Gold and copper miner PT Freeport Indonesia (PTFI) has finally agreed to divest 51 percent of its shares and to other terms related to its contractual extension, after a long tug-of-war negotiation with the Indonesian government.

Freeport Indonesia, a subsidiary of US mining giant Freeport McMoRan, also agreed to convert its contract of work (CoW) into a Special Mining License (IUPK), build a smelter within the next five years and increase its contribution to state revenues from its Grasberg mine in Papua, announced a government-Freeport joint press conference on Tuesday.

In return, Freeport’s contract, originally set to expire in 2021, will be extended to 2041 under the new terms.

Read also: Talks on Freeport divestment in final stretch

Freeport McMoRan CEO Richard Adkerson said the compromise with the government was essential for the firm because although the open mine reserves were depleting, his company had seen large potential in its underground mine.

PTFI plans to invest US$20 billion over the next two decades, with $17 billion to be invested by 2031, he added.

“To reach our objectives meant that we have to be willing to cooperate and build a smelter and divest 51 percent. We are working cooperatively with the government to achieve the objectives,” Adkerson said during the press conference.

“We have agreed to increase Indonesian ownership from 9.36 percent to 51 percent over time in a way that compensates the fair market value. We still have work to do to reach the compromise,” he said. (bbn)