After nickel, Indonesia’s copper smelting industry is now attracting investors

JAKARTA - Indonesia has attracted investments of more than US$80 billion (S$102 billion) in the past decade into its nickel smelting plants. With global demand for copper rising, the country is fast becoming a key player in the copper smelting industry too.

Indonesia has only four copper smelters compared with more than 50 nickel smelters, with these nickel plants built in the main with investor money from China.

There is just one electric vehicle (EV) battery production facility in West Java province, tied to the huge expansion of the nickel industry.

A second EV battery plant also in West Java, being built by China’s CATL – the world’s largest EV battery maker – will be completed in 2026, with a production capacity of 15GW, which could generate enough batteries to power 250,000 EVs.

In the copper industry, Indonesia has attracted more than US$9 billion worth of investments in the last few years, including the entry of Freeport Indonesia with a massive 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, while Amman Mineral is a private company partly owned by local tycoon Anthoni Salim.

The other two earlier copper smelters were built by local company Batutua Tembaga Raya, which began commercial operations in 2018, and PT Smelting, a joint venture between Mitsubishi Materials Corporation and Freeport Indonesia, which has been around since the 1990s.

Investor interest in copper ore processing plants is picking up, analysts and industrialists say, helped in part by the same surge in EVs. Copper content in each EV battery pack is typically about 10 per cent, or weighing about 80kg, for a mid-size EV.

“I expect we will see more and more copper smelters, but that can happen only if ample financing is available and long-term investment is coming in,” Mr Anindya Bakrie, chairman of the Indonesian Chamber of Commerce and Industry, or Kadin, told The Straits Times during a discussion with foreign media on June 5.

He added that investors from the US are keen to enter Indonesia’s critical minerals sector, including copper, based on his conversations with business leaders and government officials during his recent visit there. 

Global refined copper demand in 2024 is estimated at 27 million tonnes, according to the International Energy Agency, and is forecast to rise to 31 million tonnes by 2030, due to its wide use in electrical projects, EVs, renewable projects and data centres.

Copper, with the second-highest electrical conductivity among metals after silver, is widely used in wiring and cables, electric motors and generators.

Indonesia, the world’s largest archipelagic nation, on May 29 announced an aggressive plan to build 47,758km of new transmission cables to link its major islands, bringing itself closer to a single power grid. 

South-east Asia’s largest economy also pledged to build renewable power plants five times faster over the next five years (2025-2029) and 11 times faster in the five years after that (2030-3034), as part of its energy transition commitment.

Professor Irwandy Arif, an adviser at the Indonesian Mining Institute, which focuses its research on mineral resources, pointed out rosy forecasts of Indonesia’s EV sales that would absorb critical minerals, including copper.

Indonesia expects to see four-wheeled EV annual sales of 195,000 units and two-wheeled EV annual sales of five million units in 2030, he told ST, noting that each four-wheeled EV typically requires 83kg of copper, and each two-wheeled EV, 4kg.

The country’s four-wheeled EV sales tripled to 16,770 units in January-March 2025, compared with the same period a year earlier, according to the Indonesian automakers’ association (Gaikindo).

Jakarta-based research company Petromindo, which focuses on petroleum, mining and energy, illustrated in its recent report the extent of Indonesia’s under-investment in copper smelting by using the level of copper reserves a country has, relative to its processed output. 

Indonesia’s copper reserves, at 220.3 million tonnes, rank 10th globally, but the country’s refined copper production ranks 16th. The country thus lags behind even countries like Japan, South Korea and Germany, which do not have copper reserves.

“This gap highlights significant investment potential in Indonesia’s copper refining industry, which requires further development and expansion,” researcher Pandu Setiabudi of Petromindo said in his report to clients earlier in 2025.

Prof Irwandy, a former special adviser to the country’s energy and mineral resources minister, told ST that Indonesia does not yet have copper processing facilities that could make, among other things, sintered copper products that are used in automotive electrical systems, and granulated copper powder that is used in printed circuit boards and electronic or radio frequency identification tags.

The existing copper processing facilities in Indonesia make, among other things, copper anode, used in decorative coating such as jewellery or taps; and copper cathode, which is typically further processed into EV battery cells.

Indonesia, in the short term, would produce at least 1.1 million tonnes of copper cathode a year, raising the country’s global rank in this category to fifth from sixth, Ms Katri Krisnati, a senior official at Freeport Indonesia’s corporate communication department, said in a written reply to ST. Nearly half of Freeport Indonesia’s stake is owned by Freeport-McMoRan, which is based in Phoenix, Arizona.

The company’s newly completed copper refining facility in Gresik, East Java province, resumed operations in late May after a fire forced it to temporarily shut operations in mid-October 2024, only a few months after the 56 trillion rupiah (S$4.4 billion) facility was launched. The smelter’s input capacity is 1.7 million tonnes of copper concentrate, churnable into 650,000 tonnes of copper cathode.

“Freeport smelter has resumed operations and is currently working at 40 per cent capacity, and will gradually ramp up to full capacity in December 2025,” according to Ms Katri. The company aims to produce a total of 415,000 tonnes of copper cathode in 2025, she told ST.

Amman Mineral, which began copper cathode production in March 2025, said it is currently fine-tuning the new equipment before it can reach full, sustained capacity. The annual input capacity at its 21 trillion rupiah plant in Sumbawa Barat, West Nusa Tenggara province, is 900,000 tonnes of copper concentrate, which is processed into 220,000 tonnes of copper cathode and other material.

The company also plans to double the copper-processing capacity at its Sumbawa Barat plant, and will be building a 450MW power plant in order to do so. 

“We remain confident in the long-term fundamentals for copper, supported by global trends in electrification, renewable energy and infrastructure development,” Amman Mineral said in a written reply to ST.

Prof Irwandy said these two newer plants serve as the litmus test on how strong the demand for refined copper would be in Indonesia.

“It is likely that the take-up rate for their output by domestic players will be high, considering Indonesia’s ongoing energy transition to renewables,” he told ST.