AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 29, 2003
                                                     REGISTRATION NO. 333-104688
================================================================================
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             -----------------------
                                 AMENDMENT NO. 1
                                       TO
                                    FORM F-10
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933
                             -----------------------
                                  INCO LIMITED
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                                                                              
             CANADA                                      N/A                                      98-0000676
 (PROVINCE OR OTHER JURISDICTION     (PRIMARY STANDARD INDUSTRIAL CLASSIFICATION    (I.R.S. EMPLOYER IDENTIFICATION NUMBER
OF INCORPORATION OR ORGANIZATION)           CODE NUMBER (IF APPLICABLE))                       (IF APPLICABLE))


   145 KING STREET WEST, SUITE 1500, TORONTO, ONTARIO, M5H 4B7 (416) 361-7511
   (ADDRESS AND TELEPHONE NUMBER OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
                              CT CORPORATION SYSTEM
                                111 EIGHTH AVENUE
                            NEW YORK, NEW YORK 10011
                                 (212) 894-8940
   (NAME, ADDRESS, (INCLUDING ZIP CODE) AND TELEPHONE NUMBER (INCLUDING AREA
                CODE) OF AGENT FOR SERVICE IN THE UNITED STATES)
                             -----------------------
                                   COPIES TO:

  DONALD R. CRAWSHAW, ESQ.                         STUART F. FEINER, ESQ.
   SULLIVAN & CROMWELL LLP                       EXECUTIVE VICE-PRESIDENT,
      125 BROAD STREET                          GENERAL COUNSEL & SECRETARY
NEW YORK, NEW YORK 10004-2498                           INCO LIMITED
                                               145 KING STREET WEST, SUITE 1500
                                                 TORONTO, ONTARIO M5H 4B7
     APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO
                                  THE PUBLIC:
     FROM TIME TO TIME AFTER EFFECTIVENESS OF THIS REGISTRATION STATEMENT.
                               PROVINCE OF ONTARIO
        (PRINCIPAL JURISDICTION REGULATING THIS OFFERING (IF APPLICABLE))
                             -----------------------
It is proposed that this filing shall become effective (check appropriate box):
A.|_| Upon filing with the Commission, pursuant to Rule 467(a) (if in connection
      with an offering being made contemporaneously in the United States and
      Canada)
B.|X| At some future date (check the appropriate box below):
     1.|_| pursuant to Rule 467(b) on        at           (designate a time not
           sooner than 7 calendar days after filing)
     2.|_| pursuant to Rule 467(b) on        at           (designate a time
           7 calendar days or sooner after filing) because the securities
           regulatory authority in the review jurisdiction has issued a receipt
           or notification of clearance on        .
     3.|X| pursuant to Rule 467(b) as soon as practicable after notification of
           the Commission by the Registrant or the Canadian securities
           regulatory authority of the review jurisdiction that a receipt or
           notification of clearance has been issued with respect hereto.
     4.|_| After the filing of the next amendment to this form (if preliminary
           material is being filed).
     If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to the home jurisdiction's shelf short
form prospectus offering procedures, check the following box. |X|
                             -----------------------

--------------------------------------------------------------------------------
     THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE AS PROVIDED IN RULE 467 UNDER THE SECURITIES
ACT OF 1933 OR ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a)
OF THE ACT, MAY DETERMINE.
--------------------------------------------------------------------------------
================================================================================



This Amendment No. 1 to Registration Statement on Form F-10 (File No.
333-104688) (the "Registration Statement") is filed by Inco Limited, a
corporation duly organized and existing under the laws of Canada. Except as
amended hereby, the Registration Statement remains in full force and effect.

                                     PART I

         INFORMATION REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS

Part I of the Registration Statement is hereby amended and restated as follows:



                                  $227,100,000
BASE SHELF PROSPECTUS
---------------------

                                  INCO LIMITED
               3 1/2% SUBORDINATED CONVERTIBLE DEBENTURES DUE 2052
                              --------------------

    We issued  $227,100,000  aggregate  principal amount of 3 1/2%  Subordinated
Convertible  Debentures due 2052 (the  "Subordinated  Debentures")  on a private
placement basis on March 7, 2003 and March 18, 2003. This prospectus may be used
by selling  securityholders  in  connection  with  resales  of the  Subordinated
Debentures  and the common  shares  issuable  upon the  conversion,  redemption,
purchase  or payment of the  Subordinated  Debentures.  Such  common  shares are
sometimes referred to in this prospectus as the underlying shares.

    The Subordinated Debentures are currently eligible for trading on the PORTAL
market of the National Association of Securities Dealers, Inc. Our common shares
currently  trade  under the symbol "N" on the New York  Stock  Exchange  and the
Toronto Stock Exchange. The last reported sale price of our common shares on the
New York Stock Exchange on April 28, 2003 was $18.50 per share.
                              --------------------
    INVESTING  IN OUR  COMMON  SHARES OR THE  SUBORDINATED  DEBENTURES  INVOLVES
RISKS.  PLEASE CAREFULLY CONSIDER THE "RISK FACTORS" SECTION BEGINNING ON PAGE 4
OF THIS PROSPECTUS.
                              --------------------

    The  Subordinated  Debentures  and the  underlying  shares may be offered in
negotiated  transactions or otherwise,  at varying prices determined at the time
of the sale or at negotiated  prices. In addition,  the underlying shares may be
offered from time to time through  ordinary  brokerage  transactions  on the New
York Stock Exchange.  See "Plan of  Distribution".  This prospectus has not been
filed in respect of, and will not  qualify,  any  distribution  of  Subordinated
Debentures or underlying shares in Ontario or any other province or territory of
Canada.  The  selling  securityholders  may be  deemed to be  "underwriters"  as
defined in the U.S. Securities Act of 1933, as amended.  Any profits realized by
the selling securityholders may be deemed to be underwriting commissions. If the
selling  securityholders  use  any  broker-dealers,   any  commissions  paid  to
broker-dealers  and, if broker-dealers  purchase any Subordinated  Debentures or
underlying shares as principals,  any profits received by such broker-dealers on
the resale of the Subordinated Debentures or underlying shares, may be deemed to
be underwriting discounts or commissions under the Securities Act.

    We will not receive any of the proceeds from the resale of the  Subordinated
Debentures or the underlying shares by any of the selling securityholders.
                              --------------------

    UNDER  THE  MULTIJURISDICTIONAL   DISCLOSURE  SYSTEM  ADOPTED  BY  THE  U.S.
SECURITIES AND EXCHANGE COMMISSION,  WE ARE PERMITTED TO PREPARE THIS PROSPECTUS
IN ACCORDANCE WITH CANADIAN  DISCLOSURE  REQUIREMENTS,  WHICH ARE DIFFERENT FROM
THOSE OF THE UNITED  STATES.  WE PREPARE OUR FINANCIAL  STATEMENTS IN ACCORDANCE
WITH  CANADIAN  GENERALLY  ACCEPTED  ACCOUNTING  PRINCIPLES,  AND ARE SUBJECT TO
CANADIAN  AUDITING  AND  AUDITOR  INDEPENDENCE  STANDARDS.  THEY  MAY  BE NOT BE
COMPARABLE TO FINANCIAL STATEMENTS OF UNITED STATES COMPANIES.

    OWNING  SUBORDINATED  DEBENTURES OR UNDERLYING SHARES MAY SUBJECT YOU TO TAX
CONSEQUENCES  BOTH IN THE UNITED  STATES AND  CANADA.  THIS  PROSPECTUS  MAY NOT
DESCRIBE THESE TAX CONSEQUENCES  FULLY. YOU SHOULD READ THE TAX DISCUSSION UNDER
"CERTAIN INCOME TAX CONSIDERATIONS".

    YOUR ABILITY TO ENFORCE CIVIL  LIABILITIES  UNDER THE UNITED STATES  FEDERAL
SECURITIES LAWS MAY BE AFFECTED ADVERSELY BECAUSE WE ARE INCORPORATED IN CANADA,
SOME OF OUR  OFFICERS  AND  DIRECTORS  AND  SOME OF THE  EXPERTS  NAMED  IN THIS
PROSPECTUS ARE CANADIAN  RESIDENTS,  AND MOST OF OUR ASSETS ARE LOCATED  OUTSIDE
THE UNITED STATES.

    NEITHER THE  SECURITIES  AND EXCHANGE  COMMISSION  NOR ANY STATE  SECURITIES
REGULATOR HAS APPROVED OR DISAPPROVED OF THESE  SECURITIES OR DETERMINED IF THIS
PROSPECTUS  IS TRUTHFUL OR  COMPLETE.  ANY  REPRESENTATION  TO THE CONTRARY IS A
CRIMINAL OFFENSE.

                 The date of this prospectus is April 29, 2003.



                                TABLE OF CONTENTS

                                                                            Page

CURRENCY REFERENCES............................................................2
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS.........................3
ENFORCEABILITY OF CERTAIN CIVIL LIABILITIES....................................3
INCO LIMITED...................................................................4
RISK FACTORS...................................................................4
USE OF PROCEEDS...............................................................14
PRICE RANGE OF COMMON SHARES..................................................15
DIVIDEND POLICY...............................................................15
EARNINGS COVERAGE.............................................................15
RATINGS.......................................................................16
DESCRIPTION OF SUBORDINATED DEBENTURES........................................16
LEGAL OWNERSHIP...............................................................32
DESCRIPTION OF SHARE CAPITAL..................................................34
CERTAIN INCOME TAX CONSIDERATIONS.............................................38
PLAN OF DISTRIBUTION..........................................................42
VALIDITY OF THE SUBORDINATED DEBENTURES.......................................44
EXPERTS.......................................................................44
AVAILABLE INFORMATION.........................................................44
DOCUMENTS INCORPORATED BY REFERENCE...........................................44
LIST OF DOCUMENTS FILED WITH THE SEC..........................................45
SCHEDULE A - LIST OF ELECTING HOLDERS.........................................45


    You  should  rely  only on the  information  contained  or  incorporated  by
reference in this prospectus. We have not authorized any other person to provide
you with  different  information.  If  anyone  provides  you with  different  or
inconsistent  information,  you should not rely on it. These  securities are not
being  offered  or sold  in any  jurisdiction  where  the  offer  or sale is not
permitted.  You should assume that the information  appearing in this prospectus
and the  documents  incorporated  by  reference  is  accurate  only as of  their
respective dates. Our business,  financial condition,  results of operations and
prospects may have changed since those dates.

    IN THIS PROSPECTUS,  UNLESS WE STATE OTHERWISE, "INCO", THE "COMPANY", "WE",
"US" AND "OUR" REFER TO INCO LIMITED AND ALL OF ITS  CONSOLIDATED  SUBSIDIARIES,
UNINCORPORATED UNITS AND DIVISIONS.

                               CURRENCY REFERENCES

    Unless we state otherwise or the context otherwise requires,  all references
to dollar  amounts  in this  prospectus  are  references  to U.S.  dollars.  The
exchange  rate  between  the  Canadian  dollar and the U.S.  dollar used in this
prospectus varies depending on the date and context of the information contained
herein.

    On April 28,  2003,  the noon buying rate for U.S.  dollars  reported by the
Bank of Canada was Cdn.$1.4501 for each U.S.$1.00.




                                       2



             CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

    Certain  statements  contained in, or  incorporated  by reference into, this
document  are  forward-looking   statements  as  defined  in  the  U.S.  federal
securities laws.  Examples of such statements  include,  but are not limited to,
statements  concerning:  (1) the price  volatility  for nickel and other primary
metals  products  produced  by us;  (2) the  long-term  demand for and supply of
nickel,  copper and other metals as well as the availability of, and prices for,
intermediates containing nickel purchased by us, and nickel-containing stainless
steel scrap and other substitutes for primary nickel;  (3) our premiums realized
over London Metal  Exchange  cash prices and the  sensitivity  of our  financial
results to changes in metals prices and interest  rates;  (4) our strategies and
objectives;  (5) our interest and other  expenses;  (6) our energy,  pension and
other  costs;  (7) our  position  as a  low-cost  producer  of  nickel;  (8) our
debt-equity   ratio  and  tangible  net  worth;  (9)  the  political  unrest  or
instability  in  countries  such as Indonesia  and its impact on our  Indonesian
subsidiary, PT International Nickel Indonesia Tbk, and political developments in
other  countries  in which we operate and  elsewhere;  (10) the  completion  and
results of a comprehensive review of the capital cost, scope, schedule and other
key  aspects of our Goro  project and the  results of the  bankable  feasibility
study for our Voisey's Bay project;  (11) the timing of the start of  production
and the costs of construction with respect to, and the issuance of the necessary
permits and other authorizations  required for, and engineering and construction
timetables for, and the necessary financing plans and arrangements for, our Goro
and Voisey's Bay projects,  and, in the case of our Goro project,  joint venture
or similar  investment and other agreements or arrangements;  (12) our estimates
of the quantity and quality of ore reserves;  (13) planned capital expenditures;
(14) our costs of  production  and  production  levels,  including the costs and
potential impact of complying with existing and proposed  environmental laws and
regulations and net reductions in  environmental  emissions;  (15) the impact of
changes in  Canadian-U.S.  dollar and other foreign  exchange rates on our costs
and results;  (16) sales of speciality nickel products;  (17) our cost reduction
and other financial and operating  objectives;  (18) the commercial viability of
new production  processes;  (19) our productivity,  exploration and research and
development initiatives as well as environmental, health and safety initiatives;
(20) the negotiation of collective agreements with unionized employees; (21) our
sales  organization  and  personnel  requirements;  (22)  business  and economic
conditions  and (23) the  enforceability  of certain  liabilities.  Inherent  in
forward-looking  statements are risks and uncertainties  well beyond our ability
to predict or control. Actual results and developments are likely to differ, and
may differ  materially,  from those expressed or implied by the  forward-looking
statements contained in, or incorporated by reference into, this document.  Such
statements are based on a number of assumptions which may prove to be incorrect,
including,  but not limited to,  assumptions  about:  (a)  business and economic
conditions,  including  exchange  rates and energy,  pension and other costs and
other  anticipated  and  unanticipated  costs;  (b) the supply  and demand  for,
deliveries of, and the level and volatility of prices of, nickel, copper, cobalt
and our other metals products,  purchased  intermediates  and  nickel-containing
stainless  steel scrap and other  substitutes  and  competing  products  for the
primary  nickel  and other  metal  products  we  produce;  (c) the timing of the
receipt of regulatory and  governmental  approvals for our Goro and Voisey's Bay
projects and other  operations;  (d) the  availability  of financing,  including
partner or other  investment  arrangements in the case of our Goro project,  for
our development  projects on reasonable  terms;  (e) our costs of production and
our production and productivity levels, as well as those of our competitors; (f)
engineering and construction  timetables and capital and operating costs for our
Goro and Voisey's Bay projects; (g) market competition;  (h) mining, processing,
exploration  and research and  development  activities;  (i) the accuracy of ore
reserve  estimates;  (j) premiums  realized over London Metal  Exchange cash and
other benchmark  prices;  (k) tax benefits;  (l) the resolution of environmental
and other  proceedings  and the impact on us of the Kyoto  Protocol  and various
other environmental  regulations and initiatives;  (m) political  instability in
Indonesia and other countries or locations in which we operate or otherwise; and
(n) our ongoing  relations with our employees at our  operations  throughout the
world. See "Risk Factors" for more information about certain factors that, among
others, may cause actual results and developments to differ from those expressed
or  implied by  forward-looking  statements  contained  in, or  incorporated  by
reference into, this document.

                   ENFORCEABILITY OF CERTAIN CIVIL LIABILITIES

     We are a corporation  organized  under the laws of Canada and a majority of
our assets are located in, and most of our  directors and officers are residents
of,  Canada.  As a result,  it may be difficult for United  States  investors to
effect  service of process  within the United  States  upon those  directors  or
officers who are not residents of the United States, or to realize in the United
States  upon  judgments  of courts of the United  States  predicated  upon civil
liability of such directors or officers under U.S.  federal  securities laws. We
have been advised by Osler, Hoskin & Harcourt LLP, our Canadian counsel,  that a
judgment of a U.S. court predicated  solely upon civil liability under such laws
would  probably be enforceable in Canada if the U.S. court in which the judgment
was obtained had a basis for jurisdiction in the matter that was recognized by a
Canadian  court for such  purposes.  We have also been advised by such  counsel,
however,  that there is substantial  doubt whether an action could be brought in
Canada in the first  instance on the basis of liability  predicated  solely upon
such laws.





                                  INCO LIMITED

    Inco Limited is one of the world's premier mining and metals  companies.  We
are a leading  producer of nickel,  a hard,  malleable  metal  which,  given its
properties  and  wide  range of  applications,  can be  found  in  thousands  of
products.  We are also an  important  producer  of copper,  precious  metals and
cobalt,  and we produce sulphuric acid and liquid sulphur dioxide as by-products
of our  operations  at Sudbury,  Ontario.  Our  principal  mines and  processing
operations  are located in the Sudbury  area of Ontario,  the  Thompson  area of
Manitoba, and, through our 59 per cent-owned subsidiary, PT International Nickel
Indonesia  Tbk ("PT  Inco"),  on the  island  of  Sulawesi,  Indonesia.  We have
additional  wholly-owned metals refineries at Port Colborne,  Ontario and in the
United Kingdom at Clydach,  Wales and Acton,  England. We also have interests in
nickel  refining  capacity and nickel  salts  production  facilities  located in
Japan, Taiwan, South Korea and the People's Republic of China.

    We currently have two major development projects,  our Goro and Voisey's Bay
projects. We indirectly own an 85 per cent interest in Goro Nickel which holds a
number  of claims  covering  nickel-cobalt  properties  in the  French  Overseas
Territory  of New  Caledonia,  which  we  refer  to as  our  Goro  deposit.  Our
wholly-owned subsidiary,  Voisey's Bay Nickel Company Limited, holds the mineral
licenses  covering the Voisey's Bay deposit and certain other  mineral  licenses
and claims in the Province of Newfoundland and Labrador. We are currently in the
process of  undertaking a review of our Goro project.  See "Risk  Factors--Risks
Associated with, and Importance of, Future Low-Cost Nickel Projects--Uncertainty
of Production and Capital and Other Cost Estimates".

    Our  executive  offices  are located at 145 King  Street  West,  Suite 1500,
Toronto,  Ontario, Canada M5H 4B7. You should refer to our annual report on Form
10-K for the year  ended  December  31,  2002 (the "2002  10-K") for  additional
information regarding us and our operations throughout the world,  including our
exploration programs and our ore reserves.

                                  RISK FACTORS

    Investment  in  the   Subordinated   Debentures   involves   certain  risks.
Prospective purchasers of the Subordinated  Debentures should consider carefully
the risk factors set forth below as well as the other information  contained and
incorporated by reference in this prospectus  before purchasing the Subordinated
Debentures, including the information contained in our 2002 10-K.

RISKS RELATING TO OUR BUSINESS

VOLATILITY OF PRICE OF NICKEL AND OTHER PRICES AND THEIR EFFECT ON OUR FINANCIAL
RESULTS

    The price of nickel has represented,  and is currently  expected to continue
to represent, the principal determinant of our profitability.  Accordingly,  our
financial  performance  has been,  and is expected  to  continue to be,  closely
linked to the price of nickel and, to a lesser  extent,  the price of copper and
other primary  metals  produced by us. Since we sell our nickel  products in all
major  geographical  markets,  the prices for primary  nickel and other  primary
metals products realized by us are influenced by both global and regional supply
and  demand  factors  and  by  the  availability  and  prices  of  secondary  or
metal-containing scrap material,  including nickel-containing scrap generated by
the  stainless  steel  industry,  and other  substitute  or competing  commodity
products  for the  primary  nickel and other metal  products  produced by us. In
recent times, the world's nickel and copper markets have been adversely affected
by excess supply conditions.  Based upon available data, we believe that between
mid-1999 and the second half of 2000, global nickel demand exceeded supply,  but
for most, if not all, of 2001, a surplus  condition existed in the global nickel
market.  For 2002,  we estimate  that,  with the  improvement  in global  nickel
demand,  the global nickel market  experienced a modest surplus position.  There
can be no  assurance  that the  excess  supply  situations  which  have  existed
historically in the nickel markets will not occur in the future. Any such excess
supply  condition  would have an adverse effect on the prices realized by us for
our nickel products. Other international economic trends, including an uncertain
global economic  environment,  expectations of inflation and political events in
major nickel-producing and consuming countries can also affect nickel prices and
the prices of other metals  produced by us. These factors are beyond our control
and have resulted,  and are expected to continue to result,  in a high degree of
price  volatility for nickel and other primary metals  produced by us. There can
be no assurance  that the price for nickel or other  metals  produced by us will
not decline  significantly  from current levels.  A return to the relatively low
price of nickel reflected by the London Metal Exchange ("LME") cash nickel price
which prevailed  through most of 1998 and into the first half of 1999 and during
a portion of the second half of 2001 would have a material adverse impact on our
business, results of operations, financial condition and liquidity.

    The price of nickel, as the principal determinant of our profitability,  has
fluctuated  significantly  for many years.  Over the past two years,  there have
been significant  fluctuations in the LME cash nickel price. The LME cash nickel
price on January 2, 2001 was $6,995 per tonne  ($3.17 per pound) and fell during
the  course of that year  through  the end of  October  2001,  reaching a low of
$4,420 per tonne  ($2.00 per pound) on October  31,  2001.  The LME cash  nickel
price  improved  during the remainder of the fourth  quarter of 2001,  averaging
$5,039 per tonne  ($2.29 per  pound) for that  quarter  and was $5,680 per tonne
($2.58 per pound) on December 31, 2001. The LME cash nickel price opened 2002 at
$5,680 per tonne ($2.58


                                       4


per pound) and  increased  during  the first  half of 2002 as the  economies  of
certain  industrialized  countries  began to recover from their  relatively  low
fourth  quarter  2001  levels,  ending  the first half of the year at $7,080 per
tonne ($3.21 per pound).  Prices declined through the third quarter,  reaching a
low of $6,305 per tonne  ($2.86 per pound) as concern  over the pace of economic
recovery and uncertainty about a potential war with Iraq adversely  affected the
nickel markets. Prices increased in the fourth quarter of 2002, and the LME cash
nickel price ended 2002 at $7,100 per tonne  ($3.22 per pound).  As of April 28,
2003,  the LME cash  nickel  price was $7,815 per tonne  ($3.54 per  pound).  We
believe  that the  improvement  in the LME cash  nickel  price in late  2002 and
through  April 28, 2003 has been due  principally  to the  recovery in stainless
steel  production  levels and demand for certain other end-use  applications for
nickel in certain geographic regions.  However, we have not seen any recovery in
certain other  important  end-use  markets for nickel,  in  particular  the high
nickel  alloys  industry,  during 2002 and into 2003.  Global  nickel demand has
historically been closely correlated with global industrial production.

    Copper is also an important  product for us and, like nickel,  copper prices
have been  volatile for many years.  For 2001,  while the early part of the year
saw some improvement in global copper demand,  copper prices declined during the
course of the year based upon the overall global economic slowdown and increased
copper  inventories.  The COMEX first position cash copper price,  the principal
price upon which our copper  sales are based,  averaged  $1,600 per tonne ($0.73
per pound) in 2001, down 14 per cent from its average of $1,851 per tonne ($0.84
per pound) in 2000. Copper prices for 2002 did not change significantly from the
2001 average,  with the average COMEX first position cash copper price at $1,560
per tonne ($0.72 per pound) for 2002. On April 28, 2003 the COMEX first position
cash copper price was $1,575 per tonne ($0.72 per pound).

    Our  development  projects  discussed  under  "Risks  Associated  with,  and
Importance  of,  Future  Low-Cost  Nickel  Projects"  below,  in addition to the
quantities of nickel  projected to be produced by them,  are expected to produce
significant  quantities  of cobalt given the currently  estimated  quantities of
cobalt  in the  mineral  deposits  to be mined as part of these  projects.  With
significant  increases in the global supply of cobalt and changes in demand, the
price of  cobalt  has  fluctuated  significantly  over the past  several  years,
reaching a high of $70.30 per  kilogram  ($31.90 per pound) in January  1996 and
declining significantly from that peak to an average price, based upon the Metal
Bulletin 99.8 per cent average cobalt  reference  price,  of $15.66 per kilogram
($7.10 per pound)  for 2002 and was  $20.83  per  kilogram  ($9.45 per pound) on
April 28,  2003.  The  financial  analyses  undertaken  by us in  support of the
substantial  investment to be made with respect to these projects has been based
upon a long-term  price of cobalt of $15.40 per kilogram  ($7.00 per pound).  If
realized  cobalt prices,  as well as realized  prices for the other metals to be
produced by these projects, were to be below the long-term prices assumed by us,
the expected  financial  returns from, and expected cash and other unit costs of
production for, these projects would be adversely affected.

    For  information  concerning the sensitivity of our results of operations to
certain  changes  in the price of nickel  and other  metals  refer to "Risks and
Uncertainties--Sensitivities"   in  the  Management's  Discussion  and  Analysis
included as an exhibit to our 2002 10-K.

RISKS ASSOCIATED WITH, AND IMPORTANCE OF, FUTURE LOW-COST NICKEL PROJECTS

    As part of our strategy to be the world's  lowest-cost  and most  profitable
nickel  producer,  we have continued our efforts to develop new low-cost sources
of nickel.  Following the  completion of the PT Inco  expansion  project in late
1999, we have focused on potential  future  projects to  commercialize  our Goro
nickel-cobalt deposit and Voisey's Bay nickel-copper-cobalt deposit. A number of
risks and  uncertainties  are associated with the development of these projected
low-cost sources of nickel and other metals,  including  political,  regulatory,
design,  construction,  labor,  operating,  technical and  technological  risks,
uncertainties  relating to capital and other costs and  financing  risks and, in
the case of Goro, those risks related to the possible transition to independence
in the future of the French overseas territorial community of New Caledonia.

