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September 11, 2006
(Natural Resources)

Province still seeking indemnity for future contamination at Argentia

Natural Resources Minister Kathy Dunderdale said today that key timelines for the construction of a commercial processing facility at Argentia are being compromised by the federal government�s refusal to deal with the province�s request around indemnification issues related to the former American naval base.

The province wrote the federal government three months ago requesting that Inco be provided with the indemnity to allow for construction to proceed on schedule at Argentia, the company�s originally stated preferred site. The federal government has not responded, other than with a verbal request for clarification that was quickly provided.

�We have written the federal government on four occasions on this issue since June 6,� Minister Dunderdale said. �The Government of Canada owns this property and is carrying out a remediation program at the site. Any indemnity for costs and business losses Inco may incur as a result of past contamination should be the responsibility of the federal government. It is critical that the federal government address this issue before key project timelines are compromised.�

The requests were sent to federal Public Works and Government Services Canada Minister Michael Fortier and outlined the critical importance to the project timelines of resolving these issues.

�We have now reached a critical stage in the project schedule as time is limited within the Voisey�s Bay Development Agreement for Inco to make its decisions and plans regarding the construction and operations of the commercial nickel processing plant,� Minister Dunderdale said. �We are requesting that the federal government make it possible for the operation to remain at Argentia. We believe the federal government can assist in this by providing Inco with the indemnification.�

Inco notified government on November 30, 2005 of its decision to locate the planned processing plant at a site in the province other than Argentia, as per Section 4.6.4 of the Development Agreement. Based on its own assessment of environmental, legal and business risks, Inco has concluded that it is not economically feasible to use Argentia as the site for a commercial nickel processing facility. The company has since registered a proposed site in Long Harbour for environmental assessment.

In the Development Agreement Inco signed with the province in 2002, Inco committed to constructing a commercial processing plant at Argentia �unless the environmental conditions at Argentia would make it not economically feasible� to do so. In that event, Inco committed to locating the plant at another site in the province.

Media contact: Tracy Barron, Communications, (709) 729-5282, 690-1703

2006 09 11                            4:55 p.m.

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