Inco 3Q net profit drops by 16.8%
The Jakarta Post, Jakarta
Despite higher world prices, mining company PT International Nickel Indonesia -- a local unit of the world's second-biggest nickel miner, Inco Ltd. -- has reported 16.8 percent lower profit in the third quarter due to lower output.
Inco posted a US$73.2 million net profit during the July- September period, lower than the $87.9 million it reported for the same period last year, the miner said on Wednesday in a statement.
Company sales also dropped by 5 percent from $232.8 million in the third quarter of 2004 to $219.4 million in 2005.
Nickel in matte production in the third quarter fell to 19,646 tons (43.3 million pounds) this year, from 20,104 tons in 2004.
The declines countered the rise in the commodity's average realized price to $11,882 per ton in the third quarter of 2005 from $10,916 per ton for the same period last year.
The price rise in the international market was driven largely by growing demand from producers of stainless steel and other alloys in China and the U.S.
Accumulatively, Inco's net profit in the nine months of 2005 also fell by 4 percent to $215.1 million, from $224.1 million in 2004, although sales had risen by 8.6 percent from $601.8 million in 2004 to $653.7 million as of September.
The company remains optimistic that it would reach its 2005 target of 160 million pounds of nickel in matte produced.
The Sulawesi-based nickel producer pledged to continue to raise its annual production capacity to 200 million pounds of nickel in matte by 2009.
To support these efforts, it plans to build a 90-megawatt hydropower plant and dam in Karebbe, Southeast Sulawesi. The four-year construction project is estimated to cost up to $280 million, but it has yet to meet the government's approval over royalty issues.
The government has insisted Inco double its royalties for the additional dam if it wants its permit renewed.
At present the company pays the government 1.5 U.S. cents in royalty for every kilogram of nickel sold.
Currently, the miner operates a giant nickel mine in Sorowako of Southeast Sulawesi with two dams to support the existing production process.