US mining giant Freeport-McMoRan has won assurances on its future in Indonesia, allowing it to move forward with plans to invest $18 billion in the world's biggest underground mine, the company and government officials said.
Foreign resources companies have faced a rising tide of nationalist sentiment in Southeast Asia's top economy in recent years as politicians push a raft of policies they say are aimed at keeping profits from lucrative mining within the country.
The most prominent measure was a controversial ban introduced last year on exports of some unprocessed mineral ores, in a bid to encourage domestic processing.
Indonesia's biggest miner, Freeport, has been a major target, and the company has been locked in negotiations with the government for years about its future.
But with the country desperately in need of fresh investment, the government announced a deal had been struck, while the company said it had won assurances its contract would be extended beyond the current end date of 2021.
"Together with Freeport, we have reached a deal to maintain the continuity of long-term investment, with a value reaching $18 billion," Sudirman Said, Indonesia's energy and mineral resources minister, said late Thursday.
He said the deal will pave the way for Freeport to build the biggest underground mine in the world at its site, Grasberg, in eastern Papua province.
Freeport has been carrying out surface mining for four decades at Grasberg, one of the world's biggest gold and copper mines, but with reserves diminishing, it is now turning its attention to underground operations.
Freeport said in a statement: "The government has assured PT-FI (Freeport's Indonesian unit) that the government will approve the extension of operations beyond 2021."
The announcement came just two weeks before President Joko Widodo heads to the United States on an official visit.
Despite the agreement, there could still be hurdles for Freeport.
Under current Indonesian law, companies can only propose an extension two years before a contract ends, but a senior energy ministry official said that the government plans to revise the law.