Surabaya. Freeport Indonesia's $3.7 billion (Rp 60 trillion) smelter in Gresik, East Java, will be inaugurated next week. Tony Wenas, President Director of PT Freeport Indonesia, announced during the Investor Daily Roundtable 2024 at Hotel Morazen Surabaya on Friday that the smelter is expected to produce 50 to 60 tons of gold annually.

Wenas explained that the copper smelter, situated in the Java Integrated Industrial and Port Estate (JIIPE) Special Economic Zone, is in its final construction phase. With a processing capacity of 1.7 million tons of concentrate, the smelter will undergo operational testing, including furnace heating, following its inauguration.

"Starting in 2025, it will produce gold bars and silver. Gold production is expected to reach 50 to 60 tons per year, with silver at 200 tons per year," he added.

Wenas disclosed that the total capital expenditure for the smelter's development amounted to $3.7 billion.

"This will certainly have a significant multiplier effect, especially once production begins," he emphasized.

The smelter is expected to play a crucial role in Indonesia's energy transition, particularly in the electric vehicle ecosystem. The copper cathodes it produces will serve as essential raw materials for copper rods used in electric vehicle batteries, along with solar panels, copper powder, strips, tubes, roofing, paint, and sintered products.

During the construction of the smelter, it created employment for 40,000 workers, 60 percent of whom were from East Java. This resulted in an economic turnover of Rp 2 trillion in service sectors such as catering, transportation, worker accommodations, cleaning services, labor supply companies, and office supplies.

This value encompasses 1,600 contracts with local small businesses in East Java. This economic impact is expected to grow once the smelter is fully operational.

Last June, Indonesia halted unprocessed copper ore exports to boost domestic processing, while exempting Freeport until May 2024 due to its ongoing smelter construction in East Java. The government recently extended Freeport's export permit.

Meanwhile, the Indonesian government is still negotiating to extend Freeport's mining permit, with conditions including the company agreeing to relinquish an additional 10 percent stake. Freeport's current mining permit expires in 2041, and the government currently holds a 51 percent stake in the company.

In March, President Joko "Jokowi" Widodo met with Richard Adkerson, Chairman & CEO of Freeport-McMoRan, at the Presidential Palace in Jakarta to discuss the progress of the smelter.