PT Freeport to build copper smelting plant

JAKARTA (JP): PT Freeport Indonesia will start constructing a copper smelting plant in Gresik, East Java, in the middle of next year with a production capacity of 200,000 tons per annum at a cost of about US$650 million, its president says.

Hoediatmo Hoed told The Jakarta Post here Monday evening that Freeport will likely hold 100 percent of the equity in the company which will be established in order to sponsor the copper smelting project.

Freeport, a subsidiary of the American mining company Freeport-McMoRan Copper & Gold Inc (FCX), decided in the middle of this year to replace Metallgesselschaft AG (MG) of Germany as the major shareholder in the Gresik copper smelter after the German firm suffered a financial crisis.

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

"We have received a license from the Investment Coordinating Board (BKPM) for the establishment of the project with exclusive Freeport ownership," Hoed said. "The state-owned PT Petrokimia Gresik will have an option for a stake in the planned company after it starts operation."

He explained that Petrokimia Gresik can use its land, where the planned project will be constructed, as its equity participation or lease it to the new company.

Hoed said that Flour Daniel Inc. of the United States has also shown interest in joining the project.

"If Flour takes a stake, it will get preference to construct the smelting plant," he said.

"However, the contract for its construction will be tendered," he added.

Enlargement

He said that Freeport has decided to enlarge the production capacity of the project from the original plan of 150,000 tons a year to make its operation more efficient.

He said that part of the copper concentrate to be used for its feedstocks will come from Freeport's mine in Irian Jaya.

According to Freeport, it expects a steady increase in the annual production of copper ore from its Irian Jaya mine from 658 million pounds in 1993 to 1.1 billion pounds in 1996 and gold from 787,000 ounces to 1.5 million ounces.

Besides Freeport, an Indonesia-New Zealand joint venture, PT Copper Smelter Indonesia (CSI), has also planned to establish a copper smelting plant with a production capacity of 150,000 tons a year in Gresik with an investment of US$648 million.

Partners in the joint venture include Brierly Investment Ltd., Southpac Corporation Ltd., both of New Zealand, Universal Securities of Monaco and a local company, PT Citra Pertiwi Centra.

It will import copper concentrate and other materials as its feedstock from Papua New Guinea and Australia. (riz)