Mining Law Guarantees Reserves Security

MINISTRY OF ENERGY AND MINERAL RESOURCES

REPUBLIC OF INDONESIA

PRESS RELEASE

NUMBER: 217.Pers/04/SJI/2020

Date: 25 June 2020

Mining Law Guarantees Reserves Security

Lack of exploration activities often hampers the efforts to increase new resources and reserves in the mineral and coal mining subsector, whereas exploration is actually the basis to maintain continuous mining business.

Law Number 3 of 2020 on Mineral and Coal Mining has answered this challenge by imposing holders of Mining Business License (IUP)/Special Mining Business License (IUPK) to set aside Reserves Security Funds (DKC) of Mineral and Coal (Article 112A section 1).

"The Mineral and Coal Reserves Security Funds as referred to in section (1) are used to discover new reserves," is what the Article says.

To boost exploration and prepare Mining Business License Area (WIUP), the government has focused on giving assignment areas to State Research Agencies and/or State Owned Enterprises (SOEs) to carry out mining survey and research first.

But if no SOEs are interested, the area will be put on open auction to business entities and the selection process will be carried out according to the assignment provisions.

Business entities can also propose an assignment area which is not prepared by the government. This area can come from former Contract of Work or Work Agreement on Coal Mining Enterprise (PKP2B). The proposal mechanism is exactly the same with the assignment mechanism, by giving the priority to SOEs/Regional Government-Owned Enterprises first before the proposal is offered openly to private enterprises.

The Geological Agency will partner with SOEs, Regional Government-Owned Enterprises, or private enterprises in carrying out the surveys and researches.

In line with this law, the government encourages exploration specialist companies (junior mining companies) to carry out surveys and researches in the assignment areas, participate in WIUP auction, carry out exploration in WIUP, and then transfer the exploration IUP to other companies that have the capacity to carry out the operation-production IUP. (IY)

Head of Bureau of Communication, Public Information Services, and Cooperation

Agung Pribadi (08112213555)

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