    In addition  to the risks and  uncertainties  referred  to above,  there are
certain  issues that must be resolved to enable the  commercial  development  of
each of these  deposits  to  proceed.  For the Goro  deposit,  we still  need to
receive  the  necessary  environmental  and  operating  permits,   complete  our
comprehensive review of the schedule, capital costs, scope and other key aspects
of this project and develop an  acceptable  updated  capital  cost  estimate (as
discussed under "Uncertainty of Production and Capital and Other Cost Estimates"
below) and, as  discussed  below,  complete the  required  financing,  including
bringing in a partner for the project,  on acceptable  terms. In the case of our
Voisey's Bay deposit, the principal issues that would have to be resolved before
commercial  development can begin include issuance of the necessary construction
and  operating  permits,  meeting the  conditions  to be met with respect to the
overall  effectiveness  of the definitive  agreements on the  development of the
Voisey's  Bay  deposit  reached  in  October  2002  between  the  Government  of
Newfoundland and Labrador and us and the availability of financing  required for
development on acceptable terms.

    In  connection  with raising the  significant  financing  which we currently
believe will be required for the commercial development of the Goro and Voisey's
Bay deposits,  we currently  expect that, in order to meet such financing needs,
we will be required to borrow  additional  funds  and/or issue  additional  debt
and/or equity or arrange other forms of financing and/or enter


                                       5



into strategic or other arrangements.  Our current plans for development of Goro
contemplate   finalization   of  at  least   approximately   $350   million   in
tax-advantaged financing under an existing French legislative program. Our plans
also contemplate finalization of the terms and conditions under which a Japanese
consortium to be led by Sumitomo  Metal Mining Co., Ltd.  would acquire a 25 per
cent interest in Goro and assume, subject to certain limitations, the obligation
to fund 25 per cent of the capital  costs of the Goro  project.  There can be no
assurance that these  arrangements  will be finalized or that we will be able to
raise additional required funds on acceptable terms when financing is needed for
either project.  As discussed  under  "Uncertainty of Production and Capital and
Other  Cost  Estimates"  below,   while  we  have  certain  potential  new  mine
development  projects at existing  operations  in Canada,  as well as additional
resources that could be developed in Indonesia,  in addition to the Voisey's Bay
and Goro  projects,  if  sufficient  new  low-cost  sources  of  nickel  are not
developed by us on a timely basis, our overall nickel  production,  particularly
at our  Manitoba  operations,  could  decline  by  2004,  and our  unit  cost of
production  could  increase  significantly  with any  material  decline  in mine
production   from  the  Canadian   operations  if  such   operations   were  not
significantly restructured. These developments could materially adversely affect
our business, results of operations, financial condition and liquidity.

CONSTRUCTION RISKS AND TECHNOLOGICAL RISKS

    The  mine,  processing  plant  and  related   infrastructure   required  for
development of the Goro and Voisey's Bay deposits have not yet been  constructed
and no commercial  mining has commenced.  While certain  necessary  construction
permits  have  been  obtained  in  respect  of the  Goro  deposit  and  detailed
exploration  and related  studies with respect to the Goro deposit and a portion
of the Voisey's Bay deposit have been completed based on (1) significant surface
exploratory   drilling,   (2)  extensive   investigations   of  certain  of  the
mineralization  delineated to date,  (3)  construction  and mine plans,  and (4)
production  and cost  estimates,  we are not  currently in a position to predict
when all of the required  approvals  would be in place for us to develop  either
project  and,  in the  case of the  Goro  project,  when  construction  would be
restarted  given the status of the  comprehensive  review,  as  discussed  under
"Uncertainty  of  Production  and Capital and Other Cost  Estimates",  currently
being  undertaken,   and,  in  the  case  of  the  Voisey's  Bay  deposit,  when
construction  will be able to  commence.  Depending  on the  severity  of winter
conditions and other factors applicable to the Voisey's Bay deposit, a period of
approximately  36 months  from site  mobilization  will be  required to complete
construction  of the  initial  phase,  the  mine,  mill and  related  facilities
necessary  for the  commercial  development  of such deposit after all necessary
approvals and permits have been secured.

    Unforeseen  conditions or developments  could arise during the  construction
period for either  project  which  could  delay or  prevent  completion,  and/or
substantially  increase the cost of construction of the necessary facilities and
infrastructure  to develop the Goro and the Voisey's Bay  deposits.  Such events
may include,  without  limitation,  shortages of equipment,  materials or labor,
delays in delivery of  equipment  or  materials,  labor  disruptions,  political
events, local or political opposition, civil disturbances,  litigation,  adverse
weather  conditions,  unanticipated  increases  in costs,  natural  or  man-made
disasters,  accidents and unforeseen  engineering,  technical and technological,
design,  environmental,  geological  or  geotechnical  problems.  Any  delay  in
construction  would delay the  production of nickel and other  products from the
Goro and/or the Voisey's Bay deposits,  and the expected  significant  source of
revenue for us that  production  from these deposits would  represent.  Any such
delay  could  also  materially   adversely  impact  our  business,   results  of
operations, financial condition and liquidity.

    Our Goro project will involve the  application  of new  processing and other
technologies and, depending upon the results of the  hydrometallurgical  process
research  and  development  program  we plan to  conduct  for our  Voisey's  Bay
project,  that project could also utilize new processing and other  technologies
to produce one or more  refined or  finished  nickel  products.  There can be no
assurance that these technologies will be successfully  developed and applied on
a commercial  basis or that the costs associated with and/or the timing of their
implementation  will not have a  material  adverse  effect on the  timing of the
start-up of commercial production, the capital and/or operating costs for either
or both  projects and on other  factors  impacting  the  profitability  of these
projects.  These  developments  could materially  adversely impact our business,
results of operations, financial condition and liquidity.

UNCERTAINTY OF PRODUCTION AND CAPITAL AND OTHER COST ESTIMATES

    In the case of our Goro project,  in September 2002, at the time the project
was experiencing certain labor disruptions,  we initiated a review of the status
of certain key  aspects of the  project,  including  the  necessary  permitting,
capital cost  estimate,  schedule and  organization.  Work over the September --
November  2002  period  on  certain  critical  parts of the  project,  including
engineering,  continued  during this  initial  review.  On December 5, 2002,  we
announced  that we would  be  undertaking  a  comprehensive  review  of the Goro
project.  The objective of the comprehensive review is to assess all information
on our Goro  project,  including  the various  cost  estimates  and trends,  and
determine  what changes in the capital cost estimate and the project can be made
to maintain the project's economic  feasibility.  The review of the capital cost
estimate  will  cover what  downward  adjustments  can be made in such  estimate
through scope or design changes, modifications to construction and related plans
and civil and other contractual arrangements,  and alternative project execution
strategies.  Since that  announcement,  we have been  evaluating what onsite and
offsite work should be curtailed or stopped and what work should be


                                       6



continued while this review is ongoing.  The comprehensive  review was commenced
in response  to  information  we received  from the  principal  firms  providing
project engineering,  procurement and construction  management services that, if
confirmed, would indicate an increase in the capital cost for the project in the
range of 30 to 45 per cent  above the then  current  capital  cost  estimate  of
$1,450 million.  As a result of the temporary  suspension of certain development
activities  and other  actions which had been taken by year-end 2002 during this
review  process,  we  recorded  a pre-tax  charge of $25  million  in the fourth
quarter of 2002.  This charge was  comprised of pre-tax  expenses of $62 million
relating to the cancellation or termination of certain  outstanding  contractual
obligations, to accrue for demobilization costs and to reduce the carrying value
of certain assets relating to the project, partially offset by currency gains of
$37 million from the early settlement of certain forward currency contracts that
had been entered into for hedging purposes.  Based upon this ongoing evaluation,
we have also been reviewing various contractual and other arrangements  covering
construction  and other  work  relating  to the Goro  project  and  implementing
certain   actions  to  suspend  or  terminate   certain  of  those   contractual
arrangements.

    As of December 31, 2002, we had spent approximately $385 million on the Goro
project since July 1, 2001 when this project was formally launched.  This amount
excludes a current estimate of approximately  $260 million that would still have
to be spent for  equipment,  services  and  other  requirements  under  existing
contracts and commitments,  and accruals of approximately  $120 million relating
to such  requirements  as of  year-end  2002,  most of which is expected to have
value for the project.

    Since the Goro project  review  process is still in its  preliminary  stages
given its  planned  scope,  we do not  currently  expect to be in a position  to
report on the results of this review, including an updated capital cost estimate
for the project and the additional  effect,  if any, that this review could have
on our financial results,  until at least the end of the second quarter or early
in the third  quarter of 2003.  We have been  working  with  various  parties to
assist us in the review process.  While the key objective of this  comprehensive
review is to implement  such actions and steps,  if required,  to have a project
that will meet an acceptable rate of return on the investment to be made in this
project,  if, upon  completion of the review,  we were to conclude that the Goro
project  could not be  restructured  to meet our rate of  return  on  investment
requirements,  we would  likely  write off all or a  substantial  portion of the
carrying  value of the Goro project and we would also lose the  expected  future
production from Goro. Such a result would have a material  adverse effect on our
business, results of operations, financial condition and liquidity.

    During 2002, as mine production at our Manitoba operations transitioned from
the Thompson mine to the lower grade Birchtree  mine, we experienced  lower mine
production.  As this transition  moves forward,  we expect to see declining mine
production  in  Manitoba  in 2003 and in future  years.  We have  recently  been
relying  upon,  and will  continue to rely upon,  on an  increasing  basis,  the
availability of purchased intermediates to maintain Manitoba's nickel production
at around the 45,000 tonne annual level.  While we have entered into  agreements
and  other  arrangements  to  purchase   intermediates  to  maintain  Manitoba's
production  levels at or near the  45,000  tonne  annual  level for the next few
years,  until the Voisey's  Bay project  produces  intermediates  in the form of
concentrates for further processing at the Manitoba and Ontario  operations,  if
suppliers of the purchased  intermediates were to experience production problems
or other  disruptions,  this could have a material  adverse effect on our nickel
production,  business, results of operations, financial condition and liquidity.
While we have certain  potential new mine  development  projects at our existing
operations in Canada,  if sufficient new low-cost  sources of nickel such as our
Voisey's Bay and Goro projects are not developed on a timely basis,  our overall
nickel  production,  particularly at our Manitoba  operations,  could decline by
2004,  and our unit cost of production  could  increase  significantly  with any
material  decline  in mine  production  from  our  Canadian  operations  if such
operations  were  not  significantly  restructured.   These  developments  could
materially  adversely  impact our  business,  results of  operations,  financial
condition and liquidity.

    The level of production and capital and operating cost estimates relating to
the Goro project, the Voisey's Bay project and other projects of ours, which are
used in  establishing  ore reserve  estimates and for  determining and obtaining
financing  and  other  purposes,  are  based  on  certain  assumptions  and  are
inherently  subject  to  significant  uncertainties.  In the  case  of our  Goro
project,  as  discussed  above,  the review by us could result in a capital cost
estimate substantially higher than the 15 per cent increase in the estimate that
we had indicated in the third quarter of 2002 could occur given the then current
state of project procurement and engineering.

    We announced  on March 20, 2003 (i) the results of our bankable  feasibility
study for the mine for the Ovoid and adjacent surface deposits, concentrator and
related  facilities  representing  part of the initial phase of the Voisey's Bay
project and (ii) that we plan to proceed with this initial phase.


                                       7



     Based upon the results of the study,  the estimated  total capital cost for
the  mine  and  6,000-tonne   per-day   concentrator   and  related   facilities
representing the mine, concentrator and related facilities and infrastructure in
the Voisey's Bay area (the  "Mine/Concentrator  Project")  will be $582 million,
including $35 million spent since July 2002 on infrastructure  and related work.
The $582 million  amount  represents  an increase of $77 million or about 15 per
cent over the prefeasibility study estimates for the Mine/Concentrator  Project.
This  estimate  includes a $54 million  contingency.  The  initial  phase of the
Voisey's  Bay  project  will also  involve a research  and  development  program
covering hydrometallurgical processing technologies (the "Hydromet R&D Program")
for the treatment of the Voisey's Bay nickel and cobalt-containing  concentrates
to  be  produced  into  finished  nickel  and  cobalt  product,   including  the
demonstration  plant to be constructed in Argentia,  Newfoundland.  The Hydromet
R&D Program is expected to cost  approximately $134 million or about 14 per cent
above  the   initial   estimate   for  this   program.   In   addition   to  the
Mine/Concentrator  Project and the Hydromet R&D Program,  the initial phase will
include handling facilities to be constructed at our Canadian operations for the
nickel and  cobalt-containing  concentrates to be processed over the 2006 - 2011
period once the  Mine/Concentrator  Project and the  demonstration  plant are in
operation, at an estimated cost of $47 million, and an exploration program at an
estimated  cost of $13 million.  The total  capital  cost  estimate for all four
parts of the initial phase of the Voisey's Bay project is $776 million, or about
14 per cent above the prefeasibility study estimates of $680 million.

    The  engineering  firm retained to complete the study has indicated  that it
believes  that the capital cost estimate is within a range of plus 15% and minus
5% of the  $547  million  figure  still to be  spent  for the  Mine/Concentrator
Project.

    It is very likely that actual  results for these  projects  will differ from
our current estimates and assumptions, and these differences may be material. In
addition,  experience  from actual mining or processing  operations may identify
new or  unexpected  conditions  which  could  reduce  production  below,  and/or
increase capital and/or operating costs above, our current estimates.  If actual
results are less favorable than we currently estimate, our business,  results of
operations,  financial  condition  and liquidity  could be materially  adversely
impacted.

RISKS ASSOCIATED WITH PT INCO

    Our  investment  in PT Inco at book value as of December  31, 2002  totalled
$364 million.  Approximately 30 per cent of our 2003 planned total production of
primary nickel,  including  intermediate  product, is currently expected to come
from PT Inco.


                                       8



In 1999,  to meet PT Inco's  cash  shortfalls  attributable  principally  to the
increase in the capital cost of the new hydroelectric facilities which were part
of  PT  Inco's  expansion  project,   the  relatively  low  nickel  prices,  and
constraints on PT Inco's production  attributable to then reduced  hydroelectric
power generation  caused by below average  rainfall,  we advanced $88 million in
total to PT Inco. These advances have since been repaid.  PT Inco may experience
cash  shortfalls in the future,  particularly  if there were to be a significant
decline in primary nickel demand and nickel prices.  In the event of such a cash
shortfall,  we may again  conclude that it would be necessary to advance cash to
PT Inco in order to meet PT Inco's cash needs.

    The uncertain political situation in Indonesia, primarily as a result of the
ongoing  economic and political  problems  facing that country,  could adversely
affect PT Inco's ability to operate. While there has been no indication that the
Government  of the  Republic of  Indonesia  is  considering  currency  controls,
nationalization  of certain  properties or facilities or other similar  actions,
regional and local governmental  authorities have sought to take greater control
of the development of their resources and these or other political developments,
including,  but not  limited to, the  possibility  of  disruptions  in PT Inco's
operations  arising  out of the  actions of  non-governmental  organizations  or
community  activist  groups,  could have a material adverse effect on PT Inco's,
and therefore our, nickel production, business, results of operations, financial
condition and liquidity.

ENVIRONMENTAL RISKS

    Environmental  legislation  affects  nearly all  aspects  of our  operations
worldwide.  These laws apply to us along with other  companies in the mining and
metals  industry.  This type of  legislation  requires  us to  obtain  operating
licenses,  permits and other  approvals  and imposes  standards  and controls on
activities relating to mining, exploration, development, production, closure and
the refining,  distribution  and marketing of nickel and other metals  products.
Environmental  assessments are required  before  initiating most new projects or
undertaking  significant changes to existing operations.  In addition to current
requirements, we expect that additional environmental regulations will likely be
implemented  to protect the  environment  and quality of life,  given  issues of
sustainable  development and other similar  requirements  which governmental and
supragovernmental organizations and other bodies have been pursuing. Some of the
issues currently under review by environmental  regulatory  agencies include (1)
further reducing or stabilizing  various  emissions,  including sulphur dioxide,
metal and greenhouse gas emissions,  (2) mine reclamation and  restoration,  and
(3) water, air and soil quality and waste treatment and disposal.

    Although  the  ultimate  amount  to be  incurred  is  uncertain,  the  total
liability  for  future  removal  and site  restoration  costs in  respect of our
worldwide operations, to be incurred primarily after cessation of operations, is
estimated to be  approximately  $415 million at December 31, 2002,  up from $315
million at December 31, 2001. The increase was primarily due to the inclusion of
new estimates for certain sites.  In recognition  of this future  liability,  we
have recorded annually commencing in 1995 an accounting provision of $10 million
for future  removal  and site  restoration  costs,  which is included in cost of
sales and operating expenses.  This amount is based upon the estimated remaining
lives of our  applicable  ore  reserves  and  facilities  and is in  addition to
ongoing operating and capital expenditures.  The estimate of the total liability
for  future  removal  and  site  restoration   costs  has  been  developed  from
independent  environmental  studies, which include an evaluation of, among other
factors,  currently  available  information  with  respect to closure  plans and
closure  alternatives,  the  anticipated  method and extent of site  restoration
using  current  costs  and  existing  technology,  and  compliance  required  by
presently enacted laws,  regulations and existing industry standards.  The total
liability for future removal and site  restoration  costs  represents  estimated
expenditures   associated   with   closure,   progressive   rehabilitation   and
post-closure care and maintenance. Potential recoveries of funds from the future
sale of assets upon the ultimate  closure of operations  have not been reflected
in the  estimate of the total  liability  or related  annual  provision.  Future
changes,  if any,  to the  estimated  total  liability,  as a result of  amended
requirements, laws, regulations and operating assumptions may be significant and
would be  recognized  prospectively  as a change in  accounting  estimate,  when
applicable.  Environmental laws and regulations are continually  evolving in all
areas in which we operate.

    Changes made in 2000 to mining  regulations  in the Province of Ontario will
require us to provide letters of credit or other forms of financial  security to
fund our future  reclamation and restoration costs, which are not expected to be
incurred for many years, if we were to no longer meet certain minimum investment
grade  credit  ratings for our  outstanding  publicly  traded  debt  securities.
Although our debt securities are currently  rated  investment  grade,  they were
rated below  investment grade in recent times and there can be no assurance that
this  situation  will not  reoccur.  If we are not able to maintain  the minimum
investment  grade  credit  ratings,  it is currently  estimated  that letters of
credit  or other  forms of  financial  security  associated  with the  currently
estimated costs of the eventual future closure of our mines and other facilities
in Ontario would have to cover approximately $310 million in such closure costs.
Due to the recent  closure of three mines in Ontario in 2002,  we were  required
under  such  mining  regulations  to provide  surety  bonds in the amount of $17
million as of December 31, 2002 to secure  closure  costs.  In addition,  we are
subject to certain  Indonesian  regulations which require us to provide security
for the  reclamation  of land  areas  that have been  mined.  In the case of our
Manitoba  operations we expect that, based upon recently enacted  regulations in
the Province of Manitoba,  we will be required to provide some form of financial
security for our future  reclamation  and  restoration  costs in that  Province.
However, it is not currently expected that these costs and related security


                                       9



with respect to our Manitoba  operations  (beyond what has been  included in the
$415 million estimate referred to above) and for our Indonesian  operations will
be of a material amount.  These potential costs might not be incurred until many
years in the future. If these  requirements for letters of credit or other forms
of financial security had to be satisfied,  they could have an adverse effect on
the amounts available for borrowing under our bank credit facilities.

    In  February  2002,  the  Ontario  government  issued a control  order  that
requires us to reduce  sulphur  dioxide  emissions by 34 per cent at our Ontario
smelting  operations  by the end of  2006.  We are  implementing  a $76  million
investment in fluid bed roaster off-gas scrubbing  technology intended to reduce
sulfur dioxide emissions to the new levels mandated by this new control order by
the end of 2006. As part of the control  order,  we will also be required to (1)
reduce ground level concentrations of sulfur dioxide, (2) continue research into
the technology and economics of further  reductions in sulphur dioxide emissions
and (3) report  annually to the  Ontario  Ministry  of the  Environment  and the
public on the progress of this research  program.  The control order calls for a
final report on achieving the additional  reductions to be submitted by December
31, 2010. We do not currently  expect that  compliance  with the annual  sulphur
dioxide   emission   levels  from  our  smelter   operations   or  ground  level
concentrations  levels  as  set  forth  in  the  control  order  will  have  any
significant  effect on our costs,  operating  procedures or annual production of
nickel and other  primary  metals from our Ontario  operations.  The Province of
Ontario  recently  issued a  discussion  paper  covering  proposals  for further
reductions  in sulfur  dioxide  emissions by  non-ferrous  smelting  operations,
including  our  operations,  and the federal  government  of Canada has recently
designated  for  further  regulation  certain  sulfur  dioxide  and  particulate
emissions  from  copper-smelting  operations  such as those we have in  Ontario.
While  we are  not  able to  determine  the  effect,  if any,  of  these  recent
developments  and significant  future changes in regulatory  emission limits and
other  environmental  laws and regulations that may be enacted in the future due
to the  uncertainty  surrounding  the timing and ultimate form that such changes
may take, any such changes could have a material adverse effect on our business,
results of operations, financial condition and liquidity.

    Canada  signed  and  ratified  the  Kyoto  Protocol  to the  United  Nations
Framework  Convention on Climate Change ("Kyoto Protocol") in December 2002. The
Kyoto Protocol calls for  significant  reductions in the emissions of greenhouse
gases,  such as carbon dioxide,  and nationwide  ceilings on such emissions.  In
November  2002,  the federal  government  of Canada  released an  initiative  to
address  certain  causes of climate  changes.  The specific  requirement of this
initiative is also to limit the discharge of carbon dioxide and other greenhouse
gases.  Neither of these  initiatives has as yet established what the allocation
of restrictions  among various  sources of greenhouse  gases would be. While the
precise  impact on our  Canadian  operations  and the  operations  of others who
provide energy or other products or services to us is uncertain at this time, we
anticipate  that  compliance  with these  initiatives  could have a  significant
adverse effect on our results of operations and costs.

    In  2002,  the  Danish  Environmental  Protection  Agency,  as  part  of the
authority granted to it under certain environmental  regulations of the European
Union  Commission,  published draft risk assessment  reports,  including certain
conclusions  concerning  potential  human health hazards  associated with nickel
metal and certain soluble nickel  compounds,  including nickel sulphate,  nickel
chloride and nickel  nitrate.  This Agency  determined,  based on certain animal
studies,  that soluble nickel is a reproductive  toxin and has proposed  certain
product labelling  requirements as a result of this  determination.  It has also
assessed certain other environmental issues. In addition, based upon these draft
reports and taking into consideration  certain studies, this Agency has proposed
that soluble nickel be classified  under its hazard  classification  system as a
known human carcinogen.  Before any such proposed classification could come into
effect,  a number  of  regulatory  and  administrative  steps  would  have to be
completed. If this proposed classification were to come into effect as currently
proposed, it could result in use restrictions and other requirements which could
have a material  adverse impact on certain  producers and end users of the forms
of  nickel  covered  by such  classification  and on our  business,  results  of
operations,  financial  condition and liquidity.  The European Union  Commission
also in 2002 proposed a directive on air pollution  which includes  target limit
values for nickel since nickel is considered by this Commission to be a possible
carcinogenic pollutant. Member states of the European Union will have until 2010
to achieve the target limit  values,  after which more  stringent  binding limit
values may be  considered.  The  technical  and  socio-economic  feasibility  of
meeting  such  limits are  currently  being  considered  by the  European  Union
Commission  and  those  industries  that  would be  affected,  including  nickel
producers.

    Further changes in environmental  laws, the restrictions on our discharge of
greenhouse  gases as a result  of  Canada's  program  to  comply  with the Kyoto
Protocol  and similar  developments  that may be  imposed,  new  information  on
existing environmental  conditions and other events, including legal proceedings
brought based upon such conditions or an inability to obtain necessary  permits,
could require increased  financial  reserves or compliance or other expenditures
or  otherwise  have a  material  adverse  effect  on our  business,  results  of
operation, financial condition and liquidity.

    Other changes in  environmental  legislation  could have a material  adverse
effect on  product  demand,  product  quality  and  methods  of  production  and
distribution.  The  complexity  and breadth of these  issues  make it  extremely
difficult  to  predict  their  future  impact  on  us.  We  anticipate   capital
expenditures  and operating  expenses will increase in the future as a result of
the implementation of new and increasingly stringent environmental  regulations.
Compliance with environmental  legislation can require significant  expenditures
and  failure  to  comply  with  environmental  legislation  may  result  in  the
imposition of fines and


                                       10



penalties,  liability  for clean up  costs,  damages  and the loss of  important
permits.

    There can be no assurance  that we will at all times be in  compliance  with
all  environmental  regulations or that steps to bring us into compliance  would
not materially  adversely affect our business,  results of operation,  financial
condition or liquidity.  We may also be subject to claims from persons  alleging
that they have  suffered  significant  damages as a result of the  environmental
impact of our  operations,  including  operations  that have ceased to exist for
many years.

