M Toha: A Mining Permit for the Life of the Reserves Minimises Investment Risk - Kompas.id

Based on the memorandum of understanding signed in Washington DC, United States, PT Freeport Indonesia will obtain an extension of its IUPK from 2041 to the life of the copper ore reserves. Negotiations between the Indonesian government and Freeport‑McMoRan that have been pursued over several years have progressed to a certainty: PT Freeport Indonesia’s special mining business licence or IUPK will be extended from 2041 until the copper ore reserves are exhausted. In return, Indonesia will receive an additional 12 per cent stake in PT Freeport Indonesia in 2041. The agreement was reached following the signing of a memorandum of understanding in Washington DC, United States, on Wednesday, 18 February 2026 local time. The MoU was signed by the Government of the Republic of Indonesia, represented by the Minister of Investment and upstream/Head of the Investment Coordinating Board Rosan Roeslani, and by Kathleen Quirk, President and Chief Executive Officer of Freeport‑McMoRan Inc, together with Tony Wenas, President Director of PT Freeport Indonesia (PTFI); witnessed by President Prabowo Subianto. The policy is inseparable from the government’s downstream (hilirisasi) programme. PT Freeport Indonesia is a copper mining company in Timika, Mimika, Central Papua, which already owns a copper concentrate processing facility in Gresik, East Java. The IUPK for PTFI would effectively have expired in 2031 but is clearly extended again for 10 years, or to 2041. After that, under the MoU, extensions would be granted for as long as ore reserves remain. The provisions concerning post‑2041 licence extensions are in Government Regulation No. 25 of 2024 on the Implementation of Mineral and Coal Mining Activities. Article 195B Paragraph (2) of No. 25/2024 states that extensions are granted for as long as reserves exist and are subject to a ten‑year evaluation.

The next question, therefore, is whether extending mining licences to the life of reserves yields benefits, drawbacks, or a win‑win solution for the long‑term management of Indonesia’s mineral resources. To answer this, the Kompas Professional Mining team at Harian Kompas (Kompas.id) interviewed Muhammad Toha, Head of the Study of Strategic Minerals, Critical Minerals, and Mineral Downstream at the Indonesian Mining Experts Association (Perhapi), on Thursday, 26 February 2026. The following is an excerpt from the interview:

How do you view the agreement between Freeport and the Indonesian Government on the post‑2041 extension from both national interests and investment certainty perspectives?

Technically, Indonesia does have regulations governing mining licences. The government regulation states that IUP/IUPK have a maximum term of 20 years, with the possibility of two extensions of 10 years each, i.e., a maximum of 40 years. But what is interesting in the Regulation is that there is a more detailed provision allowing the extension of IUP/IUPK up to the life of the ore reserves, subject to certain conditions. There is also a clause that state that state‑owned enterprises, such as Antam and Bukit Asam, can have their licences extended every 10 years. And for mining companies that are integrated with a processing plant, if they carry out mining up to processing, they are allowed to obtain a licence for 10‑year periods up to the life of the reserves. It is also stated that such a company must hold a minimum 30 percent stake in the processing plant.

Thus, in regulatory terms, what was agreed in the US, regardless of any political interests involved, is not unusual. Other companies, not just Freeport, have already been guaranteed the same by the government: that their IUP/IUPK can be extended as long as they meet the requirements. This ties into the government’s hilirisasi drive. The government offers some form of incentive to companies that have already undertaken downstream development in the form of extending their IUP/IUPK to the life of the reserves. In addition, we know that the processing plants require substantial investment and that payback periods are long. It is easy to imagine a situation where a company has invested in a processing plant but then its mining operations stop. What happens to the processing plant then?

So, in regulatory terms, even if the licence is granted to last for the life of the reserves, there is still a 10‑year evaluation. This is an important mechanism because the government can evaluate good mining practices, environmental issues, obligations to the country, to communities, and other factors. All these aspects are measured and assessed by the government to determine whether the arrangement is viable. Are there environmental issues or community conflicts associated with the company? Either way, there must be an evaluation instrument, and the government has anticipated this. So, on the one hand there is investment certainty with a guarantee that IUP/IUPK will be extended for as long as reserves remain. On the other hand, the government will still be involved in evaluating every 10 years.

If the company operates its activities properly, responsibly, and there are no significant issues, there is little cause for concern. So far, the government has generally not had problems issuing licence extensions.

That is to say, must every ten years still require an administrative licence extension? Yes, it is an extension of the licence. Yet, by agreement, it is more straightforward because the government itself has guaranteed that the licence will be extended every 10 years as long as reserves exist.

Again, this relates to the investment climate and investor interest in committing capital in Indonesia. So the compromise is that. Because in the past,