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New Regulation In Indonesia Seeks To Strike A Balance In Mineral And Coal Mining Business

The Government of Indonesia has issued a regulation to implement the recent amendments made to the Mining Law. Principally, this new regulation, Government Regulation No. 96 of 2021 regarding the Operation of Mineral and Coal Mining Business ("GR 96/2021"), enacts a new licensing scheme for mining business activities and overhauls the divestment obligation for foreign investment companies holding a Mining Business License.

GR 96/2021 was issued following the enactment of Law No. 3 of 2020 and Law No. 11 of 2020 regarding Job Creation (together, the "Mining Law Amendment"), which amends Law No. 4 of 2009 regarding Mineral and Coal Mining (the "Mining Law"). GR 96/2021 serves as an implementing regulation to the Mining Law and replaces Government Regulation No. 23 of 2010 regarding the Operation of Mineral and Coal Mining Business, as amended several times, most recently by Government Regulation No. 8 of 2018 ("GR 23/2010").

We discuss the key changes introduced by GR 96/2021.

In line with the changes introduced under the Mining Law Amendment, GR 96/2021 introduces several changes to the mining business licensing regime. Under GR 23/2010, mining business activities were required to be implemented based on a Mining Business License (Izin Usaha Pertambangan, "IUP"), Community Mining License (Izin Pertambangan Rakyat, "IPR") or Special Mining Business License (Izin Usaha Pertambangan Khusus, "IUPK"). Now GR 96/2021 divides business licensing for mining activities into (i) Business Identification Number (Nomor Induk Berusaha, "NIB"); (ii) Standard Certificate; and/or (iii) License.

This new business licensing categorization is in accordance with Government Regulation No. 5 of 2021 regarding Risk-Based Business Licensing ("GR 5/2021"), where the required business licensing to engage in certain business activities is determined based on the level of risk of the activity. Mineral and coal mining are generally categorized as high-risk under GR 5/2021 and therefore require an NIB and License.