Why Freeport Is Seeking an Early Extension of Its Mining Permit Beyond 2041
Jakarta, CNBC Indonesia - Freeport-McMoRan (FCX) has disclosed that PT Freeport Indonesia (PTFI) submitted a request for an extension of its Special Mining Business Permit (IUPK) to the Indonesian government in June 2026. The application was filed to ensure the continuity of the company’s mining operations, which are currently set to expire in 2041.
Responding to this, the Chairman of the Indonesian Mining and Energy Forum (IMEF), Singgih Widagdo, stated that PTFI’s application for an IUPK extension is a highly rational move. He noted that underground mining has vastly different characteristics compared to open-pit mining, particularly as the deposit contains non-coal minerals.
“The investment characteristics are large-scale, technology-intensive, and high-risk, all of which must be managed to conduct underground mining. It is certain that with such a large investment, PTFI must ensure the value of its reserves and mineral quality through detailed exploration,” Singgih explained when contacted by CNBC Indonesia on Wednesday.
Beyond exploration, Singgih mentioned that underground mine development also requires the implementation of high-precision technology. This technology demands detailed data on the minerals to be mined while simultaneously ensuring infrastructure for safety and working comfort.
“Especially regarding ventilation problems and ensuring operational control with multiple automated equipment or computerised underground mining tools, the stages from exploration to commissioning production require approximately 15 years,” he clarified.
He stated that certainty over the extension of the operating permit is a primary consideration to ensure that PTFI’s investment yields long-term profitability.
“Clearly, with such enormous capital, certainty of the operating permit extension must be secured first. The duration of the operating permit is the most important factor in determining whether the mining investment will be profitable or not. This also applies to open-pit mines, such as coal. However, considering that mineral miners are no longer permitted to sell raw materials, the operating permit will be linked to the downstream investment or the smelter to be built,” he explained.
Singgih continued that if certainty over the permit extension is only granted close to the expiry of the current permit, there is a risk to the sustainability of the company’s investment. This could ultimately complicate PTFI’s efforts to develop mines within its operational area.
Fundamentally, it must first be understood that logistical certainty is paramount, given that the mine site is located in a remote area. Therefore, if exploration is required to open a new mine in the region, permit certainty must be obtained well in advance.
“Moreover, investors must involve and utilise lenders or banks (both national and international) in financing the new mine to be opened and operated,” he concluded.