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According to this recap by @Abacoolloo of a T20 investor presentation in March, GMC's power costs will be US$0.086/kWh for the next 4-5 years.

In an early feasibility study, GMC allowed US$0.11/kWh for power costs, which accounted for 44.6% of production costs - slightly higher than the standard 40% stated in the quote box above - and still resulted in a net operating margin of US$21.88m for 2 smelters.



If you plug $0.086 into the above cost template, the following things happen:
- Power costs decrease from US$360.47/tonne to $281.82/t (the 2015 Smelter Study used $302/t)
- Power as a percentage of total production costs decreases from 44.6% to 38.6%
- Net operating margin per tonne of alloy increases from US$691/t to $770/t
- Net operating margin for 2 smelters increases from US$21.88m to US$24.37m

GMC's share of this projected US$24.37m margin would be US$18.28m, having given away 25% of PT Gulf for A$6m. Obviously it was a desperate deal - suggesting that without Fofo's help, the net operating margin would have likely been zero - but we cannot underestimate the value of having him on board. His involvement and influence makes it far less likely the Indonesian government would attempt to disrupt or short-change PT Gulf, as such efforts would directly impact on the wealth of one of their richest citizens. He is well-connected and highly motivated to see this venture succeed.

One thing that did concern/confuse me looking closer at the project metrics is that Ferro Silicon and Burnt Lime are both zero in the cost template. If you followed the same formula as the rest of the template, these two items would add US$12.38m to total production costs and reduce the margins to US$379/tonne and US$11.98m for 2 smelters.

I don't know enough about the smelting process, but my understanding is the main ingredients in FeMn alloy are manganese, metallurgical (coking) coal and limestone. Are ferro silicon and burnt lime required? If not, why are they listed? If so, they surely do not account for 30-35% of production costs. After a bit of reading, my assumption is that they are byproducts that are re-entered into the smelting process to produce a stronger alloy. Ferro silicon is produced by heating sand, coke and iron ore and burnt lime is produced by heating limestone - all ingredients of the overall process.

I went on a bit tangent there, but bottom line is that power, while well and truly a significant operating cost, is not at such a level that would adversely impact the profitability of the Kupang Smelter Project, as some are trying to make it out to seem. Even at a sale price of US$1100/t for ferro manganese, the project was still highly profitable. I would encourage everyone to read/re-read the 2015 Smelter Study linked above for a better understanding of what they are investing in.