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Overcoming Roadblock Issues in the Mining Business: Legal Steps

Mining Business

The mining industry, as a vital pillar of Indonesia’s economy, has played a significant role, primarily in terms of generating revenue and creating employment. However, despite its prominent role in the economy, this industry often faces challenges that hinder business progress, one of which is the roadblock issue in mining activities. The rise of roadblock issues in the context of the mining business is becoming increasingly apparent, and that poses significant operational obstacles to this sector.

In this article, we will delve deeper into this issue, analyze various aspects of possible disputes, and identify the potential solutions. With a deeper understanding of how to overcome roadblock issues in the mining business, we can move towards better solutions and secure the business operations of companies in this sector.

Now, let’s explore an illustrative case example that reflects the common challenges faced by business actors in the mining industry in Indonesia. We start by looking at the situation faced by a mining license holder, which we call “PT X”, to understand how the roadblock issue in the mining business can be a serious problem.

PT X is a mining company with a valid Mining Business License or Izin Usaha Pertambangan (“IUP“) in one of Indonesia’s mineral resource-rich areas. PT X has carried out its operations with dedication, adhered to all regulations, and invested significant resources to develop its mining site. However, amid its operational activities, PT X encounters disruptions. A group of individuals, unrelated to its mining business, tries to stop its ore shipping operations by blocking the main hauling road that connects its mining site to the processing facility.  

PT X faces a serious dilemma. It has all the legal licenses and has complied with all applicable regulations, but the obstruction is a major bottleneck in its supply chain and threatens the continuity of its operations. In this situation, PT X has to find the right solution to overcome the obstruction that has threatened its mining business.

This illustrative case reflects the reality that business actors in Indonesia’s mining industry often face serious obstacles that can harm their operations.

In addressing situations like this, PT X can resolve the above issues in three ways, as further explained below:

A. Police Report 

Roadblocks in the mining business can consitute a criminal act if it interferes with mining business activities carried out by holders of IUP or Special Mining Business License or Izin Usaha Pertambangan Khusus (“IUPK“) who have fulfilled the conditions regulated in the mining law.

Article 162 of Law Number 4 of 2009 jo. Law Number 3 of 2020 concerning (“Mining Law“) governs legal sanctions for those interfering with mining business activities by license holders. This article stipulates that actions disrupting mining business activities carried out by license holders may result in legal sanctions, including imprisonment for a maximum of one year or a fine of a maximum amount of IDR one hundred million. 

However, it is important to note that this provision only applies if mining companies have mining licenses and meet the requirements specified in the Mining Law. Therefore, compliance with mining legality requirements before commencing operations is key to obtaining legal protection.

To overcome this obstacle, the action that PT X as the IUP holder can take is to report the roadblock incident to the authorities. Filing a police report is an important legal step to initiate the resolution process and protect the rights of PT X. By reporting the roadblock incident to legal authorities, PT X can take appropriate legal actions to eradicate illegal actions that disrupt its mining business.

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B. Civil Lawsuit

From a civil law perspective, the emergence of roadblock issues in the mining business by other parties who unilaterally claim land ownership, as seen in the case of PT X, often occurs due to various factors such as unregistered land ownership, unclear land boundaries, incomplete inheritance processes, overlapping ownership of land rights, or even the involvement of irresponsible parties in land ownership.

It should be noted that, as stated in Article 135 and Article 136 of the Mining Law, prior to commencing mining operations, IUP or IUPK holders must settle land rights. This requires license holders to obtain consent from landowners before commencing mining activities. In some cases, mining companies also have to provide compensation or reimbursement to landowners as a form of appreciation for land acquisition.

The process of settling land rights is carried out in stages according to the needs of the IUP or IUPK holder, and in practice the Land Rights relinquishement Statement Letter or Surat Pernyataan Pelepasan Hak atas Tanah (“SPPHT“) as legal written evidence is also signed in the presence of the head of village and the head of sub-district since that evidence shows that there is an agreement between the landowner and the entity who needs it.

In the situation faced by PT X as the IUP holder, PT X has the right to take legal action in the form of a civil lawsuit. Civil lawsuits are one of the legal remedies that can be taken to resolve land disputes through court. During this process, the court will examine the evidence, including SPPHT, that support the claims of PT X as a licence holder. It is important for PT X to be able to legally prove land acquisition through SPPHT as this will be a strong basis in the legal process.

