Friday, April 19, 2024

Freeport Indonesia plans to increase shares in PT Smelting as part of its long term commitment

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Journalist IBP




President Joko ‘Jokowi’ Widodo officially inaugurated the operational expansion project of the copper smelter owned by PT Smelting in Gresik, East Java. 

Through this expansion, PT Smelting’s copper smelter is now capable of increasing its smelting capacity from 300,000 tons to 1.3 million tons of copper concentrate per year. 

PT Smelting is jointly owned by Japan’s Mitsubishi Materials Corporation and the Indonesian state-owned enterprise, PT Freeport Indonesia. The copper concentrate processing plant has been in operation since 2010.

President Jokowi highlighted the commitment of PT Freeport Indonesia, collaborating with Mitsubishi, to promote downstream processes and expand operations, creating additional value within Indonesia.

As part of the expansion project, PT Freeport Indonesia plans to increase its stake in PT Smelting from 39.5% to 65%. This increase in ownership is attributed to PT Freeport being the sole investor in the smelter’s expansion project, providing a total funding of US$ 250 million or approximately IDR 3.7 trillion. Once the expansion is completed, PTFI’s stake in PT Smelting will rise accordingly.

In line with the divestment process, PT Freeport and PT Smelting have agreed on a new business scheme called the ‘tolling’ mechanism, set to fully take effect in early 2024. This mechanism will grant PT Freeport the authority to oversee the entire marketing process and have full control over by-products contracts such as anode mud, sulfuric acid, copper slag, and copper telluride.

The trading of cathode copper will be handled by PT Smelting until 2031. The tolling mechanism began its transitional phase in January 2023, during which PT Smelting handled all trading and sales contracts on behalf of PT Freeport.

PTFI’s move to expand the processing capacity of PT Smelting is part of a long-term commitment to realizing a comprehensive copper downstream project. This expansion effort aligns with the company’s initiative to construct a new copper smelter in the Java Integrated Industrial and Port Estate (JIIPE) in Gresik.

President Jokowi estimated that the project would contribute to the production of downstream copper products, including semi-finished products such as copper anodes and cathodes.

The increased smelting capacity is anticipated not only to boost the downstream copper industry but also to stimulate the growth of new industries oriented toward creating value-added copper products. 

“New industries will emerge, as we have already seen and are in the process of developing, such as copper foil,” President Jokowi remarked.

The ceremony was attended by Richard Adkerson, the CEO of Freeport McMoran and Chairman of PT Freeport Indonesia (PTFI), as well as Hideya Sato, the CEO of PT Smelting, Naoki Ono, the CEO of Mitsubishi Materials Corporation, and Tony Wenas, the CEO of PTFI.

Journalist IBP






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