The Ministry of Energy and Mineral Resources (ESDM) has prohibited\ncompanies holding Mining Business Licences (IUP) from using their own\nsubsidiaries or affiliates without prioritising local contractors, in an\neffort to boost regional economies.<\/p>\n
However, there are exceptions allowing companies to use subsidiaries\nand\/or affiliates for domestic mining activities. This policy is\noutlined in the Decree of the Minister of ESDM Number\n3::365.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 government provides exceptions for mining companies performing\nspecial assignments. The involvement of subsidiaries or affiliates is\nonly permitted if they meet specific assignment criteria and have\nobtained approval from the Minister of ESDM.<\/p>\n
\u201cThe exception for using subsidiaries and\/or affiliates in the\nmineral and coal mining services sector through approval as referred to\nin the SECOND Dictum can only be granted to holders of Mining Business\nLicences or Special Mining Business Licences who are currently carrying\nout assignments by the Government,\u201d stated the FOURTH Dictum of the\nregulation, as reported on Wednesday (30\/09\/2026).<\/p>\n
Government assignments that serve as a prerequisite for this\nexception include three main categories of national strategic\nactivities: the implementation of National Strategic Projects (PSN), the\nconstruction of mineral processing and refining facilities or coal\ndevelopment, and the fulfilment of mineral and coal commodities for\ndomestic needs.<\/p>\n
Before obtaining an exception, mining companies are prohibited from\ninvolving subsidiaries or affiliates arbitrarily to prevent monopoly\npractices. This prohibition applies to both direct share ownership and\ncases where there is a common ultimate beneficial owner between the\nmining company and the mining services company.<\/p>\n
For mining companies meeting the government assignment criteria,\napplications for approval to use subsidiaries must be submitted directly\nto the Minister of ESDM. The Ministry of ESDM will process and issue a\ndecision within a maximum of 14 working days from the receipt of\ncomplete documentation.<\/p>\n
This regulation, established in Jakarta on 18 September 2026,\nsimultaneously revokes the Regulation of the Director General of\nMinerals, Coal, and Geothermal Number 376.K\/30\/DJB\/2010. The rule became\neffective upon its establishment by Minister of ESDM Bahlal Lahadalia on\n18 September 2026.<\/p>\n
Explaining the Ministry\u2019s position, the Director General of Minerals\nand Coal at the Ministry of ESDM, Tri Winarno, explained that the\nregulation essentially prohibits licence holders from managing all\nbusiness activities independently through their subsidiaries.\nNevertheless, the government maintains space for specific exceptions for\nprojects meeting certain strategic criteria.<\/p>\n
\u201cThe regulation does not permit affiliates, but the Ministerial\nDecree allows for affiliates under certain conditions,\u201d said Tri when\nmet at the Kalibata Heroes Cemetery on Tuesday (29\/09\/2026).<\/p>\n
He noted that several criteria must be met for such affiliation to be\npermitted, including the fulfilment of domestic needs, involvement in\nNational Strategic Projects (PSN), and downstreaming programmes.<\/p>\n
The full contents of the Ministerial Decree are as follows:<\/p>\n
FIRST: Holders of Mining Business Licences or Special Mining Business\nLicences using mining services in their business activities must use\nmining service companies that prioritise companies within the\nregency\/city area surrounding the Mining Business Licence area.<\/p>\n
SECOND: Holders of Mining Business Licences or Special Mining\nBusiness Licences 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 subsidiaries and\/or affiliates in\nthe mineral and coal mining services business as referred to in the\nSECOND Dictum includes:<\/p>\n
direct share ownership by the Mining Business Licence holder in\nthe mining services company; or<\/p><\/li>\n
the presence of one or more common ultimate beneficial owners\nbetween the mining company and the mining services company.<\/p><\/li>\n<\/ol>\n
FOURTH: The exception for using subsidiaries and\/or affiliates in the\nmineral and coal mining services business through approval as referred\nto in the SECOND Dictum can only be granted to holders of Mining\nBusiness Licences or Special Mining Business Licences performing\ngovernment assignments, which include:<\/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 minerals 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 Dictum must 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\nreceipt of a complete and correct application.<\/p>\n
SEVENTH: Approval for the use of subsidiaries and\/or affiliates in\nthe mineral and coal mining services business:<\/p>\n