Freeport to lead building

Freeport to lead building

of Gresik smelter plant

JAKARTA (JP): PT Freeport Indonesia and Rio Tinto Minera of
Spain, both subsidiaries of the American mining company Freeport-
McMoRan Copper & Gold Inc (FCX), will replace Metallgesselschaft
AG (MG) of Germany as the major shareholders in the copper
smelter in Gresik, East Java.

The chief commissioner of Freeport Indonesia (FI), James R.
Moffet, told newsmen here yesterday that the replacement of
Metallgesselschaft AG was due to a decline in their financial
condition.

MG is currently the 14th largest European company.

Previously, MG had led a consortium to build Gresik copper
smelter plant, which would be 55 percent owned by MG, 20 percent
by Freeport Indonesia, 20 percent by Nipon Mining and five
percent by private Indonesian industrial companies.

Moffet declined to elaborate the new composition of the
smelter project's shareholders as the matter of the company's new
partner remains under discussion.

However, he said that Nipon Mining and Metal had indicated
their interest to go forward even without the presence of MG.

The smelter plant will be built on a 200-hectare plot near the
industrial complex of PT Petro Kimia Gresik (PKG).

According to Moffet, by-products of the first Indonesian
smelter plant, such as sulfuric acid, will bring advantages both
for Indonesia and FI itself.

He said that when the construction of the smelter plant was
complete, Indonesia would no longer need to import sulfuric acid
to fulfill PKG's demand for producing phosphate fertilizer as the
plant would provide enough sulfuric acid for this purpose.

Production

Hoediatmo Hoed, the president of Freeport Indonesia, said the
smelting plant is expected to produce around 150,000 to 200,000
metric tons of copper a year, of which approximately 60,000 will
be sold on domestic market, while the remainder will be exported.

The plant is expected to employ 700 people,

Hoediatmo said that FI will provide 50 percent annually of the
ore required by the Gresik smelter.

According to FI, FCX has scheduled an increase of FI's annual
copper ore production from 658 million pounds in 1993 to 1.1
billion pounds in 1996 and 787,000 ounces of gold in 1993 to 1.5
million ounces in 1996.

The production increase is also aimed at meeting 50 percent of
the demand of Rio Tinto Minera (RTM), FCX's other copper smelting
plant in Huelva, Spain, and the planned Gresik smelting plant.

At the press conference, Moffet declined to say when the
construction of the plant would be completed because the company
is still reviewing the engineering study which has been completed
by Lurgi AG, MG's wholly owned subsidiary. Construction has been
delayed since 1992.

However, he pledged the consortium will move quickly because
FI needs the smelter to process its ore.

FI said the smelter could be operational by 1998.

Richard H. Block, FCX's senior vice president, and Javier
Targheta, RTM's managing director, will direct the development of
the Gresik smelting plant. (03)