Jakarta (ANTARA) - Wilson Fu, a member of the Legal Advocacy division\nof the Indonesian Mining Experts Association (Perhapi), believes that\ndue diligence in the acquisition of mining companies must trace the\nacquisition of permits and the fulfilment of obligations over previous\nyears.<\/p>\n
\u201cWe must check the acquisition of permits; we must check whether\nobligations have been implemented every year or not,\u201d Wilson stated\nduring the Perhapi Knowledge Sharing session themed \u2018Mining Legal\nCompliance\u2019 in Jakarta on Monday.<\/p>\n
He explained that due diligence on mining companies needs to be\ncomprehensive, covering corporate, licensing, labour, taxation, and\nlegal dispute history aspects.<\/p>\n
According to him, the licensing aspect is one of the primary\ndifferentiations compared to other sectors because mining companies must\nmeet various requirements to obtain permits and fulfil numerous\nobligations after the permits are issued.<\/p>\n
Therefore, an inspection is not sufficient to merely ensure the\nexistence of a permit at the time of the transaction; it is also\nnecessary to trace the permit acquisition process and the company\u2019s\ntrack record in fulfilling obligations.<\/p>\n
Wilson exemplified that inspections could include the implementation\nof reclamation plans, the preparation of post-mining plans, the\nplacement of reclamation guarantees, and the completeness of periodic\nreports over several previous years.<\/p>\n
He noted that such tracing is necessary so that potential investors\nobtain a more complete picture of the legal condition of the company\nbeing targeted for investment or acquisition.<\/p>\n
\u201cSo, if asked whether the difference is significant or not, it is\nactually very significant,\u201d he said.<\/p>\n
This context arises amidst a large wave of investment in the\ndownstream sector. The Ministry of Investment and Downstreaming\/BKPM\nrecorded national investment realisation in the first semester of 2026\nat Rp1,010.6 trillion, with downstream investment amounting to Rp300.1\ntrillion, or 29.7 per cent of the total investment realisation.<\/p>\n
Downstream investment is still dominated by mineral commodities. In\nthe second quarter of 2026, bauxite downstream investment reached Rp40.1\ntrillion, followed by nickel at Rp29.4 trillion and copper at Rp16.7\ntrillion. Total downstream investment during that period reached Rp152.7\ntrillion.<\/p>\n
From a governance perspective, the Ministry of Energy and Mineral\nResources (ESDM) emphasised that holding a Mining Business Licence (IUP)\nalone is insufficient to conduct mining activities.<\/p>\n
The Directorate General of Minerals and Coal of the Ministry of ESDM,\nin its evaluation process, examines, among other things, the\ncompleteness of administrative and legal licensing, the alignment of\nmining plans, environmental obligations including reclamation\nguarantees, mining safety, and state revenue obligations.<\/p>\n
The Director General of Minerals and Coal, Tri Winarno, stated that\nevery approval is granted only after all required aspects are declared\nto meet the provisions. The Ministry of ESDM refers to this supervision\nas part of strengthening mining governance.<\/p>\n
From the investment climate perspective, the Minister of Investment\nand Downstreaming\/Head of BKPM, Rosan Roeslani, stated that the\ngovernment is maintaining investment momentum through the simplification\nof business licensing, strengthening the investment ecosystem,\naccelerating the development of industrial zones and downstreaming, and\nimproving the quality of service to investors.<\/p>\n
Wilson added that the abundance of applicable regulations means that\nthose conducting due diligence also need to understand the mining\nbusiness process to assess company compliance according to its\noperational stages.<\/p>\n
This business process includes stages ranging from general\ninvestigation, exploration, feasibility studies, and construction to\nmining, transportation, and sales.<\/p>\n
According to Wilson, understanding the business process helps legal\nteams understand the context of every provision that a company must\nfulfil.<\/p>\n
\u201cSo, on one hand, we must familiarise ourselves with reading the\nregulations, and on the other hand, we must continuously try to learn\nthe business processes,\u201d said Wilson.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/perhapi-due-diligence-in-mining-company-acquisitions-must-scrutinise-permits-1789992609", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }