29 April 2022
The mineral processing plant or smelter built by PT Freeport Indonesia (FI) will start operation in May 2024. This Freeport smelter is located in the Java Integrated Industrial and Port Estate (JIIPE) Special Economic Zone (SEZ) Gresik, East Java.
The physical construction with an investment value of US$ 3 billion or around Rp42 trillion is scheduled to be completed by the end of 2023 and will be fully operated by the end of 2024. "We hope that President Jokowi can inaugurate the operation of this smelter, in May 2024," said PT FI President Director Tony Wenas at the opening ceremony of fasting with a number of mass media leaders, Jakarta, Thursday (28/28/2022). The laying of the first stone for the smelter owned by PT FI was done by President Jokowi, Tuesday (12/10/2021).
Even though from a business perspective, the smelter is not profitable, PT FI continues to build it as a form of compliance with government policies. President Jokowi has set three directions of economic policy, namely downstream, digitalization, and a green economy. "A mineral processing plant is being built by and for Freeport. Construction of the smelter continues and is expected to be completed on track," said Tony.
Previously, since 1996, PT FI and the Japanese consortium had built a copper smelter in Gresik, East Java. The smelter, which is managed by PT Smelting, is the first copper processing plant in Indonesia. PT FI was asked by the government to rebuild the smelter which is currently being built in the JIIPE SEZ to add more added value to the previous one.
PT FI's copper processing plant with a capacity of 1.7 million tons of copper concentrate per year is built on an area of 103 ha and is the largest in the world. This factory also conducts Precious Metals Refinery (PMR) sludge purification to process anode sludge into gold with a capacity of 6,000 tons per year.
PT FI has invested US$ 720 million or more than Rp10 trillion to build this smelter. Until March 2022, added Tony, the progress has been 23%. By the end of this year, the investment that has been issued will reach US$ 1.6 billion with a progress of 50 percent. Hence, President Jokowi can inaugurate the Freeport Indonesia smelter in May 2024 according to his campaign promise. "No matter how big the economic impact of the presence of this smelter, Freeport Indonesia will continue as a form of our commitment to the nation," explained Tony. To continue operating the smelter, PT FI will have to bear a loss of US$ 200 million per year.
With that, PT FI hopes that the downstream industry that requires processed copper products can grow. "If the downstream industry does not grow, 100% of the cathode produced will be exported. What is the function of this smelter? Hopefully, the government can encourage the downstream industry to grow so that there is demand for smelter products," Tony hoped.
On April 7, 2022, PT FI successfully issued global bonds worth US$ 3 billion, the largest in Southeast Asia. These bonds are issued without any collateral. There are bonds with fixed interest rates with maturities of four years, five years, and some even 30 years that are worth US$ 750 million. "This made us proud because bonds of this size are not issued by Freeport McMoran, but by PT Freeport Indonesia which 51% shares are owned by the Indonesian government," mentioned Tony. FI bonds got investment grades from S&P and Moody's.
The purchase of PT FI's 30-year bonds reflected the trust of bondholders because the mining business license (IUP) owned by the company does not last for 30 years. They dare to buy PT FI bonds with a longer term than the IUP owned by PT FI. "This is extraordinary. They (bondholders -Ed) are so confident in PTFI's financial condition that they want to buy it that was oversubscribed five times," Tony depicted.
The trust gained by PT FI from bondholders, said Tony, was expected to become the confidence of world investors in Indonesia. Indonesia's position as the G-20 Presidency this year should be a momentum to gain the confidence of global investors.
From the results of the Indonesian Chamber of Commerce and Industry (Kadin) roadshow to the US last week, according to Tony, there was one issue that was always a topic, namely environment, social, and governance (ESG). They appreciated PT FI which has shown progress in implementing ESG. To note, for global investors, ESG has become a non-negotiable demand.
"In addition to asking about the investment climate in Indonesia, and regulations in the economic sector, investors often ask questions about ESG. They appreciate companies that implement ESG because ESG has become an international regulation," Tony expounded. From the list of around 50 investors, there are big names, including BlackRock, an investment manager that manages funds of around US$ 9.6 trillion.
PT FI's performance continues to improve, even now it has the momentum of a significant increase in revenue due to rising gold prices, especially world copper prices. In the first quarter of 2022, PT FI's production, sales, and profit exceeded the target. "In the first quarter of 2022, PT FI contributed to the state US$ 1 billion or around Rp14.5 trillion," calculated Tony. If this performance can be maintained, in a full year, PT FI's contribution to the state could reach US$ 4 billion or around Rp56 trillion, excluding dividends.
PT FI's contribution to the state will be even greater if PT FI's production has reached the targeted capacity. PT FI's production is around 200 tons of ore per day and the capacity will continue to be expanded. Next year, the company's production is planned to reach 230 tons of ore. "This year, PT's production has reached 100 percent production capacity. Next year it will be increased again to gain bigger income," planned Tony.
This year, April 7, 2022, PT FI is 55 years old and according to the IUP, PT FI can produce mining products until 2041. PT FI will continue to produce according to the permits obtained by prioritizing the application of ESG. Production activities always pay attention to safety and sustainability aspects. "Hopefully, PT FI can operate until 2041," concluded Tony.
http://www.beritasatu.com/ekonomi/922185/smelter-freeport-beroperasi-mulai-mei-2024
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