Introduction
The horizon clears
Inco sees its future
After days of murky weather, a wool fog lifted off central Labrador, revealing the bald rugged terrain explorer Jacques Cartier dismissed as "the land God gave to Cain." The momentary clearing allowed a clutch of travellers to dash to two turbo props marooned at Happy Valley Goose Bay airport.
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These were no ordinary tourists. Leading the parka-clad pack was Scott Hand, patrician chief executive officer of the world's second-largest nickel producer, Inco Ltd. Behind him, eager to explore Cain, were an elite corps of international executives. Rick Waugh, CEO of Bank of Nova Scotia, a man who is gobbling up more Latin American banks than Butch Cassidy and the Sundance Kid, was here. So was David O'Brien, chairman of EnCana Corp. and Royal Bank of Canada. Joining them were Glen Barton, retired chief of Illinois' Caterpillar Inc.; John Mayberry, onetime CEO of Hamilton steel maker Dofasco Inc.; and Francis Mer, retired boss of European steel maker Arcelor SA and a former finance minister of France. Inco directors one and all, they scrambled to the Dash 8s under an uncertain sky to see for themselves the 21st century's first great mining startup: Voisey's Bay.
Mr. Hand, however, wanted his directors to see more than a prosperous mine on the afternoon of Sept. 20, 2005. Although Inco was still digesting the $4-billion, 1996 purchase of Voisey's Bay, he believed it was time to deal again. Rival Falconbridge Ltd. was in play, presenting Inco with an opportunity to forge a global powerhouse by bringing some of the world's richest copper and nickel deposits under one corporate entity. Worried board members weren't so sure. Inco had been burned by plunging nickel prices after the Voisey's Bay deal, and the directors were nervous about risking an even bigger bet. Mr. Hand had two days to win them over. His message: "If we don't do something on our own, somebody will do something to us."
Once upon a time, his company monopolized world nickel sales by virtue of its claims to the Sudbury Basin, one of the planet's biggest and richest mineral deposits. He was convinced it could be a titan again. Acquiring Falconbridge might even dispel Canada's reputation as a place where companies are incapable of eating their way to the top of business food chains. If Inco's blue-ribbon panel of powerful directors couldn't control the destiny of one of the country's few global heavyweights, then who could?
Just as the fog lifted temporarily that day in Labrador, the window for buying Falconbridge would not be open long. The battle for mineral assets was a lighting-fast Risk game involving ever fewer, more powerful takeover players. Reaching the Dash 8s, Inco's top officials filed onto separate planes so the company would not be leaderless in case of a crash. Soon they were airborne, headed for a corporate turbulence that none of them could have imagined.
The Inco directors would travel into the heart of the most complicated takeover battle of our time. They would enter a world of colourfully named but mostly futile corporate projects, from Talon to Albatross to Sudbury Sangria. They would taste triumph, defeat, betrayal and, worst of all, a dismaying government indifference that reached up to the Prime Minister's Office. Their burden was a fading national dream that saw Canada's few remaining independent corporate giants as contenders on a global stage dominated by predatory raiders.
There would be no happy ending, however. Instead, a debilitating mix of corporate caution, personality clashes, political naiveté and shareholder revolts would weaken Canada's mining contenders at the very moment they needed to be strong. In the first decade of the 21st century, Canadian greats — from the Hamilton steel maker Dofasco Ltd. to the Vancouver resort operator Intrawest Corp. — were being gobbled up by foreigners. And mining, so quintessentially Canadian, was to be no exception. A business fantasy, of creating a Canadian global giant, was about to disintegrate into a Canadian tragedy. This is the full story of how it unfolded.
Chapter One
Better together
Historic rivals secretly plot a marriage
The battle for Canada's mining giants began with a small idea. Scott Hand wanted to do a deal. Inco's chief had been eyeing a Canadian merger since the summer of 2003, when Derek Pannell, his counterpart at Falconbridge, approached him with a suggestion. The unflappable metallurgical engineer from the English port city of Southampton had been parachuted into Falconbridge in 2002 after he distinguished himself as a tenacious manager who could launch new mines ahead of deadline and under budget. In 2003, Mr. Pannell told Mr. Hand he wanted to launch something else. It was time, he argued, for the mining rivals to bury a century of grievances and explore a joint venture in Sudbury, Ont., home to the Sudbury Basin and its vast treasure trove of minerals. On the surface, the two men had little in common. Mr. Pannell is a no-nonsense engineer who worked his way to the top by honing his skills as a hard-nosed mining operator. Mr. Hand is a stiff U.S. lawyer who was raised in an affluent New York suburb and earned the trust of Inco's powerful board by distinguishing himself as a cautious and loyal executive. In some business quarters, the reliable executive was known as "Steady Hand."
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