Minister Bahlil: Freeport License Maybe Extended Until 2061

TEMPO.CO, Jakarta - Investment Minister Bahlil Lahadalia has stated that the process of extending Freeport's contract, which is set to expire in 2041, is nearing completion. Bahlil mentioned that PT Freeport Indonesia's permit is potentially set to be extended to allow mining activities until 2061.

"We just need to wait for the Government Regulation," said Bahlil to reporters at the Ministry of Investment office on Monday, April 29, 2024.

According to Bahlil, extending Freeport's contract is indeed necessary. This is because Freeport's production peak is estimated to occur in 2035. If the contract is not extended, Freeport will not be able to conduct exploration after 2035, as exploration can take up to 10-15 years.

"The production will be depleted by 2035, and underground exploration takes 10 to 15 years," said Bahlil. "If we don't extend the contract now, by 2040, Freeport will cease operations."

Furthermore, Bahlil views the extension of Freeport's contract as not being a problem. Currently, the government already holds a 51 percent stake in Freeport. "This is ours, isn't it? Our property, why shouldn't we?" Bahlil said.

Bahlil added that the government also has the opportunity to increase its shares in Freeport as this contract is extended. There is an option to increase the stake by 10 percent at a low price if Freeport's operating license is extended again. This means that if the deal goes through, the Indonesian government could own 61 percent of Freeport's shares.

"If we reach that point [61 percent ownership], what else do we want?" said Bahlil.

The revision of the Government Regulation (PP) referred to by Bahlil is the revision of PP Number 96 of 2021 concerning the Implementation of Mineral and Coal Mining Business Activities. Previously, Bahlil stated that the revision of PP 96 was conducted to adjust and expedite to provide investment certainty.

Especially for large-scale investments. However, he stated that the adjustment of rules in the policy is not specifically for one company or just Freeport.

"We give equal treatment to all companies. One of them is Freeport," said Bahlil at the Ministry of Investment on Monday, March 18, 2024.

Furthermore, Bahlil conveyed that one of the points revised in PP 96 is the requirement for contract extension. In the current regulations, contract extensions can only be proposed at the earliest five years before the contract ends and at the latest one year before the contract ends.

"We changed this because it's integrated with smelters," he said.

Then specifically for Freeport, Bahlil said that the proposal for contract extension could be made immediately to ensure investment certainty and mining production.

"If we only start thinking about [contract extension] by 2035, it means there will be a vacuum of about 5 to 10 years," Bahlil explained. "Who would want to maintain that, while it belongs to Indonesia. That's what we're considering."

RIRI RAHAYU

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