Most foreign buyers arrive in Indonesia with one permission in mind: the mining licence. But a licence is only half the right to mine. If the ground sits inside the national forest estate — and much of Indonesia's mineral ground does — the holder needs a second, separate approval from the ministry that owns forest land, and that approval is a different instrument with its own rules, its own levy and its own failure mode.
This explainer covers Indonesia mining in forest areas: which forest classes can be mined at all, what the forest-area approval does and does not give, how the levy is calculated, and the obligations that outlive the approval. Every rule below is taken from Government Regulation (PP) No. 23 of 2021 on the Implementation of Forestry Affairs, read in the official copy published by the Supreme Audit Agency's legal database, with the levy mechanics cross-checked against a 2025 implementing regulation as summarised by Indonesian counsel.
Two permissions, two ministries
The forest estate is land the state has designated to be kept as forest. Mining inside it is legal, but only through the narrow channel the regulation opens:
Pasal 89 — the use of forest area exists to regulate the use of part of the forest estate for development purposes outside forestry. Pasal 90(1) — such use may be carried out only inside Production Forest and/or Protection Forest.
Two definitions do the heavy lifting. *Penggunaan Kawasan Hutan* is use of part of the estate without changing its function and designation (Pasal 1 angka 31). *Pelepasan Kawasan Hutan* — release — is the conversion of convertible production forest, or permanent production forest, into non-forest land (Pasal 1 angka 29). Mining is an activity that expects its ground back, or at least expects the forest to remain forest in law; the regulation therefore routes it through the approval, not the release. That distinction is the reason the estate's legal status survives the mine.
The approving authority is the Minister (Pasal 96(1)), acting on an application, and the regulation lets the Minister delegate approval for a limited area to governors for non-commercial public facilities and for *pertambangan rakyat* — people's mining (Pasal 96(2)). Applicants can be ministries, regional heads, the leadership of a legal entity, or individuals, groups and communities (Pasal 97(1)), on administrative and technical requirements (Pasal 97(2)); the Minister then assesses and either rejects or issues (Pasal 98).
What can be mined, and how
Pasal 92 is the single most expensive paragraph in the regulation for a project planner, because it decides whether an open pit is possible at all.
| Forest class | Open-pit mining | Underground mining |
|---|---|---|
| Production Forest (Hutan Produksi) | Permitted | Permitted |
| Protection Forest (Hutan Lindung) | Not permitted | Permitted, with conditions |
In Protection Forest the underground operation is barred from causing (a) subsidence of the land surface, (b) permanent change to the forest's principal function, and/or (c) damage to the groundwater aquifer (Pasal 92(1)(b)). There is an exception, and it is narrow: the prohibition does not apply to a mining activity whose environmental document has already assessed that it will cause subsidence, permanent functional change or aquifer disturbance, and which includes the measures to minimise that impact (Pasal 92(2)).
Read together, those two paragraphs tell an investor something specific. Ground inside Protection Forest is not closed to mining, but it is closed to the mining method most Indonesian mineral projects are built on. A deposit that only works as an open pit is, in Protection Forest, not a project — and a deposit that works underground has to survive an environmental assessment that concedes its own subsidence and aquifer effects up front.
The classes that are absent from Pasal 90 matter just as much: conservation forest is not on the list. Use of the estate is a channel for production and protection forest, not a general licence to mine wherever the geology is good.
What the approval actually gives you
A forest-area approval is broader than a piece of paper permitting occupation. Under Pasal 94(2) it also operates as approval to utilise timber and as approval to bring in and use equipment. Felling to open the ground is then charged: Pasal 102 allows the holder to cut trees to clear land on payment of *PSDH* (forest resource provision) and/or *DR* (reforestation fund) under the prevailing rules.
It is also not the instrument for a permanent facility. Where land acquisition is done by a non-government party for a national priority project, Pasal 94(3)(b) sends permanent use down the release route and reserves the approval route for temporary use, or for cases where the approval avoids fragmenting the estate and can be part of forest management.
The money: two levies, two rhythms
Inside the approval there is a geographic test that decides how much the holder pays. Provinces are treated as either having forest area beyond their minimum requirement, or falling short of it:
- In a province with more forest than required, the holder pays PNBP for the use of forest area (Pasal 94(5)).
- In a province short of forest area, the holder pays that and an additional PNBP compensation (Pasal 94(6)).
Pasal 94(8) exempts a defined set of uses — defence, maritime and air safety, meteorological services, survey and exploration, temporary disaster shelter, non-commercial government infrastructure, religious sites, and non-commercial national strategic, economic-recovery, food and energy programmes — from the levies and from the watershed-rehabilitation planting duty.
The mechanics of those two levies were set out later. Minister of Forestry Regulation No. 14 of 2025 (MOFR 14/2025), effective 29 July 2025, implements the PNBP provisions of PP 23/2021 and PP No. 36 of 2024, and per the client alert published by Indonesian law firm MKK in October 2025 it does four things a holder has to model:
- Different rhythms. The forest-use levy is paid annually for the life of the approval; the compensation levy is paid once for the whole term.
