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KN-JAKARTA, The administration of President Prabowo Subianto has officially reached a landmark agreement with Freeport-McMoRan, marking a strategic move in Indonesia’s broader negotiations to mitigate punitive tariffs imposed by the United States under the Trump administration.
The deal, formalized through a Memorandum of Understanding (MoU) signed on February 18, 2026, paves the way for a massive long-term partnership involving the iconic Grasberg mine in Central Papua.
Mining Extension and Divestment
Under the terms of the agreement, the Indonesian government will extend the Special Mining Business Permit (IUPK) for PT Freeport Indonesia (PTFI). The permit, which was previously set to expire in 2041, will now be extended to 2061, aligning with the projected life cycle of the mine.
In exchange for this 20-year extension, Freeport-McMoRan is required to:
- Divest additional shares in PTFI to the Indonesian government.
- Secure an investment value estimated at US$20 billion (approximately Rp 337 trillion, based on an exchange rate of Rp 16,890 per USD).
Geopolitical and Economic Strategy
The Investment and Downstream Industry Ministry highlighted that this agreement is a key component of Indonesia’s “downstreaming” agenda and its diplomatic efforts with Washington. By ensuring U.S. access to critical minerals, Jakarta aims to leverage the partnership to reduce trade barriers and tariffs currently affecting Indonesian exports to the U.S. market.
Criticism and Local Impact
Despite the significant economic scale of the deal, it has not been without controversy. Critics have pointed out the limited involvement of indigenous Papuans in the negotiation process. Observers argue that while the deal strengthens national macro-economics and bilateral ties, the social and environmental interests of the local communities in Papua must remain a priority in the upcoming definitive agreement.
