On 18 February 2025, the Indonesian Parliament approved a new bill on the fourth amendment to Law No. 4 of 2009 on Mineral and Coal Mining ("Fourth Amendment Bill") as lastly amended by Law No. 6 of 2023 on Stipulation of Government Regulation in Lieu of Law No. 6 of 2023 on Job Creation into Law ("Law 4/2009"). This new bill has been submitted to the President's chamber and is being prepared to be signed, passed, and enacted as law by the President.
This Fourth Amendment Bill includes several amendments with the most substantial one related to the expansion of downstream industry in the coal and mining sector by providing broader opportunities for small and local players (i.e., local and religious organizations, State Owned Enterprises ("SOE"), Regional Government-Owned Enterprises ("ROE"), MSMEs, and cooperatives) to manage their local mineral and coal resources. This significant amendment is expected to boost local opportunities for investment, leading to the growth of the local economy.
Based on the press release of the Ministry of Energy and Mineral Resources ("MoEMR") dated 18 February 2025, there are 12 (twelve) amendments in the Fourth Amendment Bill, including those related to Mining Area Business Permit and Special Mining Business Permit. Hence, we hereby present a summary of such amendments.
Please note that the final version is not yet publicly available. Therefore, the final Fourth Amendment Law may be different from the Fourth Amendment Bill as described in the MoEMR press release.
Holder of Mining Area Business Permit for Mineral and Metals: The most significant amendment in the Fourth Amendment Bill relates to the eligible entities that can apply for and become Subjects of Mining Area Business Permit (Wilayah Izin Usaha Pertambangan or "WIUP") for minerals and metals.
A WIUP is a license to conduct mining activities, including exploration operations in a designated location, granted to the holder of a Mining Business Permit (Izin Usaha Pertambangan or "IUP").
Previously, a WIUP for Minerals and Metals could be granted to the eligible holder through an auction for specific entities, namely Business Entities, Cooperatives, or Individual Enterprises. However, under the new Fourth Amendment Bill, the eligibility criteria for obtaining a WIUP for Minerals and Metals is expanded to include additional entities through other means, such as priority grants.
These new subjects of WIUP are as follows:
1. Higher Education Institutions: Higher education institutions (i.e., universities) can now be granted WIUP for minerals and metals through priority grants. According to the bill, the relevant authorities may grant the WIUP after considering the following:
- the WIUP area;
- the minimum accreditation of the relevant institution, which must be at B rank or above; and
- the potential enhancement of educational access and services to the community.
Please note that the granting of IUP to higher education institutions has been highly criticized by the academic community. Therefore, we have yet to see whether such inclusion will be eventually included in the final version of the Fourth Amendment Bill. It would be a controversial decision since an IUP is granted to businesses purposely for gaining economic benefits, while higher education institutions are often non-profit entities.
2. Private Business Entities: To improve local downstream industries, a private business entity may be granted a WIUP through a priority method in consideration of four key aspects:
- the area of WIUP for minerals and metals;
- the enhancement of domestic workers;
- the amount of investment; and/or
- the enhancement of domestic and/or global added values and supply chains.
Special Mining Business Permit Recipients: Similarly, this new bill also expands the eligible holders of Special Mining Business Permit (Izin Usaha Pertambangan Khusus or "IUPK").
Under the current regulatory regime, an IUPK may be granted to an eligible holder following the conversion of a State Reserve Area into a WIUP. Furthermore, an IUPK is exclusively granted to business entities, including SOEs, ROEs, and Private Entities. SOEs and ROEs are given priority to obtain IUPK.
Meanwhile, the Fourth Amendment Bill has now changed the subjects of eligibility. Business entities owned by religious community organizations can now obtain IUPK through auctions, but they are not allowed to directly manage and/or utilize IUPK. They are only permitted to operate under IUPKs indirectly through their business entities. Furthermore, such business entities can be prioritized in IUPK grants alongside SOEs and ROEs.
Investigation and Research Assignments: The Fourth Amendment Bill not only modifies the eligibility criteria for business actors but also introduces additional obligations to the mineral and coal sector. The Government may assign central and local research institutions, SOEs, ROEs, or private business entities to conduct investigation and research on certain fields.
As compensation for carrying out such investigations and research, these entities may be granted the right to match bids during the auction process for obtaining a WIUP/WIUPK for minerals.
Administrative Curbing for Overlapping Licenses: The most serious problem in the Indonesian mining sector is the overlapping utilization of mining licenses, where an area has multiple licenses held by multiple holders. In this case, the Fourth Amendment Bill regulates that Mining Business Permits (Izin Usaha Pertambangan or "IUP") that are partly or wholly a WIUP or another IUP will be revoked and returned to the State.
Concluding Remarks: The amendments to Law 4/2009 mark significant development in Indonesia's mineral and coal resources sector. The Fourth Amendment Bill introduces further revisions and additions, expanding opportunities for various entities to obtain mining permits. However, this has also sparked challenges and controversies among the public, particularly regarding the inclusion of additional entities eligible to conduct mineral and coal mining. Notably, eligibility is no longer based on technical expertise, as these higher education institutions (i.e., universities) and mining business entities owned by religious community organizations can be eligible for mining operations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
