INCO estimates nickel output at 130 million pounds in 2002

Publicly listed PT International Nickel Indonesia (INCO), a subsidiary of Canada?s Inco Limited, said on Tuesday it expects its nickel output to total 130 million pounds this year, AFX-Asia news agency reported.

The company will rebuild a furnace beginning in the fourth quarter of this year, which will likely offset any improvements in mining and processing. The furnace rebuilding is planned for completion in the first quarter of 2003, INCO president and chief executive officer Edward Hodkin said in a public expose meeting.

?We are moving this rebuilding forward from 2003 so that we will be ready to operate at maximum capacity when the balance between nickel supply and demand tightens,? Hodkin said.

Hodkin said as part of efforts to offset higher fuel prices, which accounted for 45 percent of INCO?s total cash costs in 2001, the company is implementing oil swap contracts at US$18.30 per barrel for 2002, and at $18 per barrel for about 20 percent of the oil needs projected for 2003.

He added INCO?s total long-term debt declined from $423 million at year-end 2000 to $346 million at the end of 2001, and has since dropped further to $308 million as of March 31,2002.

Inco?s capital spending fell to about $29 million in 2001 while its 2002 capital plan involves mostly sustaining capital and totals about $47 million, Hodkin said.

Hodkin said INCO recorded a sharp year-on-year fall in net profit for the three months to March due to lower realized nickel prices, although the nickel price has risen from the previous quarter.

Net profit in the first quarter fell to $1.594 from $8.929 million a year earlier, while sales amounted to $71.444 million, down from $85.599 million.

Hodkin however declined to give any projections for INCO?s net profit and sales this year given the volatility of nickel prices, but said the company will focus on low-cost production. (*)