The Indonesian government has indicated a new smelter could be built in the country in coming years as the country continues to throw its support behind the local mining sector.

The US$1.8 billion government-mandated copper smelter will be built by China’s Tsingshan Steel at its Weda Bay nickel processing plant on the island of Halmahera, in the North Maluku province.

Maritime Affairs and Investment Coordinating Minister, Luhut Panjaitan, told Asia Times he expects the deal to be inked before the end of March, 2021.

“We are happy with the agreement, but the two sides are still in detailed discussions,” he said.

 

The announcement follows earlier reports in June that the Indonesian government intended to request the smelter be built by PT Freeport Indonesia, the local arm of global mining giant Freeport-McMoRan.

The Indonesian government holds a 51 percent stake in PT Freeport Indonesia.

Halmahera to house a processing hub

The new smelter will form part of a larger industrial park on the island which received national strategic project status earlier this year, and began nickel smelting operations in April. The area is currently owned and controlled by both Tsingshan Steel, and French mining and metallurgy firm Eramet.

Initially the smelter was to be built as part of Freeport-McMoRan’s deal with Indonesian authorities to maintain mining rights to their Grasberg gold mine (one of the world’s largest) until 2041.

Preparation works began at the site in February, however Freeport requested a delay due to the effects of the coronavirus.

Asia Times reports the company may now instead proceed with a US$250 million upgrade to the existing Mitsubishi copper smelter in Gresik, East Java, as a ‘token gesture’.

Mitsubishi and Freeport signed an agreement to increase the smelter’s capacity on 13 November.

The push to increase Indonesia’s smelting capacity follows the introduction of legislative changes designed to provide ease of business to mining rights holders across the country.

Gold project advances

At the same time that Freeport and Tsingshan jostle over construction of new smelters, gold explorer Nusantara Resources (ASX: NUS) continues to advance its Awak Mas gold project.

The country has also regular ranked within the top 10 countries by production volume.

Nusantara’s Awak Mas Gold Project is believed to hold 1.53 million ounces of gold and has an expected 16-year life span, and the company owns the sole exploration and mineral rights to the roughly 14,390 square hectare area through their local subsidiary, PT Masmindo Dwi Area. 

Earlier this year the business awarded its front-end engineering design contract – which Managing Director Neil Whitaker described as a “significant milestone” for the project’s development, which brings it one step closer to production.

Nusantara’s Managing Director Neil Whitaker joined us today for our fortnightly webcast ‘The Insider’. You can watch a full recording below.  If you would like to keep up to date with their company activities, please register on their Investor Centre. 

Reach Markets have been engaged by NUS to help manage their investor communications.

Sources:

• China solves Freeport’s $3 billion problem in Indonesia
• Indonesia says it will ask Freeport build copper smelter in Halmahera
• Indonesia Omnibus Bill – Changes to the Mining Law
• World mine reserves of gold as of 2019, by country (in metric tons)
• The top 10 gold producing countries
• Indonesia-investments.com: Gold
• Top 10 Gold-Producing Countries
• Nusantara lifts gold resource to 1.53Moz, mine life upped to 16 years
• Nusantara NewsRoom
• Nusantara keeps up Awak Mas gold project momentum with FEED contract award