Mining Business License (Ijin Usaha Pertambangan / IUP)
The implementing regulations of the Mining Law that provide guidance about mining licences are GR 23/2010 (as amended by GR 24/2012, GR 1/2014, GR 77/2014, GR 1/2017, and GR 8/2018), PerMen 25/2015, and PerMen 11/2018 (as amended by PerMen 22/2018 and PerMen 51/2018).
Type of Mining Business Licenses
Under the Mining Law, mining licences may be issued to one or more parties within the designated WPs (Wilayah Pertambangan), as follows:
- An IUP is a general licence to conduct mining business activities in a WUP area (Wilayah Usaha Pertambangan-Mining Business Area);
- An IUPK is a licence for conducting mining activities in a specific WPN area (Wilayah Pencadangan Negara-State Reserve Area) in which mining business activities can be carried out;
- A People’s Mining Licence (Izin Pertambangan Rakyat – “IPR”) is a licence for conducting a mining business in a WPR area (Wilayah Pertambangan Rakyat-Peoples’ Mining Area) of limited size and investment. IPRs are not available to foreign investors.
The business licences in the fields of mineral and coal mining according to PerMen 11/2018 (as amended by PerMen 22/2018 and PerMen 51/2018) are:
Exploration Mining Business Licence (“Exploration IUP”)
An Exploration IUP is a mining business licence that is granted for the performance of general surveys, exploration, and feasibility studies within a WIUP (Wilayah Izin Usaha Pertambangan-Mining Business Licence Area) .
Exploration Special Mining Business Licence (“Exploration IUPK”)
An Exploration IUPK is a mining business licence that is granted for the performance of general surveys, exploration, and feasibility studies within a WIUPK (Wilayah Izin Usaha Pertambangan Khusus-Special MiningBusiness Licence Area)
Mining Services Business Licence (“IUJP”)
An IUJP is a mining business licence that is granted for performing core mining service business activities in relation to certain phases/parts of the mining business activities
Mining Business Licence for Production Operation (“IUP-OP”)
An IUP-OP is a mining business licence that is granted for performing production operation activities (i.e. construction, mining, processing and/or refining, transportation, and sales) within a WIUP
Special Mining Business Licence for Production Operation (“IUPK-OP”)
An IUPK-OP is a mining business licence that is granted for performing production operation activities (i.e. construction, mining, processing and/or refining, transportation, and sales) within a WIUPK
Mining Business Licence for Production Operations Specifically for Processing and/or Refining (“IUP-OP Specifically for Processing and/or Refining”)
An IUP-OP Specifically for Processing and/or Refining is a mining business licence that is granted specifically for purchasing, transporting, processing, and refining, as well as selling mineral and coal commodities
Mining Business Licence for Production Operations Specifically for Transportation and Sales (“IUP-OP Specifically for Transportation and Sales”)
An IUP-OP Specifically for Transportation and Sales is a mining business licence that is granted specifically for purchasing, transporting, and selling mineral and coal commodities
Ownership of Mining Business Licenses
*) An IUP-OP Specifically for Processing and/or Refining of metal minerals, non-metal minerals, and coal can only be granted to business entities, while for rocks, an IUP-OP Specifically for Processing and/or Refining can be granted to business entities, cooperatives, and individuals.
**) Individuals who are holders of IUJPs can only be engaged in the mining services business in consultation and/or planning activities.
In the above table, the business entities include BUMNs, BUMDs, and private business entities. PerMen 11/2018 does not define private business entities further. However, based on GR 24/2012, private business entities include PMDNs and PMAs. Under the previous Mining Law 11/1967, a CoW/CCoW (Contract of Work) could be held by either foreign or domestic investors, whilst a KP (Kuasa Pertambangan/Mining Rights) could only be issued to domestic investors.
The Mining Law therefore removes some of the distinctions between Indonesian and foreign investors in the mining sector, and it’s consistent with the Negative List on Foreign Investment (issued by BKPM), which allows 100% foreign investment in the mining sector.
The Authority to Issue IUP
Based on PerMen 11/2018 (as amended by PerMen 22/2018 and PerMen 51/2018), the issuance of IUPs is performed as below:
Grantor | Condition |
MoEMR (Minister of Energy and Mineral Resources) | If the WIUP is located:
The Exploration IUP is also granted by the MoEMR if:
|
Governor | If the WIUP is located:
|
Grantor | Condition |
MoEMR (Minister of Energy and Mineral Resources) | Exploration IUPK and IUPK-OP can only be granted by the MoEMR. |
Grantor | Condition |
MoEMR (Minister of Energy and Mineral Resources) | If the mining service business activities are conducted throughout Indonesia. |
Governor | If the mining service business activities are conducted in one province. |
Grantor | Condition |
MoEMR (Minister of Energy and Mineral Resources) | If the mining location, processing and/or refining location, as well as the special port location are located:
The IUP-OP is also granted by the MoEMR if:
|
Governor | If the mining location, processing and/or refining location, as well as the location of the special port are within one province. |
Grantor | Condition |
MoEMR (Minister of Energy and Mineral Resources) |
|
Governor |
|
Grantor | Condition |
MoEMR (Minister of Energy and Mineral Resources) | If the transportation and sales are made across province and/or nation. |
Governor | If the transportation and sales are made in one province. |
Through PerMen 25/2015, the MoEMR has delegated to BKPM the authority to issue the following licences to PMA companies: a) Exploration IUPs, b) IUP-OPs including extensions, c) Cancellation of IUPs relinquished to the Government; d)IUP-OPs Specifically for Transportation and Sales including extensions; e) IUP-OPs Specifically for Processing and/or Refining including extensions; f) Temporary Licences for Transport and Sales; g) IUP-OPs for Sales; h) In-Principle Licences for Processing and/or Refining; and i) IUJPs, including extensions.
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