Drought to lower Inco's production this year

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)