COMPETITION

    The nickel  industry is highly  competitive  in all  aspects of  operations,
including the  exploration  for, and the  development of, new sources of supply,
the acquisition of deposits,  and the processing,  distribution and marketing of
nickel  products.  The level of  production  and  export of  primary  nickel and
secondary or  nickel-containing  scrap  material from the Russian  Federation as
well as other  sources of such scrap,  together with the  continuing  relatively
limited level of domestic  consumption of nickel in the Russian Federation since
the break-up of the former Soviet Union, has had, and is expected to continue to
have, a significant impact on the nickel industry's supply-demand balance.

    During  1999,  three new  nickel  projects  in  Australia  began  commercial
production  at costs of  production  which the  sponsors  of such  projects  had
estimated  to  be  very  favorable  relative  to  other  industry  participants,
including  us.  While these  projects  still have not operated at close to their
aggregate  indicated  production  capacity,  which had been  estimated  by their
sponsors to be approximately  65,000 tonnes annually in total,  increases in the
supply of nickel  resulting from those  projects,  and from other new sources of
nickel,  if developed,  could create downward  pressure on prices realized by us
for our primary nickel products.

    While we expect  that the demand for nickel  will  continue to grow over the
longer  term,  increases  in supply in excess of increases in demand could cause
nickel  prices to remain at  current  levels or to  decrease  further.  Any such
situation could materially adversely affect our business, results of operations,
financial  condition and  liquidity.  See  "--Volatility  of Price of Nickel and
Other Prices and their Effect on Our Financial  Results"  above. As we expect to
become a  significant  producer of cobalt once our  development  projects  begin
commercial  production,  our  results  will also be  affected  by the  currently
projected highly competitive market for cobalt.

GOVERNMENTAL REGULATIONS

    In addition to environmental  regulations  referred to above, the mining and
metals  industry in Canada  operates  under  federal,  provincial  and municipal
legislation,  regulation and intervention by governments in such matters as land
tenure, limitations on areas in which mining can be conducted, production rates,
income  and other  taxes and the  export of ore and other  products,  as well as
other matters.  Our operations in Indonesia,  the United Kingdom,  New Caledonia
and other countries outside Canada are also subject to various environmental and
other  applicable laws and regulations and governmental  interventions,  some of
which are similar to those in Canada and all of which are subject to change. The
mining and metals  industry is also subject to regulation  and  intervention  by
governments in such matters as control over the  development  and abandonment of
mine sites (including  restrictions on production) and possible expropriation or
cancellation  of  contract  and mineral  rights.  Before  proceeding  with major
projects,  including significant changes to existing operations,  we must obtain
regulatory  approvals.  The regulatory  approval process can involve stakeholder
consultation,  environmental impact assessments and public hearings, among other
things.  In  addition,  regulatory  approvals  may  be  subject  to  conditions,
including  the  obligation  to  post  security   deposits  and  other  financial
commitments.  Failure to obtain regulatory approvals,  or failure to obtain them
on a timely basis,  could result in delays and abandonment or  restructuring  of
projects and increased costs,  all of which could  negatively  affect our future
earnings and cash flow. In addition,  such  regulations may be changed from time
to time in response to economic or political conditions,  and the implementation
of new  regulations or the  modification of existing  regulations  affecting the
mining and metals industry could increase our costs and have a material  adverse
impact on business, results of operations, financial condition and liquidity.

    There can be no assurance that we will be in compliance  with all applicable
statutes or regulations  at all times or that steps to bring us into  compliance
would not  materially  adversely  impact our  business,  results of  operations,
liquidity or financial condition. See "--Environmental Risks" above.

CAPITAL REQUIREMENTS AND OPERATING RISKS

    Each of our  two  current  principal  primary  metals  business  units,  the
Canadian and U.K. operations and our 59 per cent owned Indonesian subsidiary, PT
Inco,  has required,  and is expected to continue to require,  certain levels of
investment to sustain its current levels of  production.  For 2003, we currently
forecast capital  expenditures  totalling  approximately $680 million,  covering
sustaining capital projects for these units as well as planned  expenditures for
our Goro and Voisey's Bay projects and other  development  projects.  This total
amount assumes a level of capital expenditures for our Goro project of $260


                                       11



million,  which may be higher or lower  depending upon the results of the review
referred  to under  "--Uncertainty  of  Production  and  Capital  and Other Cost
Estimates" above and other  developments,  and $185 million for our Voisey's Bay
project, which may be higher or lower depending upon the results of the bankable
feasibility study referred to above and other  developments.  We anticipate very
substantial  continuing  capital  expenditures in 2004 and subsequent  years for
sustaining  capital  projects  and for our  development  projects.  The expected
capital costs of each of our two major development projects are under review and
may  ultimately be much higher than what we currently  anticipate.  To meet such
capital expenditure requirements,  we must generate sufficient positive internal
cash flow and/or utilize available financing sources.

    In addition, our mining operations and processing and related infrastructure
facilities  are subject to risks  normally  encountered in the mining and metals
industry.  Such  risks  include,  without  limitation,   environmental  hazards,
industrial accidents, labor disputes, changes in laws, technical difficulties or
failures,  late  delivery  of  supplies  or  equipment,  unusual  or  unexpected
geological  formations or pressures,  cave-ins,  pit-wall failures,  rock falls,
unanticipated ground, grade or water conditions,  flooding, periodic or extended
interruptions  due to the  unavailability of materials and force majeure events.
Such risks could result in damage to, or destruction  of, mineral  properties or
producing facilities, personal injury, environmental damage, delays in mining or
processing,  losses and possible  legal  liability.  Any  prolonged  downtime or
shutdowns at our mining or  processing  operations  could  materially  adversely
affect our business, results of operations, financial condition and liquidity.

    For example,  we recently  experienced  certain seismic conditions at two of
our  mines  at our  Ontario  operations  which  required  us to  curtail  mining
activities  while these  conditions  were  evaluated.  These  conditions did not
result in any significant production disruptions but could reoccur in the future
and  could  adversely  affect  our  production.   In  addition,  our  Indonesian
subsidiary recently experienced an unexpected  maintenance  requirement covering
one of its two hydroelectric  generating facilities which will require a limited
shutdown  of the  facility  to repair the  facility's  two  turbines.  We do not
currently  expect  that  this  shutdown  will  affect  PT  Inco's  2003  planned
production, although there can be no assurances in this regard.

    The wholesale  electricity markets in Ontario were deregulated for a portion
of 2002 and as a result we experienced  fluctuations  in some of our electricity
costs at our Ontario operations. Depending upon future changes in the regulatory
environment for these markets,  we could experience future  fluctuations in such
costs. We have from time to time experienced  adverse  production and production
cost  trends at our  operations  in Canada and  elsewhere  and could  experience
similar adverse trends in the future.

LABOR RELATIONS

    Collective  agreements  with unionized  hourly  production  and  maintenance
workers at our  Ontario  operations  remain in effect  until May 31,  2003 and a
three-year  collective  agreement  with  our  unionized  office,   clerical  and
technical  employees at our Ontario operations remains in effect until March 31,
2004.  On September 15, 2002, a new  three-year  collective  agreement  with our
unionized workers at our Manitoba operations was successfully negotiated. Our PT
Inco subsidiary entered into a new two-year  collective labor agreement with its
union in January  2003.  While  there were no  significant  problems in reaching
agreement on this new agreement  with PT Inco's labor force,  with the increased
potential for actions of non-government organizations and other activist groups,
as part of the current uncertain economic and political  situation in Indonesia,
and the general  increase in labor  activism  in that  country,  there can be no
assurance  that such  activism will not  adversely  affect PT Inco's  ability to
successfully  operate.  Any  disruption  in PT Inco's  operations as a result of
labor  issues or other  issues may  adversely  affect its  operations  and could
materially  adversely  impact our  business,  results of  operations,  financial
condition and liquidity. At Goro, we currently have two unions representing some
of our employees. In early September 2002, Goro experienced labor disruptions by
personnel  associated with certain  project  construction  subcontractors.  As a
result of these disruptions, the decision was made to curtail certain activities
at the project's site to enable the project company,  Goro Nickel,  contractors,
subcontractors  and other  interested  parties  to develop  procedures  to avoid
future  disruptions.  A number of  procedures  have been put in place and we and
Goro  Nickel  have  been  seeking  to  complete  the   implementation  of  these
procedures.  Through an employer's association,  of which we are the controlling
member, we negotiated a collective  agreement  effective September 2002 covering
the construction phase of the Voisey's Bay project.

    There  can be no  assurance  that  we  will  continue  to  have  a  positive
relationship  with our  employees at our  operations  in Canada and elsewhere or
that new collective  agreements will be entered into without work interruptions.
We could also be adversely affected by labor disruptions involving third parties
who may  provide  us with  goods or  services  at our  operations  in Canada and
elsewhere.  For example,  as discussed  above,  our Goro project has experienced
labor disruptions by employees of our construction contractors. Any lengthy work
interruptions  at our Goro or Voisey's Bay projects could  materially  adversely
affect the timing of completion and the cost of either  project,  as well as our
business, results of operations, financial condition and liquidity.


                                       12



UNCERTAINTY OF RESERVE ESTIMATES

    Our reported ore reserves are  estimated  quantities  of proven and probable
ore  that  under  present  and   anticipated   conditions  can  be  legally  and
economically mined and processed by the extraction of their mineral content.  We
determine the amount of our ore reserves in accordance with the  requirements of
the  applicable  securities  regulatory  authorities  and  established  industry
practices,  based upon a number of assumptions,  including  long-term prices for
nickel,  copper and cobalt.  In some cases, we assume  long-term prices that are
above current and recent  prices.  Changes in these  assumptions,  including any
reduction in the assumed metals prices,  could  materially  adversely affect the
calculation  of the  quantities  of proven and  probable  ore  reserves  and any
significant  reduction in such reserves  could  adversely  affect our production
levels and, accordingly, our financial results. The volume and grade of reserves
actually  recovered and rates of production from our present ore reserves may be
less than what is indicated by geological measurements of the reserves. Further,
market  price  fluctuations  in nickel,  other metals and  exchange  rates,  and
changes in  operating  and capital  costs may in the future  render  certain ore
reserves uneconomic to mine. See also "--Volatility of Price of Nickel and Other
Prices  and  their  Effect  on Our  Financial  Results"  and  "--Uncertainty  of
Production and Capital and Other Cost Estimates".

    No assurance can be given that the indicated amount of ore will be recovered
or that it will  be  recovered  at the  rates  anticipated  by us.  Our  reserve
estimates are based on limited sampling and, consequently, are uncertain because
the samples may not be representative  of the entire orebody.  As more knowledge
and understanding of the ore body is obtained,  the reserve estimates may change
significantly, either positively or negatively.

RISKS RELATING TO BANK FACILITIES

    To provide liquidity for our operations,  we maintain  committed bank credit
facilities currently aggregating $675 million, none of which was drawn as of the
date hereof.  Covenants  contained in these bank credit facilities require us to
maintain a consolidated  indebtedness to tangible net worth ratio, as defined in
such  credit  facilities  ("debt:equity  ratio"),  of not more than  50:50 and a
minimum  tangible net worth (as defined in such credit  facilities)  of at least
$1.5 billion.  At December 31, 2002, pursuant to these covenants and taking into
account the non-cash impairment charge taken by us in the second quarter of 2002
relating to the reduction in the net carrying  value of our Voisey's Bay project
and certain  other  assets and the charge  referred to above taken in the fourth
quarter  of 2002  relating  to our  Goro  project,  the  debt:equity  ratio  was
approximately 31:69 and our tangible net worth was $3.3 billion. There can be no
assurance that future material adverse developments would not result in a breach
of these covenants. If we are unable to maintain a debt:equity ratio of not more
than 50:50 and  tangible  net worth of at least $1.5  billion,  our bank lenders
generally  would  have the  right to  declare  a default  and  require  all then
outstanding loans to be repaid and pursue the various remedies available to them
under the bank  credit  facilities,  including  declining  to make any new loans
under such facilities. Any such action by the lenders could materially adversely
affect our ability to finance our operating and  development  projects,  and our
results of operations, financial condition and liquidity.

EXCHANGE RATE FLUCTUATIONS

    Our  results of  operations  are  affected  by various  exchange  rates,  in
particular  between  the  Canadian  dollar and the U.S.  dollar and, to a lesser
extent,  other exchange  rates.  These exchange rates have varied  substantially
over time,  including over the last five years. For example, the Canadian dollar
has  strengthened  significantly  compared  to the U.S.  dollar to date in 2003,
rising from $0.6350 per Cdn.$1.00 on January 2, 2003 to $0.6896 per Cdn.$1.00 on
April 28, 2003. A substantial portion of our revenue is received in U.S. dollars
since  the  price of  nickel  and  other  metals  produced  by us are  generally
referenced  in U.S.  dollars,  while a  significant  portion  of our  costs  and
expenses are incurred in Canadian dollars. Our consolidated financial statements
are expressed in U.S.  dollars.  Fluctuations in exchange rates between the U.S.
dollar and the Canadian dollar and between the U.S. dollar and other  currencies
may give rise to foreign  currency  exposure,  either  favorable or unfavorable,
which  have  materially  impacted  and may in the future  materially  impact our
financial  results.  We from time to time hedge a portion of our Canadian dollar
and other  currency  requirements  to limit any adverse  effect of exchange rate
fluctuations  with  respect to our  Canadian  dollar and other  costs,  but such
hedges have not  eliminated  the  potential  material  adverse  effect that such
fluctuations could have on our results of operations or financial condition.

INTEREST RATE AND COUNTERPARTY RISK

    Our  exposure  to changes in  interest  rates  results  from  investing  and
borrowing   activities   undertaken   to  manage  our   liquidity   and  capital
requirements.  We  generally  have used  fixed-rate  debt to  finance  long-term
investments,  while  variable-rate  debt has been used to meet  working  capital
requirements  and related  requirements on a more near-term basis. At the end of
2002,  we entered  into an interest  rate swap  agreement to manage the interest
rate risk  associated  with a portion of our fixed-rate  debt. The interest rate
swap changes our exposure to interest risk by  effectively  converting a portion
of our  fixed-rate  debt to a floating rate. We may elect in the future to enter
into interest rate swaps to effectively convert floating-rate debt to fixed-rate
debt and enter into additional  fixed-rate to  floating-rate  swaps. At December
31, 2002, approximately $448 million, or 27 per


                                       13



cent, of our total debt of $1,643  million was  effectively  subject to variable
interest rates. Based upon our level of debt that is effectively  floating rate,
as of December 31, 2002 the impact of a 10 per cent change in interest rates, or
14 basis points (based on certain  benchmark  interest  rates as at December 31,
2002),  over the course of a full year would change our interest expense by less
than $1 million over a full year.  As noted  above,  we may be required to raise
additional debt in the future and, accordingly, we could be materially adversely
affected by changes in interest  rates in the future  despite any interest  rate
swaps we then might have in effect. Since year-end 2002, we have entered into an
interest rate swap covering 100 per cent of our $400 million aggregate principal
amount  of 7 3/4%  Notes  due  2012  that  effectively  converts  all  of  those
securities to floating rate debt and increases the  sensitivity  of our interest
expense to changes in interest rates proportionately.  There can be no assurance
that we will not be  materially  adversely  affected by interest rate changes in
the future, notwithstanding our use of interest rate swaps.

    In addition,  our interest rate swaps,  metals hedging and foreign  currency
risk   management   activities   expose  us  to  the  risk  of  default  by  the
counterparties  to such  arrangements.  Any such  default  could have a material
adverse effect on our business and financial condition.

RISKS RELATING TO THE SUBORDINATED DEBENTURES

POSSIBLE VOLATILITY OF OUR COMMON SHARES

    The Subordinated Debentures are convertible into common shares; accordingly,
fluctuations in the market price of our common share may affect the market price
of the  Subordinated  Debentures.  We cannot predict whether the market price of
our common shares will rise or fall.  Factors that will affect the trading price
of our common shares  include the  following:  our operating  results and future
prospects;  nickel prices and  expectations  concerning  future  nickel  prices;
material public  announcements by us or our competitors;  the extent to which we
pay  dividends  or make other  distributions  to  holders of our common  shares;
whether we or another person issues securities like the Subordinated  Debentures
or issues or sells a large number of our common shares;  trading on the New York
Stock  Exchange  and the  Toronto  Stock  Exchange  where our common  shares are
traded;  conditions in the capital markets generally;  and political,  financial
and economic conditions.  In addition,  the common shares have from time to time
in recent years experienced significant price and volume fluctuations that often
have been  unrelated  and  disproportionate  to our operating  performance.  See
"Price Range of Common Shares" and "Dividend Policy".

TERMS OF THE SUBORDINATED DEBENTURES

    The  Subordinated  Debentures are subordinated in right of payment to all of
our existing and future senior  indebtedness.  The  Subordinated  Debentures are
unsecured  obligations  and are  subordinated  in right of payment to all of our
existing  and future  senior  indebtedness.  This means that we cannot  make any
payments on the Subordinated Debentures if we default on a payment of any of our
senior indebtedness or if any of our senior indebtedness becomes immediately due
because  of a  default  and has not yet been  paid in full.  In the event of our
bankruptcy,   liquidation  or   reorganization   or  upon  acceleration  of  the
Subordinated Debentures due to an event of default, our assets will be available
to pay obligations on the  Subordinated  Debentures only after all of our senior
indebtedness has been paid, and there may not be sufficient  assets remaining to
pay amounts due on any or all of the Subordinated Debentures then outstanding.

    If we incur additional indebtedness it could adversely affect our ability to
pay our obligations on the Subordinated Debentures. The indenture does not limit
our ability to incur additional indebtedness,  including indebtedness that ranks
senior  in  priority  of  payment  to,  or pari  passu  with,  the  Subordinated
Debentures.

    We have the  right to defer  interest  payments.  We have the right to defer
interest  payments  on the  Subordinated  Debentures  for  up to 10  consecutive
interest  periods,  but not beyond  March 14,  2052.  If we defer our payment of
interest on the  Subordinated  Debentures,  you will be  required  to  recognize
interest  income for United  States  federal  income tax  purposes in respect of
interest payments on the Subordinated  Debentures held by you before you receive
any cash distributions relating to this interest.

    In  addition,  you will not receive  this cash if you sell the  Subordinated
Debentures  before the end of any  deferral  period or before  the  record  date
relating  to  interest  payments  which  are  to  be  paid.  As  a  result,  the
Subordinated  Debentures  may trade at a price that does not fully  reflect  the
value of  accrued  but  unpaid  interest  on the  Subordinated  Debentures.  The
existence  of our  right to  defer  payments  of  interest  on the  Subordinated
Debentures may mean that the market price for the Subordinated Debentures may be
more volatile than other securities that do not have these rights.

    Your  conversion  right is  conditional.  The  Subordinated  Debentures have
several features,  including conditions to conversion,  which, if not satisfied,
could prevent you from converting your Subordinated Debentures and result in you


                                       14



receiving  less than the value of our common shares into which the  Subordinated
Debentures are otherwise convertible.  These features could adversely affect the
value and the trading prices of the Subordinated Debentures. See "Description of
Subordinated Debentures--Conversion Rights".

    The Subordinated Debentures are subject to early redemption.  If the trading
price  of  our  common  shares  exceeds  certain  thresholds,  the  Subordinated
Debentures may be redeemed at our option at any time on or after March 19, 2008,
in cash or common shares,  or a combination  of cash and common  shares,  at the
redemption  price set forth in this  prospectus.  You  should  assume  that this
redemption  option will be exercised if the trading  price of our common  shares
exceeds such  thresholds  and (1) we are able to  refinance at a lower  interest
rate  or  (2) it is  otherwise  in  our  interest  to  redeem  the  Subordinated
Debentures.

    A change in control may not result upon the occurrence of certain  important
corporate  events.   Certain  important  corporate  events,  such  as  leveraged
recapitalizations  that would increase the level of our indebtedness,  would not
constitute  a "change in  control"  under the  indenture  and  therefore  do not
require  us  to  purchase  the  Subordinated  Debentures.  See  "Description  of
Subordinated  Debentures--Change  in  Control  Requires  Offer to  Purchase  the
Subordinated Debentures".

TRADING MARKET FOR THE SUBORDINATED DEBENTURES

    The  Subordinated  Debentures  comprise a new issue of securities  for which
there may be no trading market.  The  Subordinated  Debentures are not listed on
any  securities  exchange or included in any  automated  quotation  system.  The
Subordinated  Debentures  may trade at a discount  from their  initial  offering
price,   depending  on  prevailing   interest  rates,  the  market  for  similar
securities,  the price of our common shares,  our performance and other factors.
We  do  not  know  whether  an  active  trading  market  will  develop  for  the
Subordinated  Debentures.  To the extent that an active  trading market does not
develop, the price at which you may be able to sell the Subordinated Debentures,
if at all, may be less than the price you pay for them in this offering.

INABILITY TO FUND PURCHASE OF SUBORDINATED DEBENTURES

    Upon the  occurrence  of  specified  change in  control  events,  we will be
required to offer to purchase all outstanding  Subordinated Debentures for cash,
common  shares,  or a  combination  of cash and common  shares.  However,  it is
possible  that if we elect to pay the purchase  price in cash upon such a change
in control,  we may not have sufficient  funds at that time to make the required
purchase  of  Subordinated   Debentures  or  that  restrictions  in  our  credit
facilities  or  other   indebtedness  may  not  allow  those  purchases  of  the
Subordinated Debentures for cash.

                                 USE OF PROCEEDS

    Neither the sale of any  Subordinated  Debentures by any holders thereof nor
the issue of any underlying common shares will result in any proceeds to Inco.


                                       15



                          PRICE RANGE OF COMMON SHARES

    Our common shares are listed on the New York Stock Exchange ("NYSE") and the
Toronto  Stock  Exchange  ("TSX").  The high and low closing  sale prices of our
common shares on the NYSE and the TSX for the periods indicated are set forth in
the following table:



                                                         NYSE                      TSX
                                              ----------------------    -------------------------
                                                   HIGH         LOW        HIGH            LOW
                                              -------------  -------    -------------     -------
                                                                          
YEAR ENDED DECEMBER 31, 2001
  First quarter.......................        $   18.83    $   14.60    Cdn.$29.09    Cdn.$22.10
  Second quarter......................            20.51        14.25         30.70         22.54
  Third quarter.......................            17.70        11.35         27.10         17.90
  Fourth quarter......................            16.94        12.20         27.05         19.50
YEAR ENDING DECEMBER 31, 2002
  First quarter.......................        $   19.82    $   16.52    Cdn.$31.40    Cdn.$26.35
  Second quarter......................            23.66        18.98         36.25         30.16
  Third quarter.......................            22.45        15.30         33.91         24.30
  Fourth quarter......................            21.99        15.51         34.25         24.80
YEAR ENDING DECEMBER 31, 2003
  First quarter ......................        $   23.12    $   18.00    Cdn.$35.40    Cdn.$26.35
  Second quarter (through April 28, 2003)         19.70        18.30         28.49         26.75


    On April 28, 2003,  the last reported sale price of our common shares on the
NYSE was $18.50 and on the TSX was Cdn.$26.79.

                                 DIVIDEND POLICY

    Our  dividend  policy,  under  normal  circumstances  and after  taking into
account our short-term and long-term needs and objectives, is to declare and pay
dividends on the common shares averaging approximately one-third of reported net
earnings  over a period of  years.  A  sustainable  level of  regular  quarterly
dividends would be paid,  adjusted,  when appropriate,  by extra dividends.  The
quarter-to-quarter  decision  as to the  amount of the  quarterly  dividend  per
common share is determined with reference to current  business  results and cash
needs.  In  February  1999,  our board of  directors  eliminated  the payment of
quarterly  dividends on our common shares.  This action was taken as part of our
other  actions to maintain our  financial  flexibility  in the  commodity  price
environment  prevailing at that time.  Our board of directors has reviewed,  and
will continue to review,  on a periodic  basis,  a possible  decision to restore
and, accordingly, declare and pay dividends on our common shares in the future.

                                EARNINGS COVERAGE

    For 2002,  we recorded  total  non-cash  charges of $1,626  million,  net of
deferred  income and mining taxes of $789  million,  under  Canadian  GAAP. As a
result  of these  non-cash  charges,  we had a net  loss,  before  deduction  of
interest and income and mining  taxes,  of $2,070  million for the twelve months
ended  December  31, 2002 and,  after giving  effect to our initial  offering of
Subordinated  Debentures and our concurrent  offering of convertible  debentures
due 2023 (the  "Convertible  Debentures"),  as if made as of January 1, 2002, we
would have had a deficiency  of $2,181  million in the amount  required to cover
our interest  requirement of $111 million.  Excluding  these  non-cash  charges,
after giving effect to our initial  offering of Subordinated  Debentures and our
concurrent  offering of the  Convertible  Debentures as if made as of January 1,
2002,  consolidated  net earnings,  before  deduction of interest and income and
mining  taxes of $345  million for the twelve  months  ended  December 31, 2002,
would have been 3.1 times our interest  requirement for 2002 of $111 million. If
our initial offering of Subordinated  Debentures and our concurrent  offering of
Convertible  Debentures  had been made as of April 1, 2002,  excluding  non-cash
charges of $1,613  million,  net of  deferred  income  and mining  taxes of $785
million, consolidated net earnings,  before deduction of interest and income and
mining  taxes of $302  million for the twelve  months ended March 31, 2003 would
have been 2.7 times our interest requirement of $112 million. As our zero coupon
convertible   notes  ("LYON  Notes"),   the  Subordinated   Debentures  and  the
Convertible  Debentures  are treated as equity for Canadian GAAP  purposes,  our
interest requirement does not include the carrying charges associated with these
securities. Had we accounted for the LYON Notes, the Subordinated Debentures and
the  Convertible  Debentures as debt, as is required by U.S.  GAAP, the carrying
charges of the LYON  Notes,  the  Subordinated  Debentures  and the  Convertible
Debentures would have been reflected in interest expense and we would have had a
deficiency of $2,193 million and $2,220 million in the amount  required to cover
our interest requirement for the twelve months ended December 31, 2002 and March
31, 2003, respectively.

