As a country rich in mineral resources, particularly strategic minerals, Indonesia continues to enhance its mining governance to support sustainable development. Strategic minerals, such as nickel, copper, gold, bauxite, and rare earth elements, play an essential role in various industrial sectors and global supply chains.
These resources fulfill domestic demands while contributing significantly to the global economy. Therefore, strict regulations govern licensing and mining practices to ensure responsible resource utilization.
Legal Framework for Special Mining Licenses in Indonesia
The mining sector is crucial to Indonesia’s economic growth and regional development. However, challenges such as jurisdictional conflicts between central and regional governments, licensing procedures, environmental protection, transparency, oversight, and sanctions have hindered effective mining governance.
To address these challenges, Indonesia has established a legal framework for mineral resource management. This framework is primarily regulated under Law No. 3 of 2020, which amends Law No. 4 of 2009 on Mineral and Coal Mining, better known locally as the “Minerba Law”. This law provides the legal foundation for responsible mineral and coal resource management.
Article 35(1) of the Minerba Law states that mining activities require a business license issued by the Central Government. The business licensing process involves the issuance of:
- Business Identification Number (NIB);
- Standard Certification; and/or
- Mining Permit.
The specific mining permits include:
- Mining Business Permit (IUP);
- Special Mining Business Permit (IUPK);
- IUPK for Continuation of Contract/Agreement Operations;
- Community Mining Permit (IPR);
- Rock Mining License (SIPB);
- Exploration Assignment License;
- Transportation and Sales License;
- Mining Services Business License (IUJP);
- Sales IUP.
Building upon the foundation of the Minerba Law, the government has established guidelines for the allocation of mining business and practices areas through auctions. These guidelines are regulated under Ministerial Decree No. 258.K/MB.01/MEM.B/2023 on the Guidelines for Granting Mining Business Areas and Special Mining Business Areas for Metallic Minerals and Coal, otherwise “ESDM Decree 258/2023”.
ESDM Decree 258/2023 focuses on strategic minerals such as nickel, copper, bauxite, and rare earth elements, which are essential for technology and renewable energy industries. The decree emphasizes collaboration between the central government, regional administrations, and mining companies to streamline the licensing process and improve governance.
Strategic Mineral Mining Management
The Minerba Law explicitly states that minerals and coal, as non-renewable natural resources, are national assets under state control, to be utilized for the maximum benefit of the people (Article 4(1) of the Minerba Law). The Central Government has several regulatory powers under Article 6(1)(a)-(w), including the authority to establish a national mineral and coal management plan.
Under Article 8A(2) of the Minerba Law, the national mineral and coal management plan must consider:
- Natural resource capacity and environmental sustainability based on geospatial data;
- Environmental conservation policies;
- Spatial and zoning regulations;
- Advancements in science and technology;
- Economic growth projections;
- Priority allocation of mining commodities;
- Mining area size and distribution;
- Land availability for mining;
- Existing mineral and coal reserves;
- Infrastructure availability.
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New Regulations on WIUP and WIUPK Allocation
With the enactment of the ESDM Decree 258/2023, the process of obtaining Mining Business Area (WIUP) and Special Mining Business Area (WIUPK) licenses has undergone key procedural modifications. The main steps include:
- Application Submission: Mining companies must submit applications electronically to the Ministry of Energy and Mineral Resources (ESDM), including a complete set of documents such as exploration plans and feasibility studies.
- Evaluation and Verification: The ESDM Ministry will review the submitted documents and assess compliance with applicable regulations.
- Area Designation: If approved, the government will designate WIUP or WIUPK areas for the applicant based on technical, social, and environmental considerations.
- Auction Process (If Applicable): In certain cases, WIUP or WIUPK areas may be subject to a transparent public auction for qualified bidders.
- Permit Issuance: Upon completion of the process, a business license will be issued, granting legal authorization for mining operations.
The regulatory framework established under the Minerba Law and ESDM Decree 258/2023 reflects Indonesia’s commitment to responsible mineral resource management.
By fostering structured governance and transparent licensing procedures, these regulations pave the way for a more sustainable and efficient mining practices sector. Ensuring compliance with these guidelines will strengthen Indonesia’s position as a key player in the global mineral supply chain while promoting environmental sustainability.
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References:
- Undang-Undang Nomor 3 Tahun 2020 tentang Perubahan Atas Undang-Undang Nomor 4 Tahun 2009 tentang Pertambangan Mineral dan Batubara (“UU Minerba”).
- Keputusan Menteri Energi dan Sumber Daya Mineral Nomor 258.K/MB.01/MEM.B/2023 tentang Pedoman Pemberian Wilayah Izin Usaha Pertambangan dan Wilayah Izin Usaha Pertambangan Khusus Mineral Logam dan Batubara (“Kepmen ESDM 258/2023”).