Freeport CEO Explains Smelter Construction Progress

TEMPO.CO, Jakarta - Chief Executive Officer of PT Freeport Indonesia, Tony Wenas, revealed that the progress of the copper smelter project at the Java Integrated Industrial and Ports Estate (JIIPE) in Gresik, East Java, has reached 94 percent.

"The progress of the smelter is now approximately 94 percent complete," said Tony when attending the Eid al-Fitr open house hosted by Minister of Investment Bahlil Lahadalia in South Jakarta on Wednesday, April 10, 2024.

Tony explained that the construction of the smelter is planned to be completed by May so that it can start operating in June. The copper refining project is part of the government's acceleration of downstreaming mining activities.

"It will start operating in June but not producing yet. Because the concentrate will be fed into it around early August, so the copper cathode will only come out by the end of August," he explained.

Furthermore, Tony mentioned that the smelter's production capacity in August this year will be about 50 percent or around 850,000 tons of copper concentrate. By the end of the year, the production capacity is targeted to increase to reach 100 percent.

Previously, President Director of PT Freeport Indonesia, Tony Wenas, stated that high-ranking representatives of the company and President Joko Widodo had discussed the progress of the smelter in Manyar, Gresik, East Java.

"The progress of the smelter has reached more than 92 percent with the hope of being completed in May and immediately operating in June this year," said Tony when met at the Presidential Palace, Jakarta, on Thursday, March 28, 2024.

The information was conveyed after Tony, along with Freeport McMoran's Chairman & CEO Richard C Adkerson and CFO Kathleen L. Quirk, met with Jokowi. In their statement, Freeport promised that their processing and refining facilities would be fully operational by 2024.

Construction of Freeport's smelter in Gresik began in 2018. The plant is expected to be capable of processing 1.7 million tons per year of concentrate and producing 600 tons of copper cathodes per year.

Freeport has repeatedly expressed hope that the permit for copper concentrate exports will remain open while reviewing the construction of the smelter in Gresik. Freeport should have been unable to export copper concentrate since last year. The government banned the export of several raw minerals starting June 10, 2023, to encourage increased value-added minerals domestically.

However, this regulation is exempted for four companies that have completed half of the smelter construction. Freeport is one of them. The company is allowed to export copper concentrate until May 31, 2024, with a penalty of 20 percent of the total value of raw mineral sales abroad each period. Freeport also has to pay an export duty of 7.5 percent.

When asked at the Presidential Palace in Jakarta whether the issue of concentrate export permits was discussed during the meeting with Jokowi, Tony said it was discussed at the ministerial level. However, Tony explained that extending this export permit is important.

"If we can't export, the state revenue will decrease by around US$2.2 billion at current prices," said Tony. While Adkerson declined to make a statement, he mentioned that the government would provide further information.

SAVERO ARISTIA WIENANTO | DANIEL A. FAJRI

Click here to get the latest news updates from Tempo on Google News