Extension of Mining Contracts Not Automatic, State Sovereignty Safeguarded

MINISTRY OF ENERGY AND MINERAL RESOURCES

REPUBLIC OF INDONESIA

PRESS RELEASE

NUMBER: 142.Pers/04/SJI/2020

Date: 1 April 2020

Extension of Mining Contracts Not Automatic, State Sovereignty Safeguarded

Ministry of Energy and Mineral Resources (EMR) issued Regulation of Minister of EMR No. 7 of 2020 on Procedures for Area Granting, Licensing, and Reporting in Mineral and Coal Mining Business Activities in early March. The regulation was issued to ensure legal and business certainty, make effective and efficient practices in mining business activities, simplify bureaucracy and licensing, and foster the development of mineral and coal mining businesses.

"The articles in the regulation are not new, but instead have been arranged in Regulation of Minister of EMR No. 50 of 2018 (Article 43A) and Regulation of Minister of EMR No. 51 of 2018 (Article 110A). The point is, this regulation simplifies bureaucracy and licensing, and gives legal certainty over the procedure to request the extension of KK/PKP2B to become IUPK," explained Head of Bureau of Communication, Public Information Services, and Cooperation, Agung Pribadi.

Meanwhile, the phrase "Other provisions" in Article 111 is not intended to give privilege that violate the provisions of laws and regulations but instead is meant as a controlling instrument to make mining business people fulfill their obligations proportionally to optimize the potential of mineral and coal resources, increase state revenues, and meet environmental obligations. Agung further states the provisions of Article 111 are needed to deal with any legal issues that may arise from the change from a contract regime to a license one.

According to Agung, the provisions in Article 111 are not the legal basis for the granting of PKP2B extension in the form of IUPK, but instead are technical provisions related to issuing of IUPK decision.

"In granting an extension to become IUPK, the government will certainly refer to applicable laws and regulations, fulfilment of requirements, and evaluation results of the company's performance (not automatically)," Agung asserted.

As publicly known, he adds, Ministry of EMR will not issue PKP2B extension to become IUPK OP by referring only to the provisions of Articles 111 of Ministerial Regulation No. 7 of 2020, *instead, it will also consult with the provisions of Law Number 4 of 2009, Government Regulation No. 23 of 2010 and its amendment.*

"Related to the extension of PKP2B to IUPK, currently a number of bills and draft regulations are being prepared, i.e. Draft Regulation on Sixth Amendment to GR 23/2010, Mineral and Coal Bill, and Employment Creation Bill," said Agung.

In addition, Ministerial Regulation 7/2020 regulates the application for amendment to Annual WPB, online reporting system in mineral and coal transportation and sales activities, removal of the license in the form of approval for the change of board of directors/commissioners, change of period to apply for the increase of Exploration IUP to Operation-Production IUP, as well as the mechanism to convert IUP PMDN into IUP PMA. (IY)

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

Agung Pribadi (08112213555)

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