Freeport Indonesia to Launch New $3.7 Billion Smelter in East Java
PT Freeport Indonesia (PTFI) is preparing to begin operations at its newly constructed smelter in Gresik, East Java, following a $3.7 billion investment. This development will significantly increase the company's copper concentrate processing capacity from 1 million tonnes per year to 3 million tonnes.
The new facility is projected to boost copper cathode production to over 900,000 tonnes annually, up from the existing 300,000 tonnes. PTFI President Director Tony Wenas stated that although the smelter is operational, it will take an additional six to ten weeks to commence copper cathode production, with full-scale production expected by the end of the year.
The completion of the smelter fulfills a requirement from the Indonesian government, which was stipulated in PTFI’s special mining license (IUPK) issued in 2018. The government mandated the construction of the smelter and also required PTFI to be 51 percent owned by the state.
Investment Minister Bahlil Lahadalia acknowledged the achievement, noting it enhances PTFI's prospects for a mining license extension beyond the current 2041 expiry to 2061. He also suggested that the government's ownership stake could increase to 61 percent with the extension.
The new smelter is a critical part of Indonesia's strategy to promote the export of higher-value processed minerals instead of raw materials. The government initially aimed to enforce a copper export ban in June of last year but extended the deadline for PTFI and PT Amman Mineral International to complete their smelters.
With the smelter set to begin operations, PTFI has requested an extension of the export permit to avoid a potential 20 percent revenue drop, which would bring the company's revenue down to $7.4 billion. Extending the waiver could almost double the government's revenue from PTFI.
Meanwhile, PT Amman Mineral International is also progressing on its copper smelter, which is expected to start producing copper cathode in the latter half of the year. The company is currently awaiting export permits from the Ministry of Energy and Mineral Resources and the Ministry of Trade.
