The Ministry of Energy and Mineral Resources (ESDM) now mandates all\nmining companies in Indonesia to prioritise the use of local mining\nservice companies located around their operational areas. This policy is\nintended to provide legal certainty while simultaneously boosting the\neconomies of regions surrounding mining sites.<\/p>\n
The policy is set out in the Decree of the Minister of ESDM Number\n365.K\/MB.01\/MEM.B\/2026 regarding Technical Guidelines for the\nImplementation of Approval for the Use of Subsidiaries and\/or Affiliates\nin the Mineral and Coal Mining Services Business.<\/p>\n
The regulation, signed by Minister of ESDM Bahlil Lahadalia,\nregulates all mining permit holders, prohibiting them from arbitrarily\nbringing in their own subsidiaries or affiliates without prioritising\nlocal contractors.<\/p>\n
\u201cMining Business Permit holders or Special Mining Business Permit\nholders who use mining services in their business activities must use\ncompanies holding Mining Service Business Permits, with the provision of\nprioritising mining service companies within the regency\/city areas\nsurrounding the Mining Business Permit Area or Special Mining Business\nPermit Area,\u201d stated the first clause of the regulation, as reported on\nTuesday (29\/09\/2026).<\/p>\n
The new regulation, established on 18 September 2026, aims to limit\nthe practice of monopolies in mining services by the business groups\nthat hold the mining permits.<\/p>\n
The government prohibits the involvement of subsidiaries or\naffiliates in the mineral and coal mining services sector, whether\nthrough direct share ownership or through shared ultimate beneficial\nowners.<\/p>\n
\u201cMining Business Permit holders or Special Mining Business Permit\nholders are prohibited from involving subsidiaries and\/or affiliates in\nthe mineral and coal mining services business without the Minister\u2019s\napproval,\u201d stated the second clause of the regulation.<\/p>\n
Nevertheless, the government still provides room for exceptions\nregarding the use of subsidiaries or affiliates through special approval\nfrom the Minister of ESDM for national strategic projects. Such\nexceptions may be granted if mining companies are carrying out\ngovernment assignments, such as national strategic projects, the\nconstruction of processing facilities or smelters, and the fulfilment of\ndomestic mineral and coal needs.<\/p>\n
The application process for approval to use subsidiaries will be\nevaluated by the Ministry of ESDM, with a decision timeframe of no more\nthan 14 working days.<\/p>\n
The full contents of the regulation are as follows:<\/p>\n
FIRST: Mining Business Permit holders or Special Mining Business\nPermit holders using mining services in their business activities must\nuse companies holding Mining Service Business Permits, prioritising\nmining service companies in the regency\/city areas surrounding the\nMining Business Permit Area or Special Mining and Coal Mining Business\nPermit Area;<\/p>\n
SECOND: Mining Business Permit holders or Special Mining Business\nPermit holders are prohibited from involving subsidiaries and\/or\naffiliates in the mineral and coal mining services business without the\nMinister\u2019s approval;<\/p>\n
THIRD: The prohibition of involving companies and\/or affiliates in\nthe mineral and coal mining services business as referred to in the\nSECOND clause includes:<\/p>\n
direct share ownership by Mining Business Permit holders or\nSpecial Mining Business Permit holders in the Mining Service Business\nPermit holder; or<\/p><\/li>\n
the identity of one or more ultimate beneficial owners of the\nMining Business Permit holder or Special Mining Business Permit holder\nwith the Mining Service Business Permit holder.<\/p><\/li>\n<\/ol>\n
FOURTH: Exceptions for the use of subsidiaries and\/or affiliates in\nthe mineral and coal mining services business through approval as\nreferred to in the SECOND clause can only be granted to Mining Business\nPermit holders or Special Mining Business Permit holders who are\ncarrying out government assignments, including:<\/p>\n
implementation of national strategic projects;<\/p><\/li>\n
construction of mineral processing and\/or refining facilities or\ncoal development and\/or utilisation activities; and\/or<\/p><\/li>\n
fulfilment of mineral or coal for domestic needs.<\/p><\/li>\n<\/ol>\n
FIFTH: Applications for approval to use subsidiaries and\/or\naffiliates as referred to in the FOURTH clause shall be submitted to the\nMinister.<\/p>\n
SIXTH: The granting of approval for the use of subsidiaries and\/or\naffiliates in the mineral and coal mining services business by the\nMinister shall be provided within 14 (fourteen) working days from the\ndate the application is received completely and correctly.<\/p>\n
SEVENTH: Approval for the Use of subsidiaries and\/or affiliates in\nthe mineral and coal mining services business:<\/p>\n
is granted in accordance with the field and sub-field of the\nMining Service Business Permit of the subsidiary and\/or affiliate as per\nthe submitted application; and<\/p><\/li>\n
remains valid until the expiry of the Mining Service Business\nPermit of the subsidiary and\/or affiliate;<\/p><\/li>\n<\/ol>\n
EIGHTH: For Mining Business Permits issued by a Governor within their\nauthority, applications for approval to use subsidiaries and\/or\naffiliates may be submitted to the Governor.<\/p>\n
NINTH: In the event of administrative errors and\/or evaluation errors\nin the process of issuing approval or rejection of approval for the use\nof subsidiaries and\/or affiliates in the Mineral and Coal mining\nservices, corrections may be made by the Minister or Governor according\nto their authority.<\/p>\n
TENTH: The provisions of this Ministerial Decree apply mutatis\nmutandis to holders of Special Mining Business Permits as a Continuation\nof Contract\/Agreement, Contract of Work holders, and Coal Mining\nBusiness Agreement holders.<\/p>\n
ELEVENTH: Upon the effective date of this Ministerial Decree\u2026<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/official-bahlil-issues-regulation-mandating-mining-companies-to-use-local-services-1790653943", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }