P.T. Inco reduces production forecast by 10 million pounds

P.T. Inco, Inco’s (TSE) Indonesian arm, has reduced its nickel production forecast by 10 million lb. This year, the company expects operations in Soroako, Sulawezi to produce 70 million lb. (31,800 tonnes) of nickel in matte, instead of the original estimate of 80 million lb. (36,300 tonnes).

Inco says failures of the refractory brick linings in the reduction kilns have reduced throughput at the processing plant. In addition, scheduled expansion has been delayed until the beginning of 1991, and the supplementary power required to increase production rates will not be available before 1992.

To provide extra power, an outside consultant has recommended that P.T. Inco rebuild its boiler which could take up to 18 months at a cost of about US$7 million. Without this supplementary power source, 1991 production will be limited to 80 million lb., Inco said.

The reduced production levels will affect dividend payouts. Based on the assumption that the average nickel price would remain at $3.72 per lb. (the average price in the first five months of 1990) for the rest of the year, a spokesman for P.T Inco estimates that the total amount of dividends paid out in 1990 will approximate $125 million (50 cents per share). This is down from the May estimate of $160 million (64 cents per share), when the company still expected to reach targeted production.