Freeport to build smelter in Gresik

Copper giant PT Freeport Indonesia will build a copper cathode smelter in the Gresik industrial zone in East Java, said Dede I. Suhendra, Director of Mineral Development and Management at the Ministry of Energy and Mineral Resources (MEMR) as quoted by Kotan daily on Monday.

Dede said that Freeport will require about 300 hectares of land for the planned US$2.2 billion smelter, but the company has yet to complete the land acquisition. ?We have asked them (the company) to immediately start with the land acquisition,? he said.

Freeport plans to build a 400,000 tons per year copper cathode smelter, which will require the supply of 1.6 million tons of copper concentrates. Aside from its own operation, second largest producer PT Newmont Nusa Tenggara is expected to supply part of its output to the planned smelter so as the company can resume export.

Dede said that Freeport expects ground breaking of the project to be made next year in the hope that the smelter will be complete in 2017.

Following the introduction of the export ban on mineral ores on January 12 of this year, the government drastically tightened the export requirements for certain mineral concentrates including copper. Miners are required to obtain export recommendation letter from the MEMR to obtain export permit from the Ministry of Trade.

Among of the requirements to obtain the export recommendation letters is that miners must be able to show their seriousness in building domestic smelters on their own or in cooperation with other parties. Progress in the smelter project will allow miners to get discount in the punitive export tax.

Newmont Nusa Tenggara has recently warned that it would have to suspend 80 percent of its workers if it remains unable to resume export in June.

The MEMR is expected to issue export recommendation letters for four mining firms this week including Freeport and Newmont. (*)