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Freeport-McMoRan has announced plans to build a copper smelter and develop its gold and copper mines in East Java, Indonesia, with an investment of around $17bn.

The company is said to have signed a preliminary agreement with PT Petrokimia Gresik to build the smelter, according to the Wall Street Journal.

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Freeport-McMoRan president director Maroef Sjamsuddin was reported by Bloomberg as saying the smelter will be built at a cost of more than $2bn and a further $15bn will be spent on the long-term development of underground copper and gold deposits at its Grasberg mine complex in Papua.

Freeport’s latest decision comes after the announcement made by Indonesia Energy and Mineral Resources Minister Sudirman in January last year, saying that the government would ban the company’s local unit from shipping copper concentrate outside of the country.

The ban was enforced to encourage investors to build processing plants in the country.

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"$15bn will be spent on the long-term development of underground copper and gold deposits at its Grasberg mine complex in Papua."

Freeport was permitted to recommence copper concentrates exports after agreeing to pay export taxes and later announced its intention to build a smelter in Indonesia.

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The company has been in discussions with the Indonesian Government on its contract of work amendment, including details about building the smelter, which is expected to process two million tonnes of copper concentrate a year.

Sjamsuddin said: "We’re complying with the government rule and the mining law."

To acquire land for the smelter, Freeport will sign a memorandum of understanding with petrochemical company PT Petrokimia Gresik.

Image: Freeport will invest $17bn in new copper smelter in Indonesia. Photo: courtesy of PT Freeport Indonesia.