Indonesia Mining Law: What Law 4/2009 Governs and How Its Four Amendments Changed It

Almost every question a foreign investor asks about Indonesian mining — may I hold this ground, for how long, and on what terms — is answered, at root, by a single statute: Law No. 4 of 2009 on Mineral and Coal Mining, known as the *Undang-Undang Minerba*.

It is not a static document. Since 2009 the law has been amended four times, and the most recent amendment — Law No. 2 of 2025, which took effect on 19 March 2025 — rewrote the rules for granting mining areas, hardened the environmental conditions attached to a licence, and changed how the old-generation Contracts of Work are extended. This article maps the statute as it now stands: what it governs, the instruments it creates, who may hold each, and what the 2025 amendment changed. It is a map of the law, not a licence-application guide.

What the law is, and what it replaced

Law 4/2009 was enacted on 12 January 2009 (State Gazette 2009 No. 4). It replaced a single earlier statute: Law No. 11 of 1967 on the Basic Provisions of Mining, which the 2009 law repealed outright (Pasal 173). The 1967 law had been the frame for the Contract of Work system that governed most foreign mining investment for four decades — so the 2009 law is the dividing line between the contract era and the licence era.

Its constitutional footing is Article 33 of the 1945 Constitution, which the law's preamble cites directly: mineral and coal are to be controlled by the state and used for the greatest prosperity of the people.

That principle is carried into the operative text. Under Pasal 4, as amended, mineral and coal are non-renewable natural wealth and a national asset controlled by the state, with that control exercised by the Central Government through the functions of policy, regulation, administration, management and supervision. Pasal 5 gives the Central Government the power to set a national policy of prioritising mineral and coal for domestic needs, and to determine production volumes, sales and prices of metal minerals, certain non-metal minerals, and coal. Pasal 6 lists the Central Government's specific powers — including designating mining areas and issuing the business licences.

One line in that list is worth pausing on. Pasal 6(3) provides that the Central Government sets the investment-value threshold or the shareholding percentage for a foreign-invested company operating in mining. In other words, the statute does not fix a foreign-ownership ceiling itself; it delegates the question to the government of the day. That is the statutory hook behind the capital-ownership rules an investor meets in practice. (For how that plays out, see our explainer on [foreign ownership in Indonesian mining](/en/news/foreign-ownership-indonesian-mining).)

The instruments the law creates

Mining activity in Indonesia is carried out under a business licence — *Perizinan Berusaha* — granted by the Central Government. Pasal 35, as amended in 2025, sets the framework: the licence is issued through a business identification number, a standard certificate and/or a licence, and the "licence" category is a closed list — IUP, IUPK, IUPK as Continuation of Contract/Agreement Operation, IPR, SIPB, assignment licence, transport-and-sales licence, IUJP, and IUP for sale. All of it runs through the integrated electronic licensing system (Pasal 35(5)).

For an investor, the two that matter are the IUP and the IUPK.

Two older instruments sit outside that list but still exist on the ground: the Kontrak Karya (KK), the contract of work used for foreign metal-mining investment, and the Perjanjian Karya Pengusahaan Pertambangan Batubara (PKP2B), the coal equivalent. Pasal 169 states that KK and PKP2B in existence when the 2009 law took effect remain valid until their own term expires — which is why, years on, both contract forms are still encountered.

An area is awarded, not applied for

A metal-mineral or coal licence is not granted over ground of the applicant's choosing. The state first designates the ground — the WIUP — and it is awarded.

That award route changed in 2025. Under Pasal 51 (metal minerals) and Pasal 60 (coal), as amended by Law 2/2025, a WIUP is given to a business entity, a cooperative, an individual company, or an entity owned by a religious mass organisation — by public auction, or by priority allocation. The priority route weighs the size of the area, the empowerment of cooperatives and small and medium enterprises, and the strengthening of religious organisations' economic role; a separate priority channel exists where the area is granted for downstreaming (hilirisasi). The detailed mechanics of the auction are set out in our explainer [Indonesia's mining licence auction](/en/news/indonesia-mining-licence-auction).

