AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 29, 2003
                                                     REGISTRATION NO. 333-104687
================================================================================
                     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 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.
333-104687) (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:




                                  $272,679,000
BASE SHELF PROSPECTUS
---------------------
                                  INCO LIMITED
                         CONVERTIBLE DEBENTURES DUE 2023
                              --------------------

     We issued $272,679,000 amount payable at maturity of convertible debentures
due 2023 (the  "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 Debentures  and the common shares  issuable upon
the conversion,  redemption,  purchase or payment of the Debentures. Such common
shares are sometimes referred to in this prospectus as the underlying shares.

     The 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  DEBENTURES  INVOLVES  RISKS.  PLEASE
CAREFULLY  CONSIDER  THE  "RISK  FACTORS"  SECTION  BEGINNING  ON PAGE 4 OF THIS
PROSPECTUS.
                              --------------------

     The  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 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  Debentures  or  underlying  shares  as
principals,  any profits  received by such  broker-dealers  on the resale of the
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  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  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

         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 DEBENTURES.......................................16
         LEGAL OWNERSHIP.................................................37
         DESCRIPTION OF SHARE CAPITAL....................................39
         CERTAIN INCOME TAX CONSIDERATIONS...............................42
         PLAN OF DISTRIBUTION............................................46
         VALIDITY OF THE DEBENTURES......................................48
         EXPERTS.........................................................48
         ADDITIONAL INFORMATION..........................................48
         DOCUMENTS INCORPORATED BY REFERENCE.............................49
         LIST OF DOCUMENTS FILED WITH THE SEC............................49
         SCHEDULE A - LIST OF ELECTING HOLDERS...........................50

    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.

                                       3



                                  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 Debentures involves certain risks.  Prospective purchasers
of the 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 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,

                                       4



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 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.

                                       5



    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 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

                                       6



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  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.


                                       7



     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.

     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.

                                       8



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.  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

                                       9



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  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

                                       10



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  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

                                       11



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  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

                                       12



affect the timing of completion and the cost of either  project,  as well as our
business, results of operations, financial condition and liquidity.

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.

                                       13



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
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 DEBENTURES

POSSIBLE VOLATILITY OF OUR COMMON SHARES

    The Debentures are convertible into common shares; accordingly, fluctuations
in the  market  price of our common  shares  may affect the market  price of the
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 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 DEBENTURES

    No adjustment to conversion rate for accrued interest. The rate at which the
Debentures  are  convertible  into our common shares is not adjusted for accrued
interest.  Such accrued  interest will be fully satisfied by the delivery of the
common  shares  (or cash in lieu of  common  shares  or a  combination  thereof)
received upon conversion,  so a converting  holder will not necessarily  receive
any cash payment  representing  accrued  interest.  Because the number of common
shares  issuable upon  conversion of each Debenture is not increased even though
the  accreted  value of the  Debentures  (i.e.,  the issue  price  plus  accrued
interest)  increases  over time,  the implied  effective  conversion  price will
increase over time.

    Your conversion right is conditional.  The Debentures have several features,
including conditions to conversion,  which, if not satisfied,  could prevent you
from  converting your Debentures and result in you receiving less than the value
of our common shares into which the Debentures are otherwise convertible.  These
features  could  adversely  affect  the  value  and the  trading  prices  of the
Debentures. See "Description of Debentures--Conversion Rights".

    Adverse  consequence of original issue discount.  The Debentures were issued
at a substantial  discount  from their amount  payable at maturity,  which,  for
United  States  federal  income tax purposes,  is referred to as original  issue
discount.  As a result,  if you purchased the Debentures,  you generally will be
required to include amounts in gross income for United States federal income tax
purposes  prior to the  conversion,  redemption,  purchase  or  maturity  of the
Debentures  to which  such  income is  attributable.  See  "Certain  Income  Tax
Considerations--Certain      United      States      Federal      Income     Tax
Considerations--Original Issue Discount".

    The  Debentures  are  subject to early  redemption.  The  Debentures  may be
redeemed at our option at any time on or after March 19, 2010, in cash or common
shares, or a combination of cash and common shares, at the redemption prices set
forth in this prospectus,  together with any accrued and unpaid cash interest to
the  redemption  date.  You should  assume that this  redemption  option will be
exercised  if we are  able  to  refinance  at a  lower  interest  rate  or it is
otherwise in our interest to redeem the Debentures.

                                       14



    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 not require
us to purchase the Debentures. See "Description of Debentures--Change in Control
Requires Offer to Purchase Debentures".

TRADING MARKET FOR THE DEBENTURES

    The Debentures  comprise a new issue of securities for which there may be no
trading  market.  The Debentures  are not listed on any  securities  exchange or
included  in any  automated  quotation  system.  The  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  Debentures.  To the extent that an active  trading  market
does not develop, the price at which you may be able to sell the Debentures,  if
at all, may be less than the price you pay for them in this offering.

INABILITY TO FUND PURCHASE OF DEBENTURES

    Upon the occurrence of specified  change in control  events  occurring on or
prior  to  March  14,  2010,  we will be  required  to  offer  to  purchase  all
outstanding  Debentures for cash,  common  shares,  or a combination of cash and
common shares.  However, it is possible that if we elect to pay all or a portion
of 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  Debentures  or
that restrictions in our credit  facilities or other  indebtedness may not allow
those purchases of Debentures for cash.


                                 USE OF PROCEEDS

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


                          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

                                       15



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
Debentures and our  concurrent  offering of 3 1/2%  subordinated  debentures due
2052 (the "Subordinated 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 Debentures and our concurrent  offering
of Subordinated  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
Debentures and our concurrent offering of Subordinated  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 Debentures and the  Subordinated  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 Debentures and the Subordinated Debentures as debt, as is required by
U.S.  GAAP,  the  carrying  charges of the LYON Notes,  the  Debentures  and the
Subordinated  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 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 Debentures and our concurrent offering of Subordinated 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  Debentures  and our  concurrent  offering of
Subordinated  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 Debentures and our
concurrent  offering  of  Subordinated  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 March 6, 2003,  Standard & Poor's  Corporation  ("S&P") assigned a "BBB-"
rating  to the  Debentures  and  Moody's  Investors  Service,  Inc.  ("Moody's")
assigned a "Baa3" rating to the 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
Debentures by the rating agencies are not  recommendations to purchase,  hold or
sell the  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 BBB
exhibit  adequate  protection  parameters.  However,  insofar as a BBB 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.

                                       16



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 to C, which  represents  the range from  highest to lowest  quality for such
securities rated.  According to the Moody's rating system, debt securities rated
Baa 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 DEBENTURES

    The Debentures  were issued under an 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  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  Debentures  are limited to  $272,679,000  aggregate  amount  payable at
maturity.  The  Debentures  mature on March 14,  2023.  The  amount  payable  at
maturity of each  Debenture is $1,000.  We may, at our option,  elect to pay the
amount  payable at maturity 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 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 Debentures  under  "Certain  Income Tax
Considerations".

