Indonesia Inco cuts almost 3 pct of staff, no impact on output

JAKARTA, July 29 (Reuters) - PT International Nickel Indonesia Tbk (INCO.JK) plans to cut 87 jobs, nearly 3 percent of its workforce, to reduce costs in response to the global financial crisis, a company official said on Wednesday.

PT Inco has around 3,400 employees, most of whom work at its mining site in Sorowako, South Sulawesi. It said the job cuts, which will affect workers near retirement age and some foreigners, will not affect this year's production which is likely to be 20 percent lower than in 2008.

"We have delayed some projects, frozen recruitments and cut back business trips, but it's not sufficient so we are going ahead with a restructuring programme," said Jannus Siahaan, Inco's spokesman.

Inco announced in May that it has revised down its capital expenditure this year to $166.4 million, from $228.8 million initially planned in February, reflecting a slump in global demand.

Nickel prices MNI3 hit a nine-month high of $16,600 a tonne on July 1 but are currently about two-thirds below a record high of $51,800 a tonne that was hit in May 2007.

The drop in prices reflects lower demand from stainless steel producers as construction and manufacturing slowed.

The company said previously it might cut output by 20 percent this year from 72,400 metric tonnes of nickel-in-matte in 2008 if prices remained weak.

Inco produced 16,200 metric tonnes of nickel-in-matte in January-March this year, down from 20,100 metric tonnes a year ago. (Reporting by Fitri Wulandari, editing by Sara Webb)