Regulations that went into effect in January ban the export of mineral ore from Indonesia. To comply with these laws Freeport-McMoRan Copper and Gold, owner of the Grasberg Mine in Indonesia, and state-owned PT Aneka Tambang (Antam) each agreed to study the possibility of building a copper smelter.
Before the law went into effect major mining companies warned that operations would suffer unless they were given leeway in the regulations allowing time to meet the requirements.
The law sparked widespread concern about its impact on the mining industry and its potential to further undermine confidence in Indonesia's economy, Reuters reported. Metal ore and concentrate exports ground to a complete halt, government officials said in January, two weeks after the ban on ore shipments and an export tax were put in place.
Freeport Indonesia CEO Rozik Sutjipto told reporters that the two companies had agreed to look into the feasibility of building a $2.2 billion, 300 kt (330,000 st) -capacity smelter to process copper in one of four different areas, including Gresik in east Java where a smelter already exists.
Another possible location is Papua, the remote eastern region where Freeport operates the world's fifth largest copper mine and its top gold mine, Reuters reported.
Sutjipto said the study would take three months.
The long-planned ore export ban is aimed at shifting Indonesia away from a reliance on exports of raw materials for economic growth.
Many in the industry have criticized the government for the way it introduced the policy and for making little preparation for the law's enactment even though it was originally agreed by parliament some five years ago.