Freeport Indonesia Navigates Mine Drop and License Hurdle in Push for 2041 Extension

JAKARTA, Investortrust.id — PT Freeport Indonesia is steering through an operational pause while pushing Jakarta for an early extension of its mining permit, arguing that complex underground geology demands decisions decades before current rights expire.

Speaking to reporters in Jakarta on Monday, Aug. 10, 2026, PTFI President Director Tony Wenas confirmed that output across the company's mining operations in Papua will reach approximately 65% of normal capacity this year, driven by production headwinds at its flagship Grasberg Block Cave (GBC) underground mine. Despite the resulting revenue drop, Wenas affirmed that the company remains capable of delivering dividend payouts and substantial state revenues.

Freeport’s operational cadence directly shapes both regional and national economic health. Contractions in Papua’s mining and quarrying sector have weighed on provincial economic growth, sending ripples through national GDP metrics published by Statistics Indonesia (BPS). Simultaneously, Freeport's push to extend its Special Mining Business License (IUPK) beyond 2041 highlights the complex capital planning required for massive underground block-caving operations, where multi-billion-dollar investments must be committed up to 15 years in advance to prevent reserve depletion.

Long Lead Times Drive License Push

Freeport submitted its formal permit extension application to the Ministry of Energy and Mineral Resources in mid-June 2026.

"From our perspective, the sooner the better, because developing underground mines requires a long time—more than 15 years," Wenas stated on Monday. "To prevent depletion as we approach 2041, moving faster is better."

Ministry officials are conducting an administrative and technical review of the application. Under current regulations, final permit issuance hinges on Freeport executing a binding agreement for additional share divestment to state-owned entities. While both parties previously established a memorandum of understanding, executing the formal divestment agreement remains a legal prerequisite for the new permit.

Smelter Restart and Production Recovery Timeline

Wenas laid out a multi-year recovery roadmap for both upstream extraction and downstream processing. Operations at the Grasberg Block Cave are targeted to approach nearly 100% capacity by late 2027.

Downstream, Freeport's copper smelter in Gresik, East Java, is scheduled to resume production in September 2026 as copper concentrate shipments arrive from Papua at the Manyar facility.

"In September, the smelter will start production again. Meanwhile, concentrate from Papua has begun arriving in Manyar," Wenas explained.

Initial smelter operations will remain under 30% capacity to ensure adequate concentrate inventory before ramping up furnace operations. Utilization will scale progressively alongside increasing raw material supply from the Papua mines.