Jakarta – The Indonesian government has extended the Special Mining Business Permit (IUPK) for PT Freeport Indonesia in Papua beyond 2041, a move driven by expectations of peak production in 2035 and a strategy to increase state revenue. The decision, announced Friday, also solidifies Indonesia’s increasing stake in one of the world’s largest copper and gold mines, aiming for 63% government ownership by 2041. This extension of the Freeport Indonesia permit represents a significant development in Indonesia’s resource nationalism policies.
Minister of Energy and Mineral Resources (ESDM) Bahlil Lahadalia explained the rationale behind the extension, stating that ensuring operational continuity in Timika, Papua, is crucial as Freeport approaches its projected peak output. Currently, Freeport produces approximately 3.2 million tons of copper concentrate annually, yielding around 900,000 tons of copper and 50 to 60 tons of gold, according to the minister. “Because peak production is predicted in 2035, it is important for us to ensure the sustainability of operations in Timika, Papua,” Bahlil said during a press conference, as reported by DetikFinance.
Increased Indonesian Ownership
A key component of the agreement, finalized on February 18, 2026, in Washington, D.C., with President Prabowo Subianto observing via a Memorandum of Understanding (MOU) signed by the Ministry of Investment and the Freeport-McMoRan Inc., is the increase in Indonesian government ownership. The government’s current 51% stake will rise to 63% by 2041 through an additional 12% divestment of shares, achieved without acquisition costs. Part of this additional 12% shareholding will also be allocated to the Papuan regional government, recognizing its role as the producing area.
This move aligns with Indonesia’s broader strategy of asserting greater control over its natural resources. The government has been actively pursuing increased ownership in key mining operations, aiming to maximize economic benefits for the nation. The extension of Freeport’s permit, coupled with the increased stake, is seen as a significant step in that direction.
Strategic Considerations Beyond Production
Although peak production in 2035 is a primary driver, the permit extension also serves a broader strategic purpose: exploring new reserves. Minister Bahlil emphasized that the extension is an effort to identify and develop additional resources, ensuring the long-term viability of the mine and bolstering state revenues. VOI News reported that the extension is also intended to maintain production sustainability and open up employment opportunities in Papua, as well as encourage the increase in regional income and non-tax state revenues.
The agreement comes after intensive communication between the Indonesian government, MIND ID, and Freeport-McMoRan. The details of the extension scheme were carefully negotiated to balance the interests of all parties involved, ensuring a mutually beneficial outcome. The government anticipates that state revenues will be significantly higher after 2041, particularly from royalties and taxes on gold production.
Focus on Operational Safety
The announcement of the permit extension coincided with separate calls from Minister Bahlil for Freeport to prioritize the rescue of any trapped workers. While details surrounding this situation were limited in the provided sources, it underscores the government’s concern for worker safety and operational responsibility. Indonesia Business Post reported that Bahlil urged Freeport to focus on this critical task.
Looking ahead, the implementation of the extended IUPK will be closely monitored. The government’s commitment to increasing its ownership stake and maximizing economic benefits from the Freeport mine will likely shape future negotiations and policies related to Indonesia’s mining sector. The next key milestone will be the formalization of the share divestment process and the allocation of shares to the Papuan regional government, expected to occur in the coming years.
This development in the Freeport Indonesia saga underscores the evolving dynamics between resource-rich nations and international mining companies. As Indonesia continues to assert its control over its natural resources, the outcome of this agreement will serve as a benchmark for future negotiations and investments in the sector.
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