Inco's Indonesian investment to rise 27 pct in 2011

International Nickel Indonesia (Inco) will invest an estimated $232 million at its Sulawesi mines in 2011, up 27 percent from the previous year, the firm said on Wednesday.
The investment will include $120 million for sustaining capital, $97 million for growth capital and $15 million for health, safety and the environment, Inco said in an emailed statement to Reuters.

"In addition, we intend to set aside funds in our capital plan to build a road from Bahodopi to Sorowako and to develop a Bahodopi mine as part of our CoW (contract of work) undertakings," the statement added.

Inco produces nickel in matte from lateritic ores at its integrated mining and processing facilities near Sorowako on Sulawesi, where it has a contract agreement until 2025.
"It appears that (Inco) may only be able to obtain one 10-year extension, continuing its presence beyond 2025 to December 2035," the statement said.

It added that the company had set out a strategic development plan covering areas in South Sulawesi, Southeast Sulawesi and Central Sulawesi, which is being discussed with the government.

Last year, the firm produced 75,989 tonnes of nickel matte, with its entire production sold in U.S. dollars under long-term contracts for refining in Japan, its website said.
"Our nickel production in 2011 is planned to be lower than 2010, mainly due to the rebuilding of electric furnace number two," the statement added.

The company recorded total net earnings of $437.4 million in 2010, an increase of 156.7 percent from the previous year.

Inco is a unit of Brazil's Vale Inco , one of the world's top nickel producers.
Stainless steel material nickel on the London Metal Exchange ended at $27,325 a tonne on Tuesday. Source: Reuters