Draft Procedures for Issuing Special Production IUPs for Processing and Refining and Transportation and Sales Regulation

• Author: William A. Sullivan/Christian Teo Purwono & Partners
• Profession: Licensed Foreign Advocate in Indonesia as well as a Solicitor of the Supreme Court of New South Wales
• Pages: 239-265

CHAPTER 21

Draft Procedures for Issuing Special

Production IUPs for Processing and

Refining and Transportation

and Sales Regulation

I. Executive Summary

1. Overview

1.1 An advanced draft of the Regulation setting out the Procedures for

Issuing Special Production Operation IUPs for Processing and Refining

and Transportation and Sales (hereinafter referred to as “Draft Spe-

cial IUP Regulation”) has been circulated by way of the intended

eventual implementation of Article 41 of the 2009 Mining Law.

1.2 At this time, it is not possible to say when the Draft Special IUP

Regulation will be finalized and issued.

2. Approach

2.1 Categories of Special Production Operation IUPs: Special

Production Operation IUPs are to be classified as (i) Special Pro-

duction Operation IUPs for Transportation and Sales, (ii) Temporary

Permits for Transportation and Sales, (iii) Special Production Oper-

ation IUPs for Sales, and (iv) Special Production Operation IUPs for

Processing and Refining.

2.2 Procedural Matters: Special Production Operation IUPs are to be

issued by the Relevant Government Authority.

2.3 There are substantial administrative, technical, environmental, and

financial requirements for obtaining Special Production Operation IUPs.

239

2.4 Special Production Operation IUPs for Transportation and Sales are

only transferable after approval from the Relevant Government

Authority.

2.5 Holders of Special Production Operation IUPs for Transportation and

Sales have an obligation to deliver copies of their cooperation

contracts with mine owners to the Relevant Government Authority.

2.6 Temporary Permits for Transportation and Sales may be granted by

the Relevant Government Authority.

2.7 A Temporary Permit for Transportation and Sales may only be issued

one time and may not be extended.

2.8 Holders of Exploration IUPs, that have obtained a Temporary Permit

for Transport and Sales must pay dues on their production in

accordance with the provisions of the relevant laws and regulations.

2.9 Business Entities not engaged in mining business activities that

intend to sell minerals or coal must, first, obtain Special Production

Operation IUPs for Transportation and Sales covering: (i) traffic

facilities and infrastructure construction; (ii) port construction;

(iii) tunnel construction; (iv) construction of civil buildings; and

(v) dredging of rivers, lakes, and/or seas.

2.10 Applications to extend Special Production Operation IUPs for

Transportation and Sales must be submitted to the Relevant Gov-

ernment Authority not later than six months prior to the expiry date.

2.11 The Draft Special IUP Regulation specifies a number of obligations

that must be fulfilled by Special Production Operation IUP holders.

2.12 Special Production Operation IUPs will be granted for a maximum

period of five years but are extendable.

2.13 Permitted Activities: Special Production Operation IUPs for Pro-

cessing and Refining consist of (i) Permits to carry out feasibility

studies and activities for construction of infrastructure facilities and

processing and refining infrastructure and (ii) Special Production

Operation IUPs for Processing and Refining that authorize proces-

sing and refining of metal minerals or coal into concentrates, inter-

mediate products, or metals for industrial raw materials or energy in

accordance with the provisions of relevant laws and regulations.

2.14 Permits to carry out feasibility studies and so forth are given for a

period of two years and may be extended one time for a period of

not longer than one year.

3. Sanctions

The Relevant Government Authority is entitled to impose administrative

sanctions on (i) Business Entities that are not engaged in mining business

activities but that sell minerals or coal without having Special Production

240 Mining Law & Regulatory Practice in Indonesia