Freeport McMoRan Suggests Freeport Needs Not to Build New Smelter

Summary

Freeport McMoRan Inc has suggested that PT Freeport Indonesia does not need to build a new smelter. In exchange, Freeport Indonesia suggested developing the existing smelter facility, PT Smelting Gresik. "So the alternative is, instead of building a new smelter, we can also expand the existing smelter and add precious metal processing facility," said Freeport McMoRan President and Chief Executive Officer (CEO), Richard Adkerson, in a conference call regarding the performance of the third quarter of 2020, last weekend.

According to Adkerson, Freeport McMoRan cannot decide, because the final decision is in the hands of the Indonesian Government as the largest shareholder of Freeport Indonesia through MIND ID. However, with only capacity expansion, there are two benefits. First, a precious metal smelter can be established. Second, even though the capacity is increasing, the existing smelter will still not be able to absorb all the concentrate produced by Freeport Indonesia. So, part of the concentrate production still has to be exported and Freeport Indonesia has to pay for export duties.

With the COVID-19 pandemic crushing the financial conditions of all countries including Indonesia, Adkerson explained, the additional revenue from Freeport Indonesia's export duty was quite attractive for the Indonesian government. "The benefits that can be obtained are that we [Freeport Indonesia] can avoid working on a new large smelter project and the financial benefits for the Indonesian government are also quite positive," Adkerson said.

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