    The information included in this section is based upon our audited financial
statements prepared in accordance with


                                       16



Canadian GAAP,  which differ in certain  material  respects from U.S. GAAP. As a
result of the above-referenced  non-cash charges,  which totaled $2,247 million,
net of deferred income and mining taxes of $947 million, for U.S. GAAP purposes,
we had a net loss,  before  deduction  of the  cumulative  effect of a change in
accounting  principles  of $18  million  interest  and  income  and  mining  tax
expenses,  of $2,867  million for the twelve months ended December 31, 2002 and,
after giving effect to our initial  offering of Subordinated  Debentures and our
concurrent offering of Convertible Debentures, as if made as of January 1, 2002,
we would have had a deficiency of $2,990 million in the amount required to cover
our interest  requirement  of $123 million for the twelve months ended  December
31, 2002.  Excluding these non-cash charges,  after giving effect to our initial
offering of Subordinated  Debentures and our concurrent  offering of Convertible
Debentures as if made as of January 1, 2002,  consolidated net earnings,  before
deduction of interest and income and mining taxes of $327 million for the twelve
months  ended  December  31,  2002,  would  have  been 2.7  times  our  interest
requirement of $123 million. If our offering of Subordinated  Debentures and our
concurrent offering of Convertible Debentures had been made as of April 1, 2002,
excluding  the  cumulative  effect of a change in  accounting  principles of $18
million,  non-cash charges of $2,234 million,  net of deferred income and mining
taxes of $943 million,  consolidated net earnings,  before deduction of interest
and income and mining  taxes of $287  million for the twelve  months ended March
31, 2003,  would have been 2.3 times our interest  requirement  of $124 million.
For further information regarding the differences between Canadian GAAP and U.S.
GAAP,  see  Note 22 to our  consolidated  financial  statements  included  as an
Exhibit to our 2002 10-K.

                                     RATINGS

    On February 26, 2003, Standard & Poor's Corporation ("S&P") assigned a "BB+"
rating to the Subordinated  Debentures and on March 6, 2003,  Moody's  Investors
Service,   Inc.   ("Moody's")  assigned  a  "Ba1"  rating  to  the  Subordinated
Debentures.

    Credit ratings are intended to provide investors with an independent measure
of credit quality of any issue of securities. The credit ratings accorded to the
Subordinated  Debentures  by the  rating  agencies  are not  recommendations  to
purchase,  hold or sell the Subordinated  Debentures inasmuch as such ratings do
not comment as to market price or suitability  for a particular  investor.  Each
rating  should  be  evaluated  independently  of any other  rating.  These is no
assurance  that any rating will remain in effect for any given period of time or
that any rating will not be revised or withdrawn  entirely by a rating agency in
the future if in its judgment circumstances so warrant.

    S&P's credit  ratings are on a long-term  debt rating scale that ranges from
AAA to D,  which  represents  the range from  highest to lowest  quality of such
securities rated.  According to the S&P rating system,  debt securities rated BB
exhibit  adequate  protection  parameters.  However,  insofar  as a BB rating is
concerned, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial  commitments
on the securities. The ratings from AA to CCC may be modified by the addition of
a plus  (+) or  minus  (-)  sign to show  relative  standing  within  the  major
categories.

    Moody's credit ratings are on a long-term debt rating scale that ranges from
Aaa for C, which  represents  the range from highest to lowest  quality for such
securities rated.  According to the Moody's rating system, debt securities rated
Ba are considered as medium grade obligations,  that is, they are neither highly
protected nor poorly secured.  Interest  payments and principal  security appear
adequate for the present but certain  protective  elements may be lacking or may
be characteristically  unreliable over any great length of time. Such securities
lack  outstanding  investment  characteristics  and  in  fact  have  speculative
investment characteristics as well. Moody's applies numerical modifiers 1, 2 and
3 in each generic  rating  classification  from Aa through Caa in its  corporate
bond rating system.  The modifier 1 indicates that the issue ranks in the higher
end of its generic rating category, the modifier 2 indicates a mid-range ranking
and the  modifier  3  indicates  that the  issue  ranks in the  lower end of its
generic rating category.

                     DESCRIPTION OF SUBORDINATED DEBENTURES

    The Subordinated Debentures were issued under a subordinated indenture dated
as of March 7, 2003, as supplemented by a first supplemental  indenture dated as
of March 7, 2003, between us and The Bank of New York, as trustee. References in
this description to the indenture are to the indenture as so  supplemented.  The
following  description  summarizes the material  provisions of the  Subordinated
Debentures  and the  indenture.  The  following  summary  does not purport to be
complete and is subject to, and qualified by reference to, the  definitions  and
other provisions of the indenture. As used in this description,  the words "we",
"us", "our" and "Inco" do not include any of our current or future subsidiaries.

GENERAL

    The Subordinated  Debentures are unsecured  obligations and are subordinated
in right of payment to all of our existing and future senior  indebtedness.  The
indenture does not limit our ability to incur additional indebtedness, including
indebtedness   that  ranks  senior  to  or  pari  passu  with  the  Subordinated
Debentures. As of December 31, 2002, after giving effect to our initial offering
of the  Subordinated  Debentures,  our  concurrent  offering of the  Convertible
Debentures and the use of proceeds


                                       17



therefrom,  we would have had  approximately  $2 billion of senior  indebtedness
outstanding to which the Subordinated Debentures would be subordinated.

    The Subordinated  Debentures are limited to $227,100,000 aggregate principal
amount.  The  Subordinated  Debentures  mature on March 14, 2052. We may, at our
option, elect to pay the principal amount of the Subordinated Debentures in cash
or our common shares or any  combination of cash and common shares.  If we elect
to pay all or any part of this  amount in common  shares,  the  number of common
shares we will  deliver will be equal to the portion of the amount to be paid in
common shares divided by the average market price of one common share,  which we
define  under  "--Delivery  of  Shares;  Fractional  Shares".  The  Subordinated
Debentures  are  payable  at the  office of the  paying  agent  (currently,  the
trustee), or an office or agency we maintain for this purpose, in the Borough of
Manhattan,  The City of New York.  We discuss the tax  treatment  of payments to
holders in respect of the  Subordinated  Debentures  under  "Certain  Income Tax
Considerations".

    The Subordinated  Debentures bear interest at the rate of 3 1/2% per year on
the principal  amount from the issue date, or from the most recent date to which
interest has been paid or duly provided,  until the Subordinated  Debentures are
converted in  accordance  with the  indenture or paid in full, or until funds or
common shares,  or any combination of funds and common shares are made available
for their payment in full in accordance with the indenture. Interest is computed
on the basis of a 360-day year  comprised of twelve 30-day  months.  Interest is
payable at the stated  maturity (or earlier date of redemption,  purchase or, in
certain circumstances,  conversion) and semi-annually in arrears on March 14 and
September 14 of each year,  beginning on September 14, 2003 to holders of record
at the  close of  business  on the  March 1 or  September  1  (whether  or not a
business day) immediately  preceding such interest payment date,  subject to our
right to defer interest  payments  discussed below under "--Deferral of Interest
Payments".  Each  payment of interest on the  Subordinated  Debentures  includes
interest accrued through the day before the applicable  interest payment date or
the  stated   maturity  (or  earlier   purchase,   redemption   or,  in  certain
circumstances,  conversion), as the case may be. Any payment required to be made
on any date  that is not a  business  day  will be made on the  next  succeeding
business  day as if made on the date that  payment was due and no interest  will
accrue on that  payment for the period from and after the date that  payment was
due to the date of payment on the next succeeding  business day. In the event of
the maturity, conversion,  purchase or redemption of a Subordinated Debenture as
described below,  interest will cease to accrue on such  Subordinated  Debenture
under the terms of and subject to the  conditions in the  indenture.  We may not
reissue a Subordinated Debenture that has matured or been converted,  purchased,
redeemed or otherwise cancelled,  except for registration of transfer,  exchange
or replacement of such Subordinated Debenture.

    Subordinated Debentures may be presented for conversion at the office of the
conversion  agent, and for exchange or registration of transfer at the office of
the registrar. The trustee is currently the conversion agent and the registrar.

    The indenture does not limit our right to incur  additional  indebtedness or
pay dividends,  except during an interest  deferral period, or contain any other
financial  covenants.  These  provisions of the indenture  would not necessarily
afford holders of the Subordinated  Debentures  protection from a decline in the
value  of  their  investment  in  the  event  of a  highly  leveraged  or  other
transaction involving us that may adversely affect such holders.

DEFERRALS OF INTEREST PAYMENTS

    We have the right  under the  indenture  to defer  interest  payments on the
Subordinated  Debentures  for an extension  period not exceeding 10  consecutive
interest periods. A deferral of interest payments cannot extend, however, beyond
the stated maturity of the Subordinated Debentures.  During an extension period,
the  amount  of  interest  payments  due on the  Subordinated  Debentures  would
continue to accumulate  and such  deferred  interest  payments  will  themselves
accrue interest (additional  interest).  In the event that we exercise our right
to extend an interest payment period, then:

        (1) we will not declare or pay any dividend  on, make any  distributions
    relating  to, or redeem,  purchase,  acquire or make a  liquidation  payment
    relating to, any of our capital stock or make any guarantee payment relating
    thereto other than:

         o   purchases,  redemptions  or other  acquisitions  of  shares  of our
             capital stock in connection with any employment  contract,  benefit
             plan or  other  similar  arrangement  with or for  the  benefit  of
             employees, officers, directors or consultants;

         o   as a result of an exchange or  conversion of any class or series of
             our  capital  stock  for any other  class or series of our  capital
             stock; or

         o   the purchase of fractional interests in shares of our capital stock
             pursuant to the  conversion or exchange  provisions of such capital
             stock or the security being converted or exchanged; and


                                       18



        (2) we may not make any  payment  of  interest  on or  principal  of, or
    premium,  if any,  on, or repay,  purchase  or redeem,  any debt  securities
    issued  by us  which  rank  equally  with  or  junior  to  the  Subordinated
    Debentures.

    The  foregoing,  however,  will not apply to any stock  dividends paid by us
where the stock  dividend  is the same  stock as that on which the  dividend  is
being paid.  Prior to the  termination of any extension  period,  we may further
extend the extension period, so long as that extension period, together with all
such  previous  and  further  extensions  of the  period,  does  not  exceed  10
consecutive  interest  periods.  An extension  period  cannot  extend beyond the
stated maturity of the Subordinated Debentures.

    Upon the termination of any extension  period and the payment of all amounts
then due,  we may  commence a new  extension  period  which must comply with the
above requirements. We will give holders and the trustee notice of our intention
to defer  interest at least five  business days prior to the record date for the
next succeeding  interest payment date. The trustee will give the holders of the
Subordinated  Debentures  notice of any  extension  period  upon its  receipt of
notice from us. If payments of interest  are  deferred,  the  deferred  interest
payments and accrued interest on such deferred interest payments will be paid to
holders of record of the Subordinated Debentures as they appear on our books and
records on the record date next  following  the  termination  of such  extension
period.

BOOK-ENTRY SYSTEM

    The Subordinated Debentures were issued in the form of two global securities
held in book-entry  form. The Depository Trust Company ("DTC") or its nominee is
the sole registered holder of the Subordinated Debentures for all purposes under
the indenture.  Owners of beneficial  interests in the  Subordinated  Debentures
represented  by the global  securities  hold such  interests  pursuant  to DTC's
procedures  and  practices.  As a  result,  beneficial  interests  in  any  such
securities  are shown on, and  transfers  thereof may only be effected  through,
records maintained by DTC and its direct and indirect  participants and any such
interests may not be exchanged for  certificated  securities,  except in limited
circumstances.  Owners of  beneficial  interests  must  exercise  any  rights in
respect of their  interests in accordance  with DTC's  procedures and practices.
Beneficial  owners are not holders and are not  entitled to any rights under the
global  securities or the indenture  provided to the holders of the Subordinated
Debentures.  Inco and the trustee, and any of their respective agents, may treat
DTC as the sole holder and registered owner of the global securities. See "Legal
Ownership" below.

    DTC has  advised us that it is a  limited-purpose  trust  company  organized
under the New York Banking Law, a "banking  organization"  within the meaning of
the New York Banking Law, a member of the Federal  Reserve  System,  a "clearing
corporation"  within the meaning of the New York Uniform  Commercial  Code and a
"clearing  agency"  registered  pursuant to the provisions of Section 17A of the
U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act"). DTC holds
securities that its participants  deposit with it and facilitates the settlement
among  participants of securities  transactions in deposited  securities through
electronic computerized  book-entry changes in participants'  accounts,  thereby
eliminating  the  need  for  physical   movement  of  securities   certificates.
Participants  include  securities  brokers and dealers,  banks, trust companies,
clearing corporations and certain other organizations.  DTC is owned by a number
of its participants and by the New York Stock Exchange, Inc., The American Stock
Exchange LLC and the National Association of Securities Dealers,  Inc. Access to
DTC's  book-entry  system is also  available to securities  brokers and dealers,
banks and trust companies, and others that clear through or maintain a custodial
relationship  with a  participant,  either  directly  or  indirectly.  The rules
applicable  to DTC and its  participants  are on file  with the  Securities  and
Exchange Commission (the "SEC").

RANKING OF SUBORDINATED DEBENTURES

    The  indenture  provides  that the  Subordinated  Debentures  are  unsecured
obligations and are  subordinated in right of payment to all of our existing and
future senior indebtedness.  As of December 31, 2002, after giving effect to our
initial offering of the Subordinated Debentures,  our concurrent offering of the
Convertible  Debentures  and the use of  proceeds  therefrom,  we would have had
approximately  $2  billion  of  senior  indebtedness  outstanding  to which  the
Subordinated Debentures would be subordinated.

    If we default in the payment of any  principal  or interest on, or any other
amount payable in respect of, any Senior Indebtedness, as defined below, when it
becomes  due and  payable,  whether  at stated  maturity  or at a date fixed for
redemption or by  declaration of  acceleration  or otherwise,  then,  unless and
until:

    o   the default has been cured or waived or has ceased to exist; or

    o   all amounts due and payable in respect of such Senior  Indebtedness,  as
        defined below, has been paid;

no direct or indirect payment, whether in cash, property, securities, by set-off
or otherwise, may be made


                                       19



or  agreed  to be made on the  Subordinated  Debentures,  or in  respect  of any
redemption, purchase or other acquisition of any of the Subordinated Debentures.

    If we file for  bankruptcy in Canada or certain other events of  bankruptcy,
insolvency or reorganization occur, then all Senior Indebtedness,  including any
interest on that Senior  Indebtedness  accruing  after the  commencement  of any
proceedings,  will  first be paid in full  before any  payment or  distribution,
whether in cash,  securities or other  property,  will be made on account of the
Subordinated Debentures.  If that occurs, any payment or distribution on account
of the Subordinated  Debentures that would be payable or deliverable but for the
subordination  provisions  will be paid or delivered  directly to the holders of
Senior  Indebtedness.  It will  be paid or  delivered  in  accordance  with  the
priorities then existing among these holders until all Senior  Indebtedness  and
any interest on that debt accruing after the commencement of any proceedings has
been paid in full.

    The term "Senior Indebtedness" means, with respect to us:

        (1) the principal,  premium, if any, interest, fees, expenses, indemnity
     payments  or other  obligation  in  respect of (a)  indebtedness  for money
     borrowed and (b) indebtedness evidenced by securities,  notes,  debentures,
     bonds or other similar instruments issued by us;

        (2) all of our capital lease obligations;

        (3) all  obligations  issued or assumed by us as the  deferred  purchase
     price of property,  all of our conditional  sale obligations and all of our
     obligations  under any conditional sale or title retention  agreement,  but
     excluding  trade  accounts  payable  arising  in  the  ordinary  course  of
     business;

        (4) all of our obligations,  contingent or otherwise,  in respect of any
     letters of credit,  banker's  acceptance,  security purchase  facilities or
     similar credit transactions;

        (5) all  obligations in respect of interest rate swap,  cap,  forward or
     other agreements, interest rate futures or option contracts, currency swap,
     cap  forward or other  agreements,  currency  futures or option  contracts,
     commodity swap, cap, forward or other agreements in respect of any metal or
     other product produced or marketed by us and any commodity used or consumed
     by us and any other commodity futures or option contracts and other similar
     agreements;

        (6) all  obligations  of the type referred to in clauses (1) through (5)
     above of other  persons  for the  payment  of which we are  responsible  or
     liable as obligor, guarantor or otherwise; and

        (7) all  obligations  of the type referred to in clauses (1) through (6)
     above of other  persons  secured  by any lien on any  property  or asset of
     ours, whether or not such obligation is assumed by such obligor.

        Notwithstanding the foregoing, Senior Indebtedness does not include:

        (a) any  indebtedness  that is by its  terms  subordinated  to or ranked
    equally with the Subordinated Debentures; and

        (b)any indebtedness between or among us or our affiliates.

    Senior Indebtedness shall continue to be Senior Indebtedness and be entitled
to the benefits of the subordination  provisions  irrespective of any amendment,
modification or waiver of any term of such Senior Indebtedness.

    There are no terms in the Subordinated  Debentures that limit our ability to
incur additional indebtedness,  including indebtedness that ranks senior or pari
passu to the Subordinated Debentures.

CONVERSION RIGHTS

    A holder may convert its outstanding Subordinated  Debentures,  in multiples
of $1,000 principal  amount,  into our common shares prior to 5:00 p.m. New York
City time at stated maturity only under the circumstances  described below. If a
holder  has  submitted  a change in  control  purchase  notice  requiring  us to
purchase any Subordinated Debentures,  the holder may convert these Subordinated
Debentures  as described in this  section only if the holder has  withdrawn  its
change in control  purchase  notice in accordance  with the  requirements of the
indenture.

    A holder may convert a Subordinated  Debenture into common shares only under
the following circumstances:

    o   in a calendar quarter (and only during such calendar quarter)  beginning
        with the quarter ending September 30, 2003, if,


                                       20



        as of the last day of the immediately  preceding  calendar quarter,  the
        closing sale price of our common  shares for at least 20 trading days in
        the period of 30 consecutive trading days ending on the last trading day
        of such preceding  quarter is more than 120% of the conversion price per
        common share on the last trading day of such preceding quarter; or

    o   during  the  five  business-day  period  following  any ten  consecutive
        trading-day  period  in which  the  trading  price  of the  Subordinated
        Debentures  for each day of such period was less than 95% of the product
        of the  closing  sale  price  of our  common  shares  multiplied  by the
        conversion rate in effect for that period; or

    o   if the Subordinated Debentures have been called for redemption; or

    o   upon the  occurrence  of the  corporate  events  described  below  under
        "--Conversion upon Specified Corporate Events".

CONVERSION UPON SATISFACTION OF MARKET PRICE CONDITION

    A holder may surrender any of its  Subordinated  Debentures  for  conversion
into our common  shares in a calendar  quarter  (and only during  such  calendar
quarter)  beginning  with the quarter  ending  September 30, 2003, if, as of the
last day of the immediately  preceding calendar quarter,  the closing sale price
of our  common  shares  for at  least  20  trading  days  in  the  period  of 30
consecutive  trading  days  ending  on the last  trading  day of such  preceding
quarter is more than 120% of the  conversion  price per common share on the last
trading day of such preceding quarter.

    The "closing  sale price" of the common shares on any date means the closing
sale  price per  common  share (or if no closing  sale  price is  reported,  the
average  of the bid and ask  prices  or, if more than one in  either  case,  the
average of the  average bid and the average ask prices) on such date as reported
in composite  transactions for the principal U.S.  securities  exchange on which
the common shares are traded  (currently  being the New York Stock Exchange) or,
if the common  shares are not listed on a U.S.  national or regional  securities
exchange,  as reported by the Nasdaq System or, if no such price is reported, as
reported by the  principal  non-United  States market on which the common shares
are  traded  (currently  being the  Toronto  Stock  Exchange),  such price to be
converted  into U.S.  dollars  based on the Bank of Canada noon exchange rate as
reported for conversion  into U.S.  dollars on such date. In the absence of such
quotation,  we will  determine  the  closing  sale  price  on the  basis of such
quotations as we consider appropriate.

CONVERSION UPON SATISFACTION OF TRADING PRICE CONDITION

    A holder may surrender any of its  Subordinated  Debentures  for  conversion
into our common  shares prior to stated  maturity  during the five  business-day
period  following any ten  consecutive  trading-day  period in which the trading
price of the Subordinated Debentures for each day of that period was less or was
deemed to be less  than 95% of the  product  of the  closing  sale  price of our
common shares multiplied by the applicable conversion rate.

    The  "trading  price"  of  the  Subordinated   Debentures  on  any  date  of
determination  means the  average of the  secondary  market bid  quotations  per
Subordinated Debenture obtained by the conversion agent for $5,000,000 principal
amount of the Subordinated  Debentures at approximately 3:30 p.m., New York City
time, on such  determination  date from two  independent  nationally  recognized
securities  dealers we select;  provided  that if the  conversion  agent  cannot
reasonably  obtain at least two such bids,  but can  reasonably  obtain one such
bid,  this one bid shall be used.  If for any date the  conversion  agent cannot
reasonably  obtain  at least  one bid for  $5,000,000  principal  amount  of the
Subordinated Debentures from a nationally recognized securities dealer or in our
reasonable  judgment,  the bid  quotations  are not  indicative of the secondary
market  value of the  Subordinated  Debentures,  then the  trading  price of the
Subordinated  Debentures for that date will be deemed to be less than 95% of the
product  of the  closing  sale  price of our  common  shares  multiplied  by the
applicable conversion rate.

    The  conversion  agent shall be obligated to determine  the trading price of
the Subordinated  Debentures only upon our request.  We must make such a request
only if a holder provides us with reasonable  evidence that the trading price of
the Subordinated Debentures would be less than 95% of the product of the closing
sale  price of our  common  shares and the  applicable  conversion  rate for the
applicable  period.  If a holder  provides such  evidence,  we will instruct the
conversion agent to determine the trading price of the  Subordinated  Debentures
for the applicable period.

CONVERSION UPON NOTICE OF REDEMPTION

    If we call the Subordinated Debentures for redemption,  a holder may convert
the Subordinated  Debentures from the date of the notice of redemption until the
close of business on the business day immediately preceding the redemption date,
after  which time the right to  convert  will  expire  unless we fail to pay the
redemption price.


                                       21



CONVERSION UPON SPECIFIED CORPORATE EVENTS

    If we elect to:

    o   distribute to all holders of our common shares certain rights  entitling
        them to  purchase,  for a period  expiring  within 45 days,  our  common
        shares at less than the then current market price (measured by averaging
        the  closing  sale prices of our common  shares for the 10 trading  days
        preceding   the  date  of  the  first   public   announcement   of  such
        distribution); or

    o   distribute to all holders of our common shares,  assets, debt securities
        or certain rights to purchase our securities,  which  distribution has a
        per share value  exceeding  15% of the closing  sale price of our common
        shares on the day preceding the date of the first public announcement of
        such distribution;

we must  notify the holders at least 10 days prior to the  ex-dividend  date for
the  distribution.  Once we have given this  notice,  the holders may  surrender
Subordinated  Debentures  for  conversion  at any time until the  earlier of the
close of  business  on the  business  day prior to the  ex-dividend  date or any
announcement  by us that the  distribution  will not take place. No distribution
will  entitle the holder of a  Subordinated  Debenture  to convert if the holder
would otherwise participate in the distribution without conversion.

    In addition, if

    o   we are a  party  to a  consolidation,  amalgamation,  merger,  statutory
        arrangement  (involving  a  business  combination)  or  sale  of  all or
        substantially all of our consolidated assets;

    o   we are not the resulting or surviving entity;

    o   the transaction is not with one of our affiliates; and

    o   after the transaction, either

    o   more than 50% of the surviving or resulting  entity's total voting power
        is not held by our pre-transaction shareholders, or

    o   more than 50% of the surviving or resulting  entity's directors were not
        directors of ours or approved by our pre-transaction board of directors,

then holders may surrender  Subordinated  Debentures  for conversion at any time
from and after the date that is 15 days prior to the anticipated  effective date
of the transaction until and including the date that is 15 days after the actual
date of such  transaction.  If the  transaction  also  constitutes  a "change in
control," as defined below, the holder instead can require us to purchase all or
a portion of its Subordinated Debentures as described under "--Change in Control
Requires Offer to Purchase Subordinated Debentures".

