INDONESIA Law and Practice Contributed by: Emir Nurmansyah, Mahatma Hadhi, Kenny Poltak and Atika Rizka, ABNR Counsellors at Law
1.4 Role of the State in Mining Law and Regulations The State owns and controls mineral resources to be utilised for the greatest benefit and prosperity of the people, and such control is exercised by the central government through its policymaking, regulatory, administrative, management and supervisory func - tions. The State acts as the regulator and licensing authority, and mining business actors are required to obtain a Mining Business Licence (IUP), Special Min - ing Business Licence (IUPK) or Community Mining Licence (IPR) before conducting mining activities, as provided under the Mining Law. Although the State functions as a regulator, the Mining Law provides pref - erential rights to State-owned enterprises (SOEs). For example, SOEs have first priority in obtaining mining areas before private entities can apply. This policy reflects the government’s objective of empowering SOEs in managing and controlling mining operations, thereby maximising benefits for the State and ensur - ing strategic resources remain under national influ - ence. With respect to joint venture arrangements, there is no explicit requirement to establish a joint venture with the government. However, in practice, SOEs or regionally owned enterprises may participate as joint venture partners, particularly in the management of Special Mining Business Licence Areas (WIUPKs) or in relation to share divestment obligations. 1.5 Nature of Mineral Rights The Constitution of the Republic of Indonesia man - dates that the State owns and controls mineral resources for the greatest benefit and prosperity of the people. The State does not grant ownership rights over minerals to individuals or legal entities; instead, it grants management or business rights through licens - ing mechanisms such as IUPs, IUPKs or IPRs. Furthermore, rights over minerals do not arise from contractual arrangements between individuals or legal entities and the State, but rather from licences issued in accordance with the applicable laws and regula - tions.
1.6 Granting of Mineral Rights As stipulated in the Mining Law, mining activities are carried out based on business licensing issued through the online single submission system, by the central government, which includes a Business Iden - tification Number, a Standard Certificate and/or a per - mit, which among other things includes the IUP and IUPK. Furthermore, the central government may delegate the authority to issue governments, by considering the strategic nature of mining commodities for the supply of raw materials for domestic industry and/or energy. Examples of mining-related licences that may be delegated from the central government to regional governments include: • Special Production Operation Mining Business Licence for Transportation and Sales ( IUP Operasi Produksi Khusus untuk Pengangkutan dan Penjua- lan ): A business licence granted to a company to purchase, transport and sell mineral and coal min - ing commodities. This licence may be delegated by the central government to the governor if the company’s transportation and sales activities are conducted within a single provincial jurisdiction. • People’s Mining Licence ( Izin Pertambangan Rakyat /IPR): A licence granted to carry out min - ing activities within a designated people’s mining area, subject to limited area size and investment. This licence is issued by the provincial govern - ment based on a people’s mining area manage - ment document prepared and determined by the Minister of Energy and Mineral Resources (MEMR) upon proposals from the relevant provincial gov - ernments. 1.7 Mining: Security of Tenure Mining Stages Under GR 96/2021, mining business activity can be carried out after the issuance of an IUP or IUPK and consists of two stages: (i) exploration; and (ii) produc - tion operation. The exploration stage comprises:
• general survey; • exploration; and
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