Indonesia’s New Mining Law (UU Minerba): Updates & Impact

What You Need to Know About Indonesia’s New Mining Law (UU Minerba)

  • InCorp Editorial Team
  • 3 April 2025
  • 6 minutes reading time

Indonesia, a significant player in the global mining industry, has introduced the UU Minerba (Undang-Undang Mineral dan Batubara) or Mineral and Coal Mining Law to regulate its vast mining sector. The most recent amendment, Law No. 3 of 2020, brings significant changes to enhance investment certainty, promote local industries, and ensure sustainable mining practices. 

This article provides an in-depth look at Indonesia’s new mining law, outlining its key provisions, impact on companies and investors, and the future outlook for the country’s mining sector. 

Understanding Indonesia’s Mining Law 

Indonesia’s Mining Law has undergone three amendments, with the most recent changes introduced in 2020 to enhance investment in the downstream mining sector. The revisions focused on licensing, regulatory authority, and foreign ownership rules. 

Key Changes in Past Amendments 

  • New Mining Licenses: The 2020 amendment introduced additional permits, such as rock mining certificates and assignment licenses for exploring radioactive materials. 
  • Centralized Licensing: Previously, central and regional governments could issue mining permits. The amendment transferred most licensing authority to the central government, with limited exceptions for small-scale, community-based mining. This change aims to ensure consistency and efficiency in the regulatory process. 
  • Foreign Ownership Rules: Foreign mining companies must still divest 51% of their shares to Indonesian entities. However, the amendment removed the strict 10-year deadline, allowing divestment to occur in phases, with further details to be determined by future regulations. 

The government’s commitment to increasing its stake in the mining sector was demonstrated by its 2018 acquisition of a 51% stake in PT Freeport Indonesia, the operator of Grasberg Mine, one of the world’s largest gold and copper mines. 

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Key Changes in the New Mining Law (UU Minerba) 

Indonesia’s New Mining Law (UU Minerba): Updates & Impact

Indonesia’s fourth amendment to Law No. 4 of 2009 on Mineral and Coal Mining (UU Minerba) was approved on February 18, 2024. The revisions introduce stricter regulations on land use, licensing, contract extensions, and government oversight. 

Mining Business License Areas (WIUP & WIUPK) 

  • Mining areas must remain unchanged in terms of land use. 
  • Licenses will be issued based on resource availability, production capacity, and domestic needs. 

People’s Mining Areas (WPR) 

  • Small-scale mining regions will be protected unless they conflict with other regulations. 

Mining License Eligibility 

  • Licenses are granted through auctions or priority allocation to cooperatives, SMEs, SOEs, local businesses, and religious organizations. 
  • Universities were initially included but later removed; instead, they can receive research funding or scholarships. 

Contract Extensions for Large Companies 

  • Coal Contract of Work (PKP2B) holders can extend operations for two additional 10-year periods, provided they contribute to state revenue. 

Stronger Government Oversight 

  • The Energy and Mineral Resources Ministry will manage non-tax revenue from mining. 
  • State and regional research institutions may be assigned to conduct exploration projects. 

Regulating Overlapping Permits 

  • The government will review and revoke overlapping permits issued before the amendment. 
  • Supporting regulations must be issued within six months, and DPR will review the law’s impact after two years. 

These changes strengthen state control, prioritize local businesses, and ensure sustainable mining practices. 

Positive Impacts for Foreign Investors and Companies 

The 2024 UU Minerba amendment brings greater investment security, transparent regulations, and new business opportunities for foreign investors. While prioritizing domestic industries, the law encourages foreign participation in long-term projects, mineral processing, and green energy development. 

Extended Contract Terms for Large Mining Companies 

Foreign companies holding Coal Contracts of Work (CCoW) now benefit from two additional 10-year extensions, even if their contracts were previously renewed. This ensures long-term operational stability and greater investment security in Indonesia’s coal sector. 

Strengthened Domestic Processing Incentives 

The law favors companies investing in local processing by offering priority access to mining licenses. This supports foreign investors in smelting, refining, and industrial development, especially in EV battery production, green energy, and high-value mineral processing, encouraging them to invest in these areas. 

More Clarity on Licensing and Land Use 

The amendment reduces bureaucratic hurdles by centralizing regulations, ensuring more predictable investment conditions. Mining areas must meet strict resource availability and production criteria, providing greater certainty for foreign investors seeking long-term projects. 

