Draft Guidelines for Licensing of Metal Mineral and Coal Business 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
Draft Guidelines for Licensing of
Metal Mineral and Coal Business
Activities Regulation
I. Executive Summary
1. Overview
1.1 An advanced draft of the Guidelines for Licensing of Metal Mineral
and Coal Business Activities Regulation (hereinafter referred to as
Draft MM&C Licensing Regulation) has been circulated by way
of the intended eventual implementation of Articles 19, 27(2), 44(5),
61, 68, and 111 of GR 23/2010.
1.2 At this time, it is not possible to say when the Draft MM&C Licensing
Regulation will be nalized and issued.
2. Approach
2.1 License Areas: Mining Business License Areas (WIUPsor
WIUPKs) are granted through a public tender process.
2.2 WIUPs and WIUPKs are to be determined by the MoEMR.
2.3 Tender Process: The public tender process consists of two stages
being (i) the prequalication stage and (ii) the qualication stage.
2.4 There are substantial administrative, technical, environmental, and
nancial requirements for would-be participants in public tenders for
WIUPs and WIUPKs in respect of metal minerals and coal.
2.5 Public tenders for WIUPs are carried out by the Relevant Govern-
ment Authority depending upon the location of the WIUP while
public tenders for WIUPKs are carried out by MoEMR.
2.6 The permitted participants in WIUP tenders are Business Entities,
cooperatives, and individuals, while the permitted participants in
WIUPK tenders are BUMNs, BUMDs, and BUMSs.
2.7 BUMNs and BUMDs have priority in tenders for WIUPKs. If no
BUMN or BUMD expresses interest in a WIUPK within seven
working days of the WIUPK tender being announced, the WIUPK
will be tendered to BUMSs.
2.8 The tender winners of WIUPs/WIUPKs must submit applications for
metal minerals or coal IUPs/IUPKs to the Relevant Government
Authority based on the location of the relevant WIUP/WIUPK. The
Relevant Government Authority will issue the IUP/IUPK after
the applicant has fullled various requirements.
2.9 Obligations and Rights of IUP Holders: Production Operation
IUP/IUPK holders have the right to transport mineral products from
the mining location to the processing location, to the harbor, and
elsewhere for delivery to buyers of the mineral products.
2.10 If other nonassociated mineral products are subsequently discovered
in metal mineral or coal WIUPs/WIUPKs, the relevant IUP/IUPK
holders have a priority right to obtain IUPs/IUPKs for those nonas-
sociated mineral products and without going through a public tender.
2.11 Expiry and Extension of IUPs: Metal mineral and coal IUPs/
IUPKs come to an end if they (i) are returned by the IUP/IUPK
holders to the Relevant Government Authority, (ii) are revoked or
cancelled by the Relevant Government Authority due to regulatory
violations by the holders, or (iii) expire.
2.12 Production Operation IUPs/IUPKs for metal minerals and coal may
be extended two times for a maximum period of ten years each, after
fullling certain requirements.
3. Sanctions
The Relevant Government Authority is entitled to impose administrative
sanctions on metal mineral and coal IUP/IUPK holders which (i) carry out
activities that are not in line with their IUPs/IUPKs, (ii) fail to submit the
required quarterly and/or annual reports, (iii) fail to fulll the obligations as
set out in GR 28/2009, and/or (iv) give false information or submit forged
documents to the Relevant Government Authority.
4. Transition
Exploration IUP/IUPK holders that have not deposited the Guarantee of
Seriousness before the MM&C Licensing Regulation is issued must deposit the
Guarantee of Seriousness in accordance with the provisions of and not later
than three months after the date the MM&C Licensing Regulation is
nally issued.
268 Mining Law & Regulatory Practice in Indonesia
5. Assessment
5.1 On November 22, 2012, the Constitutional Court ruled that it was
actually the Regional Governments, rather than the Central Govern-
ment (i.e., MoEMR), that had the authority to initially determine WUPs
and WIUPs and that the role of the Regional Governments was not
properly to be limited to co-ordination or consultationwith the
Central Government (November 22 SC Decision).
5.2 The Central Government has subsequently given a very narrow
interpretation to the November 22 SC Decision, which narrow inter-
pretation still leaves the Central Government free, as part of a further
vericationprocess, to adjust or change WUPs and WIUPs that have
been previously determined by the Regional Governments and if the
Central Government does not agree that the determinations made by
the Regional Government are suitable.
II. Details of Main Provisions
1. Tender for Mining Business License and Special Mining Business License
Article Details
Articles 211 1.1 Tender Preparation
A. Metal mineral and coal mining activities may only be
conducted in Mining Business License Areas or WIUPs
and Special Mining Business License Areas or WIUPKs
as part of Mining Business Areas or WUPsand Special
Mining Business Areas or WUPKsconsisting of:
a. Exploration WIUPs/WIUPKs; and
b. Production Operation WIUPs/WIUPKs.
B. WIUPs/WIUPKs are to be determined by MoEMR fol-
lowing coordination with the relevant Governors and
C. WIUPs/WIUPKs will be determined by MoEMR based on
the classication of complete and accurategeological data,
general surveys, exploration, and mineral and coal poten-
tial conditions in order to set the information data com-
pensation price or the total investment replacement cost.
D. The information data compensation price or the total
investment replacement cost, as referred to in 1.1C
above, is the minimum tender price for WIUPs/WIUPKs.
Draft Guidelines for Licensing of Metal Mineral and Coal Business Activities Regulation 269

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT