Requirements for Miners to Utilise Subsidiary or Affiliate Mining Services
The Ministry of Energy and Mineral Resources (ESDM) has prohibited companies holding Mining Business Licences (IUP) from using their own subsidiaries or affiliates without prioritising local contractors, in an effort to boost regional economies.
However, there are exceptions allowing companies to use subsidiaries and/or affiliates for domestic mining activities. This policy is outlined in the Decree of the Minister of ESDM Number 3::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 government provides exceptions for mining companies performing special assignments. The involvement of subsidiaries or affiliates is only permitted if they meet specific assignment criteria and have obtained approval from the Minister of ESDM.
“The exception for using subsidiaries and/or affiliates in the mineral and coal mining services sector through approval as referred to in the SECOND Dictum can only be granted to holders of Mining Business Licences or Special Mining Business Licences who are currently carrying out assignments by the Government,” stated the FOURTH Dictum of the regulation, as reported on Wednesday (30/09/2026).
Government assignments that serve as a prerequisite for this exception include three main categories of national strategic activities: the implementation of National Strategic Projects (PSN), the construction of mineral processing and refining facilities or coal development, and the fulfilment of mineral and coal commodities for domestic needs.
Before obtaining an exception, mining companies are prohibited from involving subsidiaries or affiliates arbitrarily to prevent monopoly practices. This prohibition applies to both direct share ownership and cases where there is a common ultimate beneficial owner between the mining company and the mining services company.
For mining companies meeting the government assignment criteria, applications for approval to use subsidiaries must be submitted directly to the Minister of ESDM. The Ministry of ESDM will process and issue a decision within a maximum of 14 working days from the receipt of complete documentation.
This regulation, established in Jakarta on 18 September 2026, simultaneously revokes the Regulation of the Director General of Minerals, Coal, and Geothermal Number 376.K/30/DJB/2010. The rule became effective upon its establishment by Minister of ESDM Bahlal Lahadalia on 18 September 2026.
Explaining the Ministry’s position, the Director General of Minerals and Coal at the Ministry of ESDM, Tri Winarno, explained that the regulation essentially prohibits licence holders from managing all business activities independently through their subsidiaries. Nevertheless, the government maintains space for specific exceptions for projects meeting certain strategic criteria.
“The regulation does not permit affiliates, but the Ministerial Decree allows for affiliates under certain conditions,” said Tri when met at the Kalibata Heroes Cemetery on Tuesday (29/09/2026).
He noted that several criteria must be met for such affiliation to be permitted, including the fulfilment of domestic needs, involvement in National Strategic Projects (PSN), and downstreaming programmes.
The full contents of the Ministerial Decree are as follows:
FIRST: Holders of Mining Business Licences or Special Mining Business Licences using mining services in their business activities must use mining service companies that prioritise companies within the regency/city area surrounding the Mining Business Licence 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 services business without the Minister’s approval.
THIRD: The prohibition of involving subsidiaries and/or affiliates in the mineral and coal mining services business as referred to in the SECOND Dictum includes:
direct share ownership by the Mining Business Licence holder in the mining services company; or
the presence of one or more common ultimate beneficial owners between the mining company and the mining services company.
FOURTH: The exception for using subsidiaries and/or affiliates in the mineral and coal mining services business through approval as referred to in the SECOND Dictum can only be granted to holders of Mining Business Licences or Special Mining Business Licences performing government assignments, which include:
implementation of National Strategic Projects;
construction of mineral processing and/or refining facilities 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 Dictum must 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 receipt of a complete and correct application.
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 Licence…