Inco Pushes Back Date of Completion For Karebbe

The Jakarta Globe, Yessar Rosendar, February 25, 2009

Nickel miner PT International Nickel Indonesia Tbk, or Inco, aims to finish developing the $285 million Karebbe hydroelectric power project in South Sulawesi Province in early 2011 instead of its initial target of mid-2010, due to delays in obtaining approval from the Ministry of Forestry, a company official said on Tuesday. 

Arif S. Siregar, Inco’s chief executive, told the House of Representatives’ Commission VII, which oversees the energy sector, that the company has now finalized building designs and secured the government permits required to proceed with construction — including approval from forestry officials. 

He said, however, that the budget for the Karebbe project had expanded due to the construction delays. 

“We’ll start dam construction [related to the Karebbe plant] after May,” Arif said. “Our [capital expenditures] this year are set at just over $200 million. A portion of this will be used to develop Karebbe.” 

The new hydroelectric plant will have a capacity of 90 megawatts per hour, expanding Inco’s hydroelectric generation capacity to 365 MWH. 

The company said earlier that its annual nickel output would increase by 20 percent once the Karebbe plant is completed. 

Inco’s nickel production fell 5.6 percent last year, to 72,400 metric tons from 76,500 metric tons in 2007, below its 2008 target of between 77,000 and 79,000 metric tons. 

Falling nickel prices pushed Inco’s sales down to $1.31 billion last year, from $2.33 million in 2007. As a result, its 2008 net profit fell significantly to $359.3 million from $1.17 million the year before. 

Arif said nickel production fell partly due to a management move in October to improve profitability in the face of declining nickel prices and rising energy costs by turning off all thermal power generators in favor of lower-cost hydroelectric power. 

Inco’s nickel mining operations are currently located in Sorowako, South Sulawesi. The company has predicted that its current nickel reserves, estimated at 80 million tons, could support its operations for the next 30 years. 

Its reserves could rise further due to exploration plans in Bahodopi, in Central Sulawesi Province, and Pomala, in Southeast Sulawesi Province, as well as sites near Sorowako.