Hendarsyah Tarmizi

Hendarsyah Tarmizi
The Jakarta Post
Jakarta

Indonesia's major nickel, gold and copper mining companies are
mostly performing well, despite the downward trend in the
country's mineral production.

PT International Nickel Indonesia (Inco), PT Antam, PT Newmont
Nusa Tenggara and PT Freeport Indonesia reported relatively good
results in 2003, although they said the poor investment climate
in the mining sector continued to hamper their mining operations.

In 2003, Inco, for example, booked a triple increase in its
net earnings to US$104.2 million from $30.3 million in 2002,
thanks to an increase both in nickel price and production.

The company produced 155 million pounds of nickel in matte
(70,200 tons) in 2003, an 18 percent increase from 13.21 million
pounds in 2002.

"Our annual production of 155 million pounds of nickel in
matte was the highest in history and substantially above our
initial goal of 140 million pounds for 2003," said Bing R.
Robing, the company's president and chief executive officer.

Inco's realized price for nickel in matte averaged $7,117 per
ton ($3.23 per pound) in 2003, up from $5,114 per ton ($2.32 per
pound) in 2002.

Inco's senior supervisor for government relations and public
affairs, Rajeshanagara Sutedja, said the company expected to
increase nickel production to 160 million pounds this year to
take advantage of higher nickel prices in the world's metal
market.

Rajeshanagara is upbeat the increase in the price of nickel
will continue this year in line with an expected worldwide
increase in demand.

"Power supply remains the bottleneck in our operation. With
more power, we could produce more nickel in matte," he said,
adding that in cooperation with its Canada-based parent company
Inco Ltd., Inco was now improving the power system in order to
get an additional power supply of 10 megawatts by later this
year.

Like Inco, diversified mining company PT Antam also reported
good result in 2003.

Antam, which produces nickel, gold, silver, bauxite and iron
sands, reported a consolidated operating profit (unaudited) of Rp
468 billion (about $55 million) in 2003, 66 percent higher than
the previous corresponding year due mainly to increased revenue
resulting from higher gold and nickel prices.

Gold prices rose 17 percent in 2003 while the prices of
nickel, saprolite nickel ore and limonite nickel rose 37 percent,
30 percent and 82 percent respectively during the year.

In 2003, Antam's gold production reached 4,176 kg, exceeding
the company's target of 4,100 kg, while silver production rose 12
percent to 28,570 kg over 2002.

The company's production of contained nickel in ferronickel
totaled 8,933 tons in 2003, below its target of 10,000 tons.

For nickel ore, Antam largely met its internal target. In
2003, the company produced 3.3 million wmt (wet metric ton) of
saprolite and 1.1 million wmt of limonite.

"In 2004, however, you should expect to see decreased
ferronickel production and sales as we conduct the necessary full
overhaul of the FeNi II smelting plant. For other commodities, we
expect stable production and sales," Antam investor relations
director Eko Indrawan told The Jakarta Post.

PT Newmont Nusa Tenggara (NNT), which operates the Batu Hijau
gold and copper mine in West Nusa Tenggara, expects increased
production within the next few years in line with the company's
commitment to improving its operations in the area.

In 2003, Newmont produced 610,000 million pounds of copper and
585,000 ounces of gold at the Batu Hijau mine, one of the
youngest gold and copper mines in the country. The copper
production in 2003 is slightly lower than 657 million pounds in
2002 but the gold production is higher than 492,516 ounces in
2002.

"With continued improvements in operating practices, we expect
similar level of production in 2004," the company's president
director, Robert Gallagher, said.

PT NNT, which signed a fourth generation contract of work with
the Indonesian government in 1986, has indicated a major
improvement in production since the start of commercial
production at the company's Batu Hijau mine in March 2000.

By December 2003, Batu Hijau's ore reserves were one billion
tons containing 0.525 percent copper and 0.37 grams per ton gold.
At the current production rate, Batu Hijau's mine life will
continue until 2005.

The company is currently exploring other parts of its contract
of work area, such as the Elang area.

As a contractor of the government, PT NNT contributes
significantly to the nation's economy through employment,
royalties and taxes, a large part of which return to the province
of West Nusa Tenggara.

At present, PT NNT is responsible for the direct employment of
over 7,200 people, comprising 4,200 employees and 3,000 contract
employees. Of these, more than 60 percent are from the province
of West Nusa Tenggara.

The company said it also contributed about $35.90 million a
year in taxes, non-taxes and royalties to the Indonesian
government.

Gallagher said that PT NNT would continue to improve its
operations and increase production, as well as maintaining its
commitment to open, transparent and safe operations conducted in
an environmentally responsible manner that emphasizes partnership
and sustainable development of local communities.

Freeport Indonesia also reported rosy 2003 results for the
company's mining operation in Mimika, Papua. The company's
Grasberg mine and surrounding minerals complex is well known as
one of the greatest ore bodies in the world.

Freeport's senior manager for corporate communications
department, Siddharta Moersjid, said that the company's gold
sales volume increased 8 percent to 2.5 million ounces in 2003
from 2.3 million ounces in 2002 because of higher gold ore
grades, partly offset by lower mill throughput.

Copper sales, however, declined 15 percent to 1.3 billion
pounds in 2003 from 1.5 billion pounds in 2002 because of lower
copper ore grades, production and mill throughput.

"We estimate 2004 production to be 1 billion pounds of copper
and 1.5 million ounces of gold, and 2005 production to be 1.5
billion pounds of copper and 2.9 million ounces of gold," he
said.

Siddharta said that sales projections for 2004 were lower
because the change in mine sequencing to mine waste material and
low-grade ore in order to re-establish safe access to high-grade
ores after last year's slippage of material in the pit.

"This was done for the safety of our employees. Production
will rump up significantly in the second quarter and the
remainder of the year. 2005 will be very good year," he said.