The Indonesian government is finalizing the revision of Government Regulation No. 96/2021 that will allow PT Freeport Indonesia to secure early extension of its special mining business permit after 2041.
“It [Freeport’s permit extension] is being finalized, hopefully it will be quick,” Minister of Energy and Miniseral Resources (ESDM) Arifin Tasrif said on Friday, March 22, 2024.
Arifin cited that the revision is about providing certainty to the mining business. A mining company should know the reserve or resource of a concesion before it starts to spend its money or invest.
“If it is a large industrial scale, the company must spend a lot of money just like the one in Gresik. It has a large capacity, so they need a lot of ores and concentrates for a long period, so we must ensure it,” he said.
One point of revision is that a mining company with smelter can submit early extension of their permit or contract at any time considering their huge investments.
“The previous regulation requires a 5-year deadline before the contract or permit expires for a mining company to be able to submit their proposal for permit extension,” Arifin said.
He said further that after the revision of Government Regulation No. 96/2021, the government will grant the special mining business permit for PT Freeport Indonesia.
“The permit extension will be granted this year for sure, because we have discussed this issue for the last 1-2 years” he added.
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 right to 2041 and Freeport will build a new smelter by 2022.
Grasberg mine has three mining operations: Open pit, the Deep Ore Zone underground mine and the Big Gossan underground mine. According to former Minister of Energy and Natural Resources, Ignasius Jonan, the Grasberg gold mine has 23.2 million ounces of gold reserves per December 31, 2017.
