Inco cuts output but not growth

UJUNGPANDANG, South Sulawesi (JP): PT International Nickel Indonesia (Inco) has cut production of its nickel in matte by 30 percent to 70 million pounds (31.8 million kilograms) per annum due to the commodity's falling international price.

Inco president Rumengan Musu said here on Tuesday that the international price of nickel had dropped from US$2.50 per pound a year ago to $1.85 per pound now.

"Production cuts have resulted in falling income. However, we still managed to book profits, although not so big," Musu said.

Inco booked unaudited earnings of $10.7 million for the first half of 1998, compared to $17 million for the same period of last year.

Inco recorded a net profit of US$24.3 million last year, from the sales of 67 million pounds of nickel out of the 71 million pounds it produced the whole year.

The company has said that production was constrained by the availability of electric power.

Despite production cuts, Inco is still to go ahead with its $580-million expansion program to increase its production capacity at its smelting facility in Soroako from the current 100 million pounds of nickel per annum to 150 million pounds.

The project includes a 93 mega watt power plant to supply the badly needed electricity to the expanded nickel smelting facility.

Musu said the expansion project was scheduled to be completed by mid-1999. Technically, therefore, the company could push its production to 150 million pounds per annum by 2000.

"This expansion here is a long-term project, and therefore, we are continuing to build it despite the falling price of nickel on the international market," Musu said.

Inco, founded by Indo Ltd of Canada and six Japanese firms in 1968, is listed on the Jakarta Stock Exchange. (37)