JAKARTA, Indonesia — Freeport-local McMoRan’s unit in Indonesia announced on Friday that talks with China’s Tsingshan Holding Group about developing a big copper smelting plant in the Southeast Asian country had fallen through. “[Freeport] was unable to strike an agreement with Tsingshan to develop the smelter,” Riza Pratama, Freeport Indonesia’s vice president for corporate relations, told Nikkei Asia. Following months of negotiations handled by Mind ID, an Indonesian state-owned mining holding company that owns a controlling position in Freeport Indonesia, Pratama refuses to explain what went wrong. Instead, Chiyoda International, a Japanese engineering and construction firm with substantial experience in Indonesia, was awarded a contract to design and construct the smelting plant in Gresik, East Java Province, for an estimated 300 billion yen ($2.7 billion). Tsingshan had approached the government with a “cheaper” plan in May, according to Mind ID President Orias Petrus Moedak, who described it as “interesting in terms of cash flow.” However, he said that the Indonesian side should verify to see if it would indeed be less expensive. Tsingshan has requested that its first copper smelting plant be built near Weda Bay on the island of Halmahera in North Maluku, closer to Freeport Indonesia’s activities in Grasberg, Papua Province on the island of New Guinea, according to Reuters. The Chinese stainless steel maker is building nickel and aluminum smelting plants in Indonesia independently and could not be reached for comment right away. Chiyoda International was awarded the engineering, procurement, and construction contract to develop the copper smelter within the Java Integrated Industrial and Ports Estate in Gresik by Freeport on Thursday. Prior to Tsingshan’s alternative, the Gresik smelter was the initial proposal. The new plant will have a capacity of 1.7 million tons of copper concentrate per year, which will be added to Freeport’s existing copper smelter, which has a capacity of 300,000 tons. Smelting, which is primarily owned by Mitsubishi Materials in Japan, is in charge of this. To keep its export licenses, Freeport has been forced to boost its smelting capacity as part of the government’s aim to develop Indonesia’s mining industry downstream. Moedak had previously stated that a decision on the additional plant needs to be made by May in order for Freeport to reach the government’s completion goal of the end of 2023. In a press statement, Chiyoda International Indonesia director Naoto Tachibana remarked, “We will try our utmost to ensure that the project is completed on schedule.” While the COVID-19 epidemic contributed to delays in contract signing, Freeport claimed that site clearance and procurement of construction materials had been completed at the Gresik site. To avoid future delays, the firm has requested 40,000 vaccination doses for construction employees. “The contract signing reaffirms [our] commitment to build the smelter, in line with the divestment agreement in 2018,” said Freeport Indonesia President Tony Wenas, referring to Mind ID’s — or Inalum as it was known at the time — acquisition of a majority stake in Freeport’s local operations as part of the government’s resource nationalism push. The contract with Chiyoda also includes the construction of a precious metals refinery in the same industrial park, according to Freeport. In Grasberg, Freeport operates one of the world’s largest copper and gold mines. Copper prices soared to new highs in May before tumbling in recent weeks. The surge in demand from the electric vehicle industry and renewable energy providers throughout the world is one of the reasons. Electric automobiles rely heavily on high-quality copper, which is used in motors, batteries, and cables./n
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