Coal and Mineral Mining Enterprise Activities Regulation

AuthorWilliam A. Sullivan/Christian Teo Purwono & Partners
ProfessionLicensed Foreign Advocate in Indonesia as well as a Solicitor of the Supreme Court of New South Wales
Coal and Mineral Mining
Enterprise Activities Regulation
I. Executive Summary
1. Overview
1.1 The Mining Mineral Enterprise Activities Regulation (hereinafter referred
to as GR 23/2010) was issuedwith legal effect from February 1, 2010,
and by way of the implementation of Articles 5(5), 34(3), 49, 63, 65(2),
71(2), 76(3), 84, 86(2),103(3), 109, 111(2), 112, 116, and 156 ofthe 2009
Mining Law.
1.2 GR 23/2010 have now been amended by GR 24/2012. See Chapter 16
for further details of GR 24/2012.
2. Approach
2.1 WIUPs/WIUPKs: A BusinessEntity, cooperative, or individual, having
the intention to carry out mineral or coal mining, may only hold one
WIUP/WIUPK, while a publicly listed company may hold more than one
2.2 IUPs/IUPKs: The holder of an Exploration IUP/IUPK is guaranteed
the right to obtain a Production Operation IUP/IUPK without
going through a tender process. However, an Exploration IUP/IUPK
holder is still obliged to submit an application to the Relevant Gov-
ernment Authority and fulll various requirements in connection with
upgrading the Exploration IUP/IUPK to become a Production Oper-
ation IUP/IUPK.
2.3 An Exploration IUP/IUPK holder has a rst-priority right to exploit
minerals, other than the type of mineral specied in its IUP/IUPK,
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
specied period.
2.5 A Special Production Operation IUP for the processing and rening
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
and coal.
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 priceas 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 fth 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 rst 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

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