Indonesia is gearing up for a significant advancement in its mining sector by July 2024, with the introduction of a state-of-the-art facility dedicated to processing and refining copper concentrate, which will also host the world’s largest single-line gold production factory.
Currently undergoing testing in the Java Integrated Industrial and Ports Estate (JIIPE) in Gresik, East Java, this manufacturing plant is owned by PT Freeport Indonesia (PTFI), with a majority stake of 51% now held by Indonesia through the state-owned mining conglomerate, MIND ID.
According to Bahlil Lahadalia, Minister of Investment/Head of the Investment Coordinating Board (BKPM), the factory is set to produce 60 tons of pure gold and 400 thousand tons of copper cathodes.
Bahlil also highlighted that Freeport Indonesia’s smelter represents a $3 billion investment, approximately IDR 48 trillion, and is scheduled to start operations on July 1, 2024. By processing copper concentrate from Timika in Gresik, it aims to generate 60 tons of pure gold, 400 thousand tons of copper cathodes, and a variety of other derivative products annually, starting next year.
Moreover, plans are in place to request Freeport Indonesia to construct another smelter in Timika, Papua, close to the Freeport mine in Tembagapura, as part of the government’s strategy to increase its stake in PTFI from 51% to 61% by 2041.
Bahlil views the development of this smelter and the divestment process as integral to the government’s downstream program, an investment strategy to generate future employment opportunities. This aligns with the global move towards green energy and industries, especially considering Indonesia’s demographic bonus peak in 2035, where 65% of the population will be of working age.
Tony Wenas, President Director of Freeport Indonesia, stated in late May 2024 that the copper smelter in JIIPE Gresik is ready to commence operations by June 2024. This project, initiated in October 2021, aims to refine copper concentrate with a capacity of 1.7 million tons per year, making it the world’s largest copper refining facility of its design. Equipped with state-of-the-art units for refining precious metals, oxygen production, sulfuric acid, desalination, and effluent and wastewater treatment, the smelter is designed for maximum raw material utilization and waste repurposing to achieve high-efficiency smelting and refining processes.
Currently, PTFI exports 60% of its concentrate production, while the remaining 40% is refined domestically at PT Smelting in Gresik, East Java, into copper cathodes. However, the anode sludge containing gold and silver is still exported. With the new smelter’s operation, anode sludge purification will be entirely domestic.
Despite the challenges of completing the world’s largest single-line copper smelter, the project team, contractors, and subcontractors have made commendable progress, supported by both central and local governments, to ensure timely completion. Tony mentioned the smelter’s potential to produce up to 50 tons of gold, 600 thousand tons of copper cathodes, and 150-200 tons of silver annually.
By the end of December 2023, Freeport Indonesia recorded the production of copper, gold, and silver contained in copper concentrate from 1992-2023 as 37.8 billion pounds of copper, 105.3 million ounces of silver, and 57.3 million ounces of gold. This smelter project, mandated by the Special Mining Business License (IUPK) of PTFI, represents a $3.1 billion investment, marking PTFI’s second smelter, with the first established in 1996 and managed by PT Smelting.