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Rearched by Industrial Info Resources (Sugar Land, Texas) -- As the 2014 dateline on raw metal ore export ban draws closer, Bumi Resources Tbk (BUMI.JK) is planning to build a $1.5 billion polymetallic smelter in Medan, South Sulawesi, Indonesia. This is to guarantee the smelting of metal concentrates expected from a planned underground lead-zinc-silver mine being developed by its 80% subsidiary, PT Dairi Prima Mineral (DPM).
Dileep Srivastava, business director of Bumi Resources disclosed this recently, adding that the management of Bumi Resources is currently seeking potential investors and technology giants to partner with, in the construction of the smelter project. "This is a billion dollar project, management is currently seeking investors to partner with, for funding and technology aspects", he said. Dileep explained further that building a smelter becomes necessary following current reforms and regulations in the Minerals sector in Indonesia prohibiting export of some unprocessed metallic ores from 2014.
Since 2001, Bumi Resources had planned to develop its lead-zinc-silver underground mine located in the axis of Gerbang III-Sidiangkat Sidikalang, Medan, Sumatra Utara, Indonesia. Industrial Info has been told that mine development, which was initially delayed by permitting, would continue to experience further delays pending the establishment of a new smelter to handle ore processing. The mine concession area has one of the highest grades of zinc deposits in the world (11.5% Zn, 6.8% Pb, 7.5 Ag g/t). The total resources size from Anjing Hitam, Lae Jahe, and Base Camp sites (including reserves size) amount to 25 million tons of ore.
Indonesian Government had legislated a ban on exports of some metal ores unless they have been processed locally first. The new regulation will take effect in 2014. The Indonesian government also imposed a 20% duty on 65 minerals through its Finance Ministry in May, 2012. A follow-up statement by the ministry explained that the new export fee is a step to curbing exports of unprocessed ores and to boost state revenue. The regulations specifically demand firms to submit plans to either build smelters or to process their ore locally, before being allowed to export raw ore from Indonesia. In response to this, companies and private investors have been submitting applications of interest to establish smelters in the country. Rudi Rubiandini, the deputy minister for energy and mineral resources in Indonesia confirmed that 185 proposals had already been submitted by investors to the ministry. That amounts to $555 billion in investments, more than two-thirds of Indonesia's gross domestic product. He cautioned that the plans were not guaranteed. "It does not mean all the plans to build smelters will be realized," Rudi said.
Companies in the first list of submitted applications include PT Vale Indonesia Tbk, French miner -- Eramet-SLN, Bumi Resources Tbk, Freeport Indonesia etc. PT Vale Indonesia Tbk (INCO.JK), a subsidiary of the Brazil-based Vale, the world's second-largest mining company, said it would invest $2 billion to expand a nickel refinery in Sorowako, South Sulawesi. It is also seeking to build a refinery in Pomalaa, and Bahodopi - Central Sulawesi in an investment expected to double production of nickel matte (a 78% intermediate nickel product) in Sorowako to 120,000 tons. These refineries are expected to be operational in 2015. Currently, Vale exports all of its nickel matte to Matsusaka, Japan. Eramet chairman - Patrick Buffet, who earlier worked as an advisor to the French government said company plans to spend $6 billion, beginning with a $450 million investment, to develop a nickel and cobalt mine and a refinery on Halmahera Island in North Maluku - The Weda Bay Nickel project. Latest updates from Eramet indicate that Weda Bay is awaiting top management's decision later this year before construction begins.
Another prospective giant in the sector, PT Aneka Tambang Tbk (ASX:ATM) is focusing on building an aluminum plant in Tayan, West Kalimantan, for $450 million. It is also building a $1 billion smelter grade alumina (SGA) plant in Pontianak, in the same region.
For the US-based mining giant, Freeport-McMoRan Copper & Gold (NYSE:FCX), recent updates seem to differ from the company's earlier resolve. Freeport had earlier indicated that 45% of the copper and gold mined at the Grasberg mine in Papua would be sent to a planned copper smelting facility in Gresik, East Java; however, this may not be feasible soon as it now considers building a new smelter as uneconomical. "Smelting is a difficult business. You have big capital expenditures and small or no margins at current treatment and refining charges (TC/RCs), and I don't see TC/RCs improving in coming years", said Javier Targhetta, Freeport's senior vice president of marketing and sales, in an interview at the Metal Bulletin Copper Conference in Madrid recently. "We have our contract of work and we are abiding by it. If there is any new smelting capacity built in Indonesia, we will make every effort to be able to supply concentrate," he added.
