Inco to boost output by 25% in 2009

Fabiola Desy Unidjaja The Jakarta Post/ Jakarta

Publicly listed PT International Nickel Indonesia (Inco), a local subsidiary of the world's second largest nickel company Canada- based Inco Ltd., said it would boost its output by 25 percent in 2009 and set up the necessary infrastructure to support it.

Company president Bing Tobing told a press briefing on Monday that the firm was in the process of building a new hydropower plant in South Sulawesi to help raise the output capacity of its giant nickel mine to 200 million pounds of nickel matte by 2009.

Inco, which operates a nickel mine in Soroako, South Sulawesi, produced about 160 million pounds of nickel in matte last year.

"The new plant will increase the power generating capacity by 90 megawatts and reduce the company's energy supply risk in the dry season," Bing announced.

Bing said the new plant would be worth US$150 million in new investment and would become the company's third plant, which would in total be able to generate power of up to 275 megawatts.

The company has been operating in the country since 1968 and has invested some US$2.4 billion.

"This is a show of commitment from our company to stay here in Indonesia and continue to increase our presence here in the country," a media statement quoted Bing as saying.

Inco has benefited from the recent surge in global nickel prices. Last year alone, the price skyrocketed to a 14-year high, driven mainly by growing demand from producers of stainless steel and other alloys in China and the U.S.

The company's realized price for nickel in matte averaged $10,916 per ton as of the third quarter last year, as compared to $7,037 in the corresponding period the year before.

Under the company's dollar-denominated long-term contracts, the selling price of its nickel in matte is determined by price movements on the London Metal Exchange.

On another matter, Bing said that in a show of solidarity to the victims of tsunami disaster, the company had donated some Rp 7 billion for the relief operation in Aceh and North Sumatra.