The government of Indonesia has finally completed drafting the sixth revision of Government Regulation (GR) No. 23/2010 on coal and mineral mining businesses.
The new regulation will provide legal basis for a number of coal miners seeking for renewal of their current coal contracts of work (or PKP2B), which are set to expire within the next few years, and converting them into IUP mining license.
Head of Legal Bureau at the Ministry of Energy and Mineral Resources, Hufron Asrofi said that the draft of the new government regulation has been completed following “discussion, harmonization and clarification” with related ministries including the Office of the Coordinating Minister for Maritime Affairs and Investment, Office of the Coordinating Minister for Economic Affairs, Office of the State Minister of State Owned Enterprises, Minister of Finance, Minister of Human Rights and Law, Minister of Energy and Mineral Resources, and State Secretary.
Hufron said that only State Minister of State Owned Enterprises Erick Thohir who has yet to sign on the draft. The new regulation will become effective once it has been signed by President Joko Widodo.
The sixth revision of Government Regulation (GR) No 23/2010 was originally targeted for completion at the end of 2018. In January of last year, the government had almost completed the sixth revision of the GR No 23, but was once again suffered another delay after then state minister of state owned enterprises Rini Soemarno insisted that coal concessions operated by PKP2B coal firms whose contracts have expired should be given to state firms.
The polemics then expanded to request that the renewal of the PKP2B contracts should await the revision of the Mining Law No 4/2009. The revision of the mining law, initiated by lawmakers, has also suffered lengthy delays. A senior lawmaker said previously that the House of Representatives aimed at completing the revision of the mining law by August of this year ahead of the expiry of a number of PKP2B coal contracts.
A number of first generation PKP2B coal miners are set to see their operating permits or contracts expire within the next year few years. These include PT Arutmin Indonesia whose contract will expire on Nov. 1, 2020, PT Kendilo Coal Indonesia (Sept. 13, 2021), PT Kaltim Prima Coal (Dec. 31, 2021), PT Multi Harapan Utama (April 1, 2022), PT Adaro Indonesia (Oct. 1, 2022), PT Kideco Jaya Agung (March 13, 2023), and PT Berau Coal (April 26, 2025).
Hufron said that the revision of the GR No 23 is seen as the fastest way to help ensure investment and legal certainty particularly in the coal mining sector rather than waiting for the completion of the deliberation of the new mining law by the House and the government.
Executive Director of the Indonesia Coal Mining Association (ICMA) Hendra Sinadia said that the coal mining industry players are now waiting for certainty from the government. He said that investment and legal certainty is crucial, either it’s provided via the GR No 23 or revision of the mining law.
“We’ll follow whatever option taken by the government. We’re confident that the government understands the urgency and impact on the national economy,” he said.
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