Bahlil: Freeport Licence Extension Aimed at Exploring New Reserves

Jakarta, VIVA – Energy and Mineral Resources Minister Bahlil Lahadalia has stated that the extension of Freeport-McMoRan’s (FCX) Special Mining Business Licence (IUPK) in Papua is an effort to explore new reserves, whilst also serving as a strategy to increase state revenue and maintain production sustainability.

Speaking at an online press conference monitored from Jakarta on Friday, Bahlil said this was also in line with Freeport’s projected peak production, expected to occur in 2035.

“As it happens, Freeport’s peak production will be around 2035. We know that Freeport’s concentrate currently produces, in a year before the incident occurred, up to 3.2 million tonnes of copper concentrate ore, yielding approximately more than 900,000 tonnes of copper and roughly 50 to 60 tonnes of gold,” Bahlil said.

“Because 2035 is the peak of production, we are of the view that it is important for us to seek solutions to ensure the continued existence and sustainability of operations in Timika, Papua,” he added.

The minister further noted that the Indonesian government, MIND ID, and Freeport have been engaged in intensive discussions regarding the licence extension scheme.

Indonesia’s shareholding composition, he continued, currently stands at 51 per cent. Through the licence extension, the government would obtain an additional 12 per cent share divestment at no acquisition cost.

Under this scheme, Indonesia’s ownership is expected to reach 63 per cent by 2041. A portion of the additional 12 per cent shareholding would also be allocated to the Papua regional government as the producing region.

Furthermore, Bahlil expressed hope that the licence extension would maintain business sustainability, create employment opportunities in Papua, and drive increases in regional revenue and non-tax state revenue (PNBP).

“In the extension to 2041, state revenue is expected to be significantly higher than current levels, including royalties and other taxes, particularly on gold,” Bahlil said.

Previously, Investment and Downstream Industries Minister and Head of the Investment Coordinating Board (BKPM) Rosan Roeslani announced that the Indonesian government and Freeport-McMoRan (FCX), the US-based mining company, had signed a Memorandum of Understanding (MoU) regarding the extension of the Special Mining Business Licence (IUPK) at Grasberg, Central Papua.