Mineral and coal mining activities are governed by the Mining Law. The Mining Law has encountered a number of issues. Some of the issues that are still being dealt with include foreign ownership restrictions, domestic processing requirements, export restrictions for unprocessed and/or unrefined mining products, and the conversion of CoWs (contract of works) and CCoWs (Coal Contracts of Works) to the new licensing system.
Governing laws and regulation
- Law No. 4/2009 concerning Mining
- Law No. 3/2020 concerning Amendment to the Mining Law as amended by Law No. 11/2020 concerning Job Creation
- The Ministry of Energy and Resources Regulation (Permen ESDM) No. 25/2018 concerning Mineral and Coal Mining Business as amended several times with the latest amendment by the Minister of Energy and Mineral Resources (Permen ESDM) No. 17/2020 concerning the Third Amendment to the Regulation of the Minister of Energy and Mineral Resources (Permen ESDM) No. 25/2018 concerning Mineral and Coal Mining
- The Ministry of Energy and Resources Regulation (Permen ESDM) No. 7/2017 concerning Procedures for Setting Standard Prices for Sales of Metal and Coal Minerals
Types of license
Under the Mining Law, mining licenses may be issued to one or more parties within the designated taxpayers (WPs), as follows:
- Mining Business License or Izin Usaha Pertambangan (IUP). It is a general license to conduct mining business activities in a mining business permit area (WIUP).
- Special Mining Business License or Izin Usaha Pertambangan Khusus (“IUPK”). It is a license for conducting mining activities in a specific State Reserve Area or Wilayah Pencadangan Negara (WPN) area in which mining business activities can be carried out.
- IUPK as Continuation of Operation of a Contract of Work (CoW)/ Coal Contract of Work (CCoW)/ IUPK as Kelanjutan Operasi Kontrak/Perjanjian or Operation Continuance IUPK. It is a mining business license granted as an extension of a CoW or CCoW upon the expiry of respective CoW or CCoW.
- Authorization Letter for Rock Mining or Surat Izin Pertambangan Batuan (SIPB). SIPB is a mining business license granted to engage in the mining of certain types of rocks for construction needs or for the purpose of supporting the development of projects funded by the government and/or regional administrations
- Assignment License or Izin Penugasan for mining activities relating to radioactive minerals
- Transportation and sale License or Izin Pengangkutan dan Penjualan (IUPP)
- Mining Service Business License or Izin Usaha Jasa Pertambangan (IUJP)
- Mining Business License for Sales or Izin Usaha Pertambangan untuk Penjualan or (IUP Penjualan)
Validity period
| Mining License | Validity Period (In Years) | Extension |
| IUP for Exploration for Metal Minerals (minerals whose main elements contain metal, have a metallic luster, and are generally good conductors of heat and electricity) | 8 | 1 year per extension |
| IUP for Exploration for Non-Metal Minerals (minerals whose main elements consist of non-metals, for example bentonite, calcite (limestone / limestone), quartz sand, and others) | 3 | N/A |
| IUP for Exploration for Certain Types of Non-Metal Minerals (non-metallic minerals which are of high-value and are not easy to obtain (among other things diamonds and precious ores) or non-metallic minerals needed to guarantee the supply of strategic industries (among other things limestone, clay, and quartz sand for the cement industry) | 7 | N/A |
| IUP for Exploration for Rocks (solid mass consisting of one or more types of minerals that form the earth’s crust, either in a massive or loose state) | 3 | N/A |
| IUP for Exploration for Coal (organic carbon compound sediment, which is naturally formed from the remains of plants) | 7 | 1 year per extension |
| IUP for Operation Production for Metal Mineral | 20 | Extendable twice, up to 10 years per extension |
| IUP for Operation Production for Non-Metal Minerals | 10 | Extendable twice, 5 years per extension |
| IUP for Operation Production for Certain Types of Non-Metal Minerals | 20 | Extendable twice, 10 years per extension |
| IUP for Operation Production for Rocks | 5 | Extendable twice, 5 years per extension |
| IUP for Operation Production for Coal | 20 | Extendable twice, 10 years per extension |
| IUP for Operation Production for Metal integrated with processing and refining facilities | 30 | 10 years per extension |
| IUP for Operation Production for Coal integrated with development and utilization activities | 30 | 10 years per extension |
Ownership of mining business license
Based on the Amendments to Mining Law, mining business licenses may be issued to the following parties:
| IUP | IUPK | IUJP |
| Business entities* | Business entities* | Business entities* |
| Cooperatives | Cooperatives | |
| Individuals | Individuals |
*The above table also includes BUMNs, BUMDs and private business entities. Private business entities include Domestic Investment or Penanaman Modal Dalam Negeri (PMDN) and PMA (foreign investment).
Authority to Issue IUPs
- Law No. 3/2020 centralizes the system whereby the government is now given the sole authority by the state with respect to the mining sector.
- The consequences of such a shift is that the government is granted the main authority to issue business licenses for the mining sector such as Business Identification Number or Nomor Induk Berusaha (NIB), standard certificates, and/or mining licenses. Any mining companies must adjust their business licenses to comply with the requirements above no later than two years from the enactment of Law No. 3/2020.
- The government may delegate its authority to grant mining business licenses to the regional administrations on a provincial level. The Law No. 3/2020 stipulates that authority of the regional administration granted under the Mining Law and other laws regulating the authority of the regional administration in mining activities must be interpreted as the authority of the government unless otherwise stipulated in the Amendment to Mining Law.
