Mining Permit Holders Required to Use Local Services, Entrepreneurs Respond
Jakarta, CNBC Indonesia - The Indonesian Coal Mining Association (APBI) has responded to a new regulation under the Decree of the Minister of Energy and Mineral Resources Number 365.K/MB.01/MEM.B/2026. The regulation requires holders of Mining Business Licences (IUP) to prioritise the use of local mining service contractors.
APBI Executive Director Gita Mahyar_rani revealed that business players are currently studying the regulation and assessing its implementation readiness on the ground. She emphasised that the appointment of contractors involves complex aspects, meaning decisions cannot rely solely on local status or corporate affiliation.
“We are still studying it. Our main concern is how this rule will be implemented in the field,” she told CNBC Indonesia, as cited on Monday (5/10/2026).
Gita explained that in mining operational practices, selecting contractor partners requires very strict and proven qualifications. The decision to select a mining service provider must consider everything from technical readiness to risk management to ensure production continuity.
“In mining activities, selecting a contractor is not just about being local or an affiliate, but is closely related to technical capability, safety, equipment availability, financial capacity, productivity, as well as governance, risk, and compliance,” she added.
The issuance of this new policy is expected to provide regulatory clarity while still accounting for safety standards and the technical capabilities of the national mining industry.
Explanation from the Ministry of Energy and Mineral Resources
Director General of Minerals and Coal at the Ministry of Energy and Mineral Resources, Tri Winarno, explained that the regulation essentially prohibits licence holders from conducting all business activities independently through their subsidiaries. However, the government still provides specific exceptions for projects that meet certain strategic criteria.
“The regulation does not permit affiliation, but the Ministerial Decree allows for affiliation under certain conditions,” said Tri, met at the Kalibata Heroes Cemetery on Tuesday (29/9/2026).
According to him, there are several criteria that must be met for affiliation to be permitted. One criterion relates to meeting domestic needs. Additionally, the provisions cover activities related to National Strategic Projects (PSN) and downstreaming programmes.
“However, there are several criteria, such as meeting domestic needs, PSN, and downstreaming,” he said.
The full contents of the Decree of the Minister of ESDM Number 365.K/MB.01/MEM.B/2026 are as follows:
FIRST: Holders of Mining Business Licences (IUP) or Special Mining Business Licences (IUPK) using mining services in their business activities must use companies holding Mining Service Business Licences, with provisions to prioritise mining service companies in the regency/city areas surrounding the IUP or IUPK area.
SECOND: Holders of Mining Business Licences or Special Mining Business Licences are prohibited from involving subsidiaries and/or affiliates in the mineral and coal mining service business sector without the Minister’s approval.
THIRD: The prohibition of involving companies and/or affiliates in the mineral and coal mining service business sector as referred to in the SECOND Clause includes:
direct share ownership by the holder of the Mining Business Licence or Special Mining Business Licence in the holder of the Mining Service Business Licence; or
the same one or more ultimate beneficial owners of the holder of the Mining Business Licence or Special Mining Business Licence as the holder of the Mining Service Business Licence.
FOURTH: Exceptions for the use of subsidiaries and/or affiliates in the mineral and coal mining service business sector through approval as referred to in the SECOND Clause can only be granted to holders of Mining Business Licences or Special Mining Business Licences that are currently undertaking assignments from the Government, including:
implementation of national strategic projects;
construction of mineral processing and/or refining facilities and/or coal development and/or utilisation activities; and/or
fulfilment of minerals or coal for domestic needs.
FIFTH: Applications for approval to use subsidiaries and/or affiliates as referred to in the FOURTH Clause shall be submitted to the Minister.
SIXTH: The granting of approval for applications to use subsidiaries and/or affiliates in the mineral and coal mining service business sector by the Minister shall be provided within 14 (fourteen) working days from the receipt of a complete and correct application.
SEVENTH: Approval for the use of subsidiaries and/or affiliates in the mineral and coal mining service business sector:
shall be granted in accordance with the field and sub-field of the Mining Service Business Licence of the subsidiary and/or affiliate as per the submitted application; and
shall remain valid until the expiry of the Mining Service Business Licence of the subsidiary and/or affiliate.
EIGHTH: For Mining Business Licences issued by a Governor within their authority, an application for approval to use subsidiaries and/or affiliates may be submitted to the Governor.
NINTH: In the event of administrative errors and/or evaluation errors in the process of issuing approval or rejection of approval for the use of subsidiaries and/or affiliates, corrections may be made by the Minister or Governor according to their authority.
TENTH: The provisions of this Ministerial Decree shall apply mutatis mutandis to holders of Special Mining Business Licences as a Continuation of Contract/Agreement, holders of Contract of Work, and holders of Coal Mining Business Agreement.
ELEVENTH: At the time of the Decree…