Dry weather has forced Companhia Vale do Rio Doce (RIO-N) subsidiary CVRD Inco to cut weekly nickel output by about 130 tonnes at its Indonesia unit because the reservoir levels at its hydroelectric power plant are too low.
International Nickel Indonesia (PT Inco) announced in mid-December that it would need to cut back on production unless there was significant rainfall. Rainfall had been lower than average since October, and the rainy season, which usually runs from December through March, has gotten off to a late start.
“Production cuts came three to four days earlier than we had predicted,” Inco spokesperson Rajeshnagara Sutedja told Reuters.
PT Inco produces between 1,400 and 1,500 tonnes of nickel-in-matte each week. Nickel-in-matte is an intermediate smelter product that must be further refined to make pure metal.
With the slowdown in production, the company was shy of its 2006 target of 71,000 tonnes, but it was able to narrow the gap with its stockpile of unprocessed nickel ore.
PT Inco will do maintenance activities originally scheduled for a planned shutdown at the end of the first quarter to lessen the impact of the production slowdown. If the lack of rainfall continues, the company could have to make more significant production cuts.
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