The special area, the WIUPK, follows a different rule. Under Pasal 74, as amended, an IUPK is granted by the Central Government, for one type of metal mineral or coal in one WIUPK. Pasal 75, also amended in 2025, lists the eligible holders — BUMN (state-owned enterprises), BUMD (regionally owned enterprises), cooperatives, small and medium enterprises, entities owned by religious mass organisations, and private companies. The first five categories receive priority; a private company obtains a WIUPK by auction. A new article, Pasal 75A, adds a priority channel for areas granted for the benefit of higher education — to a BUMN, BUMD or private company working with a university, with a share of profit going to the university and the state audit board (BPK) auditing the arrangement.

How long a licence lasts

Pasal 47, as amended in 2025, sets the terms for the Operation Production stage. The 2025 amendment adds a word that matters: holders now "dijamin memperoleh perpanjangan" — are guaranteed to obtain the stated extension rounds — provided they meet the conditions.

The structure of that table is the policy: an operation that builds domestic processing is offered a longer runway than one that only extracts.

The four amendments

Law 4/2009 has been amended four times. The fourth amendment's own preamble lists the three that came before it, which is where the chain below is taken from.

A reader should treat this as a chain, not a replacement. Law 2/2025 did not write a new mining law; it amended articles of the 2009 statute, which itself already carried the changes from 2020 and 2023.

What the fourth amendment (Law 2/2025) changed

Four themes run through the amendment, all of them visible in the articles cited above and in the law's official abstract.

1. Priority granting of areas. The biggest structural change is that a metal-mineral or coal area can now be allocated by priority rather than only auctioned — to cooperatives, small and medium enterprises, entities owned by religious mass organisations, and (through new Pasal 75A) university-linked vehicles. The abstract describes this as a move toward "equitable distribution of economic benefit and strengthening of regional economies."

2. Security of extension. Article 47 now guarantees the stated extension rounds on meeting conditions, and gives longer terms — up to 30 years — to projects integrated with domestic processing or downstreaming.

3. A harder environmental floor. Under Pasal 100, as amended, an IUP or IUPK holder must provide and place a reclamation guarantee fund and/or a post-mining guarantee fund, with the amount set by the Minister. The Minister must involve the regional government, and — new in 2025 — may appoint a third party to carry out reclamation or post-mining work using that fund where the holder does not perform its obligation.

4. Converting the old contracts. Pasal 169A, amended in 2025, allows a KK or PKP2B to be extended as an "IUPK as Continuation of Contract/Agreement Operation". A contract that has not yet been extended may be extended twice, each for up to 10 years; a contract already in its first extension may receive a second extension of up to 10 years. Two conditions are now explicit: the extension is carried out only after an environmental audit, and it accounts for increased state revenue (through re-setting tax and non-tax charges and/or the area of the continuation IUPK). A coal continuation holder must also carry out coal development and/or utilisation domestically.

What it means for a foreign investor

Six things follow from the statute as it stands.

1. The law, not the contract, is now the frame. Entry is either by obtaining a licence (IUP or IUPK) or by acquiring a company that already holds one. The contract-of-work route is closed to new entrants and is being wound down into IUPK form.
2. Foreign participation is a policy variable, not a fixed number. Pasal 6(3) leaves the ownership threshold to the Central Government, so the rules can move without amending the statute.
3. There is now a priority lane ahead of the auction. Cooperatives, SMEs, religious-organisation entities, university-linked vehicles and downstreaming projects can receive ground before a foreign private bidder reaches an auction.
4. Extensions are more secure on paper — but conditioned. The guaranteed-extension language is a real improvement in legal certainty; it is still contingent on meeting the conditions attached.
5. Environment is now a funded obligation with a substitution right. The guarantee fund and the Minister's power to appoint a third party are the tools that make post-mining liability enforceable.
6. Legacy contracts convert, with conditions. The route into IUPK form runs through an environmental audit and a revenue reset, and coal continuation brings a domestic-processing duty.

Catatan Teramine

*This section is Teramine's editorial assessment, not a statement from any government body and not a recommendation.*

The most useful way to read the 2025 amendment is as a distributional choice. The 2021 implementing regulation had already opened a priority channel for special areas; the 2025 amendment generalises the idea to ordinary metal and coal areas and adds the two constituencies the state most wants to bring inside the mining economy — cooperatives and small enterprises on one side, religious and university-linked organisations on the other. For a foreign private investor, that is the substantive change: a portion of ground that would once have reached an auction can now be allocated before it gets there. The auction remains the route for a well-capitalised private bidder, but it is no longer the only door — and, for some blocks, it is the second door.

