Stainless Steel Me

PT International Nickel Indonesia has asked the government for more time to assess plans for a new plant after a study showed the $1.8 billion project may not be feasible, the company’s chief said on Friday.

PT Inco — in which Brazil’s Vale Inco Ltd, one of the world’s top nickel producers has a 61.2 percent stake — said last year that it was considering building the new plant, with a capacity of 20,000-30,000 tonnes, near its existing plant on Sulawesi island.

But global economic weakness has slowed demand for stainless steel, leading to weaker demand for nickel and depressing prices, Arif Siregar, Inco’s president director, said.

“Looking at the economic assumptions and nickel prices, the study shows that with the current technology, the project is not feasible,” Siregar said.

Inco wants to postpone the project for another two years as it studies the feasibility, Siregar said.

Analysts have said offtake from the stainless steel industry, which accounts for around two-thirds of nickel consumption, is not expected to show signs of improvement until the end of 2009.

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Reuters