By Deden Sudrajat and I Made Sentana
JAKARTA, Indonesia-Indonesia has said the local unit of U.S.
mining giant Freeport-McMoRan Inc. (FCX) must go ahead with its
plans to build a smelter in East Java, instead of in the country's
eastern-most province where its mine is located.
The Papuan government had demanded Freeport build a smelter in
Papua Province, which hosts the company's Grasberg copper and gold
mine. But the central government said such a plan may not
economical for Freeport due to a lack of supporting infrastructure
in the province.
Energy and Mineral Resources Minister Sudirman Said said PT
Freeport Indonesia will supply concentrate feed stock to the
smelter that the Papuan government will build with a private
partner that it hasn't yet named.
Freeport Indonesia's spokeswoman Daysi Primayanti confirmed that
the company will go ahead with its plan to build a smelter in East
Java.
The company last month signed a deal with PT Petrokimia Gresik
to build a $2.3 billion copper smelter in East Java, near a
petrochemical plant owned by Gresik, with an annual capacity of 2
million metric tons per year. Mr. Said stated Indonesia needs an
annual copper smelting capacity of up to 4.5 million metric
tons.
In January 2014, Indonesia slapped an export ban on raw minerals
to keep the lucrative refining business inside the country. The
government subsequently allowed Freeport Indonesia to resume
copper-concentrate exports after the mining company agreed to pay
export tax and promised to build a smelter in Indonesia.
Write to I Made Sentana at I-Made.Sentana@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires