PT.Inco reports higher 9-month production, warns possible 2005 production decrease
Wednesday, October 20 2004 - 02:26 AM WIB
The company, however, warned that production might fall short of expectation in 2005 due to prolonged drought in its mine concession.
?During the third quarter of 2004, lower rainfall in the area of PT Inco's operations has reduced water inflow to the dam reservoirs for PT Inco's hydroelectric facilities. If rainfall were to continue in 2005 at the levels recently experienced, this development could reduce hydroelectric power generation and, accordingly, adversely affect PT Inco's production for 2005,? the company said in a statement.
The company said water inflow dropped off sharply in the third quarter to about 40% of normal level and they are about 77% of normal year-to-date, with primary reservoir level is now about 0.5 meters below normal.
?Last month, rainfall levels were 53% of normal and we hope for recovery as we move into the rainy season next month. Meanwhile, we have risk mitigation plans in place to carry us through the next couple of years. For example, we?ve started to widen and deepen a channel to improve water flow to one of our dams, and we are obtaining permits for cloud seeding to increase rainfall,? said the company.
PT. Inco is planning to raise hydroelectric capacity by 90 megawatts to 365 megawatts at a capital cost of about $150 million, which would enable it to raise annual production by 25 percent to about 200 million pounds of nickel in matte by 2009 and cut unit cost by about 7%, or $0.10-to-$0.15 a pound, from the forecast 2004 level of about $1.65-to-$1.70 a pound.
PT.Inco is expected to experince higher cash cost in 2004 due to higher oil price. PT.Inco is currently using about 3.4 million barrels of oil a year ? and a daily average of
275 megawatts of hydroelectric power, at a cost of less than $0.005 per kilowatt-hour ? to produce 160 million pounds of nickel in matte.
Inco limited has 61 percent stake at JSX-listed PT. Inco. (alex)