Bumi Resources Minerals is aiming to start commercial production of its zinc project next year after it secured an exploitation permit from the national government.
The Bumi Resources unit said on Wednesday that, through its subsidiary Dairi Prima Mineral, it had secured a mining and exploitation permit from the Ministry of Forestry on Monday for its zinc and lead concession in North Sumatra.
Dairi Prima is 80 percent owned by BRM while the remaining 20 percent is owned by state-controlled Aneka Tambang.
The project has 11 million tons of reserve and 25 million tons of resource based on an estimate by the expert Joint Ore Reserves Committee. The recently-acquired permit will last for eight years with a possible extension.
“We are expecting the commercial production to start in the second quarter or third quarter next year,” Herwin Hidayat, vice president for investor relations at BRM, told the Jakarta Globe on Wednesday.
He said the production capacity for the mine project was 1 million tons of ore annually, which can be processed into about 200,000 tons of zinc and 100,000 tons of lead before being exported.
Meanwhile, he said BRM did not plan to build and own its smelter for the zinc and lead production. “Because the production is small, it’s not economical to build our own smelter,” Herwin said.
He said the company was studying several options for downstream ore production. He said it may combine efforts with other miners to build one smelter to be used together, or invite zinc and lead buyers to invest in a smelter.
“We haven’t reached any decision yet. The focus now is to start exploitation as soon as possible,” Herwin added. He said the zinc and lead products may be sold to buyers from China or Japan. Shares in BRM rose 1.2 percent to Rp 425 on Wednesday.