Mining sector attractive for investment, Susilo says

Mining sector attractive for investment, Susilo says

Leony Aurora, The Jakarta Post, Pomalaa, Southeast Sulawesi

Investors should not feel discouraged from entering the mining
sector amid the current high global oil prices, which is pushing
up production costs, President Susilo Bambang Yudhoyono says.

The high oil prices will in time bring a new equilibrium to
the global economy, the President said after officiating two
ferronickel projects of state mining firm PT Antam and the local
unit of the world's second largest miner Inco Ltd. worth a total
US$600 million in Southeast Sulawesi and South Sulawesi.

"There is increasing demand for nickel as there are more
industries using this metal," said Susilo in Antam's mining
complex in Pomalaa, Southeast Sulawesi, on Monday.

"We invite investors, both local and foreign, to come into the
sector, even though the global economy will slow down due to the
soaring oil prices," he added.

The President officiated a 102-megawatt (MW) power plant,
which is constructed to supply electricity for Antam's FeNi I,
FeNi II, and FeNi III smelters.

The combined-cycle plant will use marine fuel oil before gas
can be provided by PT Medco Energi Internasional's Senoro field
in Central Sulawesi.

With a secure electricity supply, Antam will be ready to
operate its FeNi III smelter, which will start processing ore in
early 2006. The new smelter will more than double Antam's total
capacity from 11,000 tons per year to 26,000 tons annually, the
company said in a statement.

Antam spent a total of $320 million for the power plant and
the smelter.

Aside from the new power plant, the President also launched
Inco's project to boost production of nickel in matte from 160
million pounds annually to 200 million pounds per year.

The project, worth $280 million, will include the construction
of a 90-MW hydropower plant in Karebbe in Sorowako, South
Sulawesi.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro
said the government and Inco had agreed on additional benefits
for the higher supply. Inco would give higher royalties for the
additional production, he said, without mentioning details.

Inco will also spend more on community development projects
and build a 80-kilometer road connecting Bahodopi, where it holds
concession rights, in Central Sulawesi to Sorowako.

The price of metals has continued to rise this year, following
a strong surge in 2004. As of the first semester however, the
company's sales fell 2 percent as a smelter breakdown cut nickel
output.

Sales fell to Rp 714.62 billion (US$72.8 million) in the three
months ending on June 30. Sales of ferronickel and nickel ore
contributed 72 percent of revenue.
Antam booked Rp 195.6 billion ($20 million) in net profit in the
first quarter of 2005, a 33.15 percent increase from Rp 146.9
billion recorded in the same period last year.

The government owns a 65 percent stake in Antam while the
public controls the rest.

Inco has reported a 13 percent rise in unaudited net profit in
the year's first semester to $141.9 million from $126 million
booked in the previous year on strong global prices.