Energy and Natural ResourcesMiningOil and GasPublicationsMoratorium on Indonesian Mining Licenses

On 10 June 2020, President Joko Widodo and House of Representative signed and ratified a long-anticipated bill amending Law No. 4 of 2009 regarding Mineral and Coal Mining (“the Mining Law”). Law No. 3 of 2020 concerning amendments to Law No. 4 of 2009 (“the New Mining Law”) has majorly revised various provisions of the Mining Law.

Under the New Mining Law,  mineral and coal mining licensing is now under the control of the Central Government (the Ministry of Energy and Mineral Resources or “MEMR”). Pursuant to Circular of the Directorate General of the Ministry of Energy and Mineral Resources 742/30.01/DJB/2020 regarding the Moratorium on the Issuance of new licenses in the Mineral and Coal Mining Sector (“CL 742/2020”), the New Mining Law provides a transitional period in which Regional Governments shall not issue any new mining-related licenses for six months as of the promulgation of the New Mining Law (i.e., starting from 10 June 2020) or until its implementing regulation is issued.

This circular letter was issued on 18 June 2020 to all Governors (Regional Governments) in Indonesia in order to transfer the authority to issue licenses to the Central Government. Therefore, this article will elaborate on the licensing moratorium policy and the status of the ongoing license application.

 

Legal Basis

  1. Law No. 3 of 2020 regarding Amendment to Law No. 4 of 2009 regarding Mineral and Coal Mining
  2. Circular of the Directorate General of the Ministry of Energy and Mineral Resources 742/30.01/DJB/2020 regarding Postponement of the Issuance of New Licenses in the Mineral and Coal Mining Sector.

 

Licenses Moratorium

As mentioned above, shortly after the enactment of the New Mining Law, the MEMR issued a circular letter sent to all Regional Governments concerning the prohibition on issuing new licenses as mentioned under Article 173 of the New Mining Law.

The following is the list of licenses subject to the moratorium policy:

  1. Mining Business License (Izin Usaha Pertambangan or “IUP”);
  2. Community Mining License (Izin Pertambangan Rakyat or “IPR”);
  3. Temporary License to Conduct Transportation and Sales Activity (Izin Sementara untuk melakukan pengangkutan dan penjualan);
  4. IUP Production Operation for Processing And/Or Refinery (IUP Operasi Produksi Khusus Untuk Pengolahan dan/atau Pemurnian);
  5. IUP Production Operation for Transportation and Sales (IUP Operasi Produksi khusus Pengangkutan dan Penjualan) ;
  6. Mining Service Business License (Izin Usaha Jasa Pertambangan or “IUJP);
  7. IUP Production Operation for Sales (IUP Operasi Produksi untuk Penjualan).

 

Licensing matters that are still permitted to be governed by Regional Governments are as follows:

  1. Upgrade of the existing IUP exploration to IUP production operation;
  2. Extension of any existing licenses;
  3. Adjustment of existing IUP in the event of any change in the status of investment capital;
  4. Approval and recommendations related to governing and supervising mining activities (e.g., approval for reclamation plan).

According to the MEMR circular letter, any applications for new mining licenses to Regional Governments that had been submitted before 10 June 2020 is not permitted to be processed.

 


ADCO Law earns the trust to represent clients from multinational companies to emerging entities across a wide range of industries to achieve their business objectives in Indonesia.

By combining commercial sensibilities and legal expertise, ADCO as a Law Firm Jakarta assists the clients to structure, organize and implement their business ventures and investments, including structuring, financing and securing investments as well as establishing new foreign companies in Indonesia. Should you have more queries regarding this matter, please do not hesitate to contact us.

Dendi Adisuryo
dendi.adisuryo@adcolaw.com

Liza Mashita
liza@adcolaw.com

@2020 ADCO Law. All rights reserved.
This publication has been prepared by Nursanti Savitri Kireina for general informational purposes only to provide clients with information on recent legal developments and is not intended as legal advice or opinion.

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