Strategic Alignment: Amman's Export Concentrate Could Feed Freeport's Smelter

Jakarta, Indonesia – Indonesia's push for greater domestic value addition from its mineral resources is being tested by a real-time crisis, leading to a novel proposal. Energy and Mineral Resources Minister Bahlil Lahadalia has brokered a conversation between PT Freeport Indonesia (PTFI) and PT Amman Mineral Nusa Tenggara (AMNT), suggesting the latter's export-grade copper concentrate could supply the former's dormant smelter. This move represents a practical attempt to align raw material availability with processing capacity within the country's borders.

The proposal addresses two distinct problems with one integrated solution. Freeport's operational crisis is deep: a landslide at its cornerstone Grasberg Block Cave (GBC) mine has suspended the source of 70% of its ore, idling its massive new smelter in Gresik. Concurrently, Amman Mineral is holding a significant stockpile of concentrate that it cannot process because its own smelter is under force majeure due to a fire. While Amman has a government license to export this material, a domestic sale to Freeport would keep the value chain within Indonesia.

Minister Bahlil was careful to frame his involvement as that of a catalyst, not a controller. He revealed he specifically asked Freeport's President Director, Tony Wenas, to pursue B2B talks with Amman. "I requested that Amman and Freeport conduct B2B communication so their material can be purchased by Freeport to be processed at Freeport's smelter with an economical price. That means it's a B2B problem," Bahlil stated, emphasizing the government's limited role as regulator. This approach preserves corporate negotiating autonomy while advancing a national interest.

For Freeport, the economic imperative to restart its smelter is strong. The facility represents a multi-billion dollar investment aimed at complying with and benefiting from Indonesia's downstreaming policy. Running the smelter, even with third-party concentrate, maintains operational readiness, preserves jobs, and generates some cash flow. Tony Wenas acknowledged the company is reviewing the option, noting that Indonesia has only two major copper concentrate producers, making Amman the logical alternative source.

Amman Mineral's position is one of flexible opportunity. The company's President Director, Rachmat Makkasau, has expressed openness to all buyers. Selling to Freeport could offer certain advantages, such as lower shipping costs and faster payment cycles compared to overseas customers, though the final decision will unquestionably be driven by economics. The company's immediate priority remains repairing its smelter to commence production of copper cathode.

This potential transaction intersects with broader policy discussions, such as Domestic Market Obligation (DMO), which Bahlil has also referenced in the context of gold supplies. While not a formal DMO, the proposal embodies a similar principle: prioritizing domestic industrial needs for nationally produced raw materials. It tests the industry's ability to self-organize for mutual and national benefit without heavy-handed regulation.

The commercial and technical negotiations will be intricate. The parties must agree on a price reflective of global indices like the LME, which recently saw copper concentrate prices rise due to tight supply—a condition partly created by the Grasberg shutdown itself. They must also confirm the chemical suitability of Amman's concentrate for Freeport's specific smelting technology.

Minister Bahlil's facilitation of this dialogue marks a sophisticated step in resource sector governance. It moves beyond mere regulation to active, solution-oriented stakeholder management. Whether this specific deal materializes, it sets a precedent for creative problem-solving that leverages Indonesia's entire mineral ecosystem to overcome local disruptions and strengthen its downstream industry.

Tag: Copper Concentrate Export Domestic Market Obligation Mineral Processing Indonesia Mining Economics Resource Nationalism