Indonesia Extends Freeport Mining Permit to 2061 with $20 Billion Investment Commitment

Freeport’s Permit Extended, Bahlil: For New Reserve Exploration JAKARTA - Minister of Energy and Mineral Resources (ESDM) Bahlil Lahadalia said the extension of the Freeport-McMoRan (FCX) Special Mining Business Permit (IUPK) in Papua, was an effort to explore new reserves, as well as a strategy to increase state revenues and maintain production sustainability. Bahlil said this was also in line with Freeport’s peak production forecast which will occur in 2035. “Incidentally, the peak of Freeport’s production is the peaks of 2035. We know that Freeport’s concentrate now produces one year when the disaster has not occurred, reaching 3.2 million tons of copper concentrate ore, which produces approximately 900 thousand more copper and approximately 50 to 60 tons of gold,” said Bahlil as quoted by ANTARA, Friday, February 20. “Because 2035 is the peak (production), we think it is important for us to find solutions in order to exist and continue the business in Timika, in Papua,” he said. The Minister of Energy and Mineral Resources explained that the Indonesian government, MIND ID, and Freeport have also conducted intensive communication regarding the extension scheme of the permit. The composition of Indonesia’s shareholding, he continued, is 51 percent. Through the extension of the permit, the government can obtain an additional divestment of 12 percent of shares without acquisition costs. With this scheme, it is hoped that by 2041, Indonesia’s ownership will be 63 percent. Part of the additional 12 percent of shares will also be distributed to the Papuan regional government as a producing area. In addition, Bahlil hopes that the extension of the permit can maintain the sustainability of business and open up employment opportunities in Papua, as well as encourage the increase in regional income and non-tax state revenues (PNBP). “In the 2041 extension, it is expected that state revenues will be much higher than the current state revenues, including royalties and other taxes, especially gold,” said Bahlil. Previously, the Minister of Investment and Industrialization/Head of the Investment Coordinating Board (BKPM) Rosan Roeslani said the Indonesian Government and Freeport-McMoRan (FCX), an American mining company, had signed a Memorandum of Understanding (MoU) regarding the extension of the Special Mining Business Permit (IUPK) in Grasberg, Central Papua. The extension is valid for 2041-2061. Rosan said the investment value in the extension reached 20 billion US dollars for the next 20 years.