Government may double PT Inco's royalty payment

The overnment will likely double the royalty payment of the Central Sulawesi-based nickel producer PT International Nickel Indonesia (INCO) in the company's new contract that will begin effective in 2008, Bisnis Indonesia reported on Thursday.

Director General of Geology and Mineral Resources at the Ministry of Energy and Mineral Resources, Simon F. Sembiring said in Jakarta on Wednesday that under the extended contract, the royalty that to be paid by Inco will be based on a progressive rate.

"If the price of nickel reaches a certain level, PT Inco has, for example, to double its royalty payment," he was quoted as saying. In addition, to royalty payment, the government was also evaluating the company's community development program and its power generating capacity as part of the renewal of its contract.

Simon said that under the existing contract which will expire in 2008, the amount of the royalty that has to be paid by Inco is 0.015 percent of the company's sales turnover.

Inco plans to expand its nickel mining areas in Soroako, Pomallaa and Bahudopi beginning 2009 in order to increase its nickel production to 200 million tons from about 160 million tons this year.(*)