Inco says protest ends at Indonesian nickel mine

JAKARTA, Aug 11 (Reuters) - Villagers at a Sulawesi mine operated by PT International Nickel Indonesia Tbk (INCO.JK) have ended a protest over jobs after reaching an agreement with Inco, the company said on Tuesday.

Last month, Inco said it planned to cut 87 jobs, or nearly 3 percent of its workforce, to reduce costs in response to the global financial crisis, which has reduced demand for stainless steel and thus nickel, a key input.

Hundreds of villagers had blocked a road to Inco's mine in Sorowako, South Sulawesi, since last week over concerns there would be more job cuts by the firm.

Inco, in which Brazil's Vale Inco Ltd. (VALE5.SA) has a 60.8 percent stake, has said the blockade did not affect production at the mine.

"The community has agreed to end their rally after a meeting with the management," Jannus Siahaan, Inco's spokesman said.

"The restructuring programme will refer to national labour regulations and a working agreement with employees," Siahaan said.

Future restructuring plans will be discussed with a team made up of local government, community groups and Inco, he said.

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.

In May, Inco revised down its capital expenditure plans this year to $166.4 million, from $228.8 million initially planned in February, reflecting a slump in global demand for nickel.

(Reporting by Fitri Wulandari; Editing by Ed Davies)