Indonesia is one of the world’s most resource-rich countries, with significant reserves of coal, nickel, gold, copper, and other minerals. To ensure responsible resource management, the Indonesian government has established a comprehensive regulatory framework governing mining activities. Understanding these regulations is essential for companies operating or planning to operate in the Indonesian mining sector.
Below are the key mining regulations you need to know.
1. Mining Law (Law No. 3 of 2020)
Law No. 3 of 2020, which amends the previous Mining Law No. 4 of 2009, serves as the foundation of Indonesia’s mining regulatory framework. It governs all aspects of mineral and coal mining, including licensing, operations, processing, and post-mining obligations.
Key points include:
- Centralized authority under the national government
- Stronger control over mining permits
- Emphasis on downstream processing and value-added activities
- Clearer obligations for reclamation and post-mining activities
2. Mining Business Licenses (IUP, IUPK, and SIPB)
Mining operations in Indonesia require specific licenses depending on the scale and type of activity:
- IUP (Izin Usaha Pertambangan): For exploration and production operations
- IUPK (Izin Usaha Pertambangan Khusus): For mining in special mining areas
- SIPB: For the extraction of certain non-metallic minerals
3. Environmental Permits and AMDAL
Environmental compliance is a critical component of mining regulation in Indonesia. Companies must obtain:
- AMDAL (Environmental Impact Assessment) for large-scale projects
- UKL-UPL for smaller-scale operations
4. Domestic Processing and Refining (Downstream Policy)
Indonesia strongly promotes domestic mineral processing to increase national value creation. Regulations require certain minerals to be processed or refined domestically before export.
This policy
- Encourages investment in smelters and processing facilities
- Reduces raw mineral exports
- Strengthens local industry and employment
