Mitsubishi to boost Gresik copper output in 2001

Mitsubishi Materials Corp said on Thursday it plans to boost electrolytic copper output at its Gresik smelter plant in Indonesia to 220,000 tonnes in calendar 2001, more than the original output target of 200,000 tonnes a year.

The smelter is expected to produce about 170,000 tonnes this year after becoming fully operational in June of this year. Trial operations began in December 1998 and limited commercial operations started in May of last year.

Earlier this year, company officials said they expect Gresik to obtain the London Metal Exchange's (LME) grade A rating next April.

The operator of the smelter, PT Smelting Gresik, is 60.5% owned by Mitsubishi Materials, 25% by PT Freeport Indonesia, a unit of US-based Freeport-McMoRan Copper & Gold Inc, 9.5% by trade house Mitsubishi Corp and 5% by Nippon Mining and Metals.

According to Indoexchange.com records, the furnaces of the copper smelter was lit in mid October 1998, and slated for commercial production in January 1999.

The $700 million project, Indonesia's first and only copper smelter, is a joint venture between Freeport McMoran Copper & Gold and Mitsubishi Corp. It completed a $410 million 12-year limited recourse financing package in late 1996 via arrangers BTN, BZW and IBJ.

The sponsors, an official at Freeport said earlier, intended to pour the first copper and gold in January, as the furnaces needed to become hot enough to melt concentrates to separate the two materials. Concentrates are supplied by Freeport's mine in Irian Jaya, and transported to the 200,000 ton per annum smelter in Gresik, East Java.

Freeport Indonesia earlier reported that the concentrates contain copper making up 32.52% per ton, 27.82 grams of gold per ton (or 0.89 ounce per ton), and 55 grams of silver per ton (1.77 ounces per ton).

In May this year, New Orleans-based Freeport McMoran said that it would voluntarily limit ore production at the Grasberg open pit mining to no more than 200,000 metric tons per day "pending the conclusion of technical studies and recommendations for the safe reuse of the Wanagon basin in response to the previously reported incident on May 4, 2000 involving an overburden stockpile at its Grasberg mine."

The latest problems at the mine came early this month (May 4) when the overburden waste slipped, causing a wave of water and material to overflow from the Wanagon basin spillway and into the Wanagon valley.

Four employees, working for a mine contractor, were unaccounted for and presumed dead.

The reduced level of ore production compares with average daily output of about 230,000 metric tons of ore in recent times. That, in turn, allowed Grasberg to produce about 1.4bn ounces of copper in 1999, and 2.4m ounces of gold. (*)