Inco to save fuel costs of up to $13 million

The management of nickel miner PT International Nickel Indonesia Tbk (Inco) has projected to save fuel costs of up to US$13 million in year 2001 following the operation of hydropower Balambano .

Inco president and chief operating officer Rumengan Musu said his company had been spending a lot of funds for fuel, accounting for 40 percent of all of the company's spending.

He noted that Inco's fuel costs soared 60 percent following the increase of crude oil prices in the world market from only US$15 per barrel last year to US$25 per barrel.

According to Musu, every increase of US$1 per barrel of crude oil, it would push up the company's production costs by 2 U.S. cents per pound of nickel.

To protect itself from crude oil prices fluctuation, the company hedged its crude oil prices at US$20.56 per barrel. And 10 percent of the company's fuel needs for 2001 had been hedged at US$18.25 per barrel.

The company booked a net profit of $8.9 million in the first quarter of this year, falling from $18.1 million recorded in the same period of last year. Net profit per share also dropped to 4 U.S. cents from 7 U.S. cents.

The drop in the net profit was sparked by the fall in nickel prices in the world market.

Musu said the company would be more careful in using its cash flow as it was still burdened with debts, including $32.9 million of long-term debt, $6.1 million of subordination debt from parent company and interest charges of $16.7 million.

Inco has been delisted from the Surabaya Stock Exchange since may 16, 2001. (*)