The second signal is in the extension language. "Dijamin memperoleh perpanjangan" — guaranteed to obtain the extension — converted a discretionary renewal into something closer to an entitlement, and attached it to domestic processing: the longest terms, 30 years plus 10-year extensions, are reserved for projects integrated with processing or downstreaming. Read together with the revenue-reset condition on the old contracts, the amendment is exchanging certainty for commitment: the state is willing to lengthen the runway, but it wants the smelter and the additional revenue in return.

The honest caveat is that most of this runs through implementing regulations. The act repeatedly delegates the mechanics — the priority criteria, the auction rules, the guarantee-fund formula — to Government Regulations, and how strictly the priority verification is applied will decide whether the auction stays the main channel or becomes the residual one. On the text alone, both routes now exist; which dominates is a question the next year of awards will answer.

Where the question turns transactional — buying an existing licence holder rather than bidding for a new area — the listed inventory sits on the [mining marketplace](/en/marketplace). Where it is permit or filing work against a licence — the IUP, the IUPK, the RKAB — that is handled through our [permit services](/en/layanan-izin).

What we could not verify

• The exact enactment date of Law No. 6/2023. We read its citation inside Law 2/2025 (State Gazette 2023 No. 41) but did not open Law 6/2023 itself on JDIH ESDM, so the timeline gives its year only.
• Whether the implementing Government Regulations — above all PP No. 96/2021 and its amendments — have been fully conformed to Law 2/2025. The act delegates the priority and auction mechanics to a Government Regulation, and we did not read a post-2025 amendment to PP 96/2021.
• The formula for the reclamation and post-mining guarantee funds under Pasal 100. The amount is set by the Minister; the calculation method was not in the statute text we read.
• Any specific licence, company, area or award. This article describes the law as written; it reports no live transaction.

Sources

Every claim above comes from the documents below, each downloaded from the legal information portal of the Ministry of Energy and Mineral Resources (JDIH ESDM) and read for this article.

• Law (Undang-Undang) No. 4 of 2009 on Mineral and Coal Mining, dated 12 January 2009 (State Gazette 2009 No. 4; Supplementary Gazette No. 4959) — read for: the law's enactment and the repeal of Law 11/1967 (Pasal 173); the statement of state control and the constitutional footing (Pasal 4-6, base text); the licence instruments and their stages, including IUP (Pasal 35-38) and its two stages (Pasal 36); the Operation Production terms (Pasal 47); the IUPK grant rules and the priority of state and regional enterprises (Pasal 74-76); the IPR provisions (Pasal 66-73); and the transitional treatment of Contracts of Work and PKP2B (Pasal 169-172).
• Law No. 3 of 2020 on the Amendment to Law No. 4 of 2009 on Mineral and Coal Mining, dated 10 June 2020 (State Gazette 2020 No. 147; Supplementary Gazette No. 6525) — read for the current text of Pasal 4 (state control exercised by the Central Government), Pasal 5 (domestic-priority policy; authority over production, sales and prices), Pasal 6 (central-government powers, including Pasal 6(3) on the foreign-investment threshold or shareholding percentage), the reworked Pasal 35 (mining carried out under a central-government business licence) and Pasal 36, and the amended Pasal 75 (IUPK holders and priority).
• Law No. 11 of 2020 on Job Creation (Cipta Kerja), dated 2 November 2020 (State Gazette 2020 No. 245; Supplementary Gazette No. 6573) — read for the omnibus amendment to the Mining Law.
• Law No. 2 of 2025 on the Fourth Amendment to Law No. 4 of 2009 on Mineral and Coal Mining, dated and in force 19 March 2025 (State Gazette 2025 No. 29) — read for: the amendment chain named in its preamble and Pasal I (Law 3/2020, Law 11/2020, Law 6/2023); the restated Pasal 1 definitions; the amended Pasal 35 (licence types; integrated electronic licensing); the amended Pasal 47 (guaranteed extensions; 30-year integrated terms); the amended Pasal 51 and Pasal 60 (WIUP by auction or priority allocation, with the priority criteria); the amended Pasal 74 and Pasal 75 (IUPK holders and priority); new Pasal 75A (priority for higher-education purposes); the amended Pasal 100 (reclamation and post-mining guarantee funds; third-party substitution); and the amended Pasal 169A (KK/PKP2B extended as IUPK as Continuation of Contract/Agreement Operation, after an environmental audit, with a revenue reset). Its official abstract (document 2025absuu2) was read for the summary of the amendment's purpose.