Inco profit triples on higher nickel price
Inco profit triples on higher nickel price
Rendi A. Witular, Jakarta
Publicly listed PT International Nickel Indonesia (Inco), a
local subsidiary of the world's second largest Canada-based
nickel company Inco Ltd., announced that its first-half unaudited
net profit this year had more than tripled on a strong nickel
price.
Inco president director Bing R. Tobing said the company had
posted a US$126 million profit for the first half-year ending
June, up from $36.8 million for the same period last year. Sales
also jumped to $369 million from $214 million.
"Once again, strong nickel prices enhanced our earnings, as
the company's average realized price in the second quarter rose
by 52 percent from the second quarter of last year," said Bing in
a public meeting with investors on Friday.
Inco's realized price for nickel in matte averaged $10,627 per
ton or $4.82 per pound in the first semester of this year, up
sharply from $6,300 per ton, or $2.86 per pound, in the same
period last year.
Under the company's long-term U.S. dollar-denominated
contracts, the selling price of its nickel in matte is determined
by price movements on the London Metal Exchange.
The price of nickel skyrocketed to a 14-year high earlier this
year, driven mainly by growing demand from producers of stainless
steel and other alloys in China and the United States.
But the growing demand has outpaced supply, following
operation problems at several giant nickel producers.
Inco, which operates a giant nickel mine in Soroako, South
Sulawesi, produced 77.3 million pounds of nickel in the first six
months of this year, up slightly from 73.6 million a year ago.
Bing said that for this year the company planned to increase
its nickel production to 160 million pounds, to take advantage of
an expected further surge in the price of nickel.
To boost Inco's production capacity in the future, the company
was studying the possibility of building a third hydropower plant
with a capacity of between 90 and 100 megawatts (MW), he said.
The plant was expected to increase the company's production of
nickel to more than 200 million pounds in 2009, and cut fuel oil
costs.
Energy made up 35 percent of the company's costs in 2003 and
most of these costs involved the purchase of fuel oil.
Inco shares surged by Rp 850 or 2.5 percent to Rp 34,400 a
share on the Jakarta Stock Exchange on Friday following the news.
Regarding the settlement of the company's huge dollar-
denominated debts, Bing said as of June the company had reduced
its long-term debt to $154 million, from $192 million at the end
of last year. The company planned to have fully repaid its
remaining debt by March, 2006, he said.