PT Smelting expands capacity 25 percent: Report

Indonesian copper producer PT Smelting has raised capacity by around 25 percent after completing an expansion programme at the end of April, a top executive was quoted by Reuters as saying on Wednesday.

The company, majority owned by Japan's Mitsubishi Materials Corp, spent just under $10 million to boost copper cathode capacity to 250,000 tons a year from 200,000 tons, said Executive Vice-President Mineo Hayashi, who is also general manager of PT Smelting.

"Most of it was spent on additional facilities in the refining area, but some money was also spent on the reinforcement of the smelter," Hayashi told Reuters.

The smelter produces anode copper, which is further refined to make copper cathode for sale in Indonesia and on the international market.

Copper prices, at around $2,700 for three-month delivery on the London Metal Exchange, are around 70 percent higher than they were a year ago as a result of a global shortage and booming demand from a Chinese economy that grew 9.7 percent in the year through the first quarter.

But prices have retreated from an 8-1/2-year high of $3,055 on March 2, as Beijing reins in its fast-growing economy and copper mine output recovers from a difficult first quarter.

Hayashi did not say how many tons of copper cathode PT Smelting expected to produce in 2004. But industry officials said the company was unlikely to meet its target of 230,000 tonnes, compared to 219,000 tons last year.

PT Smelting, located in Gresik, East Java, produced around 97 million pounds (44,000 tons) of copper cathode in the first quarter of 2004, its 25-percent shareholder, U.S.-based Freeport McMoRan Copper and Gold Inc, said last month.

This was around 20 percent less than in the year-earlier period. PT Smelting carried out a 33-day maintenance programme in March and April.

LOWER CONCENTRATE SHIPMENTS

Shipments of copper concentrate to PT Smelting from Freeport's giant Grasberg mine in Indonesia's eastern province of Papua were also hit during the first quarter.

Freeport declared force majeure on some shipments from Grasberg following a rock slide at the mine in December, but said last month it had restarted high-grade mining.

Freeport forecast 2004 copper sales from Grasberg would total 1.0 billion pounds (453,600 tons), down from a forecast of 1.4 billion before the rock slide.

Copper concentrate is the main raw material for producing copper, which is used in a variety of applications from plumbing equipment and air conditioners to computer chips and the construction sector.

Mitsubishi Materials owns a 60.5-percent interest in PT Smelting. As well as Freeport, Japan's Mitsubishi Corp and Nippon Mining and Metals Co Ltd are investors in the smelter, with 9.5 percent and five percent stakes respectively. (*)