PT. Inco sets production record

Nickel miner Inco Limited reported on Tuesday that its Indonesian subsidiary PT.Inco produced 168 million pounds of nickel-in-matte in 2005 or the highest production in history, up from 159 million pounds produced in the previous year.

The company said that in 2006, PT. Inco was targeted to produce 167 million pounds of nickel-in-matte.

The company said in 2005 PT. Inco was faced with steep price increase of high sulphur fuel oil and diesel. The company did not give detail.

Inco CEO Peter Jones in a speech released Tuesday said that PT Inco?s mine productivity rose 21% from 2002 levels to 53 tonnes of ore per work shift. In 2006, PT Inco aims for 56 tonnes per work shift.

Peter Jones said the company?s plan to expand by building another dam and power plant unit at the mine might be delayed from original completion schedule of 2008 due to forestry permit problems. Company presentation showed that PT.Inco would spend US$244 million in 5 years until 2010 for the expansion.

?The new dam and power plant will give us another 90 megawatts per year of hydropower and allow us to raise production, lower annual cash costs by $0.10- to-$0.15 a pound and cut energy supply risk,? Jones said.

?We?re optimizing oil consumption, using fuels more efficiently ? and investigating substituting pulverized coal for HSFO in our kilns and dryers. Given commodity prices, this could yield operating cost savings of $0.15-to-$0.20 cents a pound. We?re working to reduce commodity price impacts. We?re improving roads to extend tire life and lower fuel use, and we?ve secured our tire needs well into 2007; by then the shortage should have eased,? he added.

Jones reported that in 2005, Inco?s new mining area of Petea supplied 2.7 million wet metric tonnes of ore. In June, under an agreement with PT Aneka Tambang, PT.Inco started sending about one million tonnes of nickel ore per year to its smelter from Pomalaa deposit.

?Depending on technical and economic viability, sites in our Contract of Work area at Bahodopi and Pomalaa could support two projects, each producing more than 100 million pounds of nickel a year. A hydromet plant to treat limonitic ore in Sorowako could produce another 50 million pounds of nickel a year,? he said.

Inco has 60 percent shares in PT. Inco. (alex)