    The  Debentures  were offered at a  substantial  discount  from their amount
payable at maturity.  See  "Certain  Income Tax  Considerations--Certain  United
States  Federal  Income  Tax  Considerations--Original   Issue  Discount".  Each
Debenture  was  issued at an issue  price of  $913.81  per  Debenture.  Interest
accrues on the issue price of a Debenture in the period during which a Debenture
remains  outstanding  at a rate  of  1.5%  per  year  compounded  semi-annually.
However,  prior to stated maturity,  we will only pay interest in cash at a rate
of  1.0943%  per year on the  issue  price of the  Debentures.  The rate of cash
interest  and the amount  payable at maturity  over the issue price  represent a
yield to maturity of 1.5% computed on a semi-annual  bond equivalent basis using
a 360-day year composed of twelve 30-day  months.  Such accrual will commence on
the issue  date for the  Debentures  of March 7,  2003.  The  amount  payable at
maturity of a Debenture  represents the issue price plus accrued interest to the
stated maturity date of March 14, 2023.

    Only cash interest at a rate of 1.0943% per year on the issue price from the
issue  date of the  Debentures,  or from the  most  recent  date to  which  cash
interest has been paid or duly provided,  will be paid on the  Debentures  until
the 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.
Cash 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.  Each payment of cash  interest on the  Debentures  includes cash 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 cash  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 Debenture as described below,
all  interest  will  cease to  accrue on such  Debenture  under the terms of and
subject to the conditions in the indenture.  We may not reissue a Debenture that
has  matured or been  converted,  purchased,  redeemed or  otherwise  cancelled,
except for registration of transfer, exchange or replacement of such Debenture.

                                       17



    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 registrar.

    The   indenture   limits  our  right  to  pledge  our  and  certain  of  our
subsidiaries' assets and to engage in some sale and leaseback  transactions,  as
described below under "--Certain Covenants",  but it does not limit our right to
incur  additional  indebtedness  or pay dividends or contain any other financial
covenants.  These  provisions  of the  indenture  would not  necessarily  afford
holders  of the  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.


BOOK-ENTRY SYSTEM

    The  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 Debentures for all purposes under the indenture. Owners
of beneficial  interests in the 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
are only 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  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 DEBENTURES

    The Debentures are unsecured and unsubordinated obligations.  The Debentures
rank on parity in right of payment with all of our existing and future unsecured
and unsubordinated indebtedness.


CONVERSION RIGHTS

    A holder may convert its  outstanding  Debentures,  in  multiples  of $1,000
amount  payable at maturity,  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 holder  redemption notice or a change in control purchase
notice requiring us to redeem or purchase any Debentures, the holder may convert
these  Debentures  as described in this section only if the holder has withdrawn
its holder  redemption notice or change in control purchase notice in accordance
with the requirements of the indenture.

    A holder may convert a 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, 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 accreted conversion price (as
        defined  below)  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 Debentures for each
        day of such period was less than 95% of the product of the closing  sale
        price of our common shares

                                       18



        multiplied by the conversion  rate in effect for that period; or

    o   if the 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 Debentures for conversion  into our common
shares in a calendar  quarter (and only during such 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  accreted
conversion  price per common  share on the last  trading  day of such  preceding
quarter.  The "accreted conversion price" per share as of any day will equal the
sum of the issue price of the  Debenture  plus accrued  interest  divided by the
number of  shares  issuable  upon  conversion  of a  Debenture,  subject  to any
adjustments to the conversion rate through that date.

    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 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
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 Debentures on any date of determination means the
average of the secondary  market bid  quotations  per Debenture  obtained by the
conversion agent for $5,000,000  amount payable at maturity of the 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 amount
payable at maturity of the 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  Debentures,  then the trading  price of the
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  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
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 Debentures for the applicable period.

CONVERSION UPON NOTICE OF REDEMPTION

    If we  call  the  Debentures  for  redemption,  a  holder  may  convert  the
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.


CONVERSION UPON SPECIFIED CORPORATE EVENTS

    If we elect to:

                                       19



    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
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  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  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  Debentures as described  under  "--Change in Control  Requires  Offer to
Purchase Debentures".

CONVERSION RATE AND CONVERSION PROCEDURES

    The  initial  conversion  rate is 31.9354  common  shares per $1,000  amount
payable at maturity of the Debentures, subject to adjustment upon the occurrence
of the events described below. This is equivalent to an initial conversion price
of  approximately  $28.61 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  Debentures.  We will give notice of our
election to deliver part or all of the conversion  consideration  in cash to the
holder  converting the 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  Debentures  as
described under  "--Redemption  of Debentures at the Option of Inco". The amount
of cash to be  delivered  per  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.

    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
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  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

                                       20



States  Federal  Income Tax  Considerations--Disposition  or  Conversion  of the
Debentures" and "Certain  Income Tax  Considerations--Certain  Canadian  Federal
Income Tax Considerations--Ownership of Debentures".

    Except as noted  below,  on  conversion  of a Debenture  the holder will not
receive any cash payment representing accrued interest. Accordingly,  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  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 cash interest that the registered holder is to receive
on the  Debenture.  Our  delivery  to the  holder of the fixed  number of common
shares into which the  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 issue price of the Debenture  plus accrued  interest
attributable to the period from the issue date through the conversion date. As a
result,  accrued  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 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 Debentures who wish to convert a 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 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.

                                       21



    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 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  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  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  Debentures  immediately  prior  to such  event  or  transaction.
However,  if  such  event  or  transaction  occurs  before  March  7,  2008  the
consideration  into which the 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 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 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 Dividend".

    The exercise of our option to restate the amount  payable at maturity of the
Debentures  to include all accrued  interest to date  following a Tax Event will
not affect the number of our  common  shares the holder is  entitled  to receive
upon  conversion  of a Debenture.  See  "--Optional  Conversion to Full Cash Pay
Debentures upon a Tax Event".


REDEMPTION OF DEBENTURES AT THE OPTION OF THE HOLDERS

    On March 14 in each of 2010,  2014 and 2018,  we will,  at the option of the
holder, be required to redeem, at the redemption

                                       22



prices set forth below,  any  outstanding  Debenture for which a written  holder
redemption  notice has been properly  delivered by the holder to the trustee and
not withdrawn,  subject to certain additional conditions. We may also add one or
more  holder  redemption  dates  on  which  holders  may  require  us to  redeem
outstanding  Debentures  at a  special  redemption  rate.  Prior  to or  on  any
scheduled or additional  holder  redemption  date, we may also offer  additional
consideration  to be  received  to  induce  holders  not to  exercise  a  holder
redemption  right.  We are  under  no  obligation,  however,  to add any  holder
redemption  dates or to offer any additional  consideration.  Holders may submit
their Debentures for redemption to the paying agent at any time from the opening
of business on the date that is 29 business days prior to the holder  redemption
date until the close of business on the date that is nine business days prior to
the holder redemption date.

    The  redemption  price,  which  consists  of the issue  price  plus  accrued
interest, excluding cash interest, at each holder redemption date, will be:

    o   $941.15 per Debenture on March 14, 2010;

    o   $958.05 per Debenture on March 14, 2014; and

    o   $976.00 per Debenture on March 14, 2018.

