Mining 2026

INDONESIA Law and Practice Contributed by: Emir Nurmansyah, Mahatma Hadhi, Kenny Poltak and Atika Rizka, ABNR Counsellors at Law

free investment regime in ASEAN that is attractive to investors. This multilateral treaty covers various sectors, one of which is mining. Other than provid - ing facilities and protection, ACIA offers benefits for ASEAN and ASEAN-based foreign investors. • The Regional Comprehensive Economic Partner - ship (RCEP): The members of RCEP consist of states that offer natural resources or technological advancement that could help to create efficient mining, such as Indonesia, Vietnam, China and Thailand. This instrument opens up the mineral market in the region. To support mineral commodi - ties trade, RCEP offers regional tariff reductions and zero tariffs. • Bilateral treaties: Although a mining specific co- operation agreement is commonly done through a Memorandum of Understanding (such as those with Saudi Arabia, Brazil and China), bilateral trea - ties also offer general protection to investment in Indonesia. For example, the 2022 Indonesia–Swit - zerland bilateral treaty provides detailed protection for investors to receive similar treatment to domes - tic investors, comprehensive guidelines for dispute resolution, and guidelines on compensation for losses. 5.4 Sources of Finance for Exploration, Development and Mining There is no official public record that keeps records on the sources of finance for exploration, develop - ment and mining in Indonesia. However, based on our experience, exploration activities are mostly financed by equity financing through direct investment and joint ventures, while third-party debt financing is more common in production operation, specifically down - stream processing through construction of smelter and processing facilities. 5.5 Role of Domestic and International Securities Markets in the Financing of Exploration, Development and Mining Domestic and international securities markets play a significant role in financing mining activities in Indo - nesia. There are numerous precedents of Indonesian mining companies raising funds through the Indo - nesian Stock Exchange (IDX) by conducting IPOs or increasing equity to finance exploration and develop - ment projects. These equity offerings often include

capital for initial exploration, preliminary production operations, and even refinancing of shareholder con - tributions during early project stages. In addition to equity markets, domestic and offshore bond markets provide alternative financing options. Mining companies can issue rupiah-denominated bonds or foreign currency bonds to secure long-term funding for their projects. These debt instruments are commonly used to finance large-scale development, infrastructure and operational expansion in the min - ing sector. International securities markets also offer opportunities for Indonesian mining companies to access global investors, diversify funding sources, and potentially secure more competitive financing terms. 5.6 Security Over Mining Tenements and Related Assets Under Indonesian law, mining licences (IUPs/IUPKs) are administrative rights granted by the government and cannot be mortgaged, pledged or taken as secu - rity. In addition, the Mining Law expressly prohibits mining companies from encumbering their mining commodities as collateral. Although mining licences and mining commodities themselves cannot be secured, lenders typically rely on alternative collateral structures, including: • Pledge of shares: Used to encumber security over shares in the mining company. Do note that the transfer of shares of a mining company is subject to MEMR approval, which might complicate the enforcement of a pledge of shares in a mining company in Indonesia. • Fiduciary security ( Jaminan Fidusia ): Used to encumber security over movable assets such as equipment, inventory, receivables and contractual rights. • Mortgage ( Hak Tanggungan ): Used to encumber security land and fixtures owned by the mining company, including the mining product processing facilities. • Conditional novation of project agreements: Used to give lenders step-in rights to material agree - ments, though these are contractual security and do not create a statutory or “in rem” security inter - est.

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