Mining downstreaming has been successful in attracting investment, creating jobs, and ultimately economic growth. One of the successes of downstream mining can be seen in the performance of the giant copper mining company in the country, PT Freeport Indonesia.

President Director of PT Freeport Indonesia Tony Wenas emphasized that the mining company he leads continues to make a significant contribution to the national economy. In his speech at the 80th anniversary of Indonesia's independence in Mimika, Sunday (17/8/2025), he said that in 2024 Freeport contributed USD 4.7 billion or around Rp 80 trillion to the state treasury.

Of that amount, IDR 11 trillion is channeled directly to Central Papua, including Mimika Regency as the main operational area.

Tony explained that the contribution was equivalent to 0.75% of the national Gross Domestic Product (GDP), 77% of Central Papua's Gross Regional Domestic Product (GRDP), and 91% of Mimika's GRDP.

This figure is said to be the largest from a single company in Indonesia. He also added that since 2019, dividends paid to the government have exceeded the cost of acquiring 51% of Freeport shares, so the state's investment is considered to have returned capital.

In addition to direct contributions, Tony emphasized the importance of downstreaming in maintaining the sustainability of the economic benefits of copper mining.

He highlighted the existence of the Gresik smelter, which President Joko Widodo inaugurated in 2024 as the largest single line in the world. Then, there is the precious metal refining plant inaugurated by President Prabowo Subianto in 2025. Since the end of 2024, this facility has produced 11.5 tons of gold bars.

Despite a fire in October 2024 that halted smelter operations, Tony said repairs were completed ahead of schedule. Operations resumed in May 2025 and the first copper cathode production began in July 2025. Freeport is targeting a capacity of 800,000 tons of cathode per year - which it claims is enough to support the manufacture of eight million electric vehicles.

According to Tony, this achievement shows that Freeport's contribution does not only come from upstream mining, but also from downstream development that provides added value.

"The synergy between the government and Freeport is key so that the mining sector continues to support national economic growth, while opening up opportunities for the energy transition agenda in the future," Tony said.

Government programs

The downstream commitment was emphasized by President Prabowo Subianto in his speech on the Financial Note of the 2026 Draft State Budget. The President asserted that natural resources must be managed for the benefit of the people by expanding downstreaming, creating jobs, and ensuring added value remains in Indonesia.

The government is even targeting the acceleration of downstream projects worth USD 38 billion, in line with the sector's contribution to economic growth in Q2-2025 which reached 5.12%.

Minister of Energy and Mineral Resources (ESDM) Bahlil Lahadalia said that the investment needs for priority downstream projects reached IDR 618.3 trillion. This consists of 18 downstream projects. The plan is that this investment can create jobs for 273,636 people.

ReforMiner Institute Executive Director Komaidi Notonegoro considers Freeport's Rp 80 trillion contribution to the state by 2024 to be a significant achievement. He said the mineral mining sector is now on par - even surpassing oil and gas - in terms of contribution to state revenue.

"The contribution is quite significant, especially amidst the increasing trend of mineral prices," Komaidi said.

According to the World Bank's Commodity Markets Outlook April 2025 report, global gold prices are expected to remain above 150% of their 2015-2019 average throughout 2025 and 2026, driven by demand as a hedging asset amid global uncertainty.

Nevertheless, Komaidi reminded that Freeport's high contribution to Central Papua and Mimika's GRDP must be anticipated so as not to cause long-term vulnerability. So far, the economic structure in mining-producing areas is dominated by private investment, in contrast to the national economy which is more supported by household consumption. According to Komaidi, local governments need to strengthen other sectors, such as public consumption and local economic empowerment.

Komaidi emphasized the importance of allocating a portion of mining revenues to productive sectors. Investments in labor training, industrial development, and agriculture are considered crucial so that people are ready to face the post-mining era. "Natural resources must have a limit, therefore the community must be prepared from now on," he said.

In response to Freeport's target to produce 800,000 tons of copper cathode per year, Komaidi sees great potential for the energy transition agenda. He emphasized that the benefits would be much greater if the cathodes were absorbed by the domestic industry, not just exported. That way, Indonesia can gain added value from the electric vehicle industry chain.

He pointed out that downstreaming should not stop at the production of raw materials. "If we have rice, it should not only be sold as rice, but processed into rice so that the added value is greater," said Komaidi. According to him, integration with the domestic automotive and electronics industries is key so that the benefits of copper downstreaming are widely felt.

According to Komaidi, integration with the domestic automotive and electronics industries is key for the downstream benefits of copper to be widely felt.

Komaidi reminded that Freeport is actually more advanced than other mining companies because it has been downstreaming since the 1990s. However, the main obstacle that still arises is the limited absorption of the domestic market. As a result, some processed products such as copper still have to be exported with not too high added value.

In his view, the development of the national industrial ecosystem should be the government's priority. Freeport's task only stops at providing raw materials to semi-finished products. Meanwhile, the sustainability of the benefits depends on the policies of the Ministry of Industry. "If the industrial roadmap is not clear, value-added products will still be enjoyed by other countries," said Komaidi.

He assessed that the sustainability of Freeport's contribution is also determined by the synergy between parties. Collaboration between mining companies and the central government, regional governments, and technical ministries needs to be directed towards creating a downstream industrial ecosystem. This is in line with President Prabowo's agenda that prioritizes downstream programs.

While acknowledging Freeport's huge contribution, Komaidi emphasized the need for proportionality in policy. He considers that other companies must still be given fair treatment in tax and royalty rates. "Comparing Freeport with other mining companies is like an elephant with a goat, the sizes are different," Komaidi said.

However, he also warned of the risks of dependence on one large entity. If there is no plan for economic diversification, disruptions to Freeport could directly impact regional and national revenues. Therefore, part of the revenue should be allocated to basic infrastructure, education, and other productive sectors.

"Natural resources will definitely run out one day. Therefore, the existing results should not be spent on consumption, but turned back into the production sector," said Komaidi. According to him, with this strategy, the community can still survive and obtain economic alternatives after the mining era ends.