    If prior to a holder  redemption  date we have elected to restate the amount
payable at maturity of the  Debentures  following the occurrence of a Tax Event,
the  redemption  price  will be  equal to the  restated  principal  amount.  See
"--Optional Conversion to Full Cash Pay Debentures Upon a Tax Event".

    We may, at our option, elect to satisfy our obligation to pay the redemption
price by  delivering  common  shares in lieu of some or all of the cash  payment
based on the  average  market  price of one common  share.  See  "--Delivery  of
Shares; Fractional Shares".

    In each case, in addition to the  redemption  price we will also pay accrued
and unpaid cash interest to the date of redemption.

    We will be required to give notice on a date not less than 29 business  days
prior to any holder  redemption  date to all holders at their addresses shown in
the  register  of the  registrar,  and to  beneficial  holders  as  required  by
applicable law,  detailing the procedures that holders must follow to require us
to redeem their Debentures.  In addition,  we will be required to give notice on
the date that is eight business days prior to any holder  redemption date to all
holders  at their  addresses  shown in the  register  of the  registrar,  and to
beneficial holders as required by applicable law, stating:

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

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

    o   the  procedures   that  holders  must  follow  to  withdraw  any  holder
        redemption notice with respect to the Debentures.

    After we have given  notice that we will  deliver  common  shares in lieu of
some or all of the cash  payable,  we may not change the number or percentage of
common  shares to be  delivered  in lieu of cash  payment,  except as  described
below.

    A holder of a  Debenture  otherwise  entitled  to a  fractional  share  will
receive cash in an amount equal to the value of such  fractional  share based on
the average market price. See "--Delivery of Shares;  Fractional Shares".  For a
discussion of the tax treatment upon exercise of a holder  redemption right, see
"Certain  Income Tax  Considerations--Certain  United States  Federal Income Tax
Considerations--Disposition or Conversion of the Debentures" and "Certain Income
Tax      Considerations--Certain      Canadian      Federal      Income      Tax
Considerations--Ownership of Debentures".

    To  exercise  the  holder  redemption  right,  on or prior  to the  close of
business on the date that is nine business  days prior to the holder  redemption
date, a holder must:

    o   complete  and manually  sign an original or  facsimile  copy of a holder
        redemption  notice and  deliver  such  holder  redemption  notice to the
        paying  agent,  in each  case  indicating  the  exercise  of the  holder
        redemption right;

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

                                       23



    o   if required, pay all transfer or similar taxes; and

    o   if we  elect to  deliver  common  shares  in lieu of some or all of cash
        payable,  but any of the  conditions to the delivery of common shares is
        not  satisfied  prior to the close of business on the holder  redemption
        date, indicate whether the holder elects:

             (1) to withdraw the holder  redemption  notice as to some or all of
         the Debentures to which it relates, or

             (2) to receive cash in respect of the entire  redemption  price for
         all  Debentures  or  portions  of  Debentures  subject  to such  holder
         redemption 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  redemption  price for all
Debentures subject to the holder redemption notice.

    A holder may  withdraw any holder  redemption  notice by  delivering  to the
conversion  agent a written notice of withdrawal  prior to the close of business
on the holder redemption date. The notice of withdrawal must state:

    o   the amount payable at maturity of the Debentures being withdrawn;

    o   the certificate numbers of the Debentures being withdrawn; and

    o   the amount payable at maturity,  if any, of the  Debentures  that remain
        subject to the holder redemption right.

    Beneficial  holders of Debentures who wish to exercise the holder redemption
right  or  withdraw  a  previous  exercise  must do so in  accordance  with  the
procedures established by DTC.

    Because the market  price of our common  shares is  determined  prior to the
applicable  holder  redemption  date,  in the event we elect to  deliver  common
shares in lieu of some or all of the cash payable,  holders of  Debentures  bear
the market  risk with  respect to the value of the common  shares to be received
from the date such market price is determined to such holder redemption date.

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

    For any holder  redemption  date,  our right to deliver  common  shares upon
exercise  of a holder  redemption  right,  in whole or in part,  is  subject  to
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 information  necessary to calculate the average market price must be
        published  daily in a newspaper  of national  circulation  in the United
        States or on our website or through such other  public  medium as we may
        use at that time;

    o   the  registration  of our 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 to the
close of  business on the holder  redemption  date,  we will pay the  redemption
price to the holders of Debentures entirely in cash.

    In connection with any holder redemption, 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 Canadian  laws which may
        then be applicable; and

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

                                       24



    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.

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

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

    Our  ability to redeem  Debentures  with cash may be limited by the terms of
our then existing borrowing agreements.

    We may not redeem Debentures for cash (other than cash in lieu of fractional
shares) if an Event of Default with respect to the  Debentures  has occurred and
is continuing,  other than a default in the payment of the redemption price with
respect to such Debentures.


REDEMPTION OF DEBENTURES AT THE OPTION OF INCO

    No sinking fund is provided for the  Debentures.  Except as described  below
under  "--Redemption for Tax Reasons",  we may only redeem the Debentures at our
option on or after March 19, 2010.  In  addition,  we may extend the time during
which we may not  redeem the  Debentures  upon  providing  notice by mail to the
holders of the  Debentures.  We may redeem all or a portion of the Debentures in
cash, common shares or a combination thereof. The redemption price will be equal
to the issue price per Debenture plus accrued  interest to the redemption  date.
We will give not less than 20  business  days' nor more than 60  business  days'
notice of redemption by mail to holders of 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  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".

    The table below shows redemption prices of a Debenture on March 19, 2010, at
each March 14  thereafter  prior to stated  maturity  and at stated  maturity on
March 14,  2023.  These  prices  reflect the issue price plus  accrued  interest
calculated  to each such date.  The  redemption  price of a  Debenture  redeemed
between such dates would include an additional  amount reflecting the additional
interest,  excluding cash interest, accrued since the immediately preceding date
in the table to the actual redemption date.

                                          (1)             (2)            (3)
                                      DEBENTURE                       REDEMPTION
                                         ISSUE          ACCRUED          PRICE
   REDEMPTION DATE                       PRICE         INTEREST        (1) + (2)
--------------------                  ----------      ---------      -----------
March 19, 2010.....................   $   913.81      $   27.39      $    941.20
March 14, 2011.....................   $   913.81      $   31.47      $    945.28
March 14, 2012.....................   $   913.81      $   35.66      $    949.47
March 14, 2013.....................   $   913.81      $   39.92      $    953.73
March 14, 2014.....................   $   913.81      $   44.24      $    958.05
March 14, 2015.....................   $   913.81      $   48.63      $    962.44
March 14, 2016.....................   $   913.81      $   53.08      $    966.89
March 14, 2017.....................   $   913.81      $   57.61      $    971.42
March 14, 2018.....................   $   913.81      $   62.19      $    976.00
March 14, 2019.....................   $   913.81      $   66.85      $    980.66
March 14, 2020.....................   $   913.81      $   71.58      $    985.39
March 14, 2021.....................   $   913.81      $   76.38      $    990.19
March 14, 2022.....................   $   913.81      $   81.25      $    995.06
At stated maturity.................   $   913.81      $   86.19      $  1,000.00

                                       25



    In each case,  we will also pay accrued and unpaid cash interest to the date
of redemption.

