MEMORANDUM

From: Willy
To:

Scribd

Date: 25 April 2014

Re:

Mining Regulation and procedure

REGULATIONS:
1. Constitution of 1945 of the Republic of Indonesia (1945 Constitution)
2. Law Number 4 of 2009 concerning Mineral And Coal Mining dated 12 January 2009
(Mineral and Coal Mining Law);
3. Law Number 41 of 1999 concerning Forestry dated 30 September 1999 (Forestry
Law)
4. Law Number 32 of 2009 concerning Environment dated 3 October 2009
(Environment Law)
5. Government Regulation Replacement Law Number 1 of 2004 concerning amendment
of Law Number 41 of 1999 concerning Forestry dated 11 March 2014 (Government
Regulation Replacement Law Number 1/2004)
6. Government Regulation Number 23 of 2010 concerning Mining Permit Application
dated 1 February 2010 ("Government Regulation Number 23/2010)
7. Government Regulation Number 24 of 2012 concerning amendment of Government
Regulation 23 of 2012 concerning Mining Permit Application dated 21 February 2012
("Government Regulation Number 24/2012)
8. Government Regulation Number 1 of 2014 concerning Activities of Mineral and Coal
Mining dated 11 January 2014 (Government Regulation Number 1/2014)
9. Government Regulation Number 78 of 2010 concerning Reclamation and Post Mining
dated 20 December 2010 (Government Regulation Number 78/2010)
10. Regulation of Minister of Energy and Natural Resources Number 1/2014 concerning
Value Addition Criteria dated 11 January 2014 (Minister of Energy and Natural
Resources Regulation Number 1/2014)
ISSUE:
Regulation about Mineral and Coal Mining in Indonesia that occur in Indonesia
ANALYSIS:
In Indonesia, Mineral and Coal Mining has new regulation that restrict foreign or local
companies to export raw mineral and coal that has not been processed in Indonesia. Foreign
or local companies that want to export mineral and coal must add mineral and coal value until
reaching standard that has been demanded in Indonesian law, furthermore mineral and coal
mining regulation constrain the mine owner to do reclamation. All of the mine owner must
pay guarantee in addition to do mine reclamation. Law Number 4 of 2009 concerning

Mineral And Coal Mining has prohibit Foreign or local companies to export Raw mineral or
coal that has not been processed in Indonesia, these regulations equipped by Government
Regulation Number 1 of 2014 concerning Activities of Mineral and Coal Mining and
Regulation of Minister of Energy and Natural Resources Number 1/2014 concerning Value
Addition Criteria. Government Regulation Number 1 of 2014 permit foreign or local
companies to export mineral and coal with requirement that has been processed whereas
Regulation of Minister of Energy and Natural Resources Number 1/2014 only will permit
foreign or local companies to export mineral and coal if they will not export raw mineral or
coal.
Mine owner have right and duty to open mine in Indonesia, based on Law Number 4 of 2009
concerning Mineral and Coal Mining article 90,91,92 mine owner that has IUP and IUPK
Mining license has right to :
1. Do partly or whole Mining process, it happen for exploration activities and production
activities;
2. Utilize Public structure and infrastructure for mine interest after fulfill Indonesian
law;
3. Having mineral, include mineral that attached in it or coal that has been produced if
has fulfilled exploration or production dues, except Radioactive Mineral.
Based on article 93 Mineral and Coal Mining regulation Number 4 of 2009 all mine owner
that holding IUP and IUPK restricted to give their IUP and IUPK to other parties. to do stock
diversion in Indonesia Stock Exchange only can be done after did exploration until certain
circumstances stage. Stock diversion only can be done with requirement :
a. Must submit announcement to Minister, Governor, Regent/Mayor according their
authority
b. As long as didnt contradict with Indonesian law
Mining activities is whole activities to find, digging, processing, utilization, and selling
Minerals, Coal, Oil and Gas. All the activities must refer to Mining Concept that pay attention
to environment that involve
1. Prospecting/ Public investigation
2. Exploration, Include: preliminary exploration, detailed exploration
3. Properness Research : Technic, Economic, Environment (including AMDAL)
4. Production Preparation (Development and Construction)
5. Mining
6. Reclamation
7. Mineral Dressing
8. Purification Process/ Metallurgy Extraction
9. Marketing
10. Corporate Social Responsibility
11. Mine Closure
Based on Government Regulation Number 23 of 2010 concerning Mining Permit Application
article 2 mining commodity has been organized to 5 category which is :
1. Radioactive Mineral such as : Radium, Thorium, Uranium, Monasit, and so on;
2. Metal Mineral such as : lithium, beryllium, magnesium, potassium, calcium, gold, copper,
silver, lead, zinc, tin, nickel, manganese, platinum, bismuth, molybdenum, bauxite, mercury,
tungsten, titanium, barite, vanadium, chromite, antimony, cobalt, tantalum , cadmium,
gallium, indium, yitrium, magnetite, iron, galena, alumina, niobium, zirconium, ilmenite,

