Freeport Sees Annual State Payments Surging to $7.5 Billion as Indonesia’s Copper Expansion Gains Momentum

JAKARTA, Investortrust.id — PT Freeport Indonesia (PTFI), Indonesia's largest copper and gold miner controlled by state mining holding MIND ID, expects its annual contribution to the Indonesian government to exceed $7.5 billion (Rp120 trillion) beginning in 2028 as production rebounds from last year's mining disruption and its massive downstream processing complex reaches full utilization.

The projection marks a sharp recovery from 2026, when government revenue from the company is expected to fall to $2.6 billion following production disruptions caused by a landslide at the Grasberg Block Cave (GBC) underground mine in Papua.

Freeport's recovery is a critical test of Indonesia's strategy to move beyond exporting raw commodities and instead build a domestic metals-processing industry. As one of the world's largest copper producers, the company sits at the center of President Prabowo Subianto's downstream industrialization agenda.

A return to full production would significantly boost government tax revenue, dividends, royalties and non-tax income while strengthening Indonesia's position as a global supplier of refined copper, gold and critical minerals used in electric vehicles, power infrastructure and data centers.

"The moment we return to full production capacity, government revenue can exceed $7 billion per year, or approximately Rp120 trillion. That level should continue in the years ahead," Freeport Indonesia President Director Tony Wenas told lawmakers during a parliamentary hearing with Commission XII on Tuesday.

The projection assumes copper prices average $6 per pound and gold prices reach $4,500 per ounce.

Production Recovery Accelerates

Tony said government revenue this year will decline because underground mining operations are still recovering after the Grasberg Block Cave landslide.

"Government revenue consisting of taxes, dividends and royalties will decline to $2.6 billion in 2026 from $4.3 billion last year," he said during the hearing.

Despite the temporary slowdown, Tony emphasized that the Indonesian government will still receive approximately $1.1 billion in dividends through MIND ID, Indonesia's state-owned mining holding company.

Freeport expects output to improve substantially in 2027 as underground mining ramps up and concentrate supply to the Gresik smelter normalizes.

Government revenue is projected to increase to $4.7 billion next year, including roughly $1.9 billion in tax payments, another $1.9 billion in dividends, and about $800 million in non-tax revenue, including royalties.

By late 2027, the company expects mining operations to return to full capacity following a gradual production ramp-up focused on operational safety.

Copper production is forecast to rise from approximately 800 million pounds in 2026 to 1.2 billion pounds in 2027 before reaching 1.6 billion pounds in 2028.

Gold output is expected to increase from 700,000 ounces in 2026 to 1 million ounces in 2027 and 1.4 million ounces by 2028.

Beginning in 2029, production will increasingly come from the Kucing Liar underground mine, which is being developed to replace the aging Deep Mill Level Zone (DMLZ) operation and sustain ore production of roughly 220,000 metric tons (about 242,500 short tons) per day.

Smelter Expands Indonesia's Downstream Ambitions

Indonesia's House of Representatives praised Freeport's multibillion-dollar investment in downstream mineral processing, calling it a cornerstone of the country's industrial policy.

Commission XII lawmakers said the company's investments strengthen domestic supply chains, create more value-added exports and expand long-term fiscal revenues.

"The agreement to make another 12% investment alongside the Indonesian government is an important breakthrough that supports the long-term sustainability of Freeport Indonesia," Commission XII member Arif Riyanto Uopdana said during the hearing.

Fellow lawmaker Alfons Manibui added that Freeport has delivered substantial economic benefits to both Papua and the national economy.

"We must acknowledge that Freeport has provided significant benefits to regional governments and, above all, to communities surrounding its operations," he said.

A Fully Integrated Copper Value Chain

Freeport's new smelter in the Gresik Special Economic Zone can process 1.7 million metric tons (about 1.9 million short tons) of copper concentrate annually.

Combined with the expanded PT Smelting facility, Indonesia now has capacity to process roughly 3 million metric tons (about 3.3 million short tons) of copper concentrate domestically each year.

"With the smelter and Precious Metal Refinery now operating in Gresik, the entire copper value chain—from concentrate to copper cathodes and precious metals including gold and silver—can now be processed inside Indonesia," Tony said.

The Precious Metal Refinery is capable of processing 6,000 metric tons (about 6,600 short tons) of anode slime annually using hydrometallurgical technology.

Together, the facilities are expected to produce around 800,000 metric tons (about 882,000 short tons) of copper cathodes annually, including output from PT Smelting.

The refinery will also produce approximately 50 metric tons of gold, 200 metric tons of silver, platinum, palladium, selenium, bismuth and lead, further expanding Indonesia's presence in global critical minerals supply chains.

Tony said the Gresik smelter suffered a fire at its gas-cleaning plant in October 2024 but resumed operations in May 2025 after repairs. Operations were later affected by concentrate shortages following the Grasberg landslide.

The company expects concentrate shipments from Papua to resume in September, allowing the downstream complex to gradually return to full operations.

"Our current priority is ensuring the mine recovery proceeds safely so concentrate supply can normalize. Once upstream production recovers and the smelter reaches full utilization, downstream processing will deliver even greater benefits through higher metal output, stronger domestic industry and increased government revenue," Tony said.