PT Inco asked to pull out from South Sulawesi

The Legislative Council and provincial administration of South Sulawesi have asked major nickel mining firm PT International Nickel Indonesia Tbk (Inco) to pull out from the province for not doing enough in developing the province?s nickel mining areas, Kompas reported on Tuesday.

"Since its first operation in the province 30 years ago, Inco has failed to inject new investment. About 36,000 hectares of its concession area have become unproductive land," the chairman of the Commission B of the province, Yusmangun, said in Makasar on Monday.

He said that the provincial administration and the Legislative Council had for several times held meetings with Inco?s management to ask the company to further open up the concession areas awarded to the company.

"Inco, however, could meet the request due to financial problem. If Inco is not capable, it should surrender to its mining area to the local government," he said.

According to existing contracts, Inco, a subsidiary of a Canadian nickel giant Inco Limited, has the rights to develop nickel mining areas in South Sulawesi, Southeast Sulawesi and Central Sulawesi. In South Sulawesi, the company has concession rights covering 32,123 hectares in Bahodapi and another 4,512 hectares Kolonedele. However, from the total areas, Inco has only developed 5,000 hectares.

The local government has used part of Inco?s concession area for transmigration site because the company does not have a firm commitment to carry out exploration activities in the area. However, the company protested the use of its mining site and asked the local authority to relocate some 700 migrant families from the area.

The local government agreed and asked the company to provide about Rp 7 billion (US$=Rp9,000) to finance the relocation and to find new area. Inco agreed to finance the relocation but it only provided Rp 2.4 billion of the total funds. The financial crisis which hit the country since early 1998 has caused an increase in the relocation budget. Although Inco has spent about Rp 7 billion, the fund is no longer enough.

Inco?s president and CEO, Edward Haddkin, acknowledged that the company still suffered a shortage of funds to develop new mining projects. "For the time being, the headquarter office in Canada focused exploration activities only two countries Canada and Caledonia. The company has invested US$1.2 billion and US$1.4 billion in the two countries, respectively. (*)