    If we restate the amount payable at maturity of the Debentures following the
occurrence  of a Tax Event,  the  Debentures  will be redeemable at the restated
principal  amount  plus  accrued  and  unpaid  interest  from  the  date of such
restatement  through the redemption  date.  However,  except as described  under
"--Redemption  of  Debentures  at the Option of Inco" or  "--Redemption  for Tax
Reasons",  in no event may the Debentures be redeemed prior to March 19, 2010 or
such later date as we may determine. See "--Optional Conversion to Full Cash Pay
Debentures Upon a Tax Event".

    If we redeem less than all of the outstanding Debentures,  the trustee shall
select the Debentures to be redeemed in amounts payable at maturity of $1,000 or
integral  multiples of $1,000, or following a Tax Event, the restated  principal
amount of the  Debentures  or  integral  multiples  of such  restated  principal
amount.  In this case, the trustee may select the Debentures by lot, pro rata or
by any other method the trustee considers fair and appropriate.  If a portion of
a holder's Debentures is selected for partial redemption and the holder converts
a portion of such 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  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 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 issue price plus  accrued  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 DEBENTURES

    Upon the  occurrence of a change in control (as defined below) of Inco on or
prior to March  14,  2010,  we will be  required  to offer to  purchase  all the
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 issue price plus  accrued  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 Debentures" and "Certain Income
Tax      Considerations--Certain      Canadian      Federal      Income      Tax
Considerations--Ownership of Debentures".

    If prior to a change in control purchase date the amount payable at maturity
of the Debentures has been restated  following the occurrence of a Tax Event, we
will be required to purchase  the  Debentures  at a price equal to the  restated
principal  amount plus accrued  interest from the date of such conversion to the
change in control purchase date.

    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  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;

    o   the date of such change in control;

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

                                       26



    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  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 Debentures to be delivered by the holder;

    o   the  portion  of the amount  payable at  maturity  of  Debentures  to be
        purchased,  which  portion  must be $1,000 or an  integral  multiple  of
        $1,000 (or following a Tax Event,  the restated  principal amount of the
        Debentures or an integral multiple of such restated principal amount);

    o   that we are to  purchase  such  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 Debentures to which it relates, or

            (2) to  receive  cash in  respect  of the  entire  change in control
        purchase price for all  Debentures or portions of 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
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 amount payable at maturity of the Debentures being withdrawn;

    o   the certificate numbers of the Debentures being withdrawn; and

    o   the amount payable at maturity,  if any, of the  Debentures  that remain
        subject to a change in control purchase notice.

    Payment of the change in control  purchase price for a Debenture for which a
change in control  purchase notice has been delivered and not validly  withdrawn
is  conditioned  upon  delivery  of  the  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  Debenture  will be made  promptly  following  the  later of the  change in
control purchase date or the time of delivery of such Debenture.

                                       27



    If the paying agent holds money or  securities  sufficient to pay the change
in control  purchase  price of the  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 Debenture will
cease to be outstanding and interest on such Debenture will cease to accrue, and
be deemed to be paid,  whether or not the  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
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 Debentures upon the occurrence of 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  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
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 change in control purchase feature of the Debentures but that would increase
the amount of our outstanding indebtedness.

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

    No Debentures  may be purchased for cash or a combination of cash and common
shares by Inco pursuant to a change in

                                       28



control  purchase  offer if there has  occurred  and is  continuing  an Event of
Default with respect to the  Debentures,  other than a default in the payment of
the change in control purchase price with respect to the Debentures.


DELIVERY OF SHARES; FRACTIONAL SHARES

DELIVERY OF SHARES

    We may,  at our option,  elect to pay the amount  payable at maturity of the
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 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  Debentures  once we have given the notice  that we are  required to give to
holders of 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 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  Debentures,  including  payment of the
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, 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,  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 amount  payable at  maturity,  the
redemption  price, or the change in control  purchase price of the 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 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.

    Because the average market price of the common shares is determined prior to
the  applicable  payment date,  holders of 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 amount payable at maturity,  the  redemption  price or
the change in control  purchase price of the 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

                                       29



    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 Debentures.


CERTAIN COVENANTS

CERTAIN DEFINITIONS APPLICABLE TO COVENANTS

    "Attributable  Debt" means as to any particular lease under which any person
is liable at the time as lessee,  and at any date as of which the amount thereof
is to be  determined,  the total net amount of rent  required to be paid by such
person under such lease during the remaining term thereof  (including any period
for which such lease has been  extended or may, at the option of the lessor,  be
extended),  discounted  from the  respective due dates thereof to such date at a
rate per annum  equivalent to the rate inherent in such lease (as  determined in
good faith by Inco) compounded  semi-annually,  excluding amounts required to be
paid on account of or attributable  to operating costs and overhead  charges and
including,  in certain  circumstances,  any termination penalty in the case of a
lease terminable by the lessee.

    "Consolidated  Net Tangible  Assets"  means the  aggregate  amount of assets
(less applicable  reserves and other properly  deductible items) after deducting
therefrom  (1)  all  current   liabilities   (excluding   any  portion   thereof
constituting  Funded  Debt);  and (2) all  goodwill,  trade  names,  trademarks,
patents,  unamortized debt discount and expense and other like intangibles,  all
as set  forth  on the most  recent  consolidated  balance  sheet of Inco and its
Subsidiaries  contained in the latest annual report to  shareholders of Inco and
computed  in  accordance  with  generally  accepted  accounting   principles  as
specified in the Indenture.

    "Funded Debt", as applied to any person,  means all  indebtedness  for money
borrowed,  created or assumed by such person  maturing  after,  or  renewable or
extendable  at the  option of such  person  beyond,  12 months  from the date of
creation thereof.

    "Principal Property" means any (1) mineral property; or (2) manufacturing or
processing plant, building,  structure or other facility, together with the land
upon which it is erected and fixtures  comprising a part thereof,  whether owned
as of the date of the indenture or thereafter acquired or constructed by Inco or
any  Restricted  Subsidiary,  which is located in Canada or the United States or
its territories or possessions,  the gross book value (without  deduction of any
reserve  depreciation)  of  which,  in each  case,  on the date as of which  the
determination  is being made, is an amount which  exceeds 0.25% of  Consolidated
Net Tangible Assets, except any such plant,  building,  structure or facility or
any  portion  thereof  (together  with the land  upon  which it is  erected  and
fixtures comprising a part thereof) (a) acquired or constructed  principally for
the purpose of controlling or abating atmospheric pollutants or contaminants, or
water,  noise,  odor or other  pollution  or (b) which our board of directors by
resolution  declares  is not  of  material  importance  to  the  total  business
conducted by Inco and its Restricted Subsidiaries considered as an enterprise.

