Freeport plans copper smelter in East Java
Freeport plans copper smelter in East Java
JAKARTA (JP): After a suspension of over one year, Freeport McMoRan Cooper & Gold Inc. from the United States and its new partners have agreed to take over a copper smelting project in Gresik, East Java.
Freeport reported recently that the company has reached a final agreement with its new partners -- Mitsubishi Materials Corporation of Japan and Fluor Daniel Inc. of the United States -- to construct the copper project under a build, own and operate plan.
The project, designed to have a production capacity of 200,000 metric tons of copper cathodes, will be owned by a new joint venture which will be 70 percent owned by Mitsubishi, 20 percent by Freeport and the remaining 10 percent by Fluor Daniel.
The project will be owned totally by foreign firms, without any involvement of a domestic partner.
In a statement made available yesterday, Freeport said, "The takeover has been approved by the Investment Coordinating Board."
The project, estimated to cost US$550 million, will be partly financed by a combination of non-recourse loans and the venture's own equity, Freeport said.
The project was earlier planned to be established by a Freeport subsidiary, PT Freeport Indonesia Company, in cooperation with Japan's Nippon Mining, Metallgesselschaft AG of Germany and Indonesian private industrial companies, with a planned investment of some $600 million.
But due to a financial fiasco in the German company, Freeport Indonesia and Rio Tinto Minera of Spain, both subsidiaries of Freeport, last year took over Metallgesselschaft to act as major shareholders in the Gresik smelter project.
Manager
According to Freeport, Fluor Daniel will act as the overall project manager responsible for engineering, procurement and construction, using Mitsubishi's continuous copper smelting processing system.
Mitsubishi, which will be in position to manage and operate the smelter, will also be responsible for the marketing of copper cathodes and other products of the copper plant, it said.
"PT Freeport Indonesia Company will provide 100 percent of the smelter's copper concentrate feed stock requirement, estimated to be approximately 600,000 metric tons annually," they said. The copper concentrate for the Gresik project will be supplied by Freeport Indonesia from its mine in Irian Jaya.
The construction of the plant is expected to begin by the middle of this year and to be on stream in the second half of 1998.
The report also stated that the smelter project in Gresik remains subject to the execution of definitive agreements among the concerned parties, the confirmation of the feasibility of the project, financing and certain Indonesian governmental approvals.
An earlier report said that Freeport Indonesia has planned to increase its output capacity in Irian Jaya to 115,000 tons of ore per day, from 70,000 tons at present, with a metal equivalent of 1.2 billion pounds of copper and 1.5 million ounces of gold.
In a related development, an Indonesia-New Zealand joint venture, PT Copper Smelter Indonesia, has reportedly planned the establishment of a similar copper smelter plant in Gresik with an investment of $648 million.
The plant, which will be owned by Brierly Investment Ltd., Southpac Corporation Ltd., both of New Zealand, Universal Securities of Monaco and a local company, PT Citra Pertiwi Centra. The plant is designed to have an output capacity of 150,000 metric tons of refined copper and 420,000 tons of sulfuric acid per annum. (fhp)