CONVERSION RATE AND CONVERSION PROCEDURES

    The conversion rate is 38.4423 common shares per $1,000  principal amount of
Subordinated Debentures, subject to adjustment upon the occurrence of the events
described  below.  This is  equivalent  to a conversion  price of  approximately
$26.01 per common  share.  On  conversion,  we will pay cash for any  fractional
shares in an amount equal to their average market price, determined as described
under  "--Delivery  of Shares;  Fractional  Shares".  We will have the option to
deliver cash in lieu of some or all of the common  shares to be  delivered  upon
conversion of the Subordinated  Debentures.  We will give notice of our election
to deliver  part or all of the  conversion  consideration  in cash to the holder
converting the Subordinated  Debentures  within two business days of our receipt
of the holder's notice of conversion  unless we have already informed holders of
our election in  connection  with our optional  redemption  of the  Subordinated
Debentures as described under  "--Redemption  of Subordinated  Debentures at the
Option of Inco". The amount of cash to be delivered per  Subordinated  Debenture
will be equal to the  number  of  common  shares  in  respect  of which the cash
payment is being made  multiplied  by the average of the closing  sale prices of
our common shares on the five consecutive  trading days commencing one day after
(a) the date of our notice of election to deliver part or all of the  conversion
consideration  in cash if we have not  given  notice of  redemption,  or (b) the
conversion date, in the case of a conversion  following our notice of redemption
specifying our intention to deliver cash upon conversion.


                                       22



    If we  elect to  deliver  cash in lieu of some or all of the  common  shares
issuable upon  conversion,  we will make the payment,  including the delivery of
any common  shares,  through  the  conversion  agent,  to  holders  surrendering
Subordinated  Debentures  no later than the tenth  business  day  following  the
conversion date. Otherwise,  we will deliver the shares,  together with any cash
payment for fractional  shares,  through the conversion  agent no later than the
fifth  business day  following the  conversion  date. We may not deliver cash in
lieu of any common shares issuable upon a conversion (other than cash in lieu of
fractional  shares) if an Event of  Default  with  respect  to the  Subordinated
Debentures  has occurred and is  continuing,  other than a default in payment of
the conversion consideration. We discuss the tax treatment upon conversion under
"Certain  Income Tax  Considerations--Certain  United States  Federal Income Tax
Considerations--Disposition  or Conversion of the  Subordinated  Debentures" and
"Certain  Income  Tax   Considerations--Certain   Canadian  Federal  Income  Tax
Considerations--Ownership of Subordinated Debentures".

    Except as noted below, on conversion of a Subordinated  Debenture the holder
will not  receive any cash  payment  representing  accrued and unpaid  interest.
Accordingly,  Subordinated  Debentures  surrendered  for  conversion by a holder
during the period from the close of  business on any regular  record date to the
opening of business of the next interest  payment date,  except for Subordinated
Debentures  to be redeemed on a date within this period or on the next  interest
payment date,  must be accompanied by payment of an amount equal to the interest
that the  registered  holder is to receive on the  Subordinated  Debenture.  Our
delivery  to the  holder of the fixed  number of common  shares  into  which the
Subordinated  Debenture  is  convertible  together  with  any cash  payment  for
fractional shares, or cash in lieu of such common shares, will fully satisfy our
obligation to pay the principal  amount of the  Subordinated  Debenture plus any
accrued  and unpaid  interest  attributable  to the  period  from the issue date
through the conversion date. As a result,  accrued and unpaid interest is deemed
paid in full rather than cancelled, extinguished or forfeited.

    To exercise its conversion right, a holder must:

    o   complete and manually sign an original or facsimile copy of a conversion
        notice and deliver such conversion notice to the conversion agent;

    o   surrender the Subordinated Debenture to the conversion agent;

    o   if required by the conversion agent,  furnish  appropriate  endorsements
        and transfer documents; and

    o   if required, pay all transfer or similar taxes.

    Pursuant  to  the  indenture,  the  date  on  which  all  of  the  foregoing
requirements have been satisfied is the conversion date.

    Beneficial  holders  of  Subordinated  Debentures  who  wish  to  convert  a
Subordinated  Debenture  into common  shares must do so in  accordance  with the
procedures established by DTC.

    The conversion rate will be adjusted for:

    o   dividends or  distributions on common shares payable in common shares or
        other shares;

    o   subdivisions or combinations of common shares;

    o   distributions  to all  holders  of common  shares of  certain  rights to
        purchase common shares for a period expiring within 45 days at less than
        the current market price per common share, as defined below,  subject to
        certain conditions;

    o   distributions   to  all  holders  of  common   shares  of  evidences  of
        indebtedness,  equity  securities  (other than  common  shares) or other
        assets  (other  than  cash  dividends  or cash  distributions  described
        below);

    o   distributions  consisting of cash to all holders of our common shares in
        an  aggregate  amount  that,  when  combined  with  (a)  other  all cash
        distributions  made within the  preceding 12 months and (b) the cash and
        the fair market  value,  as of the date of  expiration  of the tender or
        exchange offer referred to below, of the  consideration  paid in respect
        of any tender or exchange  offer by us or a  subsidiary  of ours for our
        common shares  concluded  within the preceding 12 months,  exceeds 5% of
        the product of the current market price of our common shares  multiplied
        by the number of common  shares then  outstanding  on the date fixed for
        the determination of shareholders entitled to receive the distribution;

    o   the  successful  completion of a tender or exchange  offer made by us or
        any subsidiary of ours for our common shares


                                       23




        that involves an aggregate  consideration  that,  when combined with any
        cash and the fair market value of other consideration payable in respect
        of any other tender or exchange  offer by us or a subsidiary of ours for
        our common shares concluded  within the preceding 12 months,  exceeds 5%
        of the  product  of the  current  market  price  of  our  common  shares
        multiplied by the number of common shares then  outstanding  on the date
        of expiration of the tender or exchange offer; and

    o   any  reclassification of our common shares or any reorganization or sale
        of Inco in which  holders of our common  shares are  entitled to receive
        common equity,  other securities or other property or assets in exchange
        for such common shares.

    For  the  purpose  of  (1)  cash  distributions  and  (2)  distributions  in
connection  with a tender or exchange offer as described  above,  any adjustment
required for a cash  distribution or distribution in connection with a tender or
exchange offer would be based upon the amount by which such distribution exceeds
the  amount  permitted  to be  excluded.  Any  adjustment  based  on  any  other
distribution would be based upon the full amount of the distribution.

    The "current  market  price" per common share on any date shall be deemed to
be the average of the daily closing sale price for the five consecutive  trading
days ending on the earlier of the day in question and the day before the related
ex-date with respect to any distribution, issuance or other event requiring such
computation.

    The  conversion  rate will not be adjusted for accrued and unpaid  interest.
Furthermore,  no adjustment need be made unless such adjustment would require an
increase or decrease of at least 1%. The  indenture  permits us to increase  the
conversion rate from time to time.

    Our  Shareholder  Rights Plan  Agreement  provides that each common share of
Inco,  including  any we  issue  at  the  stated  maturity  or  upon  conversion
redemption or purchase of the Subordinated Debentures,  issued at any time prior
to the distribution of separate  certificates  representing our rights,  will be
entitled to receive such rights.  However,  there shall not be any adjustment to
the conversion privilege or conversion rate as a result of:

    o   the  issuance of the rights to purchase  common  shares  pursuant to our
        Shareholder Rights Plan Agreement or any successor agreement;

    o   the distribution of any entitlement to receive the common share purchase
        rights;

    o   the  exercise  or  redemption  of such  rights  in  accordance  with our
        Shareholder Rights Plan Agreement; or

    o   the  termination or  invalidation of the common share purchase rights or
        similar rights.

    We describe  the  Shareholder  Rights Plan  Agreement  in more detail  under
"Description of Share Capital-- Shareholder Rights Plan".

    If we are party to a  consolidation,  amalgamation,  merger or binding share
exchange or a transfer of all or substantially  all of our assets,  the right to
convert a  Subordinated  Debenture  into our common shares may be changed into a
right to convert it into the kind and amount of securities, cash or other assets
of Inco or another person which the holder would have received if the holder had
converted  its  Subordinated  Debentures  immediately  prior  to such  event  or
transaction.  However,  if such event or transaction occurs before March 7, 2008
the  consideration  into which the  Subordinated  Debentures will be convertible
will be limited to Inco common shares or other prescribed securities (within the
meaning of the Income Tax Act (Canada) (the "Canadian Tax Act")), which includes
shares not  redeemable by the holder  within five years after their issue.  As a
result, in these  circumstances,  the consideration  issuable on exercise of the
conversion right could differ from the consideration  received by the holders of
common shares  pursuant to the event or  transaction,  but the  conversion  rate
would  be  adjusted  so that  the  consideration  into  which  the  Subordinated
Debentures  are  convertible  is equivalent in value at the date of the event or
transaction to the value of the consideration  received by the holders of common
shares pursuant to the event or transaction.

    Holders of the  Subordinated  Debentures may, in certain  circumstances,  be
deemed to have received a distribution  subject to U.S.  federal income tax as a
dividend in the amount of:

    o   a taxable  distribution  to holders of common shares which results in an
        adjustment of the conversion rate; or

    o   an increase in the conversion rate at our discretion.

See "Certain Income Tax Considerations--Certain United States Federal Income Tax
Considerations--Constructive


                                       24



Dividend".

REDEMPTION OF SUBORDINATED DEBENTURES AT THE OPTION OF INCO

    No sinking  fund is  provided  for the  Subordinated  Debentures.  Except as
described  below under  "--Redemption  for Tax  Reasons",  we may not redeem the
Subordinated  Debentures prior to March 19, 2008. In addition, we may extend the
time during which we may not redeem the  Subordinated  Debentures upon providing
notice by mail to the holders of the Subordinated Debentures.  On or after March
19,  2008,  we may redeem at our  option  all or a portion  of the  Subordinated
Debentures in cash,  common shares or a  combination  thereof,  for a redemption
price equal to 100% of the principal amount of the Subordinated Debentures to be
redeemed, if the closing sale price of our common shares for at least 20 trading
days in any  period  of 30  consecutive  trading  days  ending  on the fifth day
preceding the date of such notice is more than 125% of the conversion  price. If
redeemed,  we will also pay  accrued  and unpaid  cash  interest  to the date of
redemption.  We will  give not less  than 20  business  days'  nor more  than 60
business  days'  notice  of  redemption  by  mail  to  holders  of  Subordinated
Debentures.  The notice of redemption will inform the holders of our election to
deliver  common  shares or to pay cash in lieu of delivery of common shares with
respect to any Subordinated  Debentures converted after such notice and prior to
the  redemption  date. If we elect to pay the redemption  price,  in whole or in
part, in common  shares,  the number of common shares to be delivered by us will
be equal to the  portion  of the  redemption  price to be paid in common  shares
divided by the average  market price of one common  share.  See  "--Delivery  of
Shares; Fractional Shares".

    If we redeem less than all of the outstanding Subordinated  Debentures,  the
trustee  shall select the  Subordinated  Debentures  to be redeemed in principal
amounts of $1,000 or integral multiples of $1,000. In this case, the trustee may
select the  Subordinated  Debentures by lot, pro rata or by any other method the
trustee considers fair and appropriate.  If a portion of a holder's Subordinated
Debentures is selected for partial  redemption and the holder converts a portion
of such  Subordinated  Debentures,  the converted  portion shall be deemed to be
from the portion selected for redemption.

REDEMPTION FOR TAX REASONS

    We may also redeem all but not less than all of the Subordinated  Debentures
for cash or common  shares or a  combination  thereof if we have or would become
obligated (including on the future enactment of a proposed change) to pay to the
holder of any Subordinated Debenture "additional amounts" (which are more than a
de minimis  amount) as a result of any change from March 4, 2003  (including any
announced  prospective  change) in the laws or any  regulations of Canada or any
Canadian political subdivision or taxing authority,  or any change from March 4,
2003 in an  interpretation  or  application  of such laws or  regulations by any
legislative body,  court,  governmental  agency,  taxing authority or regulatory
authority (including the enactment of any legislation and the publication of any
judicial  decision or  regulatory  or  administrative  determination)  and if we
cannot avoid these obligations by taking reasonable measures available to us. We
define the term "additional amounts" under "--Canadian  Withholding Taxes". This
redemption would be at the principal amount plus accrued and unpaid interest but
without reduction for applicable  Canadian  withholding taxes (except in respect
of certain  excluded  holders).  We will give  holders not less than 20 business
days' nor more than 60 business days' notice of this redemption, except that (i)
we will not give notice of redemption earlier than 60 business days prior to the
earliest date on or from which we would be obligated to pay any such  additional
amounts, and (ii) at the time we give the notice, the circumstances creating our
obligation to pay such additional  amounts remain in effect.  If we elect to pay
the  redemption  price,  in whole or in part,  in common  shares,  the number of
common shares we deliver will be equal to the portion of the redemption price to
be paid in common  shares  divided  by the  average  market  price of one common
share. See "--Delivery of Shares; Fractional Shares".

CHANGE IN CONTROL REQUIRES OFFER TO PURCHASE SUBORDINATED DEBENTURES

    Upon the  occurrence of a change in control (as defined  below),  we will be
required to offer to purchase  all the  Subordinated  Debentures  as of the date
that is 35  business  days  after  notice of the  occurrence  of such  change in
control (a "change in control  purchase date") at a price equal to the principal
amount plus accrued and unpaid interest to the change in control  purchase date.
We may, at our option, elect to pay the change in control purchase price in cash
or  common  shares  or any  combination  thereof.  See  "--Delivery  of  Shares;
Fractional Shares",  "Certain Income Tax  Considerations--Certain  United States
Federal Income Tax Considerations--Disposition or Conversion of the Subordinated
Debentures" and "Certain Income Tax  Considerations--  Certain  Canadian Federal
Income Tax Considerations--Ownership of Subordinated Debentures".

    Within 15 business days after the occurrence of a change in control,  we are
obligated to mail to the trustee and to all holders of  Subordinated  Debentures
at their  addresses  shown in the register of the  registrar,  and to beneficial
owners as required by applicable law, a notice  regarding the change in control,
which notice shall state, among other things:

    o   the events causing a change in control;


                                       25



    o   the date of such change in control;

    o   the last date on which the change in  control  purchase  notice  must be
        given;

    o   the change in control purchase price;

    o   the change in control purchase date;

    o   whether  we will pay the  change in  control  purchase  price in cash or
        common shares or any combination thereof,  specifying the percentages of
        each;

    o   if we elect to pay in  common  shares,  the  method of  calculating  the
        average market price of common shares;

    o   the name and address of the paying agent;

    o   the conversion rate and any adjustments to the conversion rate;

    o   that  Subordinated  Debentures with respect to which a change in control
        purchase  notice is given by the  holder  may be  converted  only if the
        change in control  purchase notice has been withdrawn in accordance with
        the terms of the indenture; and

    o   the procedures that holders must follow to exercise these rights.

    To accept the change in control  purchase  offer,  the holder must deliver a
written  change in  control  purchase  notice (a  "change  in  control  purchase
notice")  to the paying  agent  prior to the close of  business on the change in
control  purchase date.  The required  change in control  purchase  notice shall
state:

    o   the certificate  numbers of the Subordinated  Debentures to be delivered
        by the holder;

    o   the  portion  of the  aggregate  principal  amount  of the  Subordinated
        Debentures to be purchased,  which portion must be $1,000 or an integral
        multiple of $1,000;

    o   that we are to purchase  such  Subordinated  Debentures  pursuant to the
        change in control offer; and

    o   in the event that we elect,  pursuant to the notice that we are required
        to give, to pay the change in control  purchase  price in common shares,
        in  whole  or in part,  but the  change  in  control  purchase  price is
        ultimately to be paid to the holder  entirely in cash because any of the
        conditions  to  payment of such price or portion of such price in common
        shares is not satisfied  prior to the close of business on the change in
        control purchase date, as described below, whether the holder elects:

        (1)   to withdraw  the change in control  purchase  notice as to some or
              all of the Subordinated Debentures to which it relates, or

        (2)   to  receive  cash in  respect  of the  entire  change  in  control
              purchase  price for all  Subordinated  Debentures  or  portions of
              Subordinated Debentures subject to such change in control purchase
              notice.

    If the holder  fails to  indicate  its choice with  respect to the  election
described in the final  bullet  point above,  the holder shall be deemed to have
elected  to  receive  cash in  respect  of the  entire  purchase  price  for all
Subordinated  Debentures  subject to the change in  control  purchase  notice in
these circumstances.

    A holder may withdraw any change in control  purchase notice by delivering a
written  notice of withdrawal to the paying agent prior to the close of business
on the change in control purchase date. The notice of withdrawal shall state:

    o   the principal amount of the Subordinated Debentures being withdrawn;

    o   the certificate numbers of the Subordinated  Debentures being withdrawn;
        and

    o   the principal amount, if any, of the Subordinated Debentures that remain
        subject to a change in control purchase notice.


                                       26



    Payment of the change in control purchase price for a Subordinated Debenture
for which a change in control purchase notice has been delivered and not validly
withdrawn is conditioned upon delivery of the Subordinated  Debenture,  together
with necessary endorsements,  to the paying agent at any time after the delivery
of such  change in  control  purchase  notice.  Payment of the change in control
purchase price for such Subordinated  Debenture will be made promptly  following
the later of the change in control purchase date or the time of delivery of such
Subordinated Debenture.

    If the paying agent holds money or  securities  sufficient to pay the change
in control  purchase  price of the  Subordinated  Debenture  on the business day
following the change in control  purchase  date in accordance  with the terms of
the indenture,  then immediately after the change in control purchase date, such
Subordinated  Debenture  will  cease  to be  outstanding  and  interest  on such
Subordinated  Debenture will cease to accrue,  and be deemed to be paid, whether
or not the Subordinated Debenture is delivered to the paying agent.  Thereafter,
all other rights of the holder shall terminate,  other than the right to receive
the  change  in  control  purchase  price  upon  delivery  of  the  Subordinated
Debenture.

    A "change in control"  of Inco will be deemed to have  occurred at such time
as:

    o   any person,  including its affiliates and  associates,  other than Inco,
        its subsidiaries or their employee  benefit plans,  files or is required
        to file a Schedule 13D or Schedule TO (or any successor  schedule,  form
        or report  under the  Exchange  Act),  or a  comparable  report with any
        securities  commission  or  securities  regulatory  authority in Canada,
        disclosing  that such person has become the  beneficial  owner of 50% or
        more of the total number of votes attached to our share capital entitled
        to general  voting rights  (currently our common shares and our Series E
        Preferred   Shares)   (collectively,   "Voting   Securities")  or  other
        securities into which the Voting Securities are reclassified or changed,
        with certain exceptions; or

    o   there shall be  consummated  any  consolidation,  merger,  amalgamation,
        statutory  arrangement  (involving  a business  combination)  or similar
        transaction  of Inco in which Inco is not the  continuing  or  surviving
        corporation  or pursuant to which the common  shares  would be converted
        into cash,  securities  or other  property,  in each case,  other than a
        consolidation,  merger,  statutory  arrangement  (involving  a  business
        combination) or similar  transaction of Inco in which the holders of the
        Voting Securities  immediately prior to such transaction have,  directly
        or  indirectly,  at  least  a  majority  of  the  voting  shares  of the
        continuing or surviving corporation immediately after such transaction.

    The indenture does not permit our board of directors to waive our obligation
to  offer to  purchase  all of the  Subordinated  Debentures  upon a  change  in
control.

    In connection  with any purchase  offer in the event of a change in control,
we will:

    o   comply  with the  provisions  of Rule  13e-4,  Rule  14e-1 and any other
        tender offer rules under the  Exchange  Act and any Canadian  laws which
        may then be applicable; and

    o   file a Schedule TO or any other  schedule  under the  Exchange Act rules
        which may then be applicable.

    To the extent any time  period set forth in the  indenture  is  inconsistent
with  the  requirements  of the  Exchange  Act  or  Canadian  law  or any  rules
thereunder, we will comply with the provisions of such laws or rules.

    The change in control purchase feature of the Subordinated Debentures may in
certain  circumstances make more difficult or discourage a takeover of Inco. The
change in control purchase feature,  however, is not the result of our knowledge
of any specific effort:

    o   to accumulate Voting Securities;

    o   to obtain  control  of Inco by means of a merger,  amalgamation,  tender
        offer, solicitation or otherwise; or

    o   part  of a plan  by  management  to  adopt  a  series  of  anti-takeover
        provisions.

    Instead, the change in control purchase feature is a standard term contained
in other  offerings  that have been  marketed by the initial  purchasers  of the
Subordinated  Debentures.  The terms of the change in control  purchase  feature
resulted from negotiations between the initial purchasers and us.

    We could, in the future, enter into certain transactions,  including certain
recapitalizations, that would not constitute a change in control with respect to
the purchase feature of the Subordinated  Debentures but that would increase the
amount of


                                       27



our outstanding indebtedness.

    Our ability to purchase  Subordinated  Debentures  upon the  occurrence of a
change  in  control  may be  limited  by the terms of our then  existing  credit
agreements.

    No  Subordinated  Debentures  may be purchased for cash or a combination  of
cash and common shares by Inco pursuant to a change in control purchase if there
has  occurred  and is  continuing  an  Event  of  Default  with  respect  to the
Subordinated  Debentures,  other than a default in the  payment of the change in
control purchase price with respect to the Subordinated Debentures.

DELIVERY OF SHARES; FRACTIONAL SHARES

DELIVERY OF SHARES

    We may, at our option, elect to pay the principal amount of the Subordinated
Debentures  in cash or  common  shares  or any  combination  of cash and  common
shares. We may also, at our option,  elect to pay the redemption price or change
in control  purchase price in cash or common shares or any combination  thereof,
or  deliver  cash in lieu of some  or all of the  common  shares  issuable  upon
conversion.  Our right to issue common shares in these  circumstances is subject
to our satisfying various conditions, including:

    o   listing of the common shares on the principal  United States or Canadian
        securities  exchange  on which our common  shares are then listed or, if
        not so listed, on Nasdaq;

    o   the  registration  of the common shares under the Securities Act and the
        Exchange Act, if required; and

    o   any necessary  qualification  or  registration  under  applicable  state
        securities   laws  or  the   availability  of  an  exemption  from  such
        qualification and registration.

    If these  conditions  are not  satisfied  with respect to a holder prior the
close of business on the  applicable  payment  date,  we will make the  required
payment on the  Subordinated  Debentures of the holder  entirely in cash. We may
not change the form of components or percentages of components of  consideration
to be paid for the Subordinated Debentures once we have given the notice that we
are required to give to holders of Subordinated Debentures,  except as described
in the preceding sentence.

    If we elect to satisfy any payment at stated maturity, the redemption price,
or the change in control purchase price of the Subordinated Debentures in common
shares,  the number of common  shares to be delivered by us will be equal to the
amount of the payment to be made in common shares  divided by the average market
price of one common share.

    For any payment in respect of the Subordinated Debentures, including payment
of the principal amount of the Subordinated  Debentures at stated maturity,  the
"average  market  price"  means the  average of the  closing  sale prices of the
common shares for the five trading day period  ending on the third  business day
prior to the applicable  redemption,  conversion,  purchase,  maturity or record
date (if the third  business day prior to the applicable  redemption,  purchase,
stated  maturity  or record date is a trading  day, or if not,  then on the last
trading day prior  thereto),  appropriately  adjusted  to take into  account the
occurrence,  during  the period  commencing  on the first of such  trading  days
during  such five  trading day period and ending on such  redemption,  purchase,
stated  maturity  or record  date,  of certain  events  that would  result in an
adjustment of the conversion rate with respect to the common shares.

    If we elect to satisfy any payment of the principal  amount,  the redemption
price, or the change in control purchase price of the Subordinated Debentures in
common  shares,  we will give you notice at least 20  business  days  before the
payment date. Our notice will state:

    o   whether  we will  make  the  payment  in cash or  common  shares  or any
        combination thereof;

    o   if both cash and  common  shares are  payable,  the  percentage  of each
        applicable on a per Subordinated Debenture basis; and

    o   the method of calculating the average market price of the common shares.

    When we determine the actual number of common shares in accordance  with the
foregoing provisions, we will publish the information on our web site or through
such other public medium as we may use at that time.


                                       28



    Because the average market price of the common shares is determined prior to
the applicable payment date, holders of Subordinated  Debentures bear the market
risk with respect to the value of the common shares to be received from the date
such average  market price is  determined  to such payment  date. We may deliver
common  shares  as  payment  for  the  principal   amount  of  the  Subordinated
Debentures,  the redemption price or the change in control purchase price of the
Subordinated  Debentures  only if the  information  necessary to  calculate  the
average  market  price  is  published  daily  in a  newspaper  of U.S.  national
circulation  or on our website or through such other public medium as we may use
at that time.

FRACTIONAL SHARES

    We will not issue any fractional  common shares.  Instead,  we will pay cash
based on the average market price on the  applicable  payment date or conversion
date for any fractional  common shares we would otherwise  deliver on account of
the Subordinated Debentures.

