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ollowing the government'€™s decision to support the development of a copper smelter in Papua, concerns are rising over the total availability of copper concentrate.

The Energy and Mineral Resources Ministry'€™s director general for mineral and coal, R. Sukhyar, said the construction of the Papua smelter might cause a supply problem for other smelters to be built in the country.

He said that Freeport Indonesia, as the main copper producer, would have to provide a supply for both the Papua plant and for its own in Gresik, East Java. As a consequence, with the current production levels the country'€™s other smelters would suffer from a shortage.

 '€œWe will need to see the current total production and the future planned production. What'€™s clear is that a supply for the Papua smelter of 900,000 tons is a must while other possible smelter developments will have to be adjusted,'€ Sukhyar said Monday evening.

He said that his office would arrange a meeting with Freeport Indonesia, PT Newmont Nusa Tenggara and PT Gorontalo Minerals and several other companies that have previously expressed plans to build smelters.

The meeting, according to Sukhyar, will discuss the balance of concentrate supply and the planned smelter developments.

Energy and Mineral Resources Minister Sudirman Said stated Tuesday that the government would support cooperation between the local administration and a Chinese investor to develop a copper smelter in the resource rich province.

Under the new plan, the copper smelter will process and refine copper concentrate produced by Freeport Indonesia, a subsidiary of US-based Freeport-McMoRan Inc.

The Papua governor initially expected that the planned smelter would be developed by Freeport Indonesia, which is also operating the Grasberg mining site located in the province. However, Freeport Indonesia said that it has opted to develop a new smelter in Gresik, East Java, as part of its commitment to comply with the 2009 Mining Law requiring mining firms to process and refine minerals in domestic smelters.

Papua Governor Lukas Enembe said the planned smelter would have the capacity to process 900,000 tons of copper concentrate. He added that the local administration would team up with the China Nonferrous Metals Co. to build the smelter.

He said the smelter development itself will need around US$1 billion in investments.

Freeport currently produces up to 2 million tons of copper concentrate per year. Following a planned full implementation of a ban on mineral ore exports, the government is only allowing copper concentrate to be sent overseas until 2017. Therefore, a new facility must be built to process the concentrate.

After a prolonged negotiation, Freeport agreed to build a new smelter in Gresik, near the location of an existing smelter operated by Smelting Gresik.

The new Gresik smelter, whose development is estimated to cost around $2.3 billion, is designed to have a total capacity for processing 2 million tons of copper concentrate per year. The smelter will be the second smelter in Gresik processing Freeport'€™s copper concentrate .

The existing smelter, PT Smelting, is jointly owned by Freeport and several other companies.