Minister of Energy and Mineral Resources (ESDM), Bahlil Lahadalia, has confirmed that the final discussions regarding the extension of Freeport's mining contract, which is set to expire in 2041, will take place in early October. 

He highlighted the importance of extending the contract beyond 2041 to allow continued underground mining exploration, which requires 10-15 years of work. Without an extension, Freeport’s peak production will be in 2035, after which it is expected to decline, affecting productivity and revenue.

“The government is negotiating with Freeport McMoRan and Freeport Indonesia, in line with the President’s instructions. We are focused on ensuring that exploration can continue beyond 2041,” Bahlil said on Friday, September 26, 2025.

He emphasized that negotiations are ongoing, and a final meeting is scheduled for early October.

The government is negotiating to acquire another 10 percent or more of shares, although the exact figure is still under discussion, with talks potentially going up to 12 percent. These additional shares will be allocated to Papua’s region-owned enterprises (ROEs), which will happen after 2041, to support continued exploration.

Regarding the construction of a new smelter in Papua, Bahlil cited that while initially planned, discussions are now focused on utilizing the smelter in Gresik, East Java.

The additional shares allocated to Papua will support the region’s economic development. While the cost evaluation is still in progress, Bahlil emphasized that the government aims to secure the lowest possible costs for Papua ROEs and MIND ID to ensure sustainable growth.

President Prabowo Subianto’s predecessor, 7th President Joko “Jokowi” Widodo, has signed a government regulation that will allow PT Freeport Indonesia to submit for an extension of their Special Mining Permit (IUPK) after 2041. In exchange of the extension, Freeport MacMoran will divest 10 percent of its share to the Indonesian government.

The government issued in May 2024 Government Regulation No. 25/2024, which is a revision to Government Regulation No. 96/2021 on the Implementation of Mineral and Coal Mining Activities.

The revised regulation has articles 195A and 195B to complement the previous regulation. It opens up the opportunity for Freeport to apply for a license extension no later than one year before the end of the period of Production Operation activities.

Bahlil said the permit extension will be good for Indonesia because currently 51 percent of the company shares already belong to Indonesian government. While the rest of the shares are owned by Freeport McMoran.

PTFI signed the Contract of Work (CoW) in 1976 for 30 years and should have ended in 1997. Before the contract expired, PTFI discovered a bigger gold reserve at Grasberg mine. The company then submitted a second contract extension in 1991. The second contract has a clausal on divestment of 51 percent of the company’s shares to the Indonesian government.

After a long negotiation, in 2018, Freeport-McMoRan announced that it divested its ownership in PTFI so that Indonesia could own 51 percent shares of the company. In return, the CoW was replaced by a Special Mining Business License (IUPK) with the mining rights to 2041 and that Freeport will build a new smelter.