Freeport Projects State Contributions of Rp120 Trillion Annually After Full Smelter Operation

PT Freeport Indonesia projects its contribution to the state will reach more than US$7 billion, or approximately Rp120 trillion, per year after mining production returns to normal and all downstream copper processing facilities in Gresik, East Java, are fully operational. President Director of Freeport Indonesia Tony Wenas said this achievement will be supported by the operation of the smelter and precious metal refinery (PMR) in the Gresik Special Economic Zone, which allows the entire copper value chain to be processed domestically. “With the operation of the smelter and precious metal refinery in Gresik, the entire copper value chain from concentrate, copper cathode, to precious metals such as gold and silver can now be processed domestically. This is a major leap for Indonesia’s mineral downstreaming,” Tony said during a hearing with Commission XII of the Indonesian House of Representatives in Jakarta on Tuesday, as quoted from a press statement on Wednesday. The new smelter has a processing capacity of 1.7 million tonnes of copper concentrate per year. Combined with the capacity expansion of PT Smelting Gresik by 300,000 tonnes and the existing operating capacity of PT Smelting of 1 million tonnes, Freeport now has a domestic refining capacity of approximately 3 million tonnes of copper concentrate per year. Additionally, the PMR, with a capacity of 6,000 tonnes of anode slime per year, is capable of refining gold, silver, and platinum group metals. The facility produces around 600,000 tonnes of copper cathode per year. Together with PT Smelting’s production, the total copper cathode output reaches approximately 800,000 tonnes per year. The PMR also produces around 50 tonnes of gold, 200 tonnes of silver, 30 kilograms of platinum, 375 kilograms of palladium, 285 tonnes of selenium, 220 tonnes of bismuth, and 2,200 tonnes of lead annually. All gold production is planned to be offtaken by PT Aneka Tambang Tbk (Antam). However, Tony explained that smelter operations faced challenges after a fire at the gas cleaning plant in October 2024. Repairs were successfully completed, allowing the smelter to resume operations in May 2025. Operations were then disrupted again by a landslide at the Grasberg Block Cave, which halted the supply of concentrate. The company is currently utilising the operational halt to perform comprehensive inspections and facility improvements before the smelter resumes receiving concentrate supply from Papua starting September this year. “Our current focus is ensuring the mine recovery process proceeds safely so that concentrate supply returns to normal. When the upstream side recovers and the smelter operates at full capacity, the benefits of downstreaming will be more optimal, in the form of increased metal production, strengthening of the domestic industry, and increased state revenue,” Tony said. According to him, mining production in 2026 is estimated to remain at around 65 percent capacity due to the post-landslide recovery process. This capacity is targeted to increase to around 75 percent in the first half of 2027 before returning to 100 percent by the end of the year. In line with this recovery, metal production is also expected to increase gradually. In 2026, Freeport targets producing around 800 million pounds of copper and 700,000 ounces of gold, or about 21 tonnes. Production is projected to increase to 1.2 billion pounds of copper and 1 million ounces of gold, or about 31 tonnes, in 2027, before reaching 1.6 billion pounds of copper and 1.4 million ounces of gold, or about 43 tonnes, in 2028. As production recovers, state revenue is expected to increase from around US$2.6 billion in 2026 to US$4.7 billion in 2027, before surpassing US$7 billion, or approximately Rp120 trillion, per year when production capacity returns to normal. During the hearing, Commission XII of the Indonesian House of Representatives appreciated the steps taken by the Mining Industry Holding MIND ID and PT Freeport Indonesia in strengthening copper downstreaming through the construction of the smelter and PMR in Gresik, which is considered to increase mineral added value, strengthen the domestic processing industry, and enhance the contribution to the national economy.