chromium, erbium, ytterbium, dysprosium, thorium, cesium, lanthanum, niobium,

neodymium, hafnium, scandium, aluminum, palladium, rhodium , osmium, ruthenium,
iridium, selenium, telluride, stronium, germanium, and zenotin
3. Non metal Mineral such as : diamond, corundum, graphite, arsenic, quartz sand, fluorspar,
cryolite, iodine, bromine, chlorine, sulfur, phosphates, halite, asbestos, talc, mica, magnesite,
yarosit, ocher, fluorite, ball clay, fire clay, zeolite, kaolin, feldspar, bentonite, gypsum,
dolomite, calcite, chert, pirofilit, quartzite, zircon, wolastonit, alum, rock quartz, perlite, rock
salt, clay, and so on
4. Boulder such as : pumice, tras, toseki, obsidian, marble, perlite, diatomaceous earth,
Fullers earth, slate, granite, granodiorite, andesite, gabbro, peridotite, basalt, trakhit, leusit,
clay, soil urug, pumice stone, opal, chalcedony, Chert, quartz crystals, jasper, krisoprase,
wood
5. Coal such as : asphalt, coal, peat
Based on Government Regulation Number 24 of 2012 concerning amendment of
Government Regulation 23 of 2012 concerning Mining Permit Application there are several
differences on IUP Mining License grants between foreign and local companies such as IUP
Mining License for foreign companies only can be granted by Minister, and based on article
97 Government Regulation Number 24 of 2012 foreign companies that have IUP Mining
license after 5 years have duty to gradually divest their stock until tenth year minimum 51%
owned by Indonesian parties with provision such as :
1.
2.
3.
4.
5.

Sixth year minimum 20% has been owned by Indonesian parties

Seventh year minimum 30% has been owned by Indonesian parties
Eighth year minimum 37% has been owned by Indonesian parties
Ninth year minimum 44% has been owned by Indonesian parties
Tenth year minimum 51% has been owned by Indonesian parties

In order to use foreign employee, foreign companies must submit application about using
Foreign employee to Minister.
Procedure that must been fulfilled by mine owner is
1.
2.

Obtaining WIUP license (license about Mining Region)

Obtaining IUP license (license about Mining activities)

In order to obtain WIUP license, foreign companies must participating in auction that will be
held by the Minister or Governor or Mayor (according to their competency based on mining
region) to obtain WIUP license for metal and coal mine or submit application to obtain
Mining region for non metal and boulder mine. Foreigner cannot have WIUP license for
radioactive Mineral mine, this WIUP only will granted for Government nuclear sector
organization.
After obtaining WIUP license, companies must obtaining IUP mining license which is
divided in two type such as : Exploration IUP and Operation Production IUP. In order to
obtain IUP there are four requirements that must been fulfilled which is
1.
2.
3.
4.

