Oct. 14 (Bloomberg) -- Every Canadian industry will be at risk of being sued if residents of Port Colborne, Ontario, win damages for losses tied to 60 years of emissions from an Inco Ltd. nickel refinery, a lawyer for the company said.

The residents sued Inco in 2001, claiming their property values were reduced by the pollution. The case was the first in Ontario to be certified as a class action against a company over long-term environmental damage.

“There isn’t a safe industry in Canada” if judges are asked “to assess liability for some historical transmission” from a plant legally permitted to operate, Alan Lenczner, a lawyer representing Inco, told Superior Court Judge Joseph Henderson in his opening statement today in Welland, Ontario.

Inco, now owned by Brazil’s Vale SA, operated the nickel refinery in Port Colborne, 145 kilometers (90 miles) south of Toronto on the shore of Lake Erie, from 1918 to 1984. The refinery spewed tons of nickel oxide into the air, contaminating properties downwind, the provincial Ministry of the Environment said in a report in September 2000.

The contaminants posed a risk to the environment and to the health of some Port Colborne residents, according to the report. Nickel oxide is classified by the Canadian government as a cancer-causing substance.

Property Values

The residents’ current lawsuit doesn’t allege they suffered harm from the nickel pollution, only that their properties didn’t appreciate in value as quickly as similar properties in neighboring cities.

The 2000 government report was widely covered in the media, deterring potential homebuyers from considering purchases in Port Colborne, Kirk Baert, a lawyer for the residents, told the judge in his opening statement yesterday.

The plaintiffs are seeking C$400 million ($389 million) in compensatory and punitive damages, plus interest.

Vale acquired Inco in 2007 for $16.7 billion and renamed the unit Vale Inco.

The Court of Appeal for Ontario overturned two lower court rulings in 2005 and allowed the group suit to go ahead. The Supreme Court of Canada declined to hear Inco’s appeal.

Inco has always complied with Ontario environmental laws and regulations, Lenczner said.

Homes in Port Colborne didn’t lose value and statistics at trial will show over certain periods of time, such as from 2000 to 2002, they appreciated faster than homes in nearby Welland, Lenczner said.

Still, it may be unfair to compare the two cities because Welland’s population is three times greater than Port Colborne’s and Port Colborne’s population has declined over a 25-year period as Inco reduced the size of the plant, cutting jobs, Lenczner said.

“There’s a real possibility we may be bringing a motion to decertify,” Lenczner told the judge.

The case is Between Ellen Smith and Inco Ltd., 12023/01, Ontario Superior Court of Justice (Welland).

To contact the reporter on this story: Joe Schneider in Toronto at jschneider5@bloomberg.net

Last Updated: October 14, 2009 15:48 EDT