Inco sees 2011 nickel output down 6.56 pct to 71,000 tonnes

PT International Nickel Indonesia Tbk expects to produce 71.000 tones of nickel in matte this year, down 6.56 percent from 75.989 tonnes in 2010 as it shuts down one of its furnaces,said Tony Wenas, Inco's Chief Executive on late Friday.

The furnace was shut down as the company plans to rebuild the furnace which will take about 21 weeks, said Wenas, adding that the plan to rebuild the furnace is part of Inco's plan to boost production capacity.

An earthquake in February and power problem after lightning stroke its 150 kv electricity transmission in March have also contributed to the expected lower output, he added.

Inco plans to increase it's nickel output to 90.000 tonnes in the next three years and to 120.000 tones by 2016, said Wenas.

Inco, the Indonesian unit of Brazilian miner Vale, plans to rebuild one of its furnace in 2014 and add one more furnace to 5,from currently 4 furnaces.

The company plans to spend US$1.5 billion to increase production to 120.000 tonnes which include US$500 million for development of its new nickel mine Bahodopi and road construction.

"We plan to finance the project using internal funds and to do it ourselves. Multi-years capital expenditure to achieve production of 120.000 tonnes in 2016 will be US$1.5 billion," said Wenas who has just tendered his resignation as Inco's President Director last week.

The company said it has identified a successor for Wenas and the candidate will be proposed to the shareholders of the company for appointment at a general meeting of shareholders expected to be held in September 2011, the company said.

Wenas will continue to assist the company after his departure. (giok)