"We are pleased to announce that we have reached a framework agreement to support operation and investment we are now doing in Papua. Mutual understanding about the structure of agreement is significant and positive for all stakeholders," President and Chief Executive Officer of PT Freeport Indonesia Richard C. Adkerson said in a statement.
Based on an official statement made available to Antara on Wednesday, PTFI would change the old Contract of Work into Special Mining Business License (IUPK) which will give long term operation right for PT Freeport Indonesia until 2041.
The government will provide fiscal and legal guarantee during the implementation of the IUPK.
On the other hand the subsidiary of the U.S. mining giant Freeport-McMoran is committed to building a new smelter in Indonesia in five years, and Freeport-McMoran agrees to sell its shares in Freeport Indonesia up to 51 percent to Indonesia on market price.
"Important job is yet to be carried out for the documentation of the agreement and we resolve to finish the documentation in 2017," Adkerson said.
Earlier the government and PT Freeport Indonesia finalized negotiation on extension of the mining contract for the company in Indonesia.
"The negotiation has been going on since early this year and it is more intensive in the past three months," Energy and Mineral Resources Minister Ignasius Jonan said here on Tuesday.
The government and PT Freeport Indonesia agreed to iron out dispute through negotiation.
A new government regulation bans export of unprocessed mineral, requiring mining companies to process their mineral ores in the country.
In addition, Freeport agrees on a larger share of revenue for the state compared with the state revenue under the previous contract.
Under the agreement PT Freeport Indonesia would be granted an extension of contract for a maximum of 2x10 years until 2041 after its present contract expires in 2021.
The government and PT Freeport Indonesia would cooperate to finish documentation of the agreement.
"I hope the details could wrapped up this week," Jonan said.