Major Support for Freeport Smelter and Other Downstream Mineral Developments Over Massive Workforce Intake

24 June 2023

Investment Minister/ Head of Investment Coordination Agency BKPM Bahlil Lahadalia says PT Freeport Indonesia (PTFI) had invested USD 2.2 billion (Rp 33 trillion) for its smelter development in Gresik, East Java as of May 2023.

 

This smelter development project that is the biggest of its kind in the world also took in a workforce of 15,000 Indonesian nationals. In total, PTFI investment will amount to USD 3 billion or Rp 45 trillion. Gadjah Mada University (UGM) Energy Economist Fahmy Radhi supports Minister Bahlil’s calling for investments coming into Indonesia in the downstream industry sector to be directed at integration of the PT Freeport Indonesia smelter with other mineral smelter projects.  

 

It is believed such integration will boost the downstreaming effort that is aimed at building an ecosystem for an industry providing added value and underpinning Indonesia’s becoming an advanced nation. “T think this makes sense insofar as it encompasses all smelter development and not just Freeport’s, as in addition to adding value, the goal is to build an ecosystem for a specific industry,” Fahmy said on Saturday (24/6).

 

Fahmy pointed out, Freeport’s smelter could be integrated with nickel smelters towards their production of derivative products, primarily the raw materials for production of electric vehicle batteries. “The derivative products from nickel production could provide components or raw material for another related industry. Industrial interrelation within an ecosystem will lead Indonesia to become an advanced nation,” he averred.  

 

Fahmy says downstreaming in the nickel industry has proved to provide significant value addition for the state, in particular, he says, as nickel is the primary material for electric vehicle batteries that are highly required for future electric vehicles. “For instance, upstream to downstream, or from nickel ore to production of batteries that will be the electric component for electric vehicles,” he said. “Indonesia’s economic growth is supported not just through consumption but the primary contributor should be industry products,” Fahmy continued.   

 

Fahmy further said if policy is consistently effective for all minerals and all minerals are required to be delivered to domestic facilities, investors, whether domestic or foreign will flock to build smelters in the country. He said these smelters will lead to large-scale creation of new jobs. “Operation of these smelters will open up new jobs on a massive scale, not just at Freeport but at all mineral producers. If the government consistently effectuates the ban on export of raw minerals and the policy on domestic smelter development, investors will come,” he said.  

 

Fahmy also said investment in smelters will not only benefit the national economy nut will also positively impact regional economies. “And subsequently new jobs will be created to contribute to regional economies, and in terms of national economy the industrial interrelationship will attract investors to smelter development and production of their derivative products,” he continued. 

 

Earlier Bahlil Lahadalia had conveyed PT Freeport Indonesia investment in its smelter development in Gresik, East Java that is targeted to begin operating in May 2024 would bring acclamation not only for Indonesia’s natural resources but also for its domestic products. “We are undertaking downstreaming through this smelter project, to provide added value. We want Indonesia to be known not just for its natural resources but also for its products,” Bahlil said. 

 

Bahlil said downstreaming, including of natural resources, is the key to Indonesia’s transforming from a developing nation to a developed nation. “It has been proven, the downstreaming of natural resources can boost the state’s revenue. An instance is nickel, which state revenue thereof increased from US$3.3 billion to 30 billion US dollars after we stopped exporting it in raw form and carried out its downstreaming,” Bahlil asserted. 

 

http://www.jawapos.com/ekonomi/011355902/serap-banyak-tenaga-kerja-investasi-pembangunan-smelter-freeport-dan-tambang-lain-banyak-didukung

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