Government and parliament committee agree on mining law revision bill in Indonesia

May 11, 2020

Revisions to Indonesia’s mining law that include changes to the rules on concession size were agreed to by the Indonesia government and a parliamentary committee overseeing mineral resources.

Reuters reported that under the proposed revision to the 2009 mining law, miners will be allowed to ask the mining minister for an expansion of their mining area beyond the maximum size stipulated in the law, according to a draft read out by the committee chairman Sugeng Suparwoto in a streamed meeting.

The concession size is often a sticking point for miners that are converting from the old contract system to a new permit system, known as IUPK.
Many of these miners are currently operating an area larger than the maximum 15,000 ha (37,066 acres) for coal mines and 25,000 ha (61,800 acres) for ore mines set for the new permit system.

Miners will be guaranteed conversion from contract to permit system, and these permits can be eligible to up to 20-year extension under the new bill. The bill also specified that ore miners building smelters will be allowed to export ore for three years since the new law is enacted, but added that the government will rule which ore it will allow for exports in a separate regulation.

Indonesia, a major producer of nickel, tin, and copper, under a ministerial regulation currently allows exports of some raw mineral until January 2022, but has banned exports of nickel ore starting this year.

Other parts of the law agreed by the government and the committee are largely in line with mining rules under a proposed sweeping “omnibus” bill, aimed at removing red tape and attracting investment in many business sectors.

To promote downstream industry expansion, the revised bill states that miners under IUPKs that are integrating their mining with a smelting or processing operation will be given a longer operation period of 30 years, and will be “guaranteed” multiple extensions of 10 years when meeting certain criteria.

Indonesia is keen to create a full nickel supply chain, starting from extraction, processing into metals and chemicals used in batteries, all the way to building electric vehicles.

The new bill also added that ore smelting should meet certain minimum processing requirements based on market demand and value add.
The bill is scheduled to be submitted soon for voting by all members of parliament.

Photo: Coal mining operations in southern Indonesia. Shutterstock.
 

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