April 4, 2014 / 9:31 AM / 4 years ago

Indonesia's Antam-Freeport copper smelter set to miss deadline

JAKARTA, April 4 (Reuters) - A copper smelter venture between diversified Indonesian miner Aneka Tambang (Antam) and Freeport McMoRan Copper & Gold Inc may not be ready before a ban on concentrate exports takes effect in 2017, the state-owned firm said.

The two firms began studying the feasibility of a copper smelter project in January soon after Indonesia halted exports of unprocessed minerals and ruled that miners must refine metals domestically by 2017 as well as pay an escalating export tax that reaches 60 percent in 2016.

The changes will force copper miners to slash output if no new smelters are ready by 2017, since Indonesia’s sole copper smelter, PT Smelting, can only process a fifth of national output of copper concentrate.

“We need more time,” Antam Chief Executive Tato Miraza told reporters on Friday, adding that construction of the copper project his firm is studying would not begin before 2015, at the earliest.

“Antam’s main focus is the development of the ferronickel smelter expansion in Pomala and East Halmahera ferronickel project,” Miraza said, referring to two of the firm’s nickel projects hit by the ban on ore shipments.

“It (needs) three years,” mineral enterprise director Dede Suhendra said, referring to the development of the Antam-Freeport project, though he added the timeframe could be cut.

Other Indonesian copper smelter projects aiming to process concentrate from Freeport and fellow miner Newmont Mining Corp were expected to take up to 5 years to build.

Concentrates are an intermediate product between ore and metal, enriched with minerals as a result of processing.

The pre-feasibility study for the copper project is expected to be complete by the end of this month, Miraza said.

A delay in the Antam copper project could also hamper this month’s expected resumption of concentrate exports by Freeport and Newmont after they stopped in January, because of the new rules.

Indonesia is using the project, which would process concentrate from the two U.S firms, to gauge Freeport’s commitment to the domestic processing rules, with an offer to adjust the export tax once the project gets underway.

“If it’s not ready (by 2017) their concentrate will be withheld,” coal and minerals director general Sukhyar told reporters, reiterating that the concentrate shipment ban would kick off as planned.

Freeport targets to sell 2,118,525 tonnes of concentrate from its Grasberg mine in Indonesia this year. (Writing by Fergus Jensen; Editing by Clarence Fernandez)

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