The construction costs of a nickel plant being built in New Caledonia by Swiss miner Xstrata and local firm SMSP have jumped by more that $1 billion, the joint venture said Wednesday. Cost overruns would see the total bill for the Koniambo plant in the French Pacific territory reach $5 billion, up from a previous estimate of $3.85 billion, Peter Hancock, president of Koniambo Nickel SAS, said in a statement. The original forecast had stood since the project was launched in 2007. Hancock blamed inflation and disappointing progress in the construction of the plant for the increased cost, which he insisted would be covered under existing plans to finance the project. He said the plant was due to go online in 2012, as scheduled, with projected annual production of 60,000 tonnes of nickel from 2014. The plant is in an area of New Caledonia\'s main island administered by the indigenous Kanak people, who have injected $167 million via SMSP. New Caledonia is home to vast quantities of nickel, an essential ingredient in making stainless steel, and the project is seen as part of a process of giving greater economic control to the indigenous people. After 25 years, SMSP will have a 51-percent controlling stake in the project.