Drought to lower Inco's production this year

JAKARTA (JP): Publicly listed PT International Nickel Indonesia (Inco) expects lower production this year, as a result of the country's prolonged dry spell.

Inco said production this year would range between 75 million and 80 million pounds of nickel in matte, down from 92 million pounds projected earlier.

The drought has reduced water levels in the Soroako area reservoir in South Sulawesi, where the company's operation is located and limited the amount of hydroelectric power it can generate, it said.

About 85 percent of PT Inco's power needs are supplied by its 165 megawatt capacity hydroelectric generating facility.

Inco, 59 percent owned by Inco Limited of Canada, said next year's production could also be affected if the drought continued.

The company is evaluating the technical and economic feasibility of several options designed to reduce the impact of drought on production.

The El Nino weather phenomenon, the warming of Pacific waters off South America, is believed to have caused the long dry spell in Asia and Australia.

But PT Inco said the drought would not affect its expansion project. The project is expected to raise its annual production capacity by 50 percent to 150 million pounds of nickel in matte.

The US$580 million project will start initial production late next year and full production in 2000. It will include hydroelectric facilities with the capacity to generate an additional 93 megawatts.

The expansion project is expected to raise Inco's position as a leading supplier for nickel in the Asian market, the company added. (das)