President Joko Widodo has signed a government regulation that will allow PT Freeport Indonesia to submit for an extension of their Special Mining Business Permit (IUPI) after 2041.
The government issued on May 30, 2024, Government Regulation No. 25/2024, which is a revision to Government Regulation No. 96/2021 on the Implementation of Mineral and Coal Mining Business Activities.
The revised regulation adds article 195A and 195B to the previous regulation. It opens up the opportunity for Freeport to apply for a license extension no later than 1 (one) year before the end of the period of Production Operation activities.
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.
Freeport McMoran also has agreed with the 10-percent share divestment as a condition for permit extension. The Indonesian government will then have a total shares of 61 percent in PTFI.
Freeport’s 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.
