found on its WIUP/WIUPK and may submit a new application to the
Relevant Government Authority for a separate Exploration IUP in
respect of the same.
2.4 The IUP/IUPK holder must submit to the Relevant Government
Authority (i) all exploration and/or production operation data and
(ii) periodic reports covering, among other things, the Work Plan
and Expenditure Budget for mining activities undertaken within the
2.5 A Special Production Operation IUP for the processing and reﬁning
of mineral products only may be granted by MoEMR.
2.6 Domestic Obligation: For the purpose of meeting domestic needs
for minerals and coal only, the Government has the right to deter-
mine the domestic selling price of the minerals and coal as well as to
control other aspects of the production, supply, and sale of minerals
2.7 Benchmark Pricing: The holder of a Production Operation IUP,
exporting the minerals or coal it produces, is obliged to sell at not
less than the “benchmark price”as determined by (i) MoEMR for
metal minerals and coal and (ii) the relevant Governor/Regent
for nonmetal minerals and rocks.
2.8 Divestiture: Not later than 90 days after the ﬁfth anniversary of
production, a foreign-owned IUP/IUPK holder must divest shares
(“Divestiture Shares”) to local parties, such that local parties
hold a minimum of 20% of the issued capital of the IUP/IUPK
2.9 The Divestiture Shares must be offered to the Government (BUMN
or BUMD) in the ﬁrst instance. The Government must accept the
offer within sixty days or, otherwise, the Divestiture Shares are then
to be offered to national private business entities, which must accept
the offer within thirty days.
2.10 A local Indonesian party, which wishes to acquire the Divestiture
Shares, must pay the purchase price for the Divestiture Shares not
later than ninety days after the local Indonesian party expresses its
intention to acquire the Divestiture Shares.
2.11 Any subsequent increase in the capitalization of the IUP/IUPK
Holder must not result in the dilution of the ownership of the
local Indonesian party that has acquired the Divestiture Shares.
The local Indonesian party shall maintain its 20% share ownership.
The divestiture requirement has now been increased to 51% after ten years. See
Chapter 16 for details of the increased divestiture requirement.
84 Mining Law & Regulatory Practice in Indonesia