    "Restricted  Subsidiary"  means (1) any Subsidiary (a)  substantially all of
the property of which is located,  or substantially all of the business of which
is  carried  on,  within  Canada  or the  United  States or its  territories  or
possessions  and (b) which  owns or  leases a  Principal  Property;  and (2) any
Subsidiary  engaged primarily in the business of owning or holding securities of
Restricted   Subsidiaries;   provided,   however,   that  the  term  "Restricted
Subsidiary"  shall not include any Subsidiary the principal  assets of which are
stock or indebtedness of corporations  which conduct  substantially all of their
business outside Canada and the United States or its territories or possessions.

    "Subsidiary" of Inco means any corporation  more than 50% of the outstanding
voting stock of which is owned,  directly or  indirectly,  by Inco and/or one or
more Subsidiaries of Inco.


NEGATIVE PLEDGE

    We have  covenanted  under the indenture  that we will not, and that we will
not permit any Restricted  Subsidiary to, create,  incur or assume any mortgage,
hypothecation,   charge,  pledge,  lien  or  other  security  interest  (each  a
"mortgage") securing any indebtedness for money borrowed  ("Indebtedness") of or
upon any  Principal  Property,  or on  shares  of stock or  indebtedness  of any
Restricted  Subsidiary,  now owned or hereafter acquired by Inco or a Restricted
Subsidiary,  without making effective  provision for the outstanding  Debentures
(together  with,  if and  to  the  extent  we  shall  so  determine,  any  other
indebtedness  or other  obligations  then existing or thereafter  created) to be
secured by such  mortgage  equally  and  ratably  with (or prior to) any and all
indebtedness and obligations secured or to be secured thereby and for so long as
such  Indebtedness  is so  secured.  Such  negative  pledge in general  will not
prevent or  restrict  the  creation,  incurrence  or  assumption  by Inco or any
Restricted Subsidiary of:

                                       30



    o   any  mortgage  on  property,  shares  of  stock or  Indebtedness  of any
        corporation  existing at the time such corporation  becomes a Restricted
        Subsidiary;

    o   any  mortgage  on  any  Principal  Property  existing  at  the  time  of
        acquisition  of  such  Principal   Property  by  Inco  or  a  Restricted
        Subsidiary,   whether  or  not  assumed  by  Inco  or  such   Restricted
        Subsidiary,  provided  that no such  mortgage  shall extend to any other
        Principal Property of Inco or any Restricted Subsidiary;

    o   any mortgage on any Principal Property (including any improvements on an
        existing Principal  Property)  hereafter acquired or constructed by Inco
        or any Restricted Subsidiary to secure the payment of all or any part of
        the purchase price or cost of  construction  of such Principal  Property
        (or  to  secure  any  Indebtedness  incurred  by  Inco  or a  Restricted
        Subsidiary  for the purpose of financing all or any part of the purchase
        price  thereof  or  cost  of  construction  thereof  or of  improvements
        thereon) created prior to, at the time or within 90 days after the later
        of the acquisition,  completion of construction, or commencement of full
        operation of such  Principal  Property,  provided  that no such mortgage
        shall  extend to any other  Principal  Property of Inco or a  Restricted
        Subsidiary  other  than,  in  the  case  of  any  such  construction  or
        improvement,  any  theretofore  unimproved  real  property  on which the
        Principal Property so constructed, or the improvement, is located;

    o   any mortgage on any Principal  Property or any Restricted  Subsidiary to
        secure  Indebtedness  owing  by it to  Inco  or  to  another  Restricted
        Subsidiary;

    o   any  mortgage  on any  Principal  Property  of  Inco  or any  Restricted
        Subsidiary  in favor of any  government  authority  in  Canada or in the
        United States to secure partial,  progress, advance or other payments to
        Inco or any  Restricted  Subsidiary  pursuant to the  provisions  of any
        contract or statute;

    o   any  mortgage  on any  Principal  Property  of  Inco  or any  Restricted
        Subsidiary existing on the date of the indenture;

    o   any  mortgage  on any  Principal  Property  of  Inco  or any  Restricted
        Subsidiary  created for the sole purpose of renewing or refunding any of
        the foregoing mortgages,  provided that the Indebtedness secured thereby
        shall not exceed the principal  amount of Indebtedness so secured at the
        time of such  renewal or  refunding,  and that such renewal or refunding
        mortgage  shall be limited to all or any part of the same  property  and
        improvements thereon which secured the mortgage renewed or refunded; or

    o   any mortgage on any Principal  Property created,  incurred or assumed to
        secure  Indebtedness of Inco or any Restricted  Subsidiary,  which would
        otherwise  be subject to the  foregoing  restrictions,  in an  aggregate
        amount  which,  together with the  aggregate  principal  amount of other
        Indebtedness   secured  by  mortgages  on  Principal   Properties   then
        outstanding (excluding Indebtedness secured by mortgages permitted under
        the foregoing  exceptions) and the  Attributable  Debt in respect of all
        Sale and  Leaseback  Transactions  entered  into  after  the date of the
        indenture (not including  Attributable  Debt in respect of any such sale
        and  Leaseback  Transactions  the  proceeds  of which are applied as set
        forth below under  "--Limitation  on Sale and  Leaseback  Transactions")
        would not then exceed 5% of Consolidated Net Tangible Assets.

    The  following  types of  transactions  will not be deemed  to be  mortgages
securing  Indebtedness:  any acquisition by Inco or any Restricted Subsidiary of
any property or assets subject to any  reservation or exception  under the terms
of which any  vendor,  lessor or  assignor  creates,  reserves or excepts or has
created,  reserved or excepted an interest in nickel, copper,  cobalt,  precious
metals,  oil,  gas or any  other  mineral  or  timber  in place or the  proceeds
thereof; any conveyance or assignment whereby Inco or any Restricted  Subsidiary
conveys or assigns to any  person or  persons  an  interest  in nickel,  copper,
cobalt, precious metals, oil, gas or any other mineral or timber in place or the
proceeds thereof; or any mortgage upon any property or assets owned or leased by
Inco or any Restricted  Subsidiary or in which Inco or any Restricted Subsidiary
owns an  interest  to secure to the person or persons  paying  the  expenses  of
developing or conducting operations for the recovery, storage, transportation or
sale of the mineral resources of the said property (or property with which it is
utilized)  the  payment to such  person or  persons of Inco's or the  Restricted
Subsidiary's proportionate part of such development or operating expense.


LIMITATION ON SALE AND LEASEBACK TRANSACTIONS

    Sale and Leaseback  Transactions (which term is defined in the indenture and
which definition excludes certain temporary leases and leases between Inco and a
Restricted  Subsidiary  or  between  Restricted  Subsidiaries)  by  Inco  or any
Restricted  Subsidiary of any Principal Property are prohibited by the indenture
unless: (1) immediately prior to the entering into of such arrangement,  Inco or
such Restricted  Subsidiary  could create a mortgage on such Principal  Property
securing Indebtedness in

                                       31



an amount equal to the Attributable Debt with respect to the particular Sale and
Leaseback  Transaction;  or (2) within 120 days after the sale or  transfer,  an
amount  equal to the fair  market  value of the  Principal  Property so sold and
leased back at the time of entering into such Sale and Leaseback Transaction (as
determined by our board of directors) is applied to the  prepayment  (other than
mandatory  prepayment) of Funded Debt of Inco or a Restricted  Subsidiary (other
than Funded Debt held by the Company or any Restricted Subsidiary).