Presently, uncertainty mounts in the mineral sector of Indonesia, on how to meet up with the dateline of the exports ban. This is because construction of a new smelter would take not less than 18 -- 24 months to complete, yet there is no existing construction schedule targeting this timeline at the moment. In a desperate reaction to this, Indonesian government is holding talks with stakeholders for possible collaborative efforts, in addition to finalizing plans to subsidize some aspects of the construction process for any company wishing to start construction of new smelters in the country.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
Dileep Srivastava, business director of Bumi Resources disclosed this recently, adding that the management of Bumi Resources is currently seeking potential investors and technology giants to partner with, in the construction of the smelter project. "This is a billion dollar project, management is currently seeking investors to partner with, for funding and technology aspects", he said. Dileep explained further that building a smelter becomes necessary following current reforms and regulations in the Minerals sector in Indonesia prohibiting export of some unprocessed metallic ores from 2014.
Since 2001, Bumi Resources had planned to develop its lead-zinc-silver underground mine located in the axis of Gerbang III-Sidiangkat Sidikalang, Medan, Sumatra Utara, Indonesia. Industrial Info has been told that mine development, which was initially delayed by permitting, would continue to experience further delays pending the establishment of a new smelter to handle ore processing. The mine concession area has one of the highest grades of zinc deposits in the world (11.5% Zn, 6.8% Pb, 7.5 Ag g/t). The total resources size from Anjing Hitam, Lae Jahe, and Base Camp sites (including reserves size) amount to 25 million tons of ore.
Indonesian Government had legislated a ban on exports of some metal ores unless they have been processed locally first. The new regulation will take effect in 2014. The Indonesian government also imposed a 20% duty on 65 minerals through its Finance Ministry in May, 2012. A follow-up statement by the ministry explained that the new export fee is a step to curbing exports of unprocessed ores and to boost state revenue. The regulations specifically demand firms to submit plans to either build smelters or to process their ore locally, before being allowed to export raw ore from Indonesia. In response to this, companies and private investors have been submitting applications of interest to establish smelters in the country. Rudi Rubiandini, the deputy minister for energy and mineral resources in Indonesia confirmed that 185 proposals had already been submitted by investors to the ministry. That amounts to $555 billion in investments, more than two-thirds of Indonesia's gross domestic product. He cautioned that the plans were not guaranteed. "It does not mean all the plans to build smelters will be realized," Rudi said.
Companies in the first list of submitted applications include PT Vale Indonesia Tbk, French miner -- Eramet-SLN, Bumi Resources Tbk, Freeport Indonesia etc. PT Vale Indonesia Tbk (INCO.JK), a subsidiary of the Brazil-based Vale, the world's second-largest mining company, said it would invest $2 billion to expand a nickel refinery in Sorowako, South Sulawesi. It is also seeking to build a refinery in Pomalaa, and Bahodopi - Central Sulawesi in an investment expected to double production of nickel matte (a 78% intermediate nickel product) in Sorowako to 120,000 tons. These refineries are expected to be operational in 2015. Currently, Vale exports all of its nickel matte to Matsusaka, Japan. Eramet chairman - Patrick Buffet, who earlier worked as an advisor to the French government said company plans to spend $6 billion, beginning with a $450 million investment, to develop a nickel and cobalt mine and a refinery on Halmahera Island in North Maluku - The Weda Bay Nickel project. Latest updates from Eramet indicate that Weda Bay is awaiting top management's decision later this year before construction begins.
Another prospective giant in the sector, PT Aneka Tambang Tbk (ASX:ATM) is focusing on building an aluminum plant in Tayan, West Kalimantan, for $450 million. It is also building a $1 billion smelter grade alumina (SGA) plant in Pontianak, in the same region.
For the US-based mining giant, Freeport-McMoRan Copper & Gold (NYSE:FCX), recent updates seem to differ from the company's earlier resolve. Freeport had earlier indicated that 45% of the copper and gold mined at the Grasberg mine in Papua would be sent to a planned copper smelting facility in Gresik, East Java; however, this may not be feasible soon as it now considers building a new smelter as uneconomical. "Smelting is a difficult business. You have big capital expenditures and small or no margins at current treatment and refining charges (TC/RCs), and I don't see TC/RCs improving in coming years", said Javier Targhetta, Freeport's senior vice president of marketing and sales, in an interview at the Metal Bulletin Copper Conference in Madrid recently. "We have our contract of work and we are abiding by it. If there is any new smelting capacity built in Indonesia, we will make every effort to be able to supply concentrate," he added.
Presently, uncertainty mounts in the mineral sector of Indonesia, on how to meet up with the dateline of the exports ban. This is because construction of a new smelter would take not less than 18 -- 24 months to complete, yet there is no existing construction schedule targeting this timeline at the moment. In a desperate reaction to this, Indonesian government is holding talks with stakeholders for possible collaborative efforts, in addition to finalizing plans to subsidize some aspects of the construction process for any company wishing to start construction of new smelters in the country.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
