Local governments asked to stop issuing mining licenses

The Energy and Mineral Resources Ministry has asked heads of provincial and regency administrations to stop issuing mining licenses (IUP) without tender until the government issues a new regulation governing the matter.

Sustisna Prawira, spokesman of the Ministry of Energy and Mineral Resources, said in a press statement that the ministry was currently preparing a new regulation governing mining licenses in line with the mining Law No. 4/2009.

The new law scraps the contract system implemented under the previous law, that is Contract of Works and Mining Contract (KP), and replaces them with IUP.

Under the new law, exploration rights for a mining area will be awarded through tenders The exploration right is valid for a maximum of eight years for base metals, a maximum of three years for non-base metals, and a maximum of seven years for coal mining.

Miners need a production permit to move from exploration to actual mining, processing and smelting, as well as transporting and marketing.

Sustisna said that the ministry had issued a letter to local governments in Jan. 30, last year instructing them to stop issuing permits until after government regulations to implement to the new law are issued. But the East Kutai regency administration challenged the instruction at the Supreme Court, which ruled in favor of the regency.

The ministry insisted that if local governments continue issuing mining permits without tender, it will be against the new law. (*)