Indonesian copper imports seen melting - industry
Reuters Story - January 12, 1998 01:32
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By K.T. Arasu
JAKARTA, Jan 12 (Reuters) - Indonesian copper imports are
set to plunge this year with the government pulling the plug on
several power projects due to an economic crisis that has slowed
the property and construction sectors, industry sources said on
Monday.
"There is no question about it. Imports of copper cathodes
will fall significantly this year," a senior executive with a
company that produces cables told Reuters.
"I see a fall of 40-50 percent in the imports of copper
cathodes. The economic outlook is gloomy and a turnround is not
expected for at least 1-1/2 to two years," he said.
Copper cathodes are widely used in the production of power
and telecommunications cables, and are used to a smaller extent
in the electronics sector and plumbing to carry hot water.
Indonesia imports all its copper cathodes because there are
no smelters in the country. Mitsubishi Materials Corp
is constructing a 200,000-tonne-per-year smelter on the main
island of Java which is scheduled for completion in August.
Mitsubishi Materials owns a 75-percent stake in the $600
million project, with Freeport-McMoRan Copper & Gold Inc
holding the remaining 25 percent.
Indonesia's President Suharto decided on Saturday to review
or postpone 15 major infrastructure projects due to the current
financial crisis.
State Secretary Murdiono was quoted by the official Antara
news agency as saying eight projects to be reviewed include the
Tanjung Jati "A" and Tajung Jati "C" coal-fired power plants.
The seven projects to be delayed include toll roads, smaller
power stations and a new airport for Medan in North Sumatra.
Industry sources said Indonesia imported some 90,000 tonnes
of copper cathodes in 1997, compared with 85,000 tonnes in 1996
and 1995.
"I expect copper cathode imports to decline by at least 30
percent this year," an executive with a mining company said.
"Copper fabricators who produce cables and wires have already
begun cutting back on work shifts."
"The cancellation of the power projects and other
infrastucture projects will only further dampen domestic
consumption of copper cathodes," he added.
Indonesia is embroiled in one of the worst economic turmoils
in decades following a loss of investor confidence that has
resulted in the rupiah shedding some 70 percent of its value
against the U.S. dollar in the last six months.
The deteriorating economic situation has led to
unprecedented calls for Suharto's resignation at the end of his
current term in March, casting uncertainty over the political
future of the 76-year-old leader who has ruled the country for
32 years.
Suharto met IMF First Deputy Managing Director Stanley
Fischer in emergency talks on Monday in a bid to rescue
Indonesia from the crisis.
"A lot of companies cancelled their orders for copper
cathodes late last year," one cable maker said.
"Imports last year should be below 100,000 tonnes because we
only had half a good year. Imports should be lower by at least
50 percent this year. First-half 1999 imports will also be
poor," he said.
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