In addressing land disputes in mining businesses, a solid understanding of the mining law, the land rights settlement process, and the legal steps such as civil lawsuits are essential. With the right approach, these disputes can be resolved fairly and in accordance with the law, which in turn allows mining operations to proceed smoothly.

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C. State Administrative Lawsuit

The situation that threatens PT X’s mining business are often related to overlapping land ownership certificates for the same object previously issued in violation of laws and regulations, or simply errors in the process or procedure, which can be detrimental to PT X’s business continuity.

In such a case, cancellation of land ownership certificates is an administrative action that can be taken by PT X. However, the question arises, “who has the authority to carry out this cancellation?”

These disputes often involve third parties unrelated to the mining business, who make unilateral claims of land ownership. One of the important steps that PT X as the IUP holder can take to resolve such land disputes is to file a State Administrative or Tata Usaha Negara (“TUN”) lawsuit to cancel the land ownership certificate.

Cancellation of land ownership certificates is an important step to maintain the continuity of mining operations. Certificates with administrative legal defects must be canceled or ordered to record changes in the maintenance of land registration data in accordance with applicable laws and regulations. This is important not only to protect legitimate ownership rights but also to maintain legal certainty in relation to land ownership.

Land ownership certificates serve as evidence of land ownership and are used in various legal contexts. The issuance of land ownership certificates involves several administrative officials, including the head of village, the head of sub-district, Land Deed Officials or Pejabat Pembuat Akta Tanah (PPAT), and the National Land Agency. Clear and legitimate land ownership is crucial for the smooth operation of mining businesses. Without proper land ownership certificates, mining activities can be hindered, and ownership rights become uncertain.

State Administrative Court or Pengadilan Tata Usaha Negara (“PTUN“) has the authority to review government administrative actions, including cancellation of land ownership certificates. In the event of cancellation of a land ownership certificate at the PTUN, the judge will consider its validity. The decision to cancel a land ownership certificate is based on a number of reasons and evidence. Therefore, if there are irregularities or legal defects in the certificate issuance process, the IUP holder, in this case PT X, has the right to file an administrative state lawsuit.

State administrative lawsuits are also an important step that can help ensure the continuity of mining operations and protect legitimate land ownership rights. With a solid understanding of this process, PT X can maintain the smooth operation of its business and avoid disruptions that could hamper its mining activities.

In this article, we have explored the challenges faced by business actors in Indonesia’s mining industry, especially in the context of roadblock issues in the mining business. The ilustrative case of PT X serves as a real-world example of how a roadblock issue can disrupt the operations of a mining company with valid licenses. However, with a deep understanding of the mining law, the land rights settlement process, and the legal steps such as filing police reports, civil lawsuits, and administrative state lawsuits, mining companies can navigate these challenges successfully.

We, ADCO Law, have a great deal of experience in helping mining companies overcome challenges such as those highlighted in this article. Our expertise is well-tuned to navigating the complexities of land rights settlement process, which ensures effective solutions to the complex and challenging issues faced by businesses in the mining sector.

With a strong understanding of mining law and a commitment to navigating clients’ business risks, ADCO Law is ready to provide expert guidance for your business operations. Together, we can overcome challenges and secure the business operations of companies in this sector.

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About ADCO Law:

ADCO Law is a firm that offers clients a wide range of integrated legal services, including in commercial transactions and corporate disputes in a variety of industry sectors. Over the course of more than a decade, we have grown to understand our client’s industry and business as well as the regulatory aspect. In dealing with business dynamics, we provide comprehensive solid legal advice and solutions to minimize legal and business risks.

ADCO Law is a Proud Member of the Alliott Global Alliance (AGA) in Indonesia. Founded in 1979, AGA is one of the largest and fastest-growing global multidisciplinary alliances, with 215 member firms in 95 countries.

As a law firm, we also believe in regeneration. To stay abreast of business changes and stay relevant, our formation of lawyers is comprised of the top graduates from Indonesian and international law schools.

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Disclaimer: This article has been prepared for scientific reading and marketing purposes only from ADCO Law. Accordingly, all the writings contained herein do not constitute the formal legal opinion of ADCO Law. Therefore, ADCO Law should be held harmless of and/or cannot be held responsible for anything performed by entities who use this writing outside the purposes of ADCO Law.