AMALGAMATION AND MERGER

    We have  covenanted  in the  indenture  that  we will  not  enter  into  any
consolidation,  amalgamation  or merger with or into any other  corporation,  or
statutory  arrangement in which Inco  participates,  or any sale,  conveyance or
lease of all or substantially  all of our property unless (1) immediately  after
such  consolidation,   amalgamation,   merger,   statutory  arrangement,   sale,
conveyance or lease the  corporation  (whether  Inco or such other  corporation)
formed by or surviving any such  consolidation,  amalgamation  or merger,  or to
which  such sale,  conveyance  or lease  shall  have been made,  shall not be in
default in the  performance  or  observance  of any of the terms,  covenants and
conditions  of the  indenture to be kept or  performed by Inco;  (2) the due and
punctual   payment  of  the  principal  of  and  interest  on  the  Subordinated
Debentures,  and the due and punctual  performance  and observance of all of the
covenants  and  conditions  of the indenture to be performed or observed by Inco
and, for which each security by its terms  provided for  conversion,  shall have
provided for the right to convert such  security in  accordance  with its terms,
shall be expressly assumed, by a supplemental  indenture satisfactory in form to
the trustee, executed and delivered to the trustee, by the corporation (if other
than Inco) formed by or surviving any such consolidation,  amalgamation,  merger
or statutory  arrangement  or into which Inco shall have been merged,  or by the
corporation  which shall have  acquired or leased such  property  and (3) if the
corporation  (whether  Inco or another  corporation)  formed by or surviving any
such consolidation,  amalgamation,  merger or statutory arrangement, or to which
such sale,  conveyance or lease will have been made, is organized under the laws
of a  jurisdiction  other  than  Canada or the  United  States or any  province,
territory,  state or district thereof (each, a "relevant taxing  jurisdiction"),
we become or such  successor  corporation  becomes  obligated by a  supplemental
indenture satisfactory in form to the trustee to make all payments on account of
the  Subordinated  Debentures  without  withholding  of a  deduction  for, or on
account  of, any present or future  taxes or  governmental  charges  ("specified
taxes")  imposed  or levied by a  relevant  taxing  jurisdiction,  unless we are
required by law or the  interpretation or administration  thereof to withhold or
deduct such specified  taxes. In that event, we will pay as additional  interest
such  additional  amounts  ("other  additional  amounts") as may be necessary in
order that the net amounts  received by each holder of  Subordinated  Debentures
after such withholding or deduction, including any withholding or deduction with
respect to such other additional amounts,  shall equal the respective amounts of
principal  and  interest  which  would  have been  receivable  in respect of the
Subordinated Debentures in the absence of such withholding or deduction,  except
that no such other additional  amounts shall be payable with respect to payments
made to a holder:

        (a) if such  holder is liable for such taxes by reason of such holder or
    the  beneficial  owner of the  Subordinated  Debenture  having a present  or
    former direct or indirect  connection with the relevant taxing  jurisdiction
    other than the mere holding of the Subordinated  Debenture or the receipt of
    payment in respect thereof;

        (b) for any taxes  imposed as a result of the  failure of such holder or
    beneficial owner to comply with certification,  identification,  declaration
    or similar reporting requirements, if such compliance is required by statute
    or by  regulation,  administrative  practice or an applicable  treaty,  as a
    precondition to relief or exemption from such tax;

        (c)  for  any  estate,  inheritance,  gift,  sales,  transfer,  personal
    property or similar  tax,  duty or fine,  assessment  or other  governmental
    charge;

        (d) for any tax  which  is  payable  otherwise  than by  withholding  or
    deduction  from  payment  by  us  of  principal  of,  or  interest  on,  the
    Subordinated Debenture;

        (e)  if the  payment  of  other  additional  amounts  would  be for  any
    withholding  or  deduction  imposed on a payment to an  individual  which is
    required to be made pursuant to a European  Union  directive on the taxation
    of  savings  implementing  the  conclusions  of ECOFIN  Council  meeting  of
    November 26-27, 2000 or any law implementing or complying with or introduced
    in order to conform to such directive; or


                                       29



       (f) any combination of items (a) to (e);

nor will such other additional  amounts be paid with respect to a payment on the
Subordinated  Debenture to a holder who is a fiduciary or  partnership  or other
than the sole beneficial owner of such Subordinated Debenture to the extent that
a  beneficiary  or settlor with respect to such  fiduciary,  or a member of such
partnership  or a  beneficial  owner  thereof,  would not have been  entitled to
receive  a  payment  of such  other  additional  amounts  had such  beneficiary,
settlor,  member  or  beneficial  owner  received  directly  its  beneficial  or
distributive share of such payment.

    We shall have the right  reasonably  to require a holder as a  condition  of
payment of amounts on the Subordinated Debentures to present at such place as we
shall  reasonably  designate a  certificate  in such form as we may from time to
time prescribe to enable us to determine our duties and liabilities with respect
to (i) any specified taxes that we or any  withholding  agent may be required to
deduct or withhold from payments in respect of a  Subordinated  Debenture  under
any present or future law of any relevant taxing  jurisdiction or any regulation
of any taxing  authority  thereof and (ii) any  reporting or other  requirements
under  such laws or  regulations.  To the  extent not  otherwise  prohibited  by
applicable  laws and  regulations,  we shall be entitled to determine our duties
and liabilities with respect to such deduction, withholding,  reporting or other
requirements on the basis of information  contained in such certificate,  or, if
no certificate  shall be presented,  on the basis of any presumption  created by
any such law or regulation, and shall be entitled to act in accordance with such
determination.

DEFAULT AND RELATED MATTERS

EVENTS OF DEFAULT

    You will have special rights if an Event of Default occurs and is not cured,
as described later in this subsection.

    The term "Event of Default" means any of the following:

    o   we do not pay or deliver (in cash or common shares,  as applicable)  the
        principal  amount,  the redemption  price,  conversion  consideration or
        change in  control  purchase  price  with  respect  to any  Subordinated
        Debenture when such becomes due and payable;

    o   if we fail to pay interest (including  additional interest) when due and
        such  failure  continues  for 30 days  (subject  to our  right  to defer
        payment of interest);

    o   we remain in breach of a  restrictive  covenant or any other term of the
        indenture  for 90 days after we  receive a notice of default  stating we
        are in  breach.  The notice  must be sent by either  the  trustee or the
        holders  of at least 25% of the  principal  amount  of the  Subordinated
        Debentures;

    o   our  obligation  to repay any  outstanding  debt is  accelerated  by our
        lenders,  and this repayment  obligation remains accelerated for 10 days
        after we receive a notice of default as described in the second sentence
        of the previous bullet; or

o       we file for  bankruptcy in Canada or certain other events in bankruptcy,
        insolvency or reorganization occur.

REMEDIES IF AN EVENT OF DEFAULT OCCURS

    If an Event of Default has occurred  and has not been cured,  the trustee or
the holders of at least 25% in principal amount of the  Subordinated  Debentures
may  declare  the  principal  amount  plus  accrued  and unpaid  interest on the
Subordinated  Debentures  to be due and  immediately  payable.  This is called a
declaration of  acceleration of stated  maturity.  If an Event of Default occurs
because of certain  events in  bankruptcy,  insolvency  or  reorganization,  the
principal amount plus accrued and unpaid interest on the Subordinated Debentures
will be  automatically  accelerated,  without  any action by the  trustee or any
holder. A declaration of acceleration of stated maturity may be cancelled by the
holders  of at  least  a  majority  in  principal  amount  of  the  Subordinated
Debentures.

    Except in cases of default,  where the trustee has some special duties,  the
trustee is not required to take any action under the indenture at the request of
any  Subordinated  Debentures  holders  unless  the  holders  offer the  trustee
reasonable  protection from expenses and liability  (called an "indemnity").  If
reasonable indemnity is provided,  the holders of a majority in principal amount
of the outstanding Subordinated Debentures may direct the time, method and place
of  conducting  any  lawsuit or other  formal  legal  action  seeking any remedy
available to the trustee.  These majority holders may also direct the trustee in


                                       30



performing any other action under the indenture.

    Before you bypass the  trustee  and bring your own  lawsuit or other  formal
legal  action  or take  other  steps to  enforce  your  rights or  protect  your
interests relating to the Subordinated Debentures, the following must occur:

    o   you must give the  trustee  written  notice that an Event of Default has
        occurred and remains uncured;

    o   the  holders  of at least 25% in  principal  amount  of all  outstanding
        Subordinated  Debentures  must make a written  request  that the trustee
        take action because of the default,  and must offer reasonable indemnity
        to the  trustee  against the cost and other  liabilities  of taking that
        action;

    o   the trustee must have not taken action for 60 days after  receipt of the
        above notice and offer of indemnity; and

    o   the trustee has not received  inconsistent  directions from holders of a
        majority in principal amount during such 60-day period.

    However,  you are entitled at any time to bring a lawsuit for the payment of
money due on your Subordinated Debenture on or after its due date.

    We will furnish to the trustee every year a written  statement of certain of
our officers  certifying  that to their  knowledge we are in compliance with the
indenture and the Subordinated Debentures, or else specifying any default.

CANADIAN WITHHOLDING TAXES

    We will make  payments  on account of the  Subordinated  Debentures  without
withholding  or  deducting  on account of any present or future  Canadian tax or
other government charge ("Canadian taxes"), unless we are required by law or the
interpretation or administration  thereof, to withhold or deduct Canadian taxes.
If we are  required  to  withhold  or deduct any  amount on account of  Canadian
taxes, we will make such withholding or deduction and pay as additional interest
the additional amounts  ("additional  amounts") necessary so that the net amount
received by each holder of  Subordinated  Debentures  after the  withholding  or
deduction  (including with respect to additional  amounts) will not be less than
the amount the holder  would have  received if the  Canadian  taxes had not been
withheld or deducted.  We will make  similar  payment of  additional  amounts to
holders of Subordinated Debentures (other than excluded holders) that are exempt
from  withholding  but are  required to pay tax  directly  on amounts  otherwise
subject to  withholding.  However,  no  additional  amounts will be payable with
respect to a payment made to holders (referred to as "excluded holders") subject
to Canadian tax on those payments  because they carry on business in Canada,  or
who  fail  to  comply  with  any  administrative  requirements  necessary  as  a
precondition to exemption from  withholding  Canadian taxes, or to certain other
excluded  holders,  as described in the  indenture.  We will remit the amount we
withhold or deduct to the relevant authority. Additional amounts will be paid in
cash, as applicable, at stated maturity, on any redemption date, on a conversion
date or on any purchase date.

MODIFICATION AND WAIVER

    There  are  three  types of  changes  we can make to the  indenture  and the
Subordinated Debentures.

    Changes  Requiring  Your Approval.  First,  there are changes that cannot be
made to  your  Subordinated  Debentures  without  your  specific  approval.  The
following is a list of those types of changes:

    o   alter the  manner or rate of  accrual of  interest  on any  Subordinated
        Debenture;

    o   change  the  stated  maturity  of  the  principal  on  any  Subordinated
        Debenture;

    o   reduce any amount payable upon conversion (except as provided for in the
        indenture),   redemption  or  purchase  of  a  Subordinated   Debenture,
        including any additional amounts;

    o   make any  Subordinated  Debenture  payable in money or securities  other
        than that stated in the indenture;

    o   make any  change  that  adversely  affects  our  obligation  to offer to
        purchase, or to purchase, a Subordinated Debenture;

    o   adversely affect the right to convert any Subordinated Debenture (except
        as permitted by the indenture);


                                       31



    o   change the place or currency of payment on a Subordinated Debenture;

    o   impair your right to sue for payment or conversion;

    o   modify the subordination provisions of the indenture in a manner adverse
        to the holders of Subordinated Debentures;

    o   reduce  the  percentage  of  holders of  Subordinated  Debentures  whose
        consent is needed to modify or amend the indenture;

    o   reduce  the  percentage  of  holders of  Subordinated  Debentures  whose
        consent is needed to waive  compliance  with certain  provisions  of the
        indenture or to waive certain defaults; or

    o   modify any other aspect of the provisions  dealing with modification and
        waiver of the indenture.

    Changes  Requiring a  Super-Majority  Vote. The second type of change to the
indenture  and the  Subordinated  Debentures is the kind that requires a vote in
favor by  holders of  Subordinated  Debentures  owning 66 2/3% of the  principal
amount of the  Subordinated  Debentures.  Most changes fall into this  category,
except for clarifying changes and certain other changes that would not adversely
affect holders of the Subordinated  Debentures.  The same vote would be required
for us to  obtain  a waiver  of all or part of the  covenants  described  in the
indenture, or a waiver of a past default.  However, we cannot obtain a waiver of
a payment  default  or any other  aspect of the  indenture  or the  Subordinated
Debentures  listed in the first  category  described  previously  under "Changes
Requiring Your Approval" unless we obtain your individual consent to the waiver.

    Changes Not  Requiring  Approval.  The third type of change does not require
any  vote by  holders  of  Subordinated  Debentures.  This  type is  limited  to
clarifications and certain other changes that would not adversely affect holders
of the Subordinated Debentures.

    Further  Details  Concerning  Voting.  When  taking a vote,  we will use the
principal amount of the Subordinated Debentures outstanding.

    Your Subordinated Debentures are not considered "outstanding", and therefore
will not be eligible to vote, if we have deposited or set aside in trust for you
money or securities for their payment or redemption.

    We will  generally  be  entitled  to set any day as a  record  date  for the
purpose of determining the holders of outstanding  Subordinated  Debentures that
are  entitled  to vote or take other  action  under the  indenture.  If we set a
record  date for a vote or other  action  to be taken by  holders,  that vote or
action may be taken only by persons who are holders of outstanding  Subordinated
Debentures on the record date.


--------------------------------------------------------------------------------
   "STREET  NAME" AND OTHER  INDIRECT  HOLDERS  SHOULD  CONSULT  THEIR  BANKS OR
BROKERS FOR  INFORMATION  ON HOW APPROVAL MAY BE GRANTED OR DENIED IF WE SEEK TO
CHANGE THE INDENTURE OR THE SUBORDINATED DEBENTURES OR REQUEST A WAIVER.
--------------------------------------------------------------------------------

GOVERNING LAW

    The indenture and the Subordinated Debentures are governed by, and construed
in accordance with, the laws of the State of New York.

CONSENT TO SERVICE

    In  connection  with the  indenture,  we have  designated  and  appointed CT
Corporation  System as our authorized  agent upon which process may be served in
any suit or  proceeding  arising  out of or  relating  to the  indenture  or the
Subordinated  Debentures that may be instituted in any federal or New York state
court located in the Borough of  Manhattan,  in the City of New York, or brought
by the trustee (whether in its individual capacity or in its capacity as trustee
under  the  indenture),   and  we  irrevocably   submit  to  the   non-exclusive
jurisdiction of such courts.

ENFORCEABILITY OF JUDGMENTS

    Since  substantially all of our assets, as well as the assets of most of our
directors  and officers,  are located  outside the United  States,  any judgment
obtained  in the  United  States  against  us or  certain  of our  directors  or
officers,  including  judgments  with respect to the payment of principal on the
Subordinated Debentures, may not be collectible within the United States.


                                      32



    We have been informed by Osler, Hoskin & Harcourt LLP, our Canadian counsel,
that  the  laws of the  Province  of  Ontario  and the  federal  laws of  Canada
applicable  therein  permit  an  action to be  brought  in a court of  competent
jurisdiction in the Province of Ontario on any final and conclusive  judgment in
personam of any federal or state court  located in the State of New York (a "New
York Court")  against Inco,  which judgment is subsisting and  unsatisfied for a
sum  certain  with  respect  to  the   enforcement  of  the  indenture  and  the
Subordinated  Debentures  that is not  impeachable as void or voidable under the
internal laws of the State of New York if (1) the New York Court  rendering such
judgment had jurisdiction  over the judgment debtor, as recognized by the courts
of the  Province of Ontario  (and  submission  by Inco in the  indenture  to the
jurisdiction  of the New York Court will be sufficient  for that  purpose);  (2)
such  judgment  was not  obtained  by fraud or in a manner  contrary  to natural
justice  and the  enforcement  thereof  would not be  inconsistent  with  public
policy,  as such terms are understood under the laws of the Province of Ontario,
or  contrary  to any order  made by the  Attorney  General  of Canada  under the
Foreign  Extraterritorial  Measures Act (Canada);  (3) the  enforcement  of such
judgment would not be contrary to the laws of general  application  limiting the
enforcement  of  creditors'   rights  and  does  not  constitute,   directly  or
indirectly,  the enforcement of foreign revenue,  expropriatory or penal laws in
the Province of Ontario;  (4) no new admissible  evidence relevant to the action
is discovered prior to the rendering of judgment by the court in the Province of
Ontario;   (5)  interest   payable  on  the   Subordinated   Debentures  is  not
characterized  by a court in the  Province of Ontario as  interest  payable at a
criminal rate within the meaning of Section 347 of the Criminal  Code  (Canada);
and (6) the action to enforce such judgment is commenced  within the appropriate
limitation  period;  except  that any court in the  Province of Ontario may only
give judgment in Canadian dollars. In the opinion of such counsel,  there are no
reasons under  present laws of the Province of Ontario for avoiding  recognition
of  such  a  judgment  of a New  York  Court  under  the  indenture  or  on  the
Subordinated Debentures based upon public policy.

DISCHARGE OF THE INDENTURE

    We may  satisfy  and  discharge  our  obligations  under  the  indenture  by
delivering  to  the  trustee  for  cancellation  all  outstanding   Subordinated
Debentures or by depositing with the trustee, the paying agent or the conversion
agent,  if applicable,  after the  Subordinated  Debentures  have become due and
payable, whether at stated maturity, on any redemption date, a change in control
purchase date, or upon  conversion or otherwise,  cash or common shares,  or any
combination thereof (as applicable under the terms of the indenture)  sufficient
to pay all of the outstanding  Subordinated Debentures and paying all other sums
payable under the indenture by us.

INFORMATION CONCERNING THE TRUSTEE

    We have  appointed  The Bank of New York as the trustee  under the indenture
and as paying agent,  conversion agent,  Subordinated  Debentures  registrar and
custodian for the  Subordinated  Debentures.  The trustee or its  affiliates may
provide  banking  and  other  services  to us in the  ordinary  course  of their
business.  The Bank of New York  currently  acts as our trustee with respect our
existing  indentures,   including  those  related  to  our  5  3/4%  Convertible
Debentures  due 2004,  our 7 3/4%  Convertible  Debentures  due 2016, our 9 7/8%
Sinking Fund  Debentures  due 2019,  our 9.60%  Debentures  due 2022, our Liquid
Yield Option Notes due 2021, our 7.20% Debentures due 2032, our 7 3/4% Notes due
2012 and our Convertible Debentures due 2023.

                                 LEGAL OWNERSHIP

STREET NAME AND OTHER INDIRECT HOLDERS

    Investors who hold  Subordinated  Debentures in accounts at banks or brokers
will  generally  not  be  recognized  by us as  legal  holders  of  Subordinated
Debentures. This is called holding in "street name". Instead, we would recognize
only the bank or broker, or the financial institution the bank or broker uses to
hold  Subordinated  Debentures.  These  intermediary  banks,  brokers  and other
financial  institutions  pass along  principal,  interest and other  payments on
Subordinated  Debentures,  either  because they agree to do so in their customer
agreements  or because they are legally  required  to. If you hold  Subordinated
Debentures in street name,  you should check with your own  institution  to find
out:

    o   how it handles securities payments, conversions,  redemptions, purchases
        and notices;

    o   whether it imposes fees or charges;

    o   how it would handle voting if ever required;

    o   whether and how you can instruct it to send you Subordinated  Debentures
        registered in your own name so you can be a direct holder in the limited
        circumstances described below; and


                                       33



    o   how it would pursue  rights under the  Subordinated  Debentures if there
        was a default or other event  triggering  the need for holders to act to
        protect their interests.

DIRECT HOLDERS

    Our obligations,  as well as the obligations of the trustee and those of any
third parties employed by us or the trustee, run only to persons or entities who
are the  direct  holders of the  Subordinated  Debentures,  i.e.,  those who are
registered as holders of the Subordinated Debentures.  As noted above, we do not
have  obligations  to you if you hold in street name or through  other  indirect
means,  either  because you choose to hold the  Subordinated  Debentures in that
manner or because the  Subordinated  Debentures are issued in the form of global
securities  as  described  below.  For  example,  once  we make  payment  to the
registered  holder,  we have no further  responsibility  for the payment even if
that registered holder is legally required to pass the payment along to you as a
street name customer but does not do so.

GLOBAL SECURITIES

    A  global  security  is a  special  type of  indirectly  held  security,  as
described above under "--Street Name and Other Indirect Holders".

    Since  the  Subordinated  Debentures  were  issued  in the  form  of  global
securities,  the ultimate beneficial owners can only be indirect holders. DTC is
the depositary.  The Subordinated  Debentures  included in the global securities
may not be transferred to the name of any other direct holder unless the special
circumstances described below occur.

    Any person  wishing to own a  Subordinated  Debenture  included  in a global
security must do so  indirectly  by virtue of an account with a broker,  bank or
other financial institution that in turn has an account with the depositary.

SPECIAL INVESTOR CONSIDERATIONS FOR GLOBAL SECURITIES

    As an indirect holder, an investor's rights relating to a global security is
governed by the account rules of the investor's financial institution and of the
depositary,  as well as general laws relating to securities transfers. We do not
recognize  this  type  of  investor  as  a  registered  holder  of  Subordinated
Debentures  and  instead  deal only with the  depositary  that  holds the global
securities.

    As an investor in  Subordinated  Debentures that are issued only in the form
of global securities,  you should be aware that except in limited  circumstances
described in the indenture:

    o   you cannot get Subordinated Debentures registered in your own name;

    o   you  cannot  receive  physical  certificates  for your  interest  in the
        Subordinated Debentures;

    o   you  will be a street  name  holder  and  must  look to your own bank or
        broker for payments on the  Subordinated  Debentures  and  protection of
        your legal rights relating to the Subordinated Debentures. See "--Street
        Name and Other Indirect Holders";

    o   you may not be able to sell interests in the Subordinated  Debentures to
        some insurance companies and other institutions that are required by law
        to own their securities in the form of physical certificates;

    o   the depositary's policies will govern conversions,  payments, transfers,
        exchange  and other  matters  relating  to your  interest  in the global
        securities.  We and the trustee have no responsibility for any aspect of
        the  depositary's  actions or for its records of ownership  interests in
        the global  securities.  We and the trustee  also do not  supervise  the
        depositary in any way.

SPECIAL SITUATIONS WHEN GLOBAL SECURITIES WILL BE TERMINATED

    In a few special  situations  described  later,  the global  securities will
terminate and interests in the global  securities will be exchanged for physical
certificates  representing  Subordinated  Debentures.  After that exchange,  the
choice of whether to hold the Subordinated Debentures directly or in street name
will be up to you.  You must  consult your own bank or broker to find out how to
have your interests in the Subordinated Debentures transferred to your own name,
so that you will be a direct  holder.  The rights of street name  investors  and
direct  holders  in the  Subordinated  Debentures  have  been  described  in the
sections


                                       34



entitled,  "--Street  Name and Other  Indirect  Holders" and "--Direct  Holders"
above.

    The special situations for termination of global securities are:

    o   when the  depositary  notifies  us that it is  unwilling,  unable  or no
        longer qualified to continue as depositary;

    o   when  we  notify  the  trustee  that we wish  to  terminate  the  global
        securities; or

    o   when an Event of Default on the Subordinated Debentures has occurred and
        has not been cured.

    Defaults   are   discussed   above  under   "Description   of   Subordinated
Debentures--Default and Related Matters".

    EXCEPT UNDER THE HEADING "LEGAL  OWNERSHIP",  IN THIS PROSPECTUS "YOU" MEANS
DIRECT  HOLDERS AND NOT STREET NAME OR OTHER  INDIRECT  HOLDERS OF  SUBORDINATED
DEBENTURES.   INDIRECT  HOLDERS  SHOULD  READ  THE  PREVIOUS  SECTIONS  ENTITLED
"--STREET   NAME  AND  OTHER   INDIRECT   HOLDERS"   AND   "--SPECIAL   INVESTOR
CONSIDERATIONS FOR GLOBAL SECURITIES".

                          DESCRIPTION OF SHARE CAPITAL

    We are  authorized to issue an unlimited  number of common  shares  (without
nominal or par value) and 45,000,000 Preferred Shares, issuable in series, for a
maximum  consideration  of  Cdn.$1,500,000,000   (or  its  equivalent  in  other
currencies)  with such rights,  privileges,  restrictions and conditions of each
series as the board of directors may determine  before the issue thereof.  As of
April 28, 2003, there were issued and outstanding  183,982,421 common shares and
9,439,600 5.5% Convertible  Redeemable  Preferred Shares Series E (the "Series E
Preferred Shares").

COMMON SHARES

    Our common shares (together with the Series E Preferred Shares) have general
voting rights;  that is, each holder is entitled to receive notice of, to attend
and to vote at, on the basis of one vote for each share  held,  all  meetings of
shareholders  of Inco other than  meetings at which the holders of another class
or series of shares are entitled to vote  separately.  Subject to the rights and
priorities  of the holders of Preferred  Shares and any other class or series of
shares in our capital stock authorized from time to time and ranking in priority
to the common shares,  the holders of common shares are entitled to: (i) receive
such  dividends as may be declared by our board of  directors in its  discretion
out of funds legally available therefor, and (ii) in the event of a distribution
of  our  assets  among  our  shareholders  on  a  liquidation,   dissolution  or
winding-up,  whether voluntary or involuntary,  or any other distribution of our
assets  among our  shareholders  for the  purpose  of  winding  up our  affairs,
receive,  in respect of each share so held,  a pro rata amount of such assets of
Inco  equivalent to the proportion  equal to the common shares then  outstanding
divided by the number of common shares then outstanding.

    The holders of common shares have no  pre-emptive,  redemption or conversion
rights.  The common shares rank junior to all Preferred Shares both as to return
of capital and as to dividends.

PREFERRED SHARES AS A CLASS

ISSUABLE IN SERIES

    Our Preferred Shares are issuable in series,  each series consisting of such
number  of  shares  and  having  such  provisions  attached  thereto  as  may be
determined by our board of directors.

PRIORITY

    The  Preferred  Shares of each series  rank on a parity  with the  Preferred
Shares of every other series,  and prior to the common  shares,  with respect to
the  payment  of  cumulative  dividends  and the  distribution  of  assets  on a
liquidation,  dissolution or winding up of Inco or for the purpose of winding up
our affairs ("liquidation").