- A classification of the ground. The forest-use levy is charged on the whole approved area but weighted by how the land is used: L1 for permanent supporting facilities, L2 for temporary use and/or significant environmental impact, and L3 for land permanently damaged and requiring reclamation to the greatest extent possible.
- A formula. Forest-use levy = (L1 × 1 × rate) + (L2 × 4 × rate) + (L3 × 7 × rate); compensation levy = approved area × rate. The rate itself follows the prevailing forestry PNBP tariff.
- A reporting deadline. Holders report payment compliance and supporting data to the Directorate General of Forestry Planning through the forest-area information system annually, no later than 30 calendar days before the payment falls due — and the levy also reaches permits still valid at the transition, including, for pre-1999 use, retroactively.
That weighting is the part worth underlining: the same hectare costs one unit, four units or seven units depending on which class it falls into, so the split between permanent facilities, temporary workings and permanently damaged ground is a cost decision, not an accounting detail.
The obligations, and the deadline that voids the approval
Pasal 99(1) lists what an approval holder must do: demarcate the approved area; pay the forest-use levy; plant for watershed rehabilitation; pay the compensation levy where the province is short of forest; carry out forest protection; reclaim and/or reforest forest area that is no longer used; reimburse the investment cost of the forest-management permit holder or manager; and meet any further obligation the Minister sets.
The demarcation duty is the one with a cliff attached. Under Pasal 99(2) the boundary must be completed within one year of the approval being issued, and that period cannot be extended; only where the holder is a government body, a state-owned enterprise, a regionally owned enterprise or a village-owned enterprise may it be extended, by up to one more year (Pasal 99(3)). Miss it, and the approval is cancelled and declared invalid (Pasal 99(5)). Until the boundary is set, the holder is barred from working the area at all, save for preparation such as building a site office or surveying (Pasal 103(1)(d)).
Three further prohibitions in Pasal 103(1) shape how a deal can be structured: the holder may not transfer the approval or change the named holder without the Minister's approval; may not pledge or collateralise the approved area; and may not use mercury in mining.
Term, evaluation and what survives expiry
The approval's term is tied to the underlying business licence (Pasal 104(1)); where no business licence is required it runs up to 20 years and may be extended on evaluation (Pasal 104(2)). The Minister evaluates it once every five years or at any time if needed (Pasal 104(4)), and revokes it where the holder is no longer using the forest area in line with the approval (Pasal 104(5)). It also ends on expiry, on revocation, on a court decision, or on voluntary hand-back by written statement (Pasal 106(1)).
Expiry is not an exit from the bill. Pasal 107(1) keeps alive the duties to pay the forest-use levy, to pay compensation where applicable, to plant for watershed rehabilitation or reforest compensation land, to reclaim and reforest forest area no longer used, to pay PSDH and DR, and to meet other conditions of the approval. Movable goods must be removed from the forest within six months of the approval ending or of reclamation being judged successful, failing which they are auctioned (Pasal 107(3)–(4)).
There is also a route for old unauthorised occupation: use of forest area without a forestry permit, carried out before Law No. 11 of 2020, can still be given an approval once the administrative sanction has been satisfied (Pasal 95(1)) — covering plantation, other activities such as oil and gas, power, geothermal infrastructure, ponds, agriculture, settlements and nature tourism, and the activities in Pasal 91(2).
Why it matters for a foreign investor
- Check the forest function map before the geology. Pasal 90 confines mining to production and protection forest; the resource model is worth nothing on ground that sits in a class the regulation does not open.
- Method risk is contained in one article. Protection Forest plus an open-pit design is a dead combination (Pasal 92(1)(b)); the only way through is a design that goes underground and an environmental document that already owns its subsidence and aquifer effects (Pasal 92(2)).
- The one-year boundary deadline is a hard cliff. It is short, it is not extendable for a private holder, and the sanction is cancellation of the approval, not a fine (Pasal 99(2), (5)).
- Two levies with different rhythms and a usage-weighted formula. An annual charge for the life of the approval plus a one-off compensation charge in forest-short provinces, weighted 1:4:7 across land-use classes (Pasal 94(5)–(6); MOFR 14/2025 as summarised by MKK). Both belong in the cash-flow model, not in the legal budget.
- The approval is not a transferable asset. No transfer, no change of holder and no pledge without the Minister's approval (Pasal 103(1)). A share acquisition is the practical route to control, and the change-of-control question has to be put to the ministry rather than assumed.
- The forest-side bill survives the mine. Reclamation, reforestation, planting and levies are not extinguished by expiry (Pasal 107(1)), and goods left behind are auctioned after six months (Pasal 107(3)–(4)). Closure costing has to carry the forest obligations, not just the mining ones.
