PT Smelting secures $250m refinancing

PT Smelting, operator of Indonesia’s first and only copper smelter and refinery, has concluded a $250m refinancing of its working-capital facility in a deal led by the Bank of Tokyo Mitsubishi UFJ and Mizuho Corporate Bank.

The refinancing will enable the company to compete more strongly against the entry of a new competitor when PT Nusantara Smelting will set-up a rival smelting plant in Bontang in east Kalimantan, Indonesia. The plant is being established ahead of a new mining law requiring materials to be processed at home before they are exported. Work will begin on the new smelting plant in 2009 and production is expected to start in 2011.

Uncertainty caused by the passage of that law has affected the development of Indonesia’s mining industry, holding up investments in coal, copper, gold, tin and nickel mining ventures, according to Reuters.

PT Smelting is three-quarters owned by Japanese conglomerates, with Mitsubishi Materials owning a controlling stake of 60.5% along with Nippon Mining and Minerals with 5% and Mitsubishi Corporation 9%. The remaining 25% is held by PT Freeport Indonesia, the Indonesian unit of US mining group Freeport McMoran Copper & Gold.

Its current production of copper cathode stands at just over 255,000 tons per year, with most being sold into the Indonesian market and the balance exported to other Asian markets. By products from the copper production processes – sulphuric acid, granulated slag and gypsum – are sold locally.

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