GDP. Inmet and their partner on the project, the Government of Papua New Guinea, created a trust fund that would administer what was then BHP’s interest, for the benefit of the people of Papua New Guinea. In February 2002, Ok Tedi concluded Mine Continuation Agreements with about 150 villages located in the vicinity and along the Ok Tedi and Fly rivers, which are the basis for annual compensation payments made by Ok Tedi to these villages.
At Cayeli, in Turkey, production was increased from the original design capacity of 600,000 tonnes per year to over 900,000 tonnes annually, and the company found ways to address other challenges such as ground conditions. The expectation in 2005 was to deliver the third highest production results since production began over a decade ago.
Shifting the focus to growth, Inmet acquired Outokumpu’s Pyhäsalmi mine in 2002, which uses automation to overcome low grades. Next, the company acquired the remaining interest in Cayeli. Then, in early 2005, Inmet acquired 70 per cent of the Las Cruces project in Spain.
The final objective was also met, when in early 2003 Inmet won the Troilus lawsuit on appeal.
Going forward, Inmet will be focusing on Las Cruces, which is expected to enter production in 2007.