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 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
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  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  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 Debenture  having a present or former direct or
    indirect  connection  with the relevant taxing  jurisdiction  other than the
    mere holding of the 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 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

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

nor will such other additional  amounts be paid with respect to a payment on the
Debenture to a holder who is a fiduciary or  partnership  or other than the sole
beneficial  owner of such  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.

                                       32



    We shall have the right  reasonably  to require a holder as a  condition  of
payment  of  amounts  on the  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 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.

    If,  upon  any  such  consolidation,   amalgamation,   merger  or  statutory
arrangement  or  upon  any  such  sale,   conveyance  or  lease,   or  upon  any
consolidation,  amalgamation,  merger or statutory arrangement of any Restricted
Subsidiary,  or upon the sale,  conveyance or lease of all or substantially  all
the  property  of any  Restricted  Subsidiary  to  any  other  corporation,  any
Principal  Property  of Inco or of any  Restricted  Subsidiary  or any shares of
stock or indebtedness of any Restricted Subsidiary owned by Inco or a Restricted
Subsidiary  immediately prior thereto or immediately  thereafter would thereupon
become subject to any mortgage securing any  Indebtedness,  unless assumption of
such  mortgage  would be  permitted  under the  covenant  described  above under
"--Negative Pledge" without securing the outstanding Debentures,  Inco, prior to
such  consolidation,   amalgamation,   merger,   statutory  arrangement,   sale,
conveyance  or  lease,  will  secure  or cause  to be  secured  by  supplemental
indenture,  the due and punctual  payment of the principal of and  interest,  if
any,  on the  Debentures  (together  with,  if and to the  extent  Inco shall so
determine,   any  other  indebtedness  or  other  obligation  then  existing  or
thereafter  created) by a direct mortgage equally and ratably with (or prior to)
any and all indebtedness and obligations secured or to be secured thereby and so
long as such indebtedness is so secured.


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
        amount  payable at maturity (or if the amount payable at maturity of the
        Debentures  has  been  restated  following  a Tax  Event,  the  restated
        principal  amount),  the redemption price,  conversion  consideration or
        change in control purchase price with respect to any Debenture when such
        becomes due and payable;

    o   if we fail to pay interest  when due and such failure  continues  for 30
        days;

    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  amount  payable  at  maturity  of the
        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 amount  payable at maturity of the Debentures may
declare  the issue  price plus  accrued  interest  and  accrued  and unpaid cash
interest on the Debentures to be due and immediately  payable.  This is called a
declaration of acceleration  of maturity.  If an Event of Default occurs because
of certain events in bankruptcy,  insolvency or reorganization,  the issue price
plus  accrued  interest on the  Debentures  will be  automatically  accelerated,
without any action by the trustee or any holder.  A declaration of  acceleration
of  maturity  may be  cancelled  by the holders of at least a majority in amount
payable at maturity of the Debentures.

    Except in cases of default,  where the trustee has some special duties,  the
trustee is not required to take any action under the

                                       33



indenture at the request of any 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
amount  payable at maturity of the  outstanding  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 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 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  amount  payable  at  maturity  of all
        outstanding 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 amount payable at maturity during such 60-day period.

    However,  you are entitled at any time to bring a lawsuit for the payment of
money due on your 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 Debentures, or else specifying any default.


OPTIONAL CONVERSION TO FULL CASH PAY DEBENTURES UPON A TAX EVENT

    From and after the date of the occurrence of a Tax Event (as defined below),
we shall have the option to elect to have semi-annual  coupon interest accrue at
1.5% per year on a  principal  amount per  Debenture  (the  "restated  principal
amount")  equal to the issue price plus accrued  interest to the date of the Tax
Event or the date on which we exercise the option  described herein whichever is
later (the "option exercise date").

    Semi-annual  coupon  interest shall accrue from the option exercise date and
shall be payable in cash semi-annually on the interest payment dates of March 14
and  September  14 of each year to holders of record at the close of business on
March 1 or September 1 immediately preceding the interest payment date. Interest
will be computed on a  semi-annual  bond  equivalent  basis using a 360-day year
comprised of twelve  30-day  months.  Interest  will accrue from the most recent
date on which  interest has been paid  subsequent  to our exercise of the option
or, if no interest had been paid subsequent to our exercise of the option,  from
the restatement date.

    A  "Tax  Event"  means  that  Inco  shall  have  received  an  opinion  from
independent  tax counsel  experienced  in such matters to the effect that, on or
after March 4, 2003, as a result of:

    o   any amendment to, or change (including any announced prospective change)
        in, the laws (or any  regulations  thereunder)  of the United  States or
        Canada or any  political  subdivision  or taxing  authority  thereof  or
        therein; or

    o   any amendment to, or change in, an interpretation or application of such
        laws or regulations by any legislative body, court,  governmental agency
        or regulatory  authority (including the enactment of any legislation and
        the publication of any judicial decision or regulatory determination),

in each case in which  amendment  or change is enacted,  promulgated,  issued or
announced  or which  interpretation  is issued or  announced  or which action is
taken, on or after March 4, 2003, there is more than an insubstantial  risk that
interest payable on the Debentures either:

    o   where it is now  deductible  on a current  accrual  basis,  would not be
        deductible on a current accrual basis, or

    o   would not be deductible under any other method,

in  either  case,  in  whole  or in  part,  by  Inco  (by  reason  of  deferral,
disallowance, or otherwise) for Canadian income tax

                                       34



purposes.

    The  modification  of the  terms  of  Debentures  by us upon a Tax  Event as
described above could possibly alter the timing of income recognition by holders
of the Debentures  with respect to the  semi-annual  payments of interest due on
the  Debentures  after  the  option  exercise  date.  See  "Certain  Income  Tax
Considerations--Certain United States Federal Income Tax Considerations".


CANADIAN WITHHOLDING TAXES

    We will make payments on account of the  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 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  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,  on any  purchase  date or on any
semi-annual interest payment date.


MODIFICATION AND WAIVER

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

    Changes  Requiring  Your Approval.  First,  there are changes that cannot be
made to your 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 Debenture;

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

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

    o   make any 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 Debenture;

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

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

    o   impair your right to sue for payment or conversion;

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

    o   reduce the  percentage of holders of 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  Debentures  is the  kind  that  requires  a vote in favor by
holders of  Debentures  owning 66 2/3% of the amount  payable at maturity of the
Debentures.  Most changes fall into this category, except for clarifying changes
and certain other changes that would not adversely affect holders

                                       35



of the Debentures.  The same vote would be required for us to obtain a waiver of
all or part of the restrictive 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 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 Debentures.  This type is limited to  clarifications  and
certain other changes that would not adversely affect holders of the Debentures.

    Further  Details  Concerning  Voting.  When  taking a vote,  we will use the
amount that would be due and  payable on the voting date if the stated  maturity
of the Debentures were accelerated to that date because of a default.

