Minister: 2017 smelter target won?t be met due to commodity downturn

By Thomas Sembiring

Minister of Energy and Mineral Resources Sudirman Said acknowledged that the initial target for domestic smelter projects to be completed in 2017 will not be achieved due to the lingering drop in commodity prices.

He said on Tuesday that the commodity downturn has weakened the financial condition of many mining firms, affecting their ability in financing the smelter projects.

?We have to accept the fact that by 2017, not all smelters will be completed,? Sudirman said, but stopped short whether the government would make changes in the smelter policy.

The previous government introduced in early 2014 a policy to ban the export of mineral ores, pushing miners to develop domestic smelters to generate greater added value from the country?s mineral resources.

Mineral concentrate producers such as the giant gold and copper company PT Freeport Indonesia, however, was allowed to continue export of concentrates until 2017, by which some the company is expected to have completed the required domestic smelter. PT Freeport is planning to develop a US$2.3 billion copper smelter in Gresik, East Java, but construction progress has so far reached only 14 percent.

Meanwhile, Director General of Mineral and Coal Bambang Gatot Ariyono said so far only 25 mining companies whose domestic smelter projects have reached 80-90 percent construction progress. Bambang said that given the various obstacles, only about seven smelters are likely to be completed next year. ?About 6-7 units will be completed in 2016 or 2017,? he said.

Editing by Reiner Simanjuntak