PT INCO advances production shutdown

South Sulawesi based nickel miner PT International Nickel Indonesia Tbk (PT Inco) on Monday announced that it has advanced its planned rebuild of Furnace No. 3 and several associated maintenance projects but remains on target to produce 130 million pounds of nickel in 2002.

The rescheduling was prompted by a leak in the seven-kilometer, pre-cast concrete canal conveying water from the Larona dam to the head pond supplying the upper Larona Generating Station. The canal was shut down on September 26 for a seven-day period. At the same time, other planned repair work scheduled for the 2002 fourth quarter was moved forward in order to offset the production impact of the canal rapair.

PT Inco had intended to shut down the canal for one week in the fourth quarter of this year for routine inspection and repairs, in conjunction with the planned Furnace No3 rebuild. However, subsidence in the soil under one of the pre-cast sections resulted in a small crack in the base of the canal. Water leakage could cause further subsidence to the underlying soil.

The company had previously announced that its 2002 production plan involved shutdown of Furnace No3 for a major rebuild starting October 1, 2002. Furnaces are routinely rebuilt after about 10 years of operation. A rebuild usually takes about four months, followed by a one month refractory curing and heat up period. Furnace No3 was last rebuilt in 1991. In order to minimize the overall impact on production, other repair work that would otherwise impact production is routinely scheduled at the same time as furnace rebuilds.

?It is fortunate that we had planned a shutdown to rebuild Furnace No3, reline Reduction Kiln No4, replace one of the upper Larona generators, inspect and repair the canal and carry out a number of smaller but critical maintenance projects. Repairing this canal leak will only impact 2002 production by about 0.5 million pounds and we still expect to meet our 2002 target of 130 million pounds of nickel. It will not significantly impact our business results, or our ability to make the next repayment on long-term loans,? said Edward W Hodkin, president and chief executive officer. ?In fact, during the four-to-seven day canal repair period, water is rerouted around the canal and Upper Larona Generating Station to the Balambano Generating Station, located further downstream, enabling us to operate at about 40 percent of capacity.? (*)