PT Inco cuts nickel output on power supply problemsBy: Lawrence...

PT Inco cuts nickel output on power supply problems
By: Lawrence Williams
Posted: '04-JAN-07 09:00' GMT © Mineweb 1997-2006



LONDON (Mineweb.com) --While copper prices took a plunge on the exchanges yesterday, nickel, which remains in short supply worldwide, remained in relatively good shape and the latest news from Indonesian miner PT Inco can only add to the current supply deficit – albeit it is not certain for how long.

The PT Inco operations in Sorowako in Indonesia rely on hydro-electric power, and poor rainfall has reduced generation capacity to the extent that the company has been forced to cut back production by around 130 tonnes of nickel in matte a week – or about 9.5 percent of planned output. Mine production itself is so far unaffected with the company stockpiling ore to narrow the gap, but if the dry weather continues there will be a further adverse impact on supplies.

With LME warehouse stocks down to about 1 day’s supply, even a small disruption on this scale can have an impact and with continuing industrial problems in New Caledonia and delays in bringing new laterite operations and plant on stream – particularly in New Caledonia and Australia – the market will remain tight for the foreseeable future.

PT Inco was expected to produce 71,000 tonnes of nickel contained in matte from its integrated Indonesian lateritic mining operations and smelter this year. While the power shortfall has come too late in the year to have a significant impact on 2006 output, it could affect 2007 figures if it is prolonged.