The Department of Energy and Mineral Resources have recently released a Bill on Mineral and Coal Mining for comments from the society members. The Bill consisted of 67 Articles divided into 15 Chapters. It is expected that important issues from the Bill would be discussed, debated and reformulated before it is being sent to the House of Representative.

The Bill defines Mineral and Coal mining as mining activities outside geothermal, oil and gas. The activities would cover both exploration and production activity. Mining activities can be performed by central government or regional government, business entities and individually.

Mining activities are categorized into four types in accordance to its objects, namely, (1) radioactive, (2) metals, (3) non-metals and stones and (4) coal, peat and bitumen derivatives. Further detail on the categorization shall be regulated by means of government regulation.

The criminal sanctions in the bill provide for terms of imprisonment and fines ranging from 1 to 5 years and fines ranging from IDR 200 million to IDR 5 billion. The harshest of these penalties are reserved for those that purchase, collects, or generally benefits from unlicensed (illegal) mining operations.

It is expected that this bill when passed will provide greater legal certainty with respect to mining of mineral and coal reserves. This improved legal certainty should lead to a more conducive business and investment climate thereby allowing the Government of Indonesia to reach its stated national economic growth and development goals.

There are 3 types of authorization for mining activities: government mandate, mining business license (“IUP”), and individual mining license (“IPR”). Mining can only be conducted in mining Mining Location as will further be regulated by the government. Radio active mining can only be conducted by a government mandate given to a minister. IUP may be obtained either from the minister or local governments and IPR can be obtained from mayor/regent.

IUP holders have the right top explore and perform production activities. The exploration license will be granted for at maximum 8 years and production license will be granted for at maximum 23 years, extendable in every 10 years.

After paying a certain amount of production fees to the government, IUP and IPR holders may obtain ownership of the mining materials. IUP is transferable to a third party subject to government’s approval.

IUP holders must pay a certain amount of guarantee to the local government for reclamation and post-mining activities. If the holders neglected their duty for reclamation the local government will liquidate the guarantee and utilize it to conduct a reclamation.

Funeral sites, sacred places, public infrastructure locations and traditional (adat) lands may not be subjected to mining activities, unless the IUP holder obtained prior approval from the government. If IUP holders wished to temporarily shut down its activity, it must request permission from the government.