Following the nickel boom, Indonesia's copper smelting industry attracts investor interest

On June 27 (Friday), over the past decade, nickel smelters in Indonesia have attracted more than $80 billion in investment. As global demand for copper rises, the country is also rapidly becoming a significant player in the copper smelting industry.

In contrast to the more than 50 nickel smelters, Indonesia only has four copper smelters.

There is only one EV battery production factory in West Java Province, and the expansion of battery factories is closely linked to the large-scale expansion of the nickel industry.

A second EV battery factory, also located in West Java Province, is set to be completed in 2026.

In the copper industry, Indonesia has attracted over $9 billion in investment in recent years, including Freeport Indonesia's large copper refining facility in East Java Province and Amman Mineral's new smelter in West Nusa Tenggara Province.

Freeport Indonesia is majority-owned by the Indonesian government, with US commodity giant Freeport-McMoRan as a significant minority shareholder. Amman Mineral, on the other hand, is a private company.

The other two earlier-built copper smelters were constructed by local company Batutua Tembaga Raya and PT Smelting, the latter being a joint venture between Mitsubishi Materials and Freeport Indonesia.

Analysts and industry experts say that investor interest in copper ore processing plants is increasing, partly due to the significant rise in EVs. For medium-sized EVs, the copper content in each battery pack is typically around 10%, or about 80 kg in weight.

Earlier this month, Anindya Bakrie, Chairman of the Indonesian Chamber of Commerce and Industry, said, "I expect that we will see more and more copper smelters, but this will only happen with adequate financing and long-term investment."

He added that investors from the US are eager to enter Indonesia's critical minerals sector, including copper.

According to data from the International Energy Agency (IEA), global refined copper demand in 2024 is projected to be 27 million mt and is expected to increase to 31 million mt by 2030, due to its widespread use in power projects, EVs, renewable energy projects, and data centers.

Copper's electrical conductivity ranks second only to silver among metals, and it is widely used in wires and cables, automotive engines, and generators.

As the world's largest archipelagic country, Indonesia announced an ambitious plan on May 29 to build 47,758 km of new transmission cables to connect its main islands, bringing it closer to a unified power grid.

Irwandy Arif, an advisor at the Indonesian Mining Institute, pointed out that the optimistic forecast for EV sales in Indonesia is that they will absorb key minerals, including copper.

He said that by 2030, annual sales of four-wheeled EVs in Indonesia are expected to reach 195,000 units, while annual sales of two-wheeled EVs are expected to reach 5 million units. He noted that each four-wheeled EV typically requires 83 kg of copper, while each two-wheeled EV requires 4 kg.

According to data from the Indonesian Automotive Manufacturers Association, from January to March 2025, sales of four-wheeled EVs in the country tripled YoY to 16,770 units.

Jakarta-based research firm Petromindo recently stated in a report that, in terms of the ratio of a country's copper reserves to its processing output, Indonesia's investment in copper smelting is insufficient.

Indonesia has 220.3 million mt of copper reserves, ranking 10th globally, but its refined copper output ranks 16th. Indonesia even lags behind countries without copper reserves, such as Japan, South Korea, and Germany.

Pandu Setiabudi, a researcher at Petromindo, stated in a report earlier this year: "This gap underscores the significant investment potential in Indonesia's copper refining industry, which requires further development and expansion."

Irwandy, who previously served as a special advisor to Indonesia's Ministry of Energy and Mineral Resources, said that Indonesia currently lacks copper processing facilities capable of producing sintered copper products for automotive electrical systems, as well as copper powder for printed circuit boards and electronic or RFID tags.

Indonesia's existing copper processing facilities mainly produce copper anode for decorative coatings on jewelry or faucets, and copper cathode, which is typically further processed into EV batteries.

Katri Krisnati, Senior Director of Corporate Communications at Freeport Indonesia, said that in the short term, Indonesia will produce at least 1.1 million mt of copper cathode annually, elevating the country's ranking in this category from sixth to fifth globally.

The company's new copper refining facility in Gresik, East Java Province, resumed operations at the end of May after being temporarily shut down due to a fire in mid-October 2024, just months after the 560,000 Indonesian rupiah facility was put into use. The smelter has an input capacity of 1.7 million mt of copper concentrates, which can be processed into 650,000 mt of copper cathode.

Katri said: "Freeport's smelter has resumed operations and is currently operating at 40% capacity, and will gradually restore full capacity by December 2025." The company plans to produce 415,000 mt of copper cathode this year.

Amman Mineral began producing copper cathode in March this year. The company said it is currently fine-tuning new equipment to achieve full and sustained capacity. The company's plant in Sumbawa Barat, West Nusa Tenggara Province, has an input capacity of 900,000 mt of copper concentrates, which can be processed into 220,000 mt of copper cathode and other materials.

Irwandy said that the two new smelters would be a litmus test for the strength of demand for refined copper in Indonesia.

(Wenhua Comprehensive)