Minister Of Energy And Mineral Resources Explains Reasons Mining Companies Can Extend IUPK Until Reserves Run Out

Minister of Energy and Mineral Resources Arifin Tasrif (Photo: Antara)

JAKARTA - Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif opened his voice about the article in Government Regulation (PP) Number 25 of 2024 which states that the extension of the Special Mining Business License (IUPK) is given during the availability of reserves and is evaluated every 10 (ten) years.

Arifin said that the consideration of granting this permit is related to the age of the smelter that the owner of the IUPK already has. If the granting of permits is limited to the next 10 years with a smelter investment estimated for the next 30 years, it will certainly harm the smelter owner entrepreneur. Again, Arifi continued, the smelter construction is not easy because it has to spend a number of fantastic budgets.

"Yes, as long as the reserves are still there, the smelter is still running, how old is the smelter? If the reserve is only 10 years old, the investment detained smelter has lost 30 years, both of them. Making the smelter is not easy, the building is not easy," said Arifin when met by the media at the Ministry of Energy and Mineral Resources Building, Tuesday, June 4.

For this reason, in the new regulation signed by President Joko Widodo on May 30, it is stated that the permit extension provisions will be carried out until the reserves run out, as long as the mining products are converted into downstream products.

"In the law, as long as the reserves are there, it can still be extended as long as it is processed into downstream products," continued Arifin.

Just so you know, In this regulation, Article 195 and Article 196 are included in two articles, namely Article 195A and Article 195B which regulates the IUPK as a Continuation of Contract/Parliament Operations.

Article 195B paragraph (1) states that the IUPK of production operations, which is a form change of Work Contract (KK) before the enactment of Law Number 3 of 2020 concerning Amendments to Law Number 4 of 2009 concerning Mineral and Coal Mining, can be given an extension after meeting the criteria for at least:

a. Have domestic integrated processing and/or purification facilities;

b. Have the availability of reserves to meet the operational needs of Processing and/or Purification facilities;

c. The shares have at least 51 percent (fifty-one percent) owned by Indonesian participants;

d. Has entered into an indeluble new share sale and purchase agreement of at least 10 percent (ten percent) of the total share ownership to BUMN;

e. considering efforts to increase state revenue;

f. Have the fewest new investment commitments in the form of advanced exploration activities and capacity building of purification facilities, which have been approved by the Minister.

Then in Article 2 it reads that an extension is given during the availability of reserves and an evaluation is carried out every 10 (ten) years.