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.
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