Administrative requirements
Technical requirements
Environment requirements
Financial requirements

Based on article 24 Government Regulation Number 23 of 2010 concerning Mining Permit

Application,

Administrative requirements that must been fulfilled for

a. Exploration IUP and Operation Production IUP for Metal and Coal is application
letter, Information about Management and shareholder list, and information letter
about domicile;
b. Exploration IUP and Operation Production IUP for Non-metal and Boulder is
application letter, company profiles, Companys certificate of incorporation that has
been legitimated by Government, Tax Registration Number (NPWP), Information
about Management and shareholder list, and information letter about domicile.
Technical requirements that must been fulfilled for
a. Exploration IUP and Operation Production IUP for Metal and Coal is Curriculum
vitae and a statement of mining experts and / or experienced geological at least three
(3) years experience, WIUP map with the boundary coordinates such as geographical
latitude and longitude in accordance with the provisions of geographic information
system that applies nationally;
b. Exploration IUP and Operation Production IUP for Non-metal and Boulder is Region
map with geographical coordinates of the boundary latitude and longitude in
accordance with the provisions of geographic information system that applies
nationally, Exploration full report, Properness research report, Reclamation and postmining plan, Work plan and budget plan, Plans to build facilities and infrastructure for
production and operations, and have mining experts and / or experienced geological at
least 3 (three) years experience.
Environment requirements that must been fulfilled for
a. Exploration IUP is statements to comply with the provisions of regulation about
environment.
b. Operation Production IUP is statements to comply with the provisions of regulation
about environment and approval of environmental documents in accordance with
provisions of regulation.
Financial requirements that must been fulfilled for
a. Exploration IUP is Guarantee placement for implementation of exploration activities
and compensation auction value price obtaining WIUP for metal or coal in accordance
with the auction bid or reserve fee payment receipt and payment of WIUP map.
b. Operation Production IUP is Latest annual financial statements that has been audited
by a public accountant, Proof of payment of fixed fees for 3 (three) years, Proof of
payment in accordance with the bid auction replacement investment for the auction
winner WIUP which has expired.
Mining license period shall affect mine owner right to open their mine and do their activities,
exploration and exploitation period based on Law Number 4 of 2009 concerning Mineral And
Coal Mining such as :
a. IUP Mining license for Metal Exploration (period will take for 8 years) that consist of
Public Inspection (for 1 year), Exploration Activities (for 3 years + 2x1 years) and
Properness Research (for 1+1 year).
b. IUP Mining License for Coal Exploration (period will take for 7 years) that consist of
Public inspection (for 1 year), Exploration Activities (for 2 years + +2x1 years) and
Properness Research (for1+1 year).

c. IUP Mining License for Mineral and Coal Operation Production (period will take for
20 Years + 2x10 Years), that consist of Construction (3 Years) and Mining, Processing
and Purified, Transporting and Selling (20 Years)

Based on Article 52 until article 62 Law Number 4 of 2009 concerning Mineral And Coal
Mining give Region limitation for Foreign or local companies that has obtaining IUP Mining
License which is :
a. Foreign or local companies that holding IUP Mining license for Metal Exploration
will have WIUP with Minimum Range 5000 Hektare and Maximum Range 100.000
Hektare for Exploration Activities and WIUP with maximum range 25.000 Hektare
for Mining Operation.
b. Foreign or local companies that holding IUP Mining license for Non-Metal
Exploration will have WIUP with Minimum Range 500 Hektare and Maximum Range
25.000 Hektare for Exploration Activities and WIUP with maximum range 5.000
Hektare for Mining Operation.
c. Foreign or local companies that holding IUP Mining license for Boulder Exploration
will have WIUP with Minimum Range 5 Hektare and Maximum Range 5.000 Hektare
for Exploration Activities and WIUP with maximum range 1.000 Hektare for Mining
Operation.
d. Foreign or local companies that holding IUP Mining license for Coal Exploration will
have WIUP with Minimum Range 5000 Hektare and Maximum Range 50.000
Hektare for Exploration Activities and WIUP with maximum range 15.000 Hektare
for Mining Operation.
Government have right to limit production summary per comodity per year at every province
based on article 5 (3) Law Number 4 of 2009 concerning Mineral And Coal Mining
CONCLUSION:
1.

Government Restrict foreign or local companies to export raw mineral and coal,
mineral and coal that can be exported must have been processed and purified before
exported

2.

Mine owner have right and duty to open mine in Indonesia, they must obey
Indonesian regulation, there are several requirements that must be completed before
open mine in Indonesia such as Administrative, Technical, Environment, and Finacial
Requirements

3.

Foreign mine owner must divestate their stock within 5 years gradually from fifth
years to Indonesian People.

4.

Government limit Foreign mine owner at production summary and mining region.