The Indonesian government has extended the Special Mining Business Permit (IUPK) for PT Freeport Indonesia in Papua beyond 2041, a decision announced Friday following negotiations with the U.S.-based mining company. The extension, formalized through a Memorandum of Understanding (MOU) signed on February 18th in Washington, D.C., and witnessed by President Prabowo Subianto, aims to ensure operational continuity as Freeport approaches peak production, projected for 2035.
According to Energy and Mineral Resources (ESDM) Minister Bahlil Lahadalia, the decision to extend the IUPK is strategically linked to Freeport’s anticipated production peak. Currently, Freeport produces approximately 3.2 million tons of copper concentrate annually, yielding around 900,000 tons of copper and 50 to 60 tons of gold. “Because peak production is projected for 2035, We see key for us to ensure the sustainability of operations in Timika, Papua,” Lahadalia stated during a press conference streamed on the Ministry of ESDM’s YouTube channel.
A key component of the agreement involves an increase in Indonesian government ownership of PT Freeport Indonesia to 63% by 2041. The government currently holds a 51% stake. This increase will be achieved through an additional 12% divestment of shares to the state, without acquisition costs, according to Lahadalia. The Minister also indicated that a portion of these additional shares will be allocated to the Papuan regional government, recognizing its role as the producing area.
The extension of the IUPK is also intended to facilitate the exploration of new reserves, as highlighted by Minister Lahadalia. This aligns with a broader strategy to increase state revenues and maintain production sustainability, according to a statement released by the Ministry. The agreement follows intensive communication between the Indonesian government, MIND ID, and Freeport-McMoRan Inc. Regarding the permit extension scheme.
Minister Lahadalia emphasized that the extended permit is expected to significantly increase state revenues beyond current levels, including royalties and taxes, particularly from gold production. The deal was reached in conjunction with the implementation of technical aspects of the Indonesia-United States reciprocal trade agreement.