JAKARTA, June 27 (Reuters) - Copper miner Freeport

Indonesia on Thursday launched its $3.7 billion copper smelter

in Gresik, East Java, citing growing demand for the metal in the

race to transition to renewable energy.

The smelter's total input capacity is 1.7 million metric

tons of copper concentrate and output capacity will reach around

650,000 tons of copper cathode and 50 to 60 tons of gold, said

Tony Wenas, chief executive of Freeport Indonesia, majority

owned by the Indonesian government but operated by U.S mining

giant Freeport McMoran ( FCX ).

The facility is expected to produce its first copper cathode

in August, when it starts to operate at 50% capacity, Wenas

said, adding it will reach full capacity in December.

"Copper going forward will be very much needed by the

world," Wenas said. "Countries are racing to transition their

energy sources to renewables and sustainable sources. This will

need a lot of copper."

Indonesia banned exports of all raw minerals from June 2023,

but gave Freeport Indonesia and rival copper miner Amman Mineral

Internasional dispensation until May 31, 2024, to

allow them to finish the construction of their smelters.

Both companies have requested an extension of export permit

until the end of 2024, so they could continue to ship copper

concentrate while waiting for their smelters to reach full

capacity. The government has said it would grant such extension.

Attending the launch, Investment Minister Bahlil Lahadalia

reiterated his support for the export permit extension,

especially after the launch of the Gresik smelter.

Minister Bahlil also asked Freeport to build another copper

smelter in the country's eastern region of Papua, near its

Grasberg copper mine.

Freeport Indonesia spokesperson did not immediately respond

to request for comment on the government's proposal for Papua

smelter and when asked whether the company has received the

permit extension.

News website Bloomberg Technoz reported on Tuesday Freeport

had not obtained the extension.

Jakarta has given Freeport Indonesia a tax break for its

Gresik smelter investment.