Catatan Teramine
*This section is Teramine's editorial assessment, not a statement from any government body and not a recommendation.*
What stands out in PP 23/2021 is how deliberately the regulation separates *using* forest from *converting* it. The estate keeps its legal status; the holder gets a time-bound, non-transferable, usage-weighted right to occupy part of it, and loses that right administratively — not criminally — if it fails to walk the boundary within a year. For an investor, that produces an unusual risk profile: the approval is cheap to lose and hard to move, so the diligence question is less "is the permit in the data room" and more "when was it issued, has the boundary been set, and what does the forest function map say about the pit design we have priced". Our assessment is that the boundary deadline and the protection-forest method restriction are the two items most often treated as paperwork and most likely to decide whether a project can be built as modelled. The levy reform of 2025 sharpens this: a usage-weighted annual charge makes the difference between temporary workings and permanent facilities a recurring cost line, which should push design decisions earlier in the feasibility study.
What we could not verify
- The text of MOFR 14/2025 itself. The levy mechanics above (annual versus one-off payment, the L1/L2/L3 weighting, the 1:4:7 formula and the 30-day reporting deadline) are taken from MKK's October 2025 client alert summarising the regulation. We did not read the regulation's own articles, and the tariff rate itself is set elsewhere in the forestry PNBP rules.
- Any area quota. Rules on the maximum share of a forest block that may be approved for mining circulate widely in secondary commentary and trace to earlier ministerial regulations; we did not read a current text and have therefore reported no percentage.
- How much of Indonesia's mineral ground is forest-classified. No figure is given here because no figure was read in a source for this article.
- Enforcement practice. The text states the sanctions; we read no data on how often approvals have been cancelled for a missed boundary.
- Any company, project, reserve or production figure. This article describes rules and names no operating company.
Sources
- Government Regulation (Peraturan Pemerintah) No. 23 of 2021 on the Implementation of Forestry Affairs — official copy on the legal database of the Supreme Audit Agency (peraturan.bpk.go.id). Read for: Pasal 1 angka 29–32 (definitions of release, use of forest area and forest-area approval); Pasal 89–90 (purpose; use confined to Production Forest and Protection Forest, without changing principal function); Pasal 91 (strategic and unavoidable purposes, including mining); Pasal 92 (open-pit and underground mining by forest class, the protection-forest prohibitions on subsidence, permanent functional change and aquifer damage, and the environmental-document exception); Pasal 94 (approval as the instrument, its effect as timber-utilisation and equipment-import approval, the release route for permanent use, the forest-sufficiency test, PNBP use and compensation levies, the watershed-rehabilitation planting duty, and the exemptions); Pasal 95 (legalising pre-2020 unlicensed use after administrative sanction); Pasal 96–98 (approving authority, delegation to governors, applicants and requirements, assessment); Pasal 99 (holder obligations, the one-year non-extendable demarcation deadline and its limited extension for state and regional entities, and cancellation on failure); Pasal 102 (felling on payment of PSDH and DR); Pasal 103 (prohibitions on transfer, pledge, mercury and pre-demarcation activity); Pasal 104 (term tied to the business licence, the 20-year ceiling, five-yearly evaluation and revocation); Pasal 106–107 (how the approval ends; obligations surviving expiry; removal of movable goods within six months and auction).
- MKK Law client alert, "New Implementing Regulation on Levy for the use of Forests for Non-Forestry Activities such as Mining", October 2025 — read for the existence, effective date (29 July 2025) and content of Minister of Forestry Regulation No. 14 of 2025: the two PNBP types, annual payment of the forest-use levy against one-off payment of the compensation levy, the L1/L2/L3 object classification, the calculation formulas, the annual reporting duty 30 days before the due date, and its transitional application to still-valid permits.
- Forest Digest, "Regulasi Pertambangan dalam Kawasan Hutan" (Pramono Dwi Susetyo), 4 August 2024 — used only for the regulatory framing that mining in forest area runs through the forest-area approval issued by the ministry holding the forestry portfolio, that it is the successor instrument to the borrow-use permit (*izin pinjam pakai kawasan hutan*), and that the approval route is the one a mining holder uses as against release.
For the permit, document and compliance work behind this framework — the licence filings, the RKAB package and the environmental documents — see our [permit services](/en/layanan-izin) page. Mining assets currently listed are on the [mining marketplace](/en/marketplace).
Read this alongside the licence framework it sits inside, [IUP vs IUPK](/en/news/iup-vs-iupk) and [Indonesia's mining law](/en/news/indonesia-mining-law); the annual work plan that carries the forest and reclamation budget, [what the RKAB is](/en/news/what-is-rkab-indonesia); what the state charges before the forest levy, [Indonesia mining royalties](/en/news/indonesia-mining-royalties); the end-of-mine obligations that run beside the forest ones, [mine closure in Indonesia](/en/news/mine-closure-in-indonesia); the residue side, [Indonesia mine tailings management](/en/news/indonesia-mine-tailings-management); and the water duties on the same ground, [Indonesia mining water management](/en/news/indonesia-mine-water-management).
