The American mining company Freeport McMoran says its compromise with the Indonesian government over Papua's Grasberg mine was an essential step towards extracting underground resources.
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Grasberg is the world's largest gold mine and third largest copper mine.
The Jakarta Post reported the company's subsidiary, PT Freeport Indonesia, had agreed to divest 51 percent of its shares and to build a smelter within five years.
In exchange its contract has been converted into a special mining license valid until 2041.
Freeport McMoRan chief executive Richard Adkerson said the subsidiary planned to invest US$20 billion over the next two decades, with $17 billion to be invested by 2031.
Mr Adkerson said Indonesian ownership of the subsidiary would be increased over time from nine percent to 51 percent in a way that compensates the miner at a fair market value.
He said while Grasberg's open mine reserves were depleting, his company saw potential in its underground mine.