MINING BUSINESS FRAMEWORK

1. Historical review on Indonesia's mining business framework (before Mining Law 2009)

• Mining business in the Indonesia archipelago before colonialism
• Portuguese and Dutch influence to the Indonesian mining business
• Mining Law 1967 and the introduction of contract system in Indonesian mining industry

2. Mining Law 2009-Law 3/2020

• Introduction of new mining area and licensing systems
• Dual licensing methods: auction and first come first served
• Exploration and exploitation licenses
• Authority to award mining licenses
• Foreign investments under Mining Law 2009
• Divestment obligation
• Financial obligations (royalty, tax, PNBPs)
• Tenure of IUP/IUPK
• Privilege of state-owned (BUMN) and local government-owned enterprises (BUMD)
• Ownership of the mining commodity
• Mining service businesses
• Marketing and benchmark price
• Land right in mining areas
• Mining license transfer
• Corporate social responsibility

3. Comparative overview: IUP/Ks – KK- PKP2B

• Area
• Mining phases
• Mining service
• Divestment
• Financial obligations
• Dispute settlement
• Etc.

MINING SERVICE BUSINESS FRAMEWORK

1. Mining service regulatory framework

• Scope of mining service
• Mining service works under KK and PKP2B vs IUP/IUPK
• Mining service licenses
• Authority to issue mining service licenses
• Responsibility of a mining service company to the Government and mining right holders
• Restrictions of mining service business
• No coal getting/mineral getting works
• Affiliated party transactions
• Promotion of local and national mining service providers
• Anti-transfer pricing policy

2. Mining contract structure

• structure of a mining services contract;
• scope of work for mining services contract;
• contract effective term;
• method and owner requirement for contractor in carrying mining service works;
• pricing negotiation method and formula;
• penalty and liquidated damages;
• exclusivity of contractor;
• subcontract arrangement;
• right to inspect by the owner;
• geological data and pit design;
• payment method;
• power to be delegated to the contractor by the owner;

Mining Business Masterclass Series

• health, safety and environment responsibility;
• annual mine plan, rolling three months plan and monthly mine plan;
• site facilities;
• equipment and infrastructure procurement by the contractor;
• contractor risk and owner risk
• unanticipated geological and subsurface conditions;
• project viability provisions anticipating market and economic conditions;
• termination mining services contract;
• indemnity by contractor and owner;
• force Majeure conditions;
• owner’s right to step-in in case of force majeure event;
• employment issues;
• insurance;
• governing law;
• dispute resolution (expert determination, senior management negotiation, arbitration)

Acquisition of Mining Companies Coal Supply Agreement

1. Incoterms on Coal Sale Agreement
2. Terms and Conditions of the International Commercial Term on sale of goods (coal)
3. Liability and responsibility of seller and buyer
4. Liability and responsibility of the transporter
5. Weight and quality adjustment
6. Reference price of coal sale
7. Choice of forum
8. Choice of law Acquisition of Mining Companies
1. Acquisition structure
2. the validity of the mining right (IUP or CCOW/COW) of the target company
3. requirement for acquiring shares in an IUP/CCOW/COW target company
4. necessary conditions precedent to be satisfied by the seller to the buyer
5. conditions subsequent of an acquisition
6. lock up period from offering third party
7. target company’s assets and liabilities disclosure
8. consideration for acquisition
9. taxes and other charges
10. management control on acquisition closing
11. restriction for material changes in the target company business activities
12. employment matters in relation to the acquisition
13. indemnity and warranties by the seller to the buyer
14. completion of a shares transfer
15. acquisition closing
16. cancellation of acquisition
17. dispute resolution forum
18. governing law