Indonesia Extends Freeport Mining Permit to 2041 with Increased Government Stake
Jakarta – The Indonesian government has extended the Special Mining Business Permit (IUPK) for PT Freeport Indonesia in Papua beyond 2041, a move driven by the anticipated peak production in 2035 and a strategy to increase state revenue. The agreement, formalized on February 18, 2026, in Washington, D.C., witnessed by President Prabowo Subianto, also outlines a plan to increase Indonesian government ownership in the company to 63% by 2041.
Strategic Rationale for Extension
Minister of Energy and Mineral Resources (ESDM) Bahlil Lahadalia explained that the extension is crucial for ensuring operational sustainability at the Timika mine in Papua as Freeport approaches its peak production capacity. Current concentrate production stands at approximately 3.2 million tons annually, yielding around 900,000 tons of copper and 50 to 60 tons of gold [VOI]. Maintaining production beyond 2035 necessitates continued exploration and investment.
Increased Government Ownership
Under the terms of the extension, the Indonesian government will acquire an additional 12% stake in PT Freeport Indonesia without incurring acquisition costs [Detik Finance]. This will raise the government’s total ownership to 63% by 2041, from its current 51% shareholding. A portion of the additional 12% stake will be allocated to the Papuan regional government, recognizing its role as the producing area.
Economic Benefits and Regional Impact
The government anticipates that the extension will lead to significantly higher state revenues, including royalties and taxes, particularly from gold production [VOI]. The continued operation of the mine is expected to maintain employment opportunities in Papua and contribute to increased regional income and non-tax state revenues.
Agreement Details
The extension agreement was reached through intensive communication between the Indonesian government, MIND ID, and Freeport-McMoRan Inc. [VOI]. The Memorandum of Understanding (MOU) was signed by the Ministry of Investment and Downstreaming and Freeport-McMoRan Inc. During the meeting in Washington, D.C.
Looking Ahead
The extension of Freeport’s IUPK represents a strategic move by the Indonesian government to secure long-term economic benefits from its natural resources even as increasing state control over key mining assets. The anticipated peak production in 2035 and the subsequent increase in government ownership are expected to contribute significantly to Indonesia’s economic growth and regional development in Papua.