Inco shareholders agree on stock split plan

The Jakarta Post, Jakarta

A meeting of the shareholders of mining company PT International Nickel Indonesia (PT Inco) has approved the company's plan for a stock split to boost the trading of its shares on the stock market.

Inco's president Bing R. Tobing said that under the stock split plan, which is due to take effect in August, the company would split each existing share into four.

"Analysts have recommended the stock split because the value of Inco's shares on the market has been too high. It is expected that the split will change shareholder composition as it should attract more individual investors to become shareholders," Bing said in a media briefing on Tuesday.

The firm, controlled by Canadian mining giant Inco, now has 248.4 million shares, or 20.09 percent of its total shares, held by public investors. Institutions make up 80 percent of these public investors, while the remaining 20 percent of shares are held by individuals

Following the stock split, the face value of the firm's shares will drop from Rp 1,000 to Rp 250.

Inco's shares were up 6.5 percent at Rp 36,400 on Tuesday.

Bing added that the company had not opted for a bigger stock split to prevent the share price from going too low.

Bing said the company was increasing the capacity of its smelting plant from the existing 150 million pounds of nickel in matte to 200 million pounds this year. The firm operates a giant nickel mine in Soroako, South Sulawesi.

To boost its capacity, Inco is studying the possibility of building a third hydropower plant with a capacity of between 90 and 100 megawatts (MW) to increase production 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.

"A one dollar increase in crude oil prices adds 2 U.S. cents to our unit cash cost," Bing said.

The company now has two hydropower plants, called Larona and Balambano, with capacities of 110 MW and 165 MW respectively.