    Your 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  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 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 DEBENTURES OR REQUEST A WAIVER.
--------------------------------------------------------------------------------


GOVERNING LAW

    The  indenture  and  the  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
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
Debentures, may not be collectible within the United States.

    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 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 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

                                       36



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 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  Debentures or by
depositing  with the  trustee,  the paying  agent or the  conversion  agent,  if
applicable,  after the 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  Debentures and paying all other sums payable under the indenture by
us.


LIMITATIONS OF CLAIMS IN BANKRUPTCY

    If a bankruptcy proceeding is commenced in respect of Inco under Title 11 of
the United States Code, the claim of the holder of a Debenture may be limited to
the issue price of the  Debenture  plus accrued  interest from the issue date to
the commencement of the proceeding.

    If an  assignment  is filed or a receiving  order  issued in respect of Inco
under the Bankruptcy and Insolvency Act (Canada) or a proceeding is commenced in
respect of Inco under the Winding-Up and Restructuring  Act (Canada),  the claim
of a holder may be limited in accordance  with the terms of the Debenture to the
issue price of the  Debenture  plus accrued  interest from the issue date to the
commencement  of the  proceeding  plus, if funds are available  after paying all
proven  claims in full,  interest  from that date to the date of  payment of the
claim at the rate of 5% per annum.

    If a  proposal  is  filed  in  respect  of Inco  under  the  Bankruptcy  and
Insolvency  Act (Canada) or a  proceeding  is commenced in respect of Inco under
the  Companies'  Creditors  Arrangement  Act  (Canada) or under any  bankruptcy,
arrangement, reorganization, dissolution, liquidation, insolvency, winding-up or
similar  law now or  hereafter  in  effect  for  the  relief  from or  otherwise
affecting  creditors of us (other than an  assignment  filed or receiving  order
issued  under  the  Bankruptcy  and  Insolvency  Act  (Canada)  or a  proceeding
commenced under the Winding-Up and Restructuring  Act (Canada)),  the claim of a
holder may be limited in accordance with the terms of the Debenture to the issue
price  of the  Debenture  plus  accrued  interest  from  the  issue  date to the
commencement of such proceeding.


INFORMATION CONCERNING THE TRUSTEE

    We have  appointed  The Bank of New York as the trustee  under the indenture
and as paying agent,  conversion agent,  Debentures  registrar and custodian for
the  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 3 1/2%  Subordinated
Debentures due 2052.


                                 LEGAL OWNERSHIP


STREET NAME AND OTHER INDIRECT HOLDERS

    Investors who hold Debentures in accounts at banks or brokers will generally
not be recognized by us as legal holders of  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  Debentures.  These
intermediary  banks,  brokers  and  other  financial   institutions  pass  along
principal,  interest and other payments on Debentures, either because they agree
to do so in their customer  agreements or because they are legally  required to.
If you  hold  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;

                                       37



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

    o   how it would pursue  rights under the  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  Debentures,  i.e.,  those who are  registered as
holders of the 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  Debentures  in that  manner or because  the  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  Debentures  were  issued in the form of  global  securities,  the
ultimate beneficial owners can only be indirect holders.  DTC is the depositary.
The 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 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 Debentures and instead
deal only with the depositary that holds the global securities.

    As an  investor  in  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 Debentures registered in your own name;

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

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

    o   you  may  not be  able  to  sell  interests  in the  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 Debentures. After that exchange, the choice of whether
to hold the  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

                                       38



the  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 Debentures
have been described in the sections 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 Debentures has occurred and has not been
        cured.

    Defaults are discussed above under "Description of  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  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").

                                       39



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 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

                                       40



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.

    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.

                                       41



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 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,  Subordinated  Debentures  and
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

                                       42



ADVICE TO ANY  PARTICULAR  HOLDER OF  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 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  Debentures  and common  shares  into which the
Debentures  may be  converted.  It  applies  to you  only  if you  acquire  your
Debentures in this offering and you hold your  Debentures and common shares into
which those  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 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.

PAYMENTS OF INTEREST

    Except as described below with respect to original issue discount,  interest
on a  Debenture  will be  taxable  to you as  ordinary  income at the time it is
received or accrued,  depending on your method of  accounting  for U.S.  federal
income tax purposes.

ORIGINAL ISSUE DISCOUNT

    The Debentures are being issued at a substantial  discount from their amount
payable at  maturity.  For U.S.  federal  income tax  purposes,  the  difference
between the issue price (i.e.,  the initial price at which a substantial  number
of the Debentures are sold to persons other than bond houses, brokers or similar
persons or  organizations  acting in the  capacity  of  underwriters,  placement
agents,  or  wholesalers)  and the stated  amount  payable at  maturity  of each
Debenture  constitutes original issue discount.  You will be required to include
original issue discount in gross income  periodically,  as described below, over
the term of the  Debentures  without regard to the timing of the receipt of cash
or other payments attributable to such income.

    You must include in gross income, for U.S. federal income tax purposes, your
"accrued original issue discount", which is

                                       43



the sum of the daily  portions of original  issue  discount  with respect to the
Debenture  for each day during the taxable  year or portion of a taxable year on
which you hold the  Debenture.  The daily portion is determined by allocating to
each day of an  accrual  period a pro rata  portion  of an  amount  equal to the
adjusted  issue price of the  Debenture at the  beginning of the accrual  period
multiplied by the yield to maturity  determined on the basis of  compounding  at
the close of each  accrual  period and  adjusted  for the length of each accrual
period of the Debenture.  The accrual period of a Debenture may be of any length
and may vary in  length  over  the term of the  Debenture,  provided  that  each
accrual  period  is no  longer  than  one year and  each  scheduled  payment  of
principal or interest occurs at the end of an accrual period or on the first day
of an accrual period.  The adjusted issue price of the Debenture at the start of
any accrual period is the issue price of the Debenture  increased by the accrued
original issue discount for each prior accrual  period.  Under these rules,  you
will have to include in gross income  increasingly  greater  amounts of original
issue discount in each successive  accrual period. Any amount included in income
as original issue discount will increase your tax basis in the Debenture.

    We will be required to furnish annually to the Internal Revenue Service (the
"IRS") and to certain noncorporate  holders information  regarding the amount of
the original issue discount attributable to that year.

    Original  issue  discount  accrued  with  respect  to your  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 from 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 DEBENTURES

    Except  as  described  below,  upon  the  sale  or  other  disposition  of a
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 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 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
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  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
pursuant  to our or your  optional  redemption  right  or  right  to  convert  a
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 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 Debenture and your tax basis in the Debenture.
Any gain  recognized  will  generally  be capital  gain,  and will be  long-term
capital  gain if the  tendered  Debenture  has been held for more than one year.
Your tax  basis in any  common  shares  received  in  exchange  for a  Debenture
(including any fractional shares for which cash is received) will be the same as
your tax basis in the  Debenture  tendered to us in  exchange,  decreased by the
amount of any cash  received in exchange for the  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
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 Debenture  or upon a tender of a 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 Debentures,
the conversion rate of the Debentures is increased,  such increase may be deemed
to be the payment of a constructive  dividend to holders of the 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

                                       44



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 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, a U.S. holder
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  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 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 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  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:

                                       45



    o   fails to provide an accurate taxpayer identification number,

    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.

