Indosmelt Set to Start As Govt Plans Ore Ban

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Indosmelt, a smelter and refinery company, plans to break ground on the construction of its $1.5 billion copper and gold smelter and refinery in February, Jakarta Globe reported news.

“We expect in early 2017, it [the smelter and refinery]can begin operations,” Indosmelt president director Natsir Mansyur said on Thursday.

Indosmelt, owned by local investors, plans to build a smelter with an annual capacity of up to 120,000 metric tons of copper cathode; 300,000 tons of slag — one of the raw materials in cement making — and 200,000 tons of anode slag — a key ingredient in the gold refining process — according to a document from the company.

The smelter, located in Maros regency of South Sulawesi province, will also be capable of producing 20 million gold bars per year. The smelter will be supported by a jetty and docks that can accommodate ships of around 5,000 to 20,000 dead weight tons.

Natsir said he was looking for bank loans to finance 70 percent of the investment. He declined to name potential lenders. The remaining financing is expected from the equity participation of Indosmelt. Natsir declined to reveal the company’s investors but said he owns a substantial amount of stake in the company.

“We don’t rule out the possibility of attracting domestic or foreign partners,” he said.

Indosmelt has been aiming to secure a steady supply of concentrates from the top two copper and gold miners in Indonesia — Freeport Indonesia and Newmont Nusa Tenggara — for its planned smelter and refinery. On Thursday, Indosmelt signed a conditional sales and purchase agreement with NNT to supply copper concentrate to be smelted and purified in Indosmelt’s smelter.

“Cooperation with a major supplier like NNT is an important stepping stone for development of our project. We are upbeat to be able to complete the smelter development in 2017 or 2018,” said Natsir. He added that he hoped to also seal a deal with Freeport Indonesia.

NNT has been selling 20 percent of its copper concentrate to Smelting, the only copper smelter in Indonesia currently, which is located in Gresik, East Java. Meanwhile, Freeport ships 30 percent of its concentrate. Indosmelt seeks to secure 500,000 tons of gold and copper concentrates per year to feed its smelter, which will be supported by 100 megawatts from Perusahaan Listrik Negara.

Natsir declined to reveal the amount of concentrate that NNT will provide, but said Indosmelt expects other miners to become suppliers.

Separately, the government said on Thursday that it would proceed with the ban on ore exports in January.

Sutan Bhatoegana, chairman of House Commission VII for energy affairs, said in Jakarta that lawmakers and the government have agreed to implement the regulations despite opposition from the business community.

Energy and Mineral Resources Minister Jero Wacik said the government would anticipate some protest at the beginning of the implementation in January.

Jero told reporters that of the 177 companies that submitted interest to build smelters to the government, 28 have started construction. One company, Aneka Tambang — a state miner known as Antam — has reached the commissioning stage. The smelter, situated in Tayan, West Kalimantan, will process bauxite ore into chemical grade alumina.

Another company, Jogja Magasa Iron, has reached the construction phase for its smelter to process iron ore.

Weda Bay Nickel, a local unit of Paris-based Eramet, and nickel miner Vale Indonesia had announced plans to build smelter in Indonesia.