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Freeport Indonesia bets big on EV with Gresik smelter project

Jakarta Post - January 16, 2023

Gresik, East Java – Gold and copper mining company PT Freeport Indonesia (PTFI) expects that its US$3 billion copper smelter project in Gresik, East Java, could start operating early next year right when the demand for copper for electric vehicle (EV) production is expected to pick up.

Once fully operational, PTFI's new smelter in Gresik could process 1.7 million tonnes of copper concentrate annually into 550,000 tonnes of copper cathode, which can be further processed into electrical wiring, pipes and car batteries, among other products.

The construction project for the new smelter facility is now 51.7 percent complete and is expected to start commercial activity in late 2024. Thus far, PTFI has spent $1.63 billion on the project.

"Once we reach full capacity and manage to produce 600,000 tonnes of copper cathode we expect that industries further downstream, especially electric vehicle manufacturers, can absorb that output," PTFI CEO Tony Wenas said in a site visit to the Gresik smelter project over the weekend. The Jakarta Post was invited to join the trip.

Tony said that the Gresik smelter facility, which will be the biggest single-line design in the world, was built to support President Joko "Jokowi" Widodo's downstreaming ambition and was designed to be part of the EV production ecosystem in Indonesia.

"Truth be told, no country in the world builds smelters anymore [...] existing ones are already overcapacity. But we decided to do this to support the ecosystem of electric vehicles," Tony said.

Other than metals used in battery production such as cobalt, lithium and nickel, copper is expected to also play a key role in EV production especially in the wiring process to power an automobile.

PTFI started construction of the Gresik project in October 2021 and opted to build the facility at the Java Integrated Industrial & Port Estate (JIIPE) in the coastal city of Gresik due to its strategic location.

When the copper smelter, developed by Japan-controlled PT Chiyoda International Indonesia is operational, PTFI is expected to ship 100 percent of its copper concentrate mined in Timika, Papua, to Gresik and process it at the site.

Currently, PTFI uses the smelter facility run by PT Smelting Gresik in the nearby Manyaran area to produce 300,000 tonnes of copper cathodes. PTFI owns a 40 percent stake in the company while the Japanese firm Mitsubishi controls the remaining 60 percent.

Following the divestment deal between the United States-based mining giant and the Indonesian government, which led to the 20-year contract extension, PTFI plans to focus on developing a smelter and an underground mine at its Grasberg facility in Papua.

Freeport McMoRan CEO Richard Adkerson said in 2018 that PTFI was committed to complete the Gresik smelter construction within five years.

Earlier, President Jokowi touted the success of his government's takeover of Freeport's operation in Papua as key to pushing his downstreaming agenda further.

"We need to reverse the situation to one where our raw materials in mining, agriculture and plantation are processed locally to increase their added value," President Jokowi said in his speech to celebrate the 50th anniversary of the Indonesian Democratic Party of Struggle (PDI-P) last week.

Source: https://www.thejakartapost.com/business/2023/01/16/freeport-indonesia-bets-big-on-ev-with-gresik-smelter-project.htm