Govt extends Inco's contract for nickel mining

Govt extends Inco's contract for nickel mining

JAKARTA (JP): The government yesterday extended the contract of PT International Nickel Indonesia (Inco) for its nickel mine in Soroako, southern Sulawesi, for another 30 years to the year 2025.

The extension agreement was signed here by Minister of Mines and Energy I.B. Sudjana and Inco's chief commissioner, Scott M. Hand, who is also president of Inco Limited of Canada.

"We will expand our annual production capacity by 50 percent from 100 million pounds (45,000 tons) of nickel in matte at present to 150 million pounds in 1998 with an additional investment of US$1.5 billion," Hand told reporters after the signing ceremony.

He said the additional investment will be spent for the expansion of Soroako mines and the development of new mines in Bahudopi, Central Sulawesi, and in Pomalaa, Southeast Sulawesi, and for the construction of basic infrastructure.

Inco will expand its hydro power plant in Soroako and will build a new one at Pomalaa to support its production expansion, he added.

Inco, which is 58.7 percent owned by Inco Limited and 27.4 percent by Sumitomo of Japan, floated a portion of its shares on the Jakarta and Surabaya stock exchanges in 1990.

The mining company, which currently has a concession area of 218,530 hectares in Soroako, had invested $1.4 billion as of 1994.

Meanwhile, Sudjana said the government expects to earn Rp 444.4 billion ($193.2 million) from royalties after the extension of the working contract, while the South Sulawesi administration will earn Rp 137.45 billion.

He said the annual concession fee from the concession area will increase from $1 per hectare to $1.50 per hectare after the extension of the contract.

He added Inco is required to build an 80-kilometer road from Bahudopi to Soroako and pay contributions of $3 million each to the administrations of South, Central and Southeast Sulawesi. (04)