Inco working contract set to be extended

Inco working contract set to be extended

JAKARTA (JP): The House of Representatives is likely to approve the plan of PT International Nickel Indonesia (Inco) to extend its working contract for coal mining in southern Sulawesi for another 30 years, House members said yesterday.

"The House may approve the contract extension in the middle of this month," Adimir Adin, a member of the House's Industry, Mines and Investment Commission, told The Jakarta Post.

Adimir, who attended a hearing between the commission and Minister of Mines and Energy I.B. Sudjana, said that the company will spend about US$1.5 billion for its expansion plan.

Inco's current working contract will expire in the year 2008.

Sudjana told the hearing that Inco, which is owned by Inco Ltd. of Canada, Sumitomo of Japan and public investors, will gradually increase its annual production capacity by 200 percent, from 100 million pounds (45,000 tons) at present to 300 million pounds to meet increasing demand for nickel on the world market.

He said Inco had invested $1.34 billion in its mines in Soroako, southern Sulawesi, as of 1994.

"The extension of the working contract will increase the government's revenues from the company's royalties and taxes," he said.

Sudjana said the government expects to earn Rp 444.4 billion ($193.2 million) from the royalties after the extension of the working contract, while the South Sulawesi administration will earn Rp 137.45 billion.

He said the concession fee from the company tax will increase from $1 per hectare to $1.50 per hectare after the extension.

Inco, which floated 20 percent of its shares on the Jakarta and Surabaya stock exchanges in 1990, currently has a concession area of 218,530 hectares in Soroako.

Sudjana said Inco would be required to build an 80-kilometer road from Bahudopi to Soroako and make an initial contribution of $3 million to the South Sulawesi administration. (04)