A fire broke out at the world’s largest copper plant, operated by Freeport McMoRan’s Indonesian subsidiary, PT Freeport Indonesia, halting copper cathode production. This incident has raised concerns about its potential impact on the Indonesian government’s ongoing policies to control mineral exports and promote downstream industries.
On Monday, Tony Wenas, CEO of Freeport Indonesia, announced that a fire broke out at the smelter in the JIIPE economic zone in East Java, forcing a production shutdown. The fire occurred in the sulfuric acid facility of the $3.1 billion smelter, the largest of its kind in the world. Fortunately, there were no casualties, and authorities are currently investigating the exact cause of the fire.
Wenas stated that sulfur gases are released during copper cathode production, necessitating a halt. The outcome of the investigation will determine whether production can resume.
Indonesian Minister of Investment Luhut Binsar Pandjaitan stated that the government will review the production resumption plan focusing on safety.
Freeport Indonesia completed the smelter in June and began production last month, but earlier leaks delayed full operations until November. Designed to process 1.7 million tonnes of copper concentrate annually, it produces approximately 900,000 tonnes of copper cathodes, 50 tonnes of gold, and 210 tonnes of silver. Full capacity is expected by January 2025, though the recent fire will prompt a reassessment of these production expansion plans.
Indonesia has been pushing to shift from exporting raw materials to higher-value products by controlling key mineral exports. However, setbacks at the smelter, including the fire and previous leaks, may delay the government’s timeline for export controls.
The Indonesian government is likely to extend Freeport Indonesia’s copper concentrate export license from the original date of December 31 to early next year. Minister of Energy and Mineral Resources Arifin Tasrif indicated that while peak production is anticipated by December, it will depend on whether the plant can operate at full capacity over the next few months. If the plant’s performance lags, an export permit extension of 1-2 months is likely.
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