Medco: Newmont may develop own smelter

IDX-listed energy company PT Medco Energi Internasional Tbk, the new controlling owner of gold and copper giant PT Newmont Nusa Tenggara (NNT), is considering an option for NNT to develop its own copper smelter as an alternative to the initial plan of cooperating with another giant PT Freeport Indonesia.

This was said by Medco President Director Hilmi Panigoro as reported by Kontan and Bisnis Indonesia on Tuesday.

Medco has recently obtained approval from the Ministry of Energy and Mineral Resources over a deal to acquire 82.2 percent shares in NNT, which operates the Batu Hijau mine in Sumbawa, West Nusa Tenggara Province, from PT Amman Mineral Internasional. The latter acquired the shares from Newmont Mining Corp, Sumitomo Corp, and PT Multi Daerah Bersaing.

Hilmi said that Medco plans to hold a shareholders meeting next month. Once the NNT acquisition has been effective, he said that the company will determine the future direction of NNT?s business including considering an alternative of developing an own copper smelter.

Kontan said that alternative locations for the planned copper smelter includes Sumbawa and Bojanegara in Banten.

The government introduced a policy early in 2014 banning the export of mineral ores, but still allowed the export of mineral concentrates including copper concentrates produced by NNT and PT Freeport. The two companies, however, are required to develop domestic smelter as export of mineral concentrates will be banned starting 2017.

PT Freeport plans to build a smelter in Gresik, East Java. NNT had announced in the past of planning to cooperate with PT Freeport in developing the required smelter. Having smelter plan in place forms part of the requirements set by the government for the two firms to be allowed to continue export. There has been no significant progress yet on the PT Freeport smelter project.

Meanwhile, Medco President Commissioner M. Lutfi said that the company remains firm with the initial plan of teaming up with PT Freeport in developing the domestic smelter, pointing out it has allocated US$500 million to help finance the project.

Separately, Director General of Mineral and Coal Bambang GatotAriyono said that Medco in its report to the Ministry of Energy and Mineral Resources regarding its recent deal to acquire NNT will maintain Rachmat Makkasau as the President Director of the latter company. (*)