Indonesian state-owned miner PT Aneka Tambang is considering building a copper smelter for an estimated cost of $700 million, a company official said on Monday.

As well as conducting a preliminary study, the company was also in talks with an Asian firm on developing the copper smelter, Tato Miraza, Antam's development director said. He did not identify the company, or say where the smelter could be located.

We're still studying. It will take a long time, maybe 7-10 years. But we believe with the new mining law, there will be priority to process the metal at home, Miraza told reporters, referring to the new law passed last year that is partly aimed at pushing mining firms to process more minerals at home.

Miraza said the smelter could be an equivalent size to a copper smelter operated by PT Smelting in Gresik, East Java.

The smelter is currently the country's only copper smelter and has a capacity of 270,000 tonnes a year.

Smelting which is 60.5 percent-owned by Japan's Mitsubishi Materials Corp (5711.T: Quote) has said it planned to expand its capacity to 300,000 tonnes this year.

Under the new mining and coal law, investors must process all mining products into metal locally. But the government has said there would be flexibility in applying the requirement.


Antam could also start commercial production at its Cibaliung gold project in April or May next year, Miraza said.

The firm acquired PT Cibaliung Sumber Daya, which was 96 percent owned by Australian firm Arc Exploration Limited (ARX.AX: Quote), in February for $8 million.

The Cibaliung gold project in Banten province has a mine life of six years with annual ore production of 220,000 tonnes and production of gold equivalent of around 2.2 tonnes.

It has estimated gold reserves of around 12.8 tonnes, or 412,000 ounces.

Antam, 65 percent-owned by the Indonesian government, is involved in exploration and production of nickel ore, smelting of ferronickel, production and refining of gold, silver, bauxite, and iron sands.

(Reporting by Fitri Wulandari; Editing by Ed Davies)

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