The Minister of Energy and Mineral Resources (“ MEMR ”) introduces a new regulation that revokes 8 (eight) previous mining licensing procedure regulation. MEMR simplifies those 8 (eight) regulations into 1 (one) regulation namely MEMR Regulation Number 11 of 2018 on Procedures for Granting Areas, Licensing, and Reporting in Mineral and Coal Mining Business Activities (“ MEMR Regulation 11/2018 ”).
Several scopes covered by MEMR Regulation 11/2018 are as follow: (1) Procedures for granting licenses; (2) Rights and obligations of license holders; (3) Annual Work and Budget Plan/ Rencana Kerja dan Anggaran Biaya Tahunan (“ RKAB Tahunan ”) and reporting which consists of periodic, final and special reports; and some other provisions. MEMR differentiates the rights, obligations and prohibitions among Mining License (“ IUP ”) and Special Mining License (“ IUPK ”) holders, IUP Special Operation Production for Processing and/or Refinering holders, IUP Special Operation Production for Transportation and Sales, Mining Services License (“ IUJP ”) holders.
IUP or IUPK holders have obligations, some of which are: (1) to divest shares; (2) to include local businessmen; (3) to pay the financial obligations and and some other provisions. As for IUJP holders, they have obligation: (1) to prioritize the local products/contents; (2) to prioritize the local sub-contractors; (3) to prioritize the local labors and some other provisions.
Regarding changes of shares ownership composition and the management such as Board of Directors and/or Board of Commissioners, it is compulsory for companies holding licenses of IUP, IUPK or IUP Special Operation Production for Processing and/or Refinering to obtain an approval from MEMR or relevant governor before registering to the MOLHR.
IUP or IUPK holders are required to pay appropriate compensations to the community that is directly and negatively affected by misconducts in the mining business activities. (ppm)
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This publication has been prepared by Aditya Yudhistira for general informational purposes only to provide clients with information on recent legal developments and is not intended as legal advice or opinion.