CREATION AND ISSUE OF ADDITIONAL PREFERRED SHARES

    Subject to applicable law, we may, without the consent of the holders of the
Preferred Shares as a class, (1) create additional  Preferred Shares, (2) create
Preferred  Shares of  another  class or  classes  ranking  on a parity  with the
Preferred   Shares  with  respect  to  the  payment  of  dividends   and/or  the
distribution of assets on liquidation or (3) increase any maximum number


                                       35



of authorized shares of any one or more of such other classes of shares. If (but
only so long as) any dividends are in arrears on any  outstanding  series of the
Preferred Shares,  we may not, without the consent,  by a simple majority of the
votes cast,  of the holders of the  Preferred  Shares as a class,  (i) issue any
additional  series of the Preferred  Shares,  or (ii) issue Preferred  Shares of
another class ranking on a parity with the Preferred  Shares with respect to the
payment of dividends and/or the distribution of assets on liquidation.

CLASS VOTING RIGHTS

    The holders of the Preferred Shares are not entitled to any voting rights as
a class  except (1) as  provided  above,  (2) as  provided  by law,  or (3) with
respect  to  the  right  to  vote  on  certain   matters  as   described   under
"--Modification" below. When the holders of Preferred Shares vote as a class, or
when two or more series of Preferred  Shares vote  together at a joint  meeting,
each holder has one  one-hundredth  of a vote in respect of each Canadian dollar
(or its  equivalent in a foreign  currency at the date of issuance) of the issue
price of the Preferred Shares he or she holds.

    Our  board of  directors  may,  at the time of  creation  of any  series  of
Preferred Shares,  confer voting rights on such series in addition to the voting
rights of the  holders of the  Preferred  Shares as a class.  The voting  rights
attached to the only currently outstanding series, our Series E Preferred Shares
are summarized below. It is our board of directors' current intention that, with
respect to the creation of any future series of Preferred  Shares, to the extent
that such  Preferred  Shares would have general  voting  rights then such shares
would not have more than one vote in respect of each Preferred Share. The voting
rights  attached  to the Series E  Preferred  Shares as a series are  summarized
below under "--Series E Preferred Shares--Series Voting Rights".

MODIFICATION

    The class provisions attaching to the Preferred Shares may be amended at any
time with such approval of the holders of such shares as may then be required by
law, which  currently is approval by at least  two-thirds of the votes cast at a
meeting of such  holders  duly  called for the  purpose and at which a quorum is
present,  or as are required by the rules of any stock  exchange  upon which the
shares of any series of  Preferred  Shares are then  listed.  In  addition,  the
approval by at least two-thirds of the votes cast at a meeting of the holders of
all our shares carrying  general voting rights is currently  required by law for
the amendment of such class provisions.

SERIES E PREFERRED SHARES

    In August 1996,  we issued 9.4 million  Series E Preferred  Shares of the 10
million  authorized Series E Preferred Shares at an issue price of $50 per share
for an aggregate  issue price of $471 million in connection with the acquisition
of Diamond  Fields.  By notice of redemption  dated March 28, 2003, we announced
our intention to redeem the Series E Preferred  Shares effective May 1, 2003. In
addition to the foregoing class  provisions,  the Series E Preferred Shares have
the following provisions.

DIVIDENDS

    The holders of the Series E Preferred Shares are entitled to receive, as and
when  declared  by our  board of  directors,  fixed  cumulative  cash  dividends
accruing  from  their  issue  date at the rate of 5.5 per cent per  annum.  Such
dividends  are payable in dollars (or, at the  election of the holder,  Canadian
dollars)  quarterly  in  arrears  on the  first  business  day of  March,  June,
September, and December in each year.

OPTIONAL AND MANDATORY REDEMPTION

    The Series E Preferred Shares, in whole or in part, are currently redeemable
at our  option  upon 30  days'  notice  specifying  the  redemption  date at the
applicable  optional  redemption price of $51.10 per share, which price declines
by $0.275 per year until such redemption price reaches $50.00 in 2006.

    The optional redemption price is payable in dollars or, at the option of the
holder,  Canadian  dollars,  provided  that we have  the  right to  satisfy  the
optional  redemption  price  payable to each holder by requiring  such holder to
exchange  the Series E Preferred  Shares so  redeemed  for that number of common
shares  obtained by dividing  the  aggregate  optional  redemption  price of the
shares of such  holder  to be so  redeemed  by 95 per cent of a 20-day  weighted
average trading price on the New York Stock Exchange ending five days before the
optional  redemption date.  However,  we will not have the right to issue common
shares  in  satisfaction  of  the  optional  redemption  price  payable  to  any
particular  holder  if:  (i) at the time of such  redemption  we have  ceased to
qualify as a "foreign private issuer" as defined in Rule 3b-4 under the Exchange
Act; and (ii) as a result of such  issuance of common  shares,  that  particular
holder would thereby be deemed to be a greater-than-10 per cent beneficial owner
of common shares for purposes of Section 13(d) of the Exchange Act.


                                       36



    We are  required  to redeem all of the then  outstanding  Series E Preferred
Shares on August 21, 2006 upon 30 days' notice at a redemption  price of $50 per
share,  together with all accrued and unpaid dividends  thereon.  This mandatory
redemption  price is  payable in dollars  or, at the  option of the  holder,  in
Canadian  dollars,  provided  that we have the right to satisfy  the  redemption
price  payable to each holder by requiring  such holder to exchange the Series E
Preferred  Shares so  redeemed  for that  number of common  shares  obtained  by
dividing the  aggregate  redemption  price of the shares of such holder to be so
redeemed by 95 per cent of a 20-day  weighted  average  trading price on the New
York Stock  Exchange  ending five days  before the  mandatory  redemption  date.
However,  we do not have the right to issue common shares in satisfaction of the
mandatory  redemption  price  payable  to any  particular  holder  in  the  same
circumstances  as those in which  we would  not have the  right to issue  common
shares in satisfaction of the optional redemption price.

CONVERSION

    The Series E Preferred  Shares are  convertible at the holder's  option into
common  shares at any time,  at a conversion  rate of 1.19474  common shares for
each Series E Preferred Share  (representing  an effective  conversion  price of
$41.85 per Series E Preferred Share), subject to certain adjustments,  including
stock splits,  distributions  of common shares other than as "dividends  paid in
the  ordinary  course" (as defined in the terms and  conditions  of the Series E
Preferred Shares) and certain right offerings.

SERIES VOTING RIGHTS

    The  Series E  Preferred  Shares  (together  with our common  shares)  carry
general voting rights.  The holders of Series E Preferred Shares are entitled to
receive notice of, to attend (in person or by proxy) and be heard and to vote on
the basis of one vote in respect of each such share held, at all meetings of our
shareholders  other than meetings at which holders of another class or series of
shares are entitled to vote separately. The holders of Series E Preferred Shares
shall also be entitled,  voting  exclusively and separately as a series,  to one
vote in  respect  of each  Series E  Preferred  Share held in respect of certain
amendments to our articles or any action which under any legislation, regulation
or rule applicable to us requires the approval or authorization of a class vote.
In the  event  that,  and as long  as,  we fail to make six  quarterly  dividend
payments,  the  holders of Series E Preferred  Shares  shall have the right as a
series to elect two  directors  to our board of directors  while such  dividends
remain in arrears.

RESTRICTIONS  ON  DIVIDENDS  AND  EXCHANGE  OR OTHER  RETIREMENT  OF SHARES  AND
ISSUANCE OF SENIOR SHARES

    So long as any of the Series E Preferred Shares are outstanding,  we are not
entitled to:

        (1) declare or pay any dividend on the common shares or any of our other
    shares  ranking  junior to the Series E  Preferred  Shares in respect of the
    payment of dividends and the  distribution  of assets on liquidation  (other
    than stock dividends in common shares or any such other junior shares);

        (2) redeem,  purchase or otherwise retire for value any common shares or
    any of our other shares ranking  junior to the Series E Preferred  Shares in
    respect  of the  payment  of  dividends  and the  distribution  of assets on
    liquidation; or

        (3) redeem, purchase or otherwise retire for value (i) less than all the
    Series E Preferred  Shares,  (ii) any other  Series E Preferred  Shares,  or
    (iii)  any of our  other  shares  ranking  prior to or on a parity  with the
    Series E  Preferred  Shares  in  respect  of the  distribution  of assets on
    liquidation;

unless all  dividends  then payable on the Series E Preferred  Shares and on all
other shares ranking prior to or on a parity therewith in respect of the payment
of dividends shall have been paid or set apart for payment.

TAX ELECTION

    The Series E Preferred Shares are "taxable  preferred  shares" as defined in
the Canadian Tax Act. The terms of the Series E Preferred  Shares  require us to
make the  necessary  elections  under Part VI.1 of the  Canadian Tax Act so that
holders  will not be subject to tax under Part IV.1 of the  Canadian  Tax Act on
dividends received (or deemed to be received) on the Series E Preferred Shares.

COMMON SHARE PURCHASE WARRANTS

    We have  approximately  11,000,000 common share purchase warrants issued and
outstanding  as of April 28,  2003.  Each whole  warrant  entitles the holder to
purchase one common share at an exercise  price of Cdn.$30.00  (or at the option
of the  holder,  the  equivalent  in U.S.  dollars  based  upon  exchange  rates
prevailing at the time of exercise), subject to certain


                                       37



adjustments, until 5:00 p.m. (Toronto time) on August 21, 2006. Any warrants not
exercised prior to such time will expire.

SHAREHOLDER RIGHTS PLAN

    On September 14, 1998, our board of directors  adopted a shareholder  rights
plan that took effect on October 3, 1998,  replacing a prior plan.  The plan was
amended in certain  respects by the board of directors in February 1999, and was
ratified and approved by  shareholders at the 1999 Annual and Special Meeting of
Shareholders. It was further amended in certain limited respects and restated by
the board of  directors  in  February  2002 and  reconfirmed,  as so amended and
restated,  by the  shareholders  at the 2002  Annual and Special  Meeting.  This
current plan,  set forth in an amended and restated  rights plan  agreement (the
"Shareholder  Rights Plan  Agreement")  entered  into between us and CIBC Mellon
Trust Company,  as rights agent, is designed to (i) encourage the fair and equal
treatment of  shareholders  in connection  with any take-over offer by providing
them with more time than the minimum  statutory  period during which a take-over
bid must remain open in order to fully consider their options,  and (ii) provide
the board of directors with  additional  time, if  appropriate,  to pursue other
alternatives  to maximize  shareholder  value.  The new plan is in effect  until
October 2008 subject to  reconfirmation  by holders of our Voting Securities (as
defined below) at our annual meeting in the year 2005.

    The  rights  issued  under the new plan  attach to and trade with our common
shares,  and no separate  certificates will be issued unless an event triggering
these rights occurs.  Certificates  evidencing common shares will be legended to
reflect  that they  evidence the rights  until the  Separation  Time (as defined
below).  Holders  of  our 7 3/4%  Convertible  Debentures,  5  3/4%  Convertible
Debentures,  Series  E  Preferred  Shares,  LYONs,  Convertible  Debentures  and
Subordinated  Debentures will generally be entitled to receive,  upon conversion
of the  relevant  security,  rights in an amount  equal to the  number of common
shares issued upon conversion of such securities.

    The rights will separate from the common shares  ("Separation  Time") and be
transferable,  trade  separately  from the common shares and become  exercisable
only when a person,  including  any party  related  to or acting  jointly  or in
concert  with such  person,  acquires,  or  announces  its  intention to acquire
beneficial  ownership of 20 per cent or more of (1) our then outstanding  Voting
Securities  (defined to include our common shares and Series E Preferred Shares)
or (2) its  then  outstanding  common  shares  alone,  in  either  case  without
complying with the "permitted bid" provisions of the plan (as summarized below),
or without the approval of the board of  directors.  Should such an  acquisition
occur,  each right would entitle its holder,  other than the acquiring person or
persons related to or acting jointly or in concert with such person, to purchase
additional  common  shares of Inco at a 50 per cent discount to the then current
market price.  The  acquisition by any person (an "Acquiring  Person") of 20 per
cent or more of our common shares or Voting  Securities,  other than by way of a
permitted  bid,  is  referred  to as a  "Flip-in-Event".  Any rights  held by an
Acquiring Person will become void upon the occurrence of a Flip-in Event.

    A  "permitted  bid" is a bid made to all holders of our  outstanding  Voting
Securities  that is open for at least  60  days.  If,  at the end of such 60 day
period, more than 50 per cent of our then outstanding common shares,  other than
those  securities owned by the party making the bid and certain related persons,
have been  tendered,  such party may take up and pay for the  common  shares but
must extend the bid for a further 10 business  days to allow other  shareholders
to tender. This feature is designed to provide shareholders who had not tendered
to the bid  with  enough  time to  tender  to the bid  once it is  clear  that a
majority of common shares have been tendered to that bid.

    We will be  entitled  (1) to waive the  application  of the plan to enable a
particular  take-over  bid to proceed,  in which case the plan will be deemed to
have been  waived  with  respect  to any other  take-over  bid made prior to the
expiry of any bid subject to such waiver and (2) with the prior  approval of the
holders  of Voting  Securities  or  rights,  to redeem  the  rights  for  normal
consideration at any time prior to a Flip-in Event.

                        CERTAIN INCOME TAX CONSIDERATIONS

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

    THIS  SUMMARY IS OF A GENERAL  NATURE  ONLY AND IS NOT  INTENDED  TO BE, AND
SHOULD NOT BE CONSTRUED TO BE, LEGAL OR TAX ADVICE TO ANY  PARTICULAR  HOLDER OF
SUBORDINATED DEBENTURES OR INCO COMMON SHARES AND NO REPRESENTATION IS MADE WITH
RESPECT TO THE U.S.  FEDERAL INCOME TAX  CONSEQUENCES TO ANY PARTICULAR  HOLDER.
ACCORDINGLY,  PROSPECTIVE  PURCHASERS OF SUBORDINATED  DEBENTURES SHOULD CONSULT
THEIR  OWN  TAX  ADVISORS   WITH  RESPECT  TO  THE  U.S.   FEDERAL   INCOME  TAX
CONSIDERATIONS   RELEVANT   TO  THEM,   HAVING   REGARD   TO  THEIR   PARTICULAR
CIRCUMSTANCES,  AS WELL AS THE EFFECT OF ANY U.S. STATE,  LOCAL OR NON-U.S.  TAX
LAWS.

    This section  describes the material U.S. federal income tax consequences to
you if you are a U.S. holder of  Subordinated  Debentures and common shares into
which the  Subordinated  Debentures may be converted.  It applies to you only if
you acquire  your  Subordinated  Debentures  in this  offering and you hold your
Subordinated   Debentures  and  common  shares  into


                                       38



which those Subordinated  Debentures may be converted as capital assets for U.S.
federal  income tax  purposes.  This  section does not apply to you if you are a
member of a special class of holders subject to special rules, including:

    o   a dealer in securities,

    o   a trader in  securities  that elects to use a  mark-to-market  method of
        accounting for your securities holdings,

    o   a financial institution,

    o   a tax-exempt organization,

    o   a life insurance company,

    o   a person liable for alternative minimum tax,

    o   a person that actually or constructively owns 10 per cent or more of our
        voting stock,

    o   a person that holds Subordinated  Debentures or common shares as part of
        a straddle or a hedging or conversion transaction, or

    o   a person whose functional currency is not the dollar.

    This section is based on the Internal  Revenue Code of 1986, as amended (the
"Code"),   its  legislative   history,   existing  and  proposed  U.S.  Treasury
regulations,  published rulings and court decisions, all as currently in effect.
These laws are subject to change, possibly on a retroactive basis.

    You are a U.S. holder if you are a beneficial owner of common shares and you
are:

    o   a citizen or resident of the United States,

    o   a domestic corporation,

    o   an estate whose income is subject to U.S.  federal income tax regardless
        of its source, or

    o   a trust  if a U.S.  court  can  exercise  primary  supervision  over the
        trust's  administration  and one or more U.S.  persons are authorized to
        control all substantial decisions of the trust.

CHARACTER OF THE SUBORDINATED DEBENTURES

    The following discussion assumes that the Subordinated  Debentures should be
classified as indebtedness of Inco for U.S. federal income tax purposes.  If the
Internal  Revenue  Service  (the  "IRS")  were to  successfully  assert that the
Subordinated Debentures should be treated as equity, the U.S. federal income tax
consequences  to you would be similar to that of a holder of common shares after
conversion as described under the heading "Common Shares" below.

INTEREST AND ORIGINAL ISSUE DISCOUNT

    Except as set forth below, stated interest on a Subordinated  Debenture will
generally be taxable to you as ordinary income at the time it is paid or accrued
in  accordance  with your  method  of  accounting  for U.S  federal  income  tax
purposes.

    We have the option to defer interest payments on the Subordinated Debentures
for a period not exceeding 20 consecutive  interest  periods.  Under  applicable
U.S. Treasury regulations,  a "remote" contingency that stated interest will not
be timely  paid will be  ignored in  determining  whether a debt  instrument  is
issued  with  original  issue  discount.  We  believe  that  the  likelihood  of
exercising  our  option  is  remote  within  the  meaning  of the U.S.  Treasury
regulations. Based on the forgoing we believe that, while the matter is not free
from doubt,  the Subordinated  Debentures  should not be considered to be issued
with original issue discount.

    If our option to defer any  payment of  interest  was  determined  not to be
"remote" within the meaning of the U.S. Treasury  regulations or if we exercised
our option to defer  payments,  the  Subordinated  Debentures  would  treated as
issued with  original  issue  discount at the time of issuance or at the time of
such  exercise,  as the case may be. As a result,  all  stated  interest  on the


                                       39



Subordinated  Debentures  would be treated a original  issue discount as long as
the Subordinated  Debenture remained outstanding.  In such an event, all of your
taxable interest income relating to the Subordinated Debentures would have to be
included  in income on an  economic  accrual  basis  before the  receipt of cash
attributable to the interest  regardless of your method of tax  accounting,  and
actual distributions of stated interest would not be reported as taxable income.
Consequently,  you would be required to include in gross income  original  issue
discount  even  though  we would not make any  actual  cash  payments  during an
extension  period. No rulings or other  interpretations  have been issued by the
IRS which have  addressed  the meaning of the term  "remote" as used in the U.S.
Treasury  regulations  and it is possible  that the IRS could take the  position
that the likelihood of deferral was not remote.

    Stated interest and original issue discount (if any) accrued with respect to
your  Subordinated  Debentures will  constitute  income from sources outside the
United  States,  but, with certain  exceptions,  will be "passive" or "financial
services"  income,  which is treated  separately  form other types of income for
purposes of  computing  the U.S.  foreign tax credit  allowable to you as a U.S.
holder.

DISPOSITION OR CONVERSION OF THE SUBORDINATED DEBENTURES

    Except  as  described  below,  upon  the  sale  or  other  disposition  of a
Subordinated  Debenture,  a U.S.  holder  will  recognize  gain or loss for U.S.
federal  income tax  purposes in an amount equal to the  difference  between the
dollar  value of the amount  realized  (except to the extent that such amount is
attributable to accrued interest income not previously included in income, which
will be taxable as ordinary  income) and the U.S.  holder's  adjusted  tax basis
(determined in dollars) in such Subordinated  Debenture.  Such gain or loss will
generally be capital gain or loss and will be long-term  capital gain or loss if
your holding period for the Subordinated  Debenture  exceeds one year. Such gain
or loss will be income or loss from  sources  within the United  States for U.S.
foreign tax credit limitation purposes. Long-term capital gain of a noncorporate
U.S. holder is generally subject to a maximum tax rate of 20 per cent.

    If a  Subordinated  Debenture  held by you is converted to common  shares or
cash or a  combination  of common  shares and cash  pursuant to your  conversion
right or our  optional  redemption  right or right  to  convert  a  Subordinated
Debenture  upon a change in control,  you will not recognize any gain or loss to
the extent  that you receive  common  shares in  exchange  for the  Subordinated
Debenture,  but you will  recognize  any  realized  gain to the extent  that you
receive cash. Your realized gain will be measured by the difference  between the
value of the consideration  you receive for the Subordinated  Debenture and your
tax basis in the Subordinated  Debenture.  Any gain recognized will generally be
capital gain,  and will be long-term  capital gain if the tendered  Subordinated
Debenture  has been held for more than one  year.  Your tax basis in any  common
shares  received  in  exchange  for  a  Subordinated  Debenture  (including  any
fractional shares for which cash is received) will be the same as your tax basis
in the  Subordinated  Debenture  tendered to us in  exchange,  decreased  by the
amount of any cash  received  in exchange  for the  Subordinated  Debenture  and
increased by the amount of any gain you recognize on the exchange.  Your holding
period for common  shares  received  in the  exchange  will  include the holding
period for the Subordinated  Debenture tendered to us in the exchange.  However,
to the extent  that the  holding  period for common  shares is  attributable  to
accrued  original  issue  discount  it will  commence on the day  following  the
conversion.

    Cash  received  in lieu of a  fractional  common  share upon  conversion  or
redemption  of a  Subordinated  Debenture  or upon a  tender  of a  Subordinated
Debenture  to us on a purchase  date  should be treated as a payment in exchange
for the fractional share. Accordingly, if the common share is a capital asset in
your hands,  the receipt of cash in lieu of a  fractional  common  share  should
generally  result in capital gain or loss,  if any,  measured by the  difference
between the cash  received  for the  fractional  share and your tax basis in the
fractional share.

CONSTRUCTIVE DIVIDEND

    If at any time we make a distribution of property to our  shareholders  that
would be taxable to the  shareholders as a dividend for U.S.  federal income tax
purposes  and,  in  accordance   with  the   anti-dilution   provisions  of  the
Subordinated  Debentures,  the conversion rate of the Subordinated Debentures is
increased,  such  increase  may be deemed to be the  payment  of a  constructive
dividend to holders of the Subordinated Debentures that is taxable to the extent
paid out of our current or  accumulated  earnings and profits (as determined for
U.S. federal income tax purposes).

DIVIDENDS ON COMMON SHARES

    You will  include in gross  income  the gross  amount of any  dividend  paid
(before  reduction for Canadian  withholding  taxes) by us out of our current or
accumulated  earnings and profits (as  determined  for U.S.  federal  income tax
purposes)  as ordinary  income when you actually or  constructively  receive the
dividend. The dividend will not be eligible for the dividends-received deduction
generally  allowed to U.S.  corporations  in respect of dividends  received from
other U.S. corporations.  The amount of a dividend paid in foreign currency that
you must include in your income as a U.S.  holder will be the U.S.  dollar value
of the


                                       40



foreign currency payments made,  determined at the spot conversion rate for that
foreign  currency  on the  date  of  the  dividend  distribution,  and  will  be
includible  in  your  income,  regardless  of  whether  the  payment  is in fact
converted into U.S. dollars. Generally, any gain or loss resulting from currency
exchange  fluctuations  during the period from the date you include the dividend
payment in income to the date you convert the payment into U.S.  dollars will be
treated as ordinary income or loss. The gain or loss generally will be income or
loss  from  sources  within  the  United  States  for U.S.  foreign  tax  credit
limitation purposes. Distributions in excess of current and accumulated earnings
and profits, as determined for U.S. federal income tax purposes, will be treated
as a return of capital to the extent of your tax basis in the common  shares and
thereafter as capital gain.

    Subject to certain limitations and the provisions of the next paragraph, the
Canadian tax withheld  and paid over to Canada will be  creditable  against your
U.S.  federal  income tax  liability.  For U.S.  foreign  tax credit  limitation
purposes,  the dividend will be income from sources  without the United  States,
but generally will be treated separately,  together with other items of "passive
income" (or, in the case of certain holders, "financial services income").

    It is possible  that, on the date a dividend is paid, the Company will be at
least 50 per cent  owned by U.S.  persons.  Under  Section  904(g)  of the Code,
dividends  paid by a foreign  corporation  that is at least 50 per cent owned by
U.S.  persons may be treated as U.S.  source income  (rather than foreign source
income)  for  U.S.  foreign  tax  credit  purposes  to the  extent  the  foreign
corporation has more than an  insignificant  amount of U.S.  source income.  The
effect  of this  rule may be to treat a  portion  of the  dividends  paid by the
Company as U.S. source income.

    The rules relating to the  determination  of the U.S. foreign tax credit are
complex and you should  consult with your own tax advisors to determine  whether
and to what extent a credit would be available.

DISPOSITION OF COMMON SHARES

    Upon the sale,  exchange or other  disposition  of common  shares,  you will
recognize capital gain or loss for U.S. federal income tax purposes in an amount
equal to the difference between the U.S. dollar value of the amount realized and
the U.S.  holder's tax basis (determined in U.S. dollars) in such common shares.
Generally,  such gain or loss will be capital gain or loss and will be long-term
capital gain or loss if the U.S.  holder's holding period for such common shares
exceeds  one year and any such gain or loss will be income or loss from  sources
within  the United  States for U.S.  foreign  tax  credit  limitation  purposes.
Long-term  capital gain of a noncorporate  U.S. holder is generally subject to a
maximum tax rate of 20 per cent.

