Freeport Indonesia Smelter In Gresik Operates, Airlangga Hopes To Increase State Revenue

JAKARTA - The government has initiated an industrial downstream policy which is expected to be able to support increasing the added value of the national economy as well as being one of the keys in maintaining national economic resilience.

Coordinating Minister for Economic Affairs Airlangga Hartarto said that to support downstreaming policies, the role of domestic off-takers is very important, including users of copper raw materials.

Furthermore, Airlangga said, the supply of copper downstream products needed by Indonesia currently still relies on imported products such as copper tubes, copper tape, copper evaporators, as well as the components needed in the production of Electric Vehicles (EVs) such as cables, inverters, and batteries.

According to Airlangga, in order to meet these needs, the Government continues to encourage the processing industry in Special Economic Zones (SEZs) to carry out downstreaming.

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Airlangga explained that the PT Freeport Indonesia (PTFI) smelter is the copper refining facility with the largest single-line design in the world with a purification capacity of 1.7 million tons of copper concentrate per year.

The project occupies 100 hectares of land in the SEZ of Java Integrated Industrial Ports Estate (JIIPE), Gresik, East Java with a cumulative investment value of IDR 58 trillion or around USD 3.7 billion.

Airlangga said the investment would not only provide benefits to domestic construction companies, but would also create multiplier effects to people in Gresik Regency.

Together with the smelter operated by PT Smelting, both of them will purify 3 million tons of copper concentrate per year by producing around 600,000 tons of copper cathode, 50 tons of gold, and 200 tons of silver per year.

With the operation of this smelter, Airlangga said that all copper costs produced by PTFI can all be processed and purified domestically, as well as anode mud from PT Smelting.

Dan ini yang pertama integrasi tambang sampai dengan produk akhir. Dan dengan integrasi ini, maka produksi emas nanti yang 50 ton bayar royalties. Karena ini terintegrasi dari tambang sampai ke hilir. Begitu juga untuk silver juga bayar royalties. Jadi tentu banyak pendapatan yang diperoleh Pemerintah, ungkap Airlangga.

Airlangga conveyed that the presence of PTFI at the Gresik SEZ is expected to be one of the attractors in forming an area with an ecosystem that supports downstreaming, especially EVs.

As for March 2024, SEZ Gresik has recorded an investment value of IDR 75.2 trillion and absorbs more than 35,000 workers.

Of course in the future Indonesia will be able to increase its exports. If our exports are strong, then our rupiah can be stable. For example, from nickel and from palm oil, our exports are 55 billion US dollars. Now the oil imports are 40 billion US dollars. So actually natural hedging happened," concluded Airlangga.