The subsidiary of the U.S. mining giant Freeport-McMoRan Copper & Gold Inc. operates a large copper and gold mine in Papua.
"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 choose negotiation to iron out dispute to follow the issuance of the government regulation No. 1 of 2017.
"Through a series of negotiations agreements were reached including divestment by PT Freeport up to 51 percent of its shares. Details of the agreement are still negotiated," Jonan said.
Freeport also agreed to build a smelter in five years after its Special Mining Permit (IUPK) is issued, he said.
A new government regulation bans export of unprocessed mineral, requiring mining companies to process their mineral ores in the country.
In addition, Freeport agrees with 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.