Former Minister of Investment/Head of Investment Coordinating Board and newly appointed Minister of Energy and Mineral Resources (ESDM) Bahlil Lahadalia says that PT Freeport Indonesia has been a bit slow in preparing various conditions for the extension of the company’s special mining business permit (IUPK).
“Please do not keep asking the government about it, ask Freeport too,” Bahlil said on Monday August 19, 2024.
He said further that the negotiation for Freeport’s special mining permit from 2041 to 2061 is almost complete. Currently, the Indonesian government negotiation team and Freeport McMoran nearly agree on the points of negotiation. Beside the additional 10 percent shares divestment, some of the points of agreement are the construction of a smelter in Papua and the involvement of Papuan entrepreneurs in the construction.
The Indonesian government negotiation team consists of Minister of Investment /Head of the Investment Coordinating Board and several technical ministers, such as the Minister of Energy and Mineral Resources, the Minister of Finance and the Minister of State Owned Enterprises.
President Joko Widodo has signed a government regulation that will allow PT Freeport Indonesia to submit for an extension of their IUPK 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 Activities.
The revised regulation has article 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.
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 clause 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.
