Indonesia’s mining industry has a long history, dating back more than 160 years to the colonial era. While the modern sector began to take shape following major mining and investment reforms in the late 1960s, mineral resources continue to play a significant role in Indonesia’s economy today. Mining contributes around five percent of national GDP and is even more important in resource- rich regions such as East Kalimantan, West Papua, and West Nusa Tenggara. Indonesia remains a key global supplier of coal, nickel, bauxite, and tin, and the sector continues to attract substantial foreign investment, including from China, India, Russia, and South Korea.
HISTORY OF MINING BUSINESS LICENSE (IUP) IN INDONESIA
Changes in mining governance in Indonesia began with the enactment of Law Number 32 of 2004 on Regional Government, which granted regional authorities the ability to manage natural resource utilization through the Contract of Work scheme. However, the equal standing between private mining companies and the state under this scheme drew significant criticism. In response, the government introduced Law Number 4 of 2009 on Mineral and Coal, which replaced the Contract of Work system with a licensing system. This transition marked the introduction of the Mining Business License (IUP).
During the implementation of Law 32/2004 and Law 4/2009, the authority to issue IUPs was predominantly held by regional governments. Therefore, mining was widely regarded as a strategic asset to increase Regional Own-Source Revenue (PAD) which encouraged many regions to issue a large number of IUPs. However, this level of autonomy also resulted in overlapping permit areas and weakening administrative verification. The Directorate General of Mineral and Coal recorded thousands of problematic IUPs that required evaluation, which prompted the central government to issue corrective policies.
Law 4/2009 states that an IUP consists of two stages, the Exploration IUP as the pre- production phase and the Production Operation IUP as the production phase. The Exploration IUP is issued to permit activities such as general investigation, exploration, and feasibility studies. Once these activities are completed, the Production Operation IUP may be issued to allow the holder to conduct production operation activities.
SHIFT OF THE REGIME TO CENTRAL GOVERNMENT AUTHORITY
The implementation of Law Number 3 of 2020 on Mineral and Coal Mining (Law 3/2020) transfer all licensing authority from the regional governments to the central government. Authority is now vested in the Ministry of Energy and Mineral Resources (the Ministry of ESDM). This shift established a centralised regulatory regime, under which several terms and mechanism have been introduces within the IUP framework, including the following:
Clear and Clean (CNC)
The Ministry of ESDM launched the CNC program, which assesses the legality of each IUP againts administrative, technical, enviromental and financial criteria. The program serves as a review mechanism for the central government to identify problematic licenses.
Reconciliation Minutes (BA Rekonsiliasi)
As part of the restructuring process, the government implemented the Reconciliation Minutes, a joint verification procedure carried out by the Directorate General of Mineral and Coal and regional governments. This process involves cross-checking original documents, geographic positions, forest area status, and other records. Completion of this reconciliation was required before licensing authority could be assumed by the central government.
State Administrative Court (PTUN)
In practice, corrective actions such as license revocation, area reduction, or adjustment of IUP status often give rise to disputes brought before the State Administrative Court. The role of PTUN has become increasingly important, particularly given the substantial number of problematic IUPs issued during the decentralization era. Companies that consider themselves harmed by the government decisions including the revocation of an IUP, the denial of CNC status, or the cancellation of designated areas may submit a claim to PTUN as a means to obtain legal certainty and ensure fairness.
The regulatory shift was accompanied by the introduction of a revised licencing system, comprising the following:
Minerba One Data Indonesia (MODI)
MODI is a web-based application developed by the Ministry of ESDM to manage integrated data on mineral and coal companies in Indonesia.
Minerba One Map Indonesia (MOMI)
MOMI is a Geographic Information System (GIS)-based application that maps all mining business areas in Indonesia and integrates them with various cross-sector spatial datasets. MOMI enables the government to detect potential overlaps at an early stage, thereby preventing land conflicts and potential legal disputes.
Naskah Dinas Elektronik (Nadine)
Nadine is a web-based document management application used within the Ministry of ESDM to create, distribute, assign, archive, and track official documents electronically.
CENTRALIZATION OF THE MINERBA ONE SYSTEM
The government consolidated mining data through the Minerba One system, which integrates MODI, MOMI, and other applications within a single digital platform. This system is designed to ensure that each IUP has a valid and verified administrative record and functions as a control mechanism for monitoring compliance obligations.
Centralizing mining licensing authority has strengthened regulatory oversight by enabling the government to directly monitor all business data and activities through a unified national system. Centralized and real-time supervision now minimizes potential irregularities such as overlapping permit areas, which were common during the decentralization era when authority was dispersed across regions with differing standards.
Mining Business License Under The Minerba One System
The mining business licensing framework has been fully centralized under the Minerba One system, which the CNC-based verification and Reconciliation Minutes are no longer applicable. All licensing data previously administered through the MODI application has been migrated into Minerba One, which now serves as the national platform for mining licensing administration. Accordingly, the registration and amendment of IUP, as well as the submission and approval of the Work Plan and Budget (RKAB), are carried out through the Minerba One system.
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