A draft bill on minerals and coal mining is currently being
circulated for discussion in the House of Representative of
Indonesia. If passed, the bill is intended to replace the
current Law No 4 of 2009 on minerals and coal mining.
The draft bill provides for different types of mining
business licence (Izin Usaha Pertambangan, or IUP).
This includes the exploration IUP (which is required for
preliminary studies, feasibility studies, and exploration
activities) and the operation-production IUP (which is required
for construction, extraction, processing, and purification
The exploration IUP and operation-production IUP are further
delineated by the type of minerals being extracted. There are
separate IUPs for: metals; non-metals; rare earth minerals;
rock minerals; and, coal.
The period for which the licences are valid varies depending
on the type of minerals and whether the licence is for
exploration or operation-production. The period ranges from
three years to 20 years but extensions are possible.
The draft bill also introduces a new license called the SIP.
This is required for companies conducting exploration
activities for certain minerals. However, the draft bill has
not yet specified the type of minerals that will require the
SIP licence. The relevant ministry is empowered to issue
regulations on this.
The SIP licence is valid for six months.
The draft bill also contains a mandatory divestment
provision whereby foreign shareholders of a mining company must
transfer their shares to Indonesian nationals within five years
of the company entering the production stage. Divestment
through public share offering is permitted, provided the
company has previously offered the shares to, and this offer
was subsequently refused by, the central or regional
government, the state or regionally-owned enterprises, and
private Indonesian business entities.
The parliament is discussing the draft bill and the final
bill may, therefore, differ substantially from the current
Oene Marseille and Emir Nurmansyah