Official: Bahlil Issues Regulation Mandating Mining Companies to Use Local Services
The Ministry of Energy and Mineral Resources (ESDM) now mandates all mining companies in Indonesia to prioritise the use of local mining service companies located around their operational areas. This policy is intended to provide legal certainty while simultaneously boosting the economies of regions surrounding mining sites.
The policy is set out in the Decree of the Minister of ESDM Number 365.K/MB.01/MEM.B/2026 regarding Technical Guidelines for the Implementation of Approval for the Use of Subsidiaries and/or Affiliates in the Mineral and Coal Mining Services Business.
The regulation, signed by Minister of ESDM Bahlil Lahadalia, regulates all mining permit holders, prohibiting them from arbitrarily bringing in their own subsidiaries or affiliates without prioritising local contractors.
“Mining Business Permit holders or Special Mining Business Permit holders who use mining services in their business activities must use companies holding Mining Service Business Permits, with the provision of prioritising mining service companies within the regency/city areas surrounding the Mining Business Permit Area or Special Mining Business Permit Area,” stated the first clause of the regulation, as reported on Tuesday (29/09/2026).
The new regulation, established on 18 September 2026, aims to limit the practice of monopolies in mining services by the business groups that hold the mining permits.
The government prohibits the involvement of subsidiaries or affiliates in the mineral and coal mining services sector, whether through direct share ownership or through shared ultimate beneficial owners.
“Mining Business Permit holders or Special Mining Business Permit holders are prohibited from involving subsidiaries and/or affiliates in the mineral and coal mining services business without the Minister’s approval,” stated the second clause of the regulation.
Nevertheless, the government still provides room for exceptions regarding the use of subsidiaries or affiliates through special approval from the Minister of ESDM for national strategic projects. Such exceptions may be granted if mining companies are carrying out government assignments, such as national strategic projects, the construction of processing facilities or smelters, and the fulfilment of domestic mineral and coal needs.
The application process for approval to use subsidiaries will be evaluated by the Ministry of ESDM, with a decision timeframe of no more than 14 working days.
The full contents of the regulation are as follows:
FIRST: Mining Business Permit holders or Special Mining Business Permit holders using mining services in their business activities must use companies holding Mining Service Business Permits, prioritising mining service companies in the regency/city areas surrounding the Mining Business Permit Area or Special Mining and Coal Mining Business Permit Area;
SECOND: Mining Business Permit holders or Special Mining Business Permit holders are prohibited from involving subsidiaries and/or affiliates in the mineral and coal mining services business without the Minister’s approval;
THIRD: The prohibition of involving companies and/or affiliates in the mineral and coal mining services business as referred to in the SECOND clause includes:
direct share ownership by Mining Business Permit holders or Special Mining Business Permit holders in the Mining Service Business Permit holder; or
the identity of one or more ultimate beneficial owners of the Mining Business Permit holder or Special Mining Business Permit holder with the Mining Service Business Permit holder.
FOURTH: Exceptions for the use of subsidiaries and/or affiliates in the mineral and coal mining services business through approval as referred to in the SECOND clause can only be granted to Mining Business Permit holders or Special Mining Business Permit holders who are carrying out government assignments, including:
implementation of national strategic projects;
construction of mineral processing and/or refining facilities or coal development and/or utilisation activities; and/or
fulfilment of mineral 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 the use of subsidiaries and/or affiliates in the mineral and coal mining services business by the Minister shall be provided within 14 (fourteen) working days from the date the application is received completely and correctly.
SEVENTH: Approval for the Use of subsidiaries and/or affiliates in the mineral and coal mining services business:
is granted in accordance with the field and sub-field of the Mining Service Business Permit of the subsidiary and/or affiliate as per the submitted application; and
remains valid until the expiry of the Mining Service Business Permit of the subsidiary and/or affiliate;
EIGHTH: For Mining Business Permits issued by a Governor within their authority, applications 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 in the Mineral and Coal mining services, corrections may be made by the Minister or Governor according to their authority.
TENTH: The provisions of this Ministerial Decree apply mutatis mutandis to holders of Special Mining Business Permits as a Continuation of Contract/Agreement, Contract of Work holders, and Coal Mining Business Agreement holders.
ELEVENTH: Upon the effective date of this Ministerial Decree…