Authority in the Management and Utilization of Mines in the Era of Regional Autonomy

Law Number 11 of 1967 concerning Basic Mining Provisions states that every entrepreneur who will carry out mining activities must have a Mining Power of Attorney (KP). The provision of KP is based on the classification of excavated materials.

There are three kinds of excavated material groups, namely groups a, b and c.  Class a excavated materials are strategic mining ventures that are considered useful for defense and security as well as the country’s economy such as petroleum, natural gas, coal, nickel, tin or radioactive materials.

Group b excavated materials are vital mining businesses that function to ensure the lives of many people such as gold, silver, diamond, iron or zinc. Group c excavated material is excavated material that is not a group a and b excavated material such as sand, gravel, marble, granite or kaolin.

The authority to regulate the mining business of class a and b excavated materials rests with the Minister of Energy and Mineral Resources while the authority of the mining business of class c excavated materials rests with the Level I Regional Government where the excavated material is located. However, taking into account the interests of the regions, the Minister can submit the arrangements for the mining business of class b excavated materials to the Provincial Government where the excavated material is located.

The awarding of public contracts to private companies (investors) is possible if government agencies are deemed unable to carry out their own.  For this reason, the Minister can give public permission to contract with other parties, including investors.

For class c excavated materials that are located offshore and cultivated by Foreign Companies must be carried out in the form of a contract of work. Based on Article 4 paragraph (2) of Law Number 11 of 1967 Jo. Government Regulation Number 37 of 1986, excavated materials of this group are delegated to the Regional Government by issuing a Regional Mining Permit (SIPD).

The implementation of mining operations for group a excavated materials can only be carried out by government agencies and state enterprises. The operation of class b excavated materials can be carried out by anyone, both state mining companies and government agencies, individuals or private legal entities, as long as they meet the requirements in Article 12 paragraph 1 of the Basic Mining Law.

Based on Article 4 paragraph 1 of Government Regulation Number 37 of 1986 concerning Partial Handover of Government Affairs in the Mining Sector to Level I Regional Governments, mining business carried out with a contract of work can be carried out on excavated materials of groups a and b through cooperation with government agencies or state companies as KP holders, as long as they have not been able or unable to do it themselves.

The forms of KP that can be given to the applicant are:

1. Mining Power (KP) granted to state enterprises, regional companies, cooperatives, other legal entities or individuals to carry out mining business of excavated materials of groups a and b
2. Assignment Decree (KP Assignment) is a form of KP given by the Minister to government agencies to carry out mining business in conducting research on excavated materials
3. People’s Mining Permit Decree (SIPR) is a business permit for all groups (a, b and c) granted by the Minister to the local people which is carried out in a hereditary, small way and with very simple equipment
4. Regional Mining Permit (SIPD) granted by the local government to companies / legal entities and individuals for the mining business of class c excavated materials in their area

 

Mining Management in the Era of Regional Autonomy

Article 10 of Law Number 22 of 1999 concerning Regional Government gives regional authority in managing national resources available in their area and is responsible for maintaining environmental sustainability in accordance with laws and regulations.

A number of government affairs will be handed over to the districts/ cities, namely public works, health, education and culture, agriculture, transportation, industry and trade, investment, environment, land, cooperatives and labor under article 11 of the Local Government Law.

Thus mining matters are not mandatory affairs for autonomous regions, but rather elective affairs.  Law Number 32 of 2004 concerning Regional Government also states that mining affairs do not include mandatory affairs for provinces and/or regencies/cities, but include elective affairs.

Based on Government Regulation Number 38 of 2007 concerning the Division of Government Affairs Between the Provincial Government and the Regional Government of the City Regency as an implementing regulation of Law 32 of 2004 concerning Regional Government, no affair is absolutely the authority of an autonomous region alone. Similarly, mining affairs are government affairs that are divided between levels of government together.

Referring to Government Regulation Number 75 of 2001 concerning the Second Amendment to Government Regulation Number 32 of 1969 concerning the Implementation of Law Number 11 of 1967 concerning the basic provisions of mining, the authority to issue mining permits depends on the location of mining activities carried out.  For this reason, mining permits can be the authority of the Regent, Mayor, Governor or Minister.

Article 33 paragraph 3 of the 1945 Constitution of the Republic of Indonesia states that the excavated materials that can be decentralized are group a and group b, while group c is decentralized to autonomous regions.  In contrast to Law Number 11 of 1967, Law Number 4 of 2009 does not regulate the classification of excavated materials and basically all excavated materials can be decentralized to autonomous regions according to the authority based on the place where mining activities are carried out.

 

Mineral and Coal Mining Management

The management of mineral and coal mining is in the hands of the Government, Provincial Government and Regency/City Governments according to their respective authorities.  Article 9 of Law U Number 4 of 2009 concerning Mineral and Coal Mining states that mining areas are part of the national spatial plan established by the Central Government after coordinating with local governments and consulting with the Dpr.

The mining area itself is divided into mining business areas designated by the government after coordinating with the local government and submitted in writing to the DPR, community mining areas designated by the Regent / Mayor after consulting with the DPRD and state reserve areas designated by the government for national strategic interests reserved for certain commodities and conservation areas in order to maintain the balance of the ecosystem and  milieu.

However, until now the determination of the mining business area according to the existing spatial plan has not been determined by the government so that local governments that have received delegation of authority to issue mining business permits have not been able to issue these permits until now.

The Mineral and Coal Mining Law adopts several forms of licensing, namely:

1. Mining Power (KP) granted to state companies, regional companies, cooperatives, other legal entities or individuals to carry out mining business of excavated materials of classes a and b
2. Mining Business Permit (IUP) is a business license to carry out mining carried out by the Minister, Governor, Regent according to their authority (Article 1 number 7), which includes the  Exploration IUP, which is a business license granted to carry out stages of general investigation activities, exploration and feasibility studies and IUP product operations i, namely a business license granted after the completion of the implementation of the Exploration IUP to carry out stages of production operations. Production Operations IUP consists of construction, mining, processing and refining activities, as well as transportation and sales.
3. People’s Mining Permit (IPR) is a permit to carry out mining in a community mining area with a limited area and investment made by the Minister, Governor, Regent according to their authority.   The Regent / Mayor provides IPR, especially to local residents, both individuals with a maximum area of 1 Ha and to community groups with a maximum area of 5 Ha and / or cooperatives with a maximum area of 10 Ha. This can be delegated to the sub-district in accordance with applicable laws and regulations.
4. Special Mining Business Permit (IUPK) is a permit to carry out mining business in the area of a special mining business permit (WIUPK: Article 1 number 11). A special mining business license area is an area granted to IUPK holders (Article 1 number 35).

IUPK consists of two stages, namely:

 

Author / Contributor:

Anthony Muslim, S.H. Senior Associate Contact: Mail       : anthony@siplawfirm.id Phone    : +62-21 799 7973 / +62-21 799 7975