Apr

01

How Many Types of Mining Permits that Mining Owners Should Have in Indonesia?

To carry out mining activities in Indonesia, it is necessary to own permits in accordance with the latest government regulations and other applicable Laws in Indonesia. The stages of mining start from general investigation, exploration, feasibility study, construction, mining, processing, and refining, transportation and sales, and post-mining. These stages can be fully or partially carried out by one mining company, it depends on the type of mining permit the company owns. The following are the different types of mining permits in Indonesia:

  1. Mining Services Permit (“IUJP”)
    IUJP is a permit granted to carry out core mining business activities related to the stages and/or parts of mining business activities. The validity period for the IUJP is a maximum of five years and can be extended for a period of five years each time.
  2. Mining Exploration Permit ( “IUP Exploration” )
    A Mining Exploration Permit ( “IUP” ) is a business permit granted to carry out the General Investigation, Exploration and Feasibility Study stages. This permit will be obtained after the mining company has obtained a Mining Business Area Permit ( “WIUP” ) from the Region/Province/Governor (ESDM Office). The WIUP can be granted to business entities, cooperatives and individuals through auctions or applications in accordance to the type of commodity. The IUP Exploration is granted for a maximum of eight years for metallic minerals, seven years for coal and certain types of non-metallic minerals, and three years for non-metallic minerals and rocks.
  3. Special Exploration Mining Permit ( “IUPK Exploration” )
    IUPK Eksplorari is a business permit granted to carry out the General Investigation, Exploration, and Feasibility Study stages in the special mining business permit area. IUPK Exploration has the same validity period as the IUP Exploration, the only difference is that the IUPK Exploration permit is granted by the Minister of Energy and Mineral Resources.
  4. Production Operation Mining Permit ( “IUP OP” )
    IUP OP is a business permit granted after the completion of the IUP Exploration implementation to carry out activities that include construction, mining, processing and/or purification, transportation and sales. The validity period of the IUP OP is a maximum of 20 years and can be extended twice for 10 years each for certain types of metallic minerals, coal and non-metallic minerals, 10 years with the possibility of two five-year extensions for others non-metallic minerals, while a permit for rocks is for five years with the possibility of two five-year extensions.
  5. Special Production Operation Mining Permit ( “IUPK OP” )
    IUPK OP is a business permit granted after the completion of the IUPK Exploration implementation to carry out production operation activities. IUPK OP has the same validity period as the IUP OP, the only difference is that the IUPK OP permit is granted by the Minister of Energy and Mineral Resources.
  6. Special Production Operation Mining Permit for Processing and/or Purification ( “IUP OPK I” )
    IUP OPK I is a business permit granted to purchase, transport, process and purify and sell mineral or coal mining yield commodities. The IUP OPK I is granted for a maximum of 30 years and can be extended for a period of 20 years for each extension. The authority over IUP OPK I is handled by the Minister if:
    1. The mining commodities to be processed come from other provincial areas outside the location of the processing and/or refining facilities;
    2. The mining commodities to be processed come from abroad, and/or…
    3. If the location of the processing and refining facilities is in a cross-provincial area.
    The authority over IUP OPK I is handle by the Governor if:
      a) The mining commodity to be processed comes from the same province as the location of the processing and/or refining facility, and/or… b) If the location of the processing and/or refining facility is within one province.
  7. Special Production Operation Mining Permit for Transportation and Sales (“IUP OPK II”) IUP OPK II is a business license granted to companies to purchase, transport, and sell mineral or coal mining commodities. The validity period for IUP OPK II is a maximum of five years and can be extended for a period of five years each time. The authority over OPK IUP II is granted by the Minister if:
    1. The transportation and sales activities are carried out on provincial and/or cross-border lines.
    The authority of IUP OPK for transportation and sales is granted by the Governor if:
    1. The transportation and sales activities are carried out in one provincial area.

In addition to the mining permits described above, there are still two types of mining permits that existed before Law Number 4 of 2009, namely Contract of Work and Coal Mining Concession Work Agreement. Contract of Work, hereinafter abbreviated as KK, is an agreement between the Government of the Republic of Indonesia and a company incorporated as an Indonesian legal entity to carry out mineral mining business activities. Meanwhile, the Coal Mining Concession Work Agreement, hereinafter abbreviated as PKP2B, is an agreement between the Government of the Republic of Indonesia and a company incorporated as an Indonesian legal entity to conduct coal mining business activities. These two types of mining permits ceased to exist after 2009 once the Minerba Law was enacted.

Schinder Law Firm has had years of experience in these matters, supported by numerous number of civil and corporate lawyers in its team, making Schinder Law Firm one of the biggest corporate law firms in Jakarta. For more information regarding the registration of mining business permits, you may contact us at info@schinderlawfirm.com.

Author: Suryani Lim

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