Enhanced Business Opportunities in Green Energy 

With Indonesia prioritizing domestic mineral sales, industries such as electric vehicle (EV) battery production, solar panels, and green steel manufacturing stand to benefit. The push for domestic mineral utilization increases the demand for foreign expertise, technology, and capital investment. 

Future Outlook for Indonesia’s Mining Industry 

Indonesia’s mining industry is poised for growth and transformation as the government strengthens its focus on downstream processing, investment incentives, and sustainable resource management. The new UU Minerba amendments, with their potential to shape the sector in the coming years, create opportunities and challenges for investors and paint a promising future for the industry. 

Stronger Growth in Domestic Mineral Processing 

Indonesia’s ban on raw mineral exports and emphasis on local refining and smelting will drive massive investment in processing facilities. Sectors like EV battery production and green energy technologies will benefit, with significant foreign players expected to expand operations. 

Increased Foreign Investment in Green Industries 

Indonesia’s strategy of prioritizing domestic mineral sales to attract global companies in EV battery production, solar panels, and renewable energy is already bearing fruit.  

The US$1 billion EV battery plant in West Java, built by Hyundai, LG, and Indonesia Battery Corporation, is a testament to the strong investor confidence in this strategy, encouraging more foreign investment in green industries. 

More Predictable Investment Environment 

The centralization of mining permits under the Energy and Mineral Resources Ministry is a significant step towards improving regulatory consistency and reducing regional uncertainties. This move assures foreign investors of a more transparent licensing framework and longer-term contract security, fostering confidence in the investment environment. 

Growing Role of State-Owned Enterprises (SOEs) 

While foreign companies can still invest, SOEs and local enterprises will play a more significant role in Indonesia’s mining sector. Strategic partnerships with local entities may be essential for securing new licenses and operational stability. 

Long-Term Stability in Coal Mining 

The extension of Coal Contracts of Work (CCoW) ensures that major coal players can operate for an additional 20 years. This stability benefits domestic and international stakeholders in Indonesia’s coal supply chain. 

New Regulations to Watch 

Supporting regulations for land use, overlapping permits, and domestic sales mandates are expected within six months. Investors should closely monitor policy updates to adapt their business strategies accordingly. 

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Get Started in Indonesia’s Mining Industry with InCorp 

Indonesia’s new mining law signals a significant shift in the country’s resource management strategy. While strengthening government control and local industry participation, it also creates opportunities for foreign investors in mineral processing, green energy, and long-term coal operations.  

Legal compliance and proper business registration are crucial for companies looking to invest or expand in Indonesia’s mining sector. To simplify the process, leverage InCorp (an Ascentium Company) expertise in: 

  • Company Registration: Get your business legally established in Indonesia with expert assistance in structuring your company for mining and industrial operations. 
  • Business License: Secure the necessary permits and licenses to operate in Indonesia’s regulated mining sector without hassle. 

Capitalize on Indonesia’s growing mining opportunities while ensuring compliance with the latest regulations by completing the form below. 

Daris Salam

COO Indonesia at InCorp Indonesia

With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships.

Get in touch with us.

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Frequent Asked Questions

As their names suggest, the main differences between the three business kinds in Indonesia lie in the businesses and the purpose of their incorporation. Local company owners (PT) must be Indonesian citizens, as even 1 percent of foreign ownership is not allowed. This type of company is not limited to entering any business field, and restrictions on incorporation are not so tight. On the contrary, a foreign-owned company (PT PMA) is open to international investors, but the maximal percentage of foreign shares differs in various business sectors. Contact InCorp to get the most updated information on the Negative Investment List. International investors tend to open representative offices as a first step to understanding the Indonesian market before setting up a limited liability company. This type is used for marketing and promotion activities and needs the right to sell directly and receive income.

There are three things business owners need to consider before setting up a business in Indonesia: the type of business entity, capital requirements, and regulations.

Indonesian regulations separate local companies from foreign companies. Generally, foreign-owned companies (PT PMA) have more limitations than their local counterparts (Local PT). However, to pursue more foreign direct investment in the country, the government has taken several bold initiatives to increase the ease of doing business and provide numerous attractive incentives for foreign investors.

Yes, this mainly applies to import and export businesses. Instead of establishing a company, you can use an under-name import service, an importer of record.

It should take between 30 to 45 days.