The government has recently introduced a significant regulatory development with Minister of Energy and Mineral Resources Regulation Number 14 of 2023, addressing the delegation procedures for Investigation and Research (I&R) related to Mining Area preparation. Serving as a detailed supplement to Government Regulation Number 25 of 2023, this regulation is pivotal for the mining sector.
Under MEMR Regulation 14/2023, the Minister of Energy and Mineral Resources (MEMR) is empowered to delegate I&R activities to various entities, including state research institutions, state-owned enterprises, regional-owned enterprises, or eligible private businesses. This delegation specifically targets the preparation of mining areas, leading to tenders for Mining Business License Areas (WIUP) for metal minerals and coal, as well as Special Mining Business License Areas (WIUPK) for coal.
Application for Assignment Licenses is subject to stringent criteria, encompassing administrative, technical, and financial requirements. Applicants must demonstrate a minimum budget for the initial two years of planned I&R activities and secure support from an experienced mining company, as evidenced by an agreement. Notably, the regulation emphasizes a priority principle, granting precedence to the first application meeting all requirements (first come, first served).
MEMR Regulation 14/2023 also specifies the maximum area allowed for application: 100,000 hectares for metal mineral WIUP preparation and 50,000 hectares for coal WIUP preparation. In cases involving I&R activities in forest or sea areas, requisite approvals from the Ministry of Environment and Forestry and the Ministry of Maritime are mandatory before commencement.
Furthermore, the regulation introduces a provision for the postponement of I&R activities if licenses from authorized institutions have not been obtained. The extension of the assignment license can be requested within a specific timeframe, accompanied by comprehensive technical and financial details, including the realization of planned I&R activities and reasons for the extension.
Reporting and supervision obligations are outlined, necessitating companies with assignment licenses to provide periodic, annual, and final reports on implementation results to MEMR. In situations where the holder of the assignment license, belonging to state-owned enterprises, regional-owned enterprises, or private entities, is not awarded as the tender winner, MEMR Regulation 14/2023 guarantees exploration investment replacement costs. This amount is set at 0.75 times the audited expenditure on I&R activities, providing a safeguard mechanism.
This article has been contributed by Steven Martin of Armila Rako, a corporate law firm based in Jakarta. The above article does not, and is not intended to, constitute legal advice; instead, this article is for general informational purposes only. Information contained in this article may not include the most up-to-date legal or other information. Should the readers have any inquiries, they can contact the authors at email@example.com. Any reliance on this article is at the user’s own risk.
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