TAX EVENT

    The  modification  of the terms of the Debentures by us upon a Tax Event, as
described in  "Description of  Debentures--Optional  Conversion to Full Cash Pay
Debentures  Upon a Tax Event",  could alter the timing of income  recognition by
you with  respect to the  semi-annual  payments of interest due after the option
exercise date.


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 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  Debentures  and will hold Inco common shares
acquired in respect of the  Debentures  as capital  property and does not use or
hold and is not deemed to use or hold the  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  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
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 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 DEBENTURES

    Under the Canadian Tax Act, the payment to a Non-Canadian  holder by Inco of
interest  or the  amount  owing at  maturity,  on the  redemption,  purchase  or
conversion of a 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 Debentures  unless the Debenture
constitutes  "taxable Canadian property" to the Non-Canadian holder. A 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

                                       46



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


                              PLAN OF DISTRIBUTION

    The  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 Debentures or underlying
shares in Ontario or any other province or territory of Canada.

    The  holders of the  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 amount payable at maturity of 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 amount  payable at maturity of Debentures
held by such Electing  Holder shall  thereafter be reduced to the extent of such
sales.  All of the Debentures held by the Electing  Holders were either acquired
by them upon the issuance of the  Debentures on March 7, 2003 or March 18, 2003,
or in subsequent transactions thereafter.

    We are registering the 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;

                                       47



    o   varying prices determined at the time of sale; or

    o   negotiated prices.

     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   Debentures  for  trading  on  any  national   securities   exchange.
Accordingly,  no  assurance  can be given as to the  development  of any trading
market  for  the  Debentures.   See  Risk  Factors  -  Trading  Market  for  the
Debentures".

     In  order  to  comply  with  the  securities  laws of  certain  states,  if
applicable,   the  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 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 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 DEBENTURES

    The validity of the 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.

                                       48



                                     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 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.


                             ADDITIONAL 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 us 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 Debentures and the Subordinated 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
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

                                       49



Office of the  Secretary,  Inco  Limited,  145 King  Street  West,  Suite  1500,
Toronto, Ontario, M5H 4B7, telephone (416) 361-7511.


                      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.










                                       50




                                   SCHEDULE A
                            LIST OF ELECTING HOLDERS


NAME OF SELLING SECURITYHOLDER                        AMOUNT PAYABLE AT MATURITY
------------------------------                        --------------------------
AIG / National Union Fire Insurance                                  $   450,000
AIG DKR Soundshore Opportunity Holding Fund Ltd.                     $ 2,500,000
Advisory Convertible Arbitrage Fund (I) L.P.                         $ 1,000,000
Aloha Airlines Non-Pilots Pension Trust                              $    90,000
Aloha Pilots Retirement Trust                                        $    50,000
American Fidelity Assurance Company                                  $   450,000
Attorneys Title Insurance Fund                                       $   120,000
B.G.I. Global Investors                                              $   324,000
Bay County PERS                                                      $   125,000
Bear, Stearns & Co. Inc.                                             $ 1,000,000
Blue Cross Blue Shield of Delaware, Inc.                             $   130,000
BTES - Convertible ARB                                               $   200,000
BTOP Growth vs Value                                                 $   800,000
C & H Sugar Company Inc.                                             $   120,000
CALAMOS(R) Market Neutral Fund -
    CALAMOS(R) Investment Trust                                      $10,000,000
CareFirst BlueChoice, Inc.                                           $   130,000
CareFirst of Maryland, Inc.                                          $   360,000
CEMEX Pension Plan                                                   $   140,000
Citigroup Global Markets Inc.                                        $ 9,510,000
Consulting Group Capital Markets Funds                               $   900,000
Continental Casualty Company                                         $ 3,000,000
Credit Suisse First Boston LLC                                       $ 1,250,000
DaimlerChrsyler Corp. Emp. #1 Pension Plan                           $ 1,890,000
Drury University                                                     $    20,000
FreeState Health Plan, Inc.                                          $    70,000
Forest Fulcrum Fund L.L.P.                                           $   966,000
Forest Global Convertible Fund Series A-5                            $ 3,687,000
Forest Multi-Strategy Master Fund SPC                                $   403,000
Franklin and Marshall College                                        $   115,000
Gaia Offshore Master Fund Ltd.                                       $ 4,750,000
Gasner Investors Holdings Ltd.                                       $ 2,500,000
Greek Catholic Union of the USA                                      $    60,000
Group Hospitalization and Medical Services, Inc.                     $   390,000
JP Morgan Securities Inc.                                            $ 7,500,000
Jackson County Employees' Retirement System                          $   245,000
Hawaiian Airlines Employees Pension Plan -  IAM                      $    35,000
Hawaiian Airlines Pension Plan for Salaried Employees                $     5,000
Hawaiian Airlines Pilots Retirement Plan                             $    85,000
HealthNow New York, Inc.                                             $   220,000
Hillbloom Foundation                                                 $    40,000

Louisiana CCRF                                                       $   180,000
Lyxor/Gaia II Fund Ltd.                                              $ 1,350,000
Lyxor Master Fund                                                    $ 1,934,000
McMahan Securities Co. L.P.                                          $   500,000
NORCAL Mutual Insurance Company                                      $   140,000
Physicians' Reciprocal Insurers Account #7                           $ 1,350,000


                                       51



NAME OF SELLING SECURITYHOLDER                        AMOUNT PAYABLE AT MATURITY
------------------------------                        --------------------------
Plexus Fund Ltd.                                                     $10,500,000
Quest Global Convertible Master Fund, Ltd.                           $ 1,000,000
R.B.C. Alternative Assets L.P.                                       $   308,000
Relay 11 Holdings                                                    $   150,000
Southern Farm Bureau Life Insurance                                  $   755,000
Southern Farm Bureau Life Insurance Company                          $ 1,100,000
Sphinx Convertible Arbitrage                                         $    79,000
State of Oregon / SAIF Corporation                                   $ 2,925,000
State Street Bank Custodian for GE Pension Trust                     $   995,000
Sunrise Partners Limited Partnership                                 $ 2,000,000
The California Wellness Foundation                                   $   425,000
The Cockrell Foundation                                              $    80,000
The Northwestern Mutual Life Insurance
   Company - General Account                                         $ 4,750,000
The Northwestern Mutual Life Insurance
   Company - Group Annuity Separate Account                          $   250,000
Thrivent Financial for Lutherans                                     $ 1,500,000
Topanga XI Inc.                                                      $ 1,400,000
Union Carbide Retirement Account                                     $ 1,275,000
White River Securities L.L.C.                                        $ 1,000,000
Zurich Master Hedge Fund                                             $   505,000

                                       52



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

                                  $272,679,000




                                  INCO LIMITED



                         CONVERTIBLE DEBENTURES DUE 2023






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

                              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)