PASSIVE FOREIGN INVESTMENT COMPANY

    We believe  that we  currently  are not,  and should not  become,  a passive
foreign investment company (a "PFIC") for U.S. federal income tax purposes,  but
this conclusion is a factual determination that is made annually and thus may be
subject  to change.  If we were to be treated as a PFIC,  unless you elect to be
taxed annually on a mark-to-market basis with respect to the common shares, gain
realized on the sale or other  disposition  of your  Subordinated  Debentures or
common shares would in general not be treated as capital gain.  Instead,  if you
are a U.S.  holder,  you would be treated as if you had  realized  such gain and
certain  "excess  distributions"  ratably  over  your  holding  period  for  the
Subordinated  Debentures  or common shares and would be taxed at the highest tax
rate in effect for each such year to which the gain was allocated, together with
an interest charge in respect of the tax attributable to each such year.

BACKUP WITHHOLDING AND INFORMATION REPORTING

    If you are a noncorporate U.S. holder,  information reporting  requirements,
on IRS Form 1099, generally will apply to:

    o   payments  of  principal  and  interest on your  Subordinated  Debentures
        within the United States,  including payments made by wire transfer from
        outside  the United  States to an  account  you  maintain  in the United
        States,

    o   dividend  payments or other  taxable  distributions  made to you on your
        common shares within the United States, and

    o   the  payment  of  the  proceeds  from  the  sale  of  your  Subordinated
        Debentures or common shares effected at a U.S. office of a broker.

    Additionally,  backup  withholding  will apply to such payments if you are a
noncorporate U.S. holder that:

    o   fails to provide an accurate taxpayer identification number,


                                       41



    o   is notified by the IRS that you have failed to report all  interest  and
        dividends required to be shown on your federal income tax returns, or

    o   in certain circumstances,  fails to comply with applicable certification
        requirements.

CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

    The  following is a summary of the  principal  Canadian  federal  income tax
considerations  generally  applicable to a holder (a  "Non-Canadian  holder") in
respect of the acquisition,  holding, conversion and disposition of Subordinated
Debentures  purchased  pursuant to this  prospectus who, for the purposes of the
Canadian Tax Act and any applicable  income tax convention,  and at all relevant
times,  is not,  and is not deemed to be,  resident  in  Canada,  deals at arm's
length with Inco, is not affiliated with Inco, holds Subordinated Debentures and
will hold Inco common shares acquired in respect of the Subordinated  Debentures
as  capital  property  and does not use or hold and is not deemed to use or hold
the  Subordinated  Debentures  or the Inco common  shares in or in the course of
carrying on business in Canada.  Special rules,  which are not discussed in this
summary,  may apply to a Non-Canadian  holder that is an insurer that carries on
an insurance business in Canada and elsewhere.

    This summary is based on the current  provisions of the Canadian Tax Act and
the  Regulations,  all specific  proposals to amend the Canadian Tax Act and the
Regulations  announced by or on behalf of the Minister of Finance (Canada) prior
to the  date  hereof,  and our  understanding  of the  published  administrative
practices  of the  Canada  Customs  and  Revenue  Agency.  This  summary  is not
exhaustive of all Canadian  federal  income tax  considerations  and,  except as
mentioned  above,  does not take into account or anticipate  any changes in law,
whether by judicial,  governmental or legislative  decision or action or changes
in administrative  practices of the Canada Customs and Revenue Agency,  nor does
it  take  into   account   provincial,   territorial   or  foreign   income  tax
considerations   which  may  vary  from  the   Canadian   federal   income   tax
considerations described herein.

    All amounts  relating to the ownership of the  Subordinated  Debentures  and
Inco common shares must be converted  into  Canadian  dollars for the purpose of
the Canadian Tax Act and the Regulations.

    THIS  SUMMARY IS OF A GENERAL  NATURE  ONLY AND IS NOT  INTENDED  TO BE, AND
SHOULD NOT BE CONSTRUED TO BE, LEGAL OR TAX ADVICE TO ANY  PARTICULAR  HOLDER OF
SUBORDINATED DEBENTURES OR INCO COMMON SHARES AND NO REPRESENTATION IS MADE WITH
RESPECT TO THE CANADIAN TAX CONSEQUENCES TO ANY PARTICULAR HOLDER.  ACCORDINGLY,
PROSPECTIVE  PURCHASERS OF SUBORDINATED  DEBENTURES SHOULD CONSULT THEIR OWN TAX
ADVISORS  WITH  RESPECT TO THE  CANADIAN  TAX  CONSIDERATIONS  RELEVANT TO THEM,
HAVING REGARD TO THEIR PARTICULAR CIRCUMSTANCES.

OWNERSHIP OF SUBORDINATED DEBENTURES

    Under the Canadian Tax Act, the payment to a Non-Canadian  holder by Inco of
interest under a Subordinated Debenture will be exempt from Canadian withholding
tax.

    In general, a Non-Canadian holder will not be subject to Canadian income tax
on capital gains arising on the  disposition of Subordinated  Debentures  unless
the  Subordinated  Debenture  constitutes  "taxable  Canadian  property"  to the
Non-Canadian  holder. A Subordinated  Debenture will constitute taxable Canadian
property to a  Non-Canadian  holder if, at any time during the five-year  period
immediately  preceding the disposition,  the Non-Canadian  holder,  persons with
whom such holder did not deal at arm's length,  or the  Non-Canadian  holder and
persons  with whom such holder did not deal at arm's length owned 25 per cent or
more of the shares of any class or series of the capital stock of Inco.

OWNERSHIP OF INCO COMMON SHARES

    Under  the  Canadian  Tax  Act,  dividends  on Inco  common  shares  paid or
credited,  or deemed to be paid or credited,  to a  Non-Canadian  holder will be
subject  to  Canadian  withholding  tax at the rate of 25 per cent of the  gross
amount of such dividends.  The rate of this withholding tax may be reduced under
the terms of an  applicable  income  tax  convention.  Under the  Canada--United
States Income Tax Convention (1980),  this withholding tax rate is reduced to 15
per cent or, in the case of a  Non-Canadian  holder that is a corporation  which
beneficially owns at least 10 per cent of the voting shares of Inco, 5 per cent.

    In general, a Non-Canadian holder will not be subject to Canadian income tax
on capital gains arising on the  disposition  of Inco common shares unless those
Inco common shares constitute  "taxable  Canadian  property" to the Non-Canadian
holder.  An Inco common share will  constitute  taxable  Canadian  property to a
Non-Canadian  holder  if,  at any  time  in  the  five-year  period  immediately
preceding  the  disposition,  the  Non-Canadian  holder,  persons with whom such
holder did not deal at arm's length or the Non-Canadian  holder and persons with
whom such holder did not deal at arm's  length  owned 25 per cent or more of the


                                       42



shares of any class or series of the capital stock of Inco.


                              PLAN OF DISTRIBUTION

    The Subordinated  Debentures were issued on March 7, 2003 and March 18, 2003
and offered and sold in the United States to qualified  institutional  buyers in
reliance on Rule 144A under the  Securities  Act. This  prospectus  has not been
filed in respect of, and will not  qualify,  any  distribution  of  Subordinated
Debentures or underlying shares in Ontario or any other province or territory of
Canada.

    The  holders  of the  Subordinated  Debentures  and  the  underlying  shares
(together  the  "Registrable  Securities")  are  entitled  to the  benefits of a
registration rights agreement,  entered into as of March 7, 2003, between us and
Morgan  Stanley  &  Co.   Incorporated   and  Salomon  Smith  Barney  Inc.  (the
"Registration  Rights  Agreement"),  pursuant  to which we have filed this short
form prospectus with the Ontario Securities  Commission under the Canadian shelf
prospectus  system and a registration  statement  including this prospectus with
the  Securities  and Exchange  Commission  under the  Securities Act (the "Shelf
Registration Statement") covering resales of the Registrable Securities.

    A list of the  holders  of  Registrable  Securities  who  have  delivered  a
completed  selling  securityholder's  questionnaire  to us (each,  an  "Electing
Holder") is set out in Schedule A to this prospectus, which is incorporated into
and forms part of this  prospectus and which may be updated by way of supplement
to  this  prospectus.  All  shelf  information  omitted  from  this  base  shelf
prospectus  will be  contained in a shelf  supplement  that will be delivered to
purchasers  together  with this base shelf  prospectus.  Each  shelf  prospectus
supplement will be incorporated by reference into this base shelf  prospectus as
of the date of the shelf prospectus  supplement and only for the purposes of the
distribution  to which the shelf  prospectus  supplement  pertains.  Each  shelf
prospectus  supplement to this base shelf prospectus will contain a current list
of the Electing Holders.

    Each Electing  Holder is the beneficial,  but not the registered,  holder of
the aggregate  principal amount of Subordinated  Debentures shown in Schedule A,
any or all of which may be sold by the Electing Holder at any time, or from time
to time,  pursuant to this  prospectus,  and the aggregate  principal  amount of
Subordinated Debentures held by such Electing Holder shall thereafter be reduced
to the extent of such  sales.  All of the  Subordinated  Debentures  held by the
Electing  Holders  were  either  acquired  by  them  upon  the  issuance  of the
Subordinated  Debentures  on March 7, 2003 or March 18, 2003,  or in  subsequent
transactions thereafter.

    We are registering  the  Subordinated  Debentures and the underlying  shares
covered  by this  prospectus  under  the  Securities  Act to  permit  any of the
Electing  Holders to conduct public  secondary  trading of these securities from
time to time after the date of this  prospectus in  accordance  with the federal
securities laws of the United States. We have agreed in the Registration  Rights
Agreement to bear all fees and expenses,  other than underwriting  discounts and
selling  commissions,  in  connection  with  the  registration  and  sale of the
Registrable Securities covered by this prospectus.  Additionally, we have agreed
to indemnify the holders of Registrable  Securities against certain liabilities,
including  liabilities  under the Securities  Act, and each Electing  Holder has
agreed to indemnify us, other holders and any persons who control us, as defined
in the federal securities laws of the United States,  against any liability with
respect to any information  furnished by such holder in writing to us (including
the  selling  securityholder's  questionnaire)  expressly  for use in the  Shelf
Registration Statement.

    We will not receive  any of the  proceeds  from the sale of the  Registrable
Securities by the Electing Holders. We have been advised by the Electing Holders
that  the  Electing  Holders  may  sell all or any  portion  of the  Registrable
Securities beneficially owned by them and offered hereby from time to time:

    o   directly; or

    o   through   underwriters,   broker-dealers  or  agents,  who  may  receive
        compensation in the form of discounts,  commissions or concessions  from
        the  Electing   Holders  or  from  the  purchasers  of  the  Registrable
        Securities from whom they may act as agent.

    The  Registrable  Securities  may be sold  from  time to time in one or more
transactions at:

    o   fixed prices, which may be changed;

    o   varying prices determined at the time of sale; or

    o   negotiated prices.


                                       43



     The prices  will be  determined  by the  Electing  Holders or by  agreement
between the Electing Holders and underwriters or dealers who may receive fees or
commissions in connection with the sale. The aggregate  proceeds to the Electing
Holders from the sale of the Registrable  Securities offered by them hereby will
be  the  purchase  price  of  the  Registrable   Securities  less  discount  and
commissions, if any.

     The  sales  described  in  the  preceding  paragraph  may  be  effected  in
transactions:

    o   on any U.S. national  securities  exchange or quotation service on which
        the  Registrable  Securities  may be listed or quoted at the time of the
        sale, including the NYSE in the case of the underlying shares;

    o   in the over-the-counter market;

    o   in  transactions  otherwise than on such exchanges or services or in the
        over-the-counter market; or

o        through the writing of options.

     These transactions may include block  transactions or crosses.  Crosses are
transactions in which the same broker acts as agent on both sides of the trade.

     Once any  Registrable  Security is sold by any Electing  Holder pursuant to
the Shelf Registration  Statement,  such Registrable  Security is not thereafter
covered by the Shelf Registration  Statement even if subsequently  reacquired by
an Electing Holder.

     Our  outstanding  common shares are listed on the NYSE and the TSX, each of
which has approved  the listing of the  underlying  shares.  We do not intend to
list  the  Subordinated  Debentures  for  trading  on  any  national  securities
exchange.  Accordingly,  no assurance can be given as to the  development of any
trading  market  for the  Subordinated  Debentures.  See Risk  Factors - Trading
Market for the Subordinated Debentures".

     In  order  to  comply  with  the  securities  laws of  certain  states,  if
applicable,  the  Subordinated  Debentures and underlying  shares may be sold in
such jurisdictions only through registered or licensed brokers or dealers.

     The selling  securityholders  and any underwriters,  dealers or agents that
participate in the  distribution of the  Subordinated  Debentures and underlying
shares offered under this prospectus may be deemed to be underwriters within the
meaning of Section 2(11) of the Securities  Act, and any discounts,  commissions
or concessions  received by them pursuant to the sale of such securities by them
might  be  deemed  to  be  underwriting  discounts  and  commissions  under  the
Securities Act.

     We will be  permitted  pursuant to the  Registration  Rights  Agreement  to
suspend  the use of this  prospectus  that  is  part of the  Shelf  Registration
Statement   under   certain   circumstances   relating   to  pending   corporate
developments, public filings with the SEC and similar events for a period not to
exceed 45 days in any three-month period and 120 days in any 12-month period.

     In addition,  any securities  covered by this prospectus  which qualify for
sale pursuant to Rule 144 or Rule 144A of the  Securities  Act may be sold under
Rule 144 or Rule 144A  rather  than  pursuant  to this  prospectus.  There is no
assurance  that  any  selling  securityholder  will  sell  any  or  all  of  the
Subordinated  Debentures or underlying shares described in this prospectus,  and
any selling securityholder may transfer, devise or gift such securities by other
means not described in this prospectus.

                     VALIDITY OF THE SUBORDINATED DEBENTURES

    The validity of the  Subordinated  Debentures  under New York law was passed
upon for us by Sullivan & Cromwell LLP, New York, New York.  Certain other legal
matters  were  passed on for us by  Stuart  F.  Feiner,  Inco's  Executive  Vice
President,  General  Counsel and Secretary,  Mark J. Travers,  Inco's  Assistant
General Counsel,  and Osler, Hoskin & Harcourt LLP, Toronto,  Ontario. As of the
date hereof, certain lawyers with Osler, Hoskin & Harcourt LLP, own, directly or
indirectly,  in the aggregate,  less than one per cent of our outstanding common
shares.

                                     EXPERTS

    The  consolidated  financial  statements  incorporated in this prospectus by
reference to the Annual Report on Form 10-K for the year ended December  31,2002
have been so  incorporated  in reliance on the report of  PricewaterhouseCoopers
LLP, independent accountants,  given on the authority of said firm as experts in
auditing and accounting. The statements as to our


                                       44



reserves  which  appear in our 2002 10-K have  been  incorporated  by  reference
herein  upon the  authority,  as  experts,  of Robert A.  Horn,  Vice-President,
Exploration,  and Robert C. Osborne,  Consulting  Geologist,  Laterites,  to the
extent described in our 2002 10-K.

                              AVAILABLE INFORMATION

    We are subject to the informational  requirements of the Securities Exchange
Act of 1934, and in accordance therewith file reports and other information with
the SEC. Our recent SEC filings are available over the Internet at the SEC's web
site at http://www.sec.gov. You may also read and copy any document we file with
the SEC at the public  reference  facilities  maintained by the SEC at Judiciary
Plaza, 450 Fifth Street,  N.W., Room 1024,  Washington,  D.C. 20549. Please call
1-800-SEC-0330 for further information on the operations of the public reference
facilities  and  copying  charges.  Copies  of  reports  and  other  information
concerning  Inco may be inspected at the offices of the New York Stock Exchange,
20 Broad Street, New York, New York 10005.

                       DOCUMENTS INCORPORATED BY REFERENCE

    The  following  documents,  filed  with  the SEC  and  with  the  applicable
securities commissions or similar authorities in all of the provinces of Canada,
are  incorporated  by  reference  herein  and  form  an  integral  part  of this
prospectus:

    o   our Annual  Report on Form 10-K for the fiscal year ended  December  31,
        2002;

    o   our Proxy Circular and Statement  dated February 10, 2003 other than the
        sections  entitled "Report of the Management  Resources and Compensation
        Committee  on  Executive  Compensation"  and  "Comparative   Shareholder
        Return";

    o   our Current Report on Form 8-K dated February 26, 2003;

    o   our material  change report dated March 4, 2003 relating to the issuance
        of the Subordinated Debentures and the Convertible Debentures;

    o   our Current Report on Form 8-K dated March 11, 2003; and

    o   our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
        2003, as filed with the SEC on April 28, 2003.

    Although not incorporated by reference, a technical report pertaining to our
Goro  nickel-cobalt  project,  dated effective as of December 31, 2002, has been
filed with the Canadian securities regulatory authorities.

    All  documents  we  file  with  the SEC or with  the  applicable  securities
commissions or similar authorities in all of the provinces of Canada,  after the
date of this  prospectus  and prior to the  termination of the  distribution  of
Subordinated Debentures under this prospectus shall be deemed to be incorporated
by reference into this prospectus.

    ANY  STATEMENT  CONTAINED  IN  A  DOCUMENT  INCORPORATED  OR  DEEMED  TO  BE
INCORPORATED  BY REFERENCE  HEREIN SHALL BE DEEMED TO BE MODIFIED OR  SUPERSEDED
FOR THE  PURPOSES OF THIS  PROSPECTUS  TO THE EXTENT THAT A STATEMENT  CONTAINED
HEREIN, OR IN ANY OTHER  SUBSEQUENTLY  FILED DOCUMENT WHICH ALSO IS OR IS DEEMED
TO BE INCORPORATED BY REFERENCE  HEREIN,  MODIFIES OR SUPERSEDES THAT STATEMENT.
THE MODIFYING OR  SUPERSEDING  STATEMENT  NEED NOT STATE THAT IT HAS MODIFIED OR
SUPERSEDED A PRIOR  STATEMENT OR INCLUDE ANY OTHER  INFORMATION SET FORTH IN THE
DOCUMENT  THAT  IT  MODIFIES  OR  SUPERSEDES.  THE  MAKING  OF  A  MODIFYING  OR
SUPERSEDING STATEMENT SHALL NOT BE DEEMED AN ADMISSION FOR ANY PURPOSES THAT THE
MODIFIED OR SUPERSEDED STATEMENT, WHEN MADE, CONSTITUTED A MISREPRESENTATION, AN
UNTRUE STATEMENT OF A MATERIAL FACT OR AN OMISSION TO STATE A MATERIAL FACT THAT
IS REQUIRED TO BE STATED OR THAT IS NECESSARY TO MAKE A STATEMENT NOT MISLEADING
IN LIGHT OF THE CIRCUMSTANCES IN WHICH IT WAS MADE. ANY STATEMENT SO MODIFIED OR
SUPERSEDED  SHALL  NOT BE  DEEMED,  EXCEPT  AS SO  MODIFIED  OR  SUPERSEDED,  TO
CONSTITUTE A PART OF THIS PROSPECTUS.

    Copies of the documents  incorporated in this prospectus by reference may be
obtained  on  request  without  charge  from the Office of the  Secretary,  Inco
Limited, 145 King Street West, Suite 1500, Toronto,  Ontario, M5H 4B7, telephone
(416) 361-7511.


                                       45



                      LIST OF DOCUMENTS FILED WITH THE SEC

    The  following  documents  have  been  filed  with  the  SEC as  part of the
Registration  Statement of which this short form  prospectus  forms a part:  the
documents referred to under the heading  "Documents  Incorporated by Reference";
consents of the independent public  accountant,  Robert Horn, Robert Osborne and
Osler,  Hoskin & Harcourt  LLP;  powers of attorney;  the  indenture;  the first
supplemental indenture;  and the Statement of Eligibility of the Trustee on Form
T-1.










                                       46


                                   SCHEDULE A
                            LIST OF ELECTING HOLDERS



NAME OF SELLING SECURITYHOLDER                                  PRINCIPAL AMOUNT
------------------------------                                  ----------------


Alpine Associates                                                    $10,220,000
Alpine Partners, L.P.                                                $ 1,380,000
Akela Capital Master Fund, Ltd.                                      $10,000,000
B.G.I. Global Investors                                              $   453,000
Bear, Stearns & Co. Inc.                                             $ 2,000,000
BTES - Convertible ARB                                               $   200,000
BTOP Growth vs Value                                                 $   800,000
Citigroup Global Markets Inc.                                        $11,950,000
Credit Suisse First Boston LLC                                       $ 1,250,000
Forest Fulcrum Fund L.L.P                                            $ 1,770,000
Forest Global Convertible Fund Series A-5                            $ 6,168,000
Forest Multi-Strategy Master Fund SPC                                $   977,000
JP Morgan Securities Inc.                                            $ 3,000,000
KBC Convertible Arbitrage Fund                                       $18,920,000
KBC Convertible Mac 28 Ltd.                                          $ 1,720,000
LLT Limited                                                          $   455,000
Lyxor Master Fund                                                    $ 6,308,000
Melody IAM Ltd.                                                      $   860,000
OIP Limited                                                          $ 1,683,000
RBC Alternative Assets LP                                            $   397,000
Relay 11 Holdings                                                    $   247,000
SG Cowan Securities - Convertible Arbitrage                          $ 7,500,000
Silvercreek II Limited                                               $ 1,020,000
Silvercreek Limited Partnership                                      $ 2,397,000
Sphinx Convertible Arbitrage                                         $   125,000
Sunrise Partners Limited Partnership                                 $   500,000
TD Securities (USA) Inc.                                             $ 3,000,000
White River Securities L.L.C                                         $ 2,000,000
Zurich Master Hedge Fund                                             $   610,000










                                  $227,100,000




                                  INCO LIMITED



               3 1/2% SUBORDINATED CONVERTIBLE DEBENTURES DUE 2052





                          ==============================

                              BASE SHELF PROSPECTUS

                          ==============================








                                 April 29, 2003








                    ----------------------------------------



                                     PART II

       INFORMATION NOT REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS

                                  EXHIBIT INDEX

EXHIBIT
NUMBER     DESCRIPTION
-------    -----------
3.1        Prospectus, incorporated by reference to Part I of this Registration
           Statement
4.1        Annual Report on Form 10-K for the fiscal year ended December 31,
           2002, which Report is incorporated herein by reference (File No.
           1-1143)
4.2        Proxy Circular and Statement of the Company dated February 10, 2003
           other than the sections entitled "Report of the Management Resources
           and Compensation Committee on Executive Compensation" and
           "Comparative Shareholder Return" (incorporated by reference to
           Exhibit 99 to the Annual Report on Form 10-K for the fiscal year
           ended December 31, 2002 (File No. 1-1143))
4.3        Quarterly Report on Form 10-Q for the quarter ended March 31, 2003,
           which Report is incorporated herein by reference (File No. 1-1143)
4.4        Current Report on Form 8-K of the Company, dated February 26, 2003,
           which Report is incorporated herein by reference (File No. 1-1143)
4.5        Current Report on Form 8-K of the Company, dated March 11, 2003,
           which Report is incorporated herein by reference (File No. 1-1143)
4.6        Material Change Report of the Company, dated March 4, 2003, filed
           with the Ontario Securities Commission*
5.1        Consent of PricewaterhouseCoopers LLP
5.2        Consent of Osler, Hoskin & Harcourt LLP
5.3        Consent of Mr. Robert C. Osborne*
5.4        Consent of Mr. Robert A. Horn*
6.1        Powers of Attorney*
7.1        Indenture, dated March 7, 2003, between the Company and The Bank of
           New York*
7.2        First Supplemental Indenture, dated March 7, 2003, between the
           Company and The Bank of New York*
8.1        Statement of Eligibility of The Bank of New York on Form T-1*

------
*     Previously filed.



                                   SIGNATURES

    Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form F-10 and has duly caused this Amendment No. 1 to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Toronto, Province of Ontario, Canada, on the
29th day of April, 2003.



                                INCO LIMITED




                                By  /S/ STUART F. FEINER
                                    --------------------------------------------
                                    (Stuart F. Feiner, Executive Vice-President,
                                    General Counsel and Secretary)

    Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities indicated, on the 29th day of April, 2003.

/S/ SCOTT M. HAND           Chairman and Chief Executive Officer and Director
--------------------------  (Principal Executive Officer)
(Scott M. Hand)

/S/ FAROKH S. HAKIMI        Executive Vice-President and Chief Financial Officer
--------------------------  (Principal Financial Officer)
(Farokh S. Hakimi)

/S/ RONALD A. LEHTOVAARA    Vice-President and Comptroller
--------------------------  (Principal Accounting Officer)
(Ronald A. Lehtovaara)

             *              Director
--------------------------
(Glenn A. Barton)

             *              Director
--------------------------
(Angus A. Bruneau)

                            Director
--------------------------
(Ronald C. Cambre)

             *              Director
--------------------------
(Judith A. Erola)

             *              Director
--------------------------
(Chaviva M. Hosek)

             *              Director
--------------------------
(Peter C. Jones)

                            Director
--------------------------
(John T. Mayberry)

             *              Director
--------------------------
(David P. O'Brien)



                            Director
--------------------------
(Roger Phillips)

             *              Director
--------------------------
(James M. Stanford)

             *              Director
--------------------------
(Richard M. Thomson)


/S/ EDWARD A. STEEN         Authorized Representative in the United States
--------------------------
Edward A. Steen
Inco United States, Inc.

*    Pursuant to powers of attorney executed by the persons named above whose
     names are preceded by an asterisk, Stuart F. Feiner, as attorney-in-fact,
     does hereby sign this Amendment No. 1 to Registration Statement on behalf
     of each such person, in each case in the capacity indicated, on the date
     indicated.


By  /S/ STUART F. FEINER
    ----------------------------------------------
          (Stuart F. Feiner, Attorney-in-Fact)