Draft Government Regulations in the Mining Sector - Mining Zones

Indonesian legislation has begun stipulating very definite time frames for the implementation of subordinate or subsidiary legislation that is required to clarify or give force to specific provisions in the primary law. In the Indonesian context this subordinate legislation is referred to as implementing regulations. The recent decision by the Tangerang District Court and the subsequent overturning of that decision by the Banten High Court in the Prita Mulyasari case highlights the importance of subordinate legislation, particularly with regards to application and enforcement.

Law No. 4 of 2009 on Mineral and Coal Mining (“Mining Law”) explicitly states that the implementing regulations must be in force no later than 12 January 2010. The government is intending to meet this date and has been working towards drafting, debating, confirming, and ultimately enacting the necessary implementing regulations. This has been very much a work-in-progress. The current word from the Department is that the implementing regulations are 90% complete.

The implementing regulations cover matters relating to reclamation, mining zones, implementation of business activities in the minerals and coal sector, and supervision in the minerals and coal sector.

Focusing on mining zones, the Mining Law requires that the central and regional governments work cooperatively with the House of Representatives in establishing mining zones. Basically, what constitutes a mining zone will be determined based on investigation and analysis of data collected under the auspices of the Minister of Energy and Mineral Resources in conjunction with the relevant regional authorities. The general focus of the investigation and analysis relates to six defined areas, among others: the geological environmental conditions; social, economical, and cultural aspects, as well as; the environment.

Once a mining zone has been established or defined, then this zone will become the reference point for the establishment of Mining Efforts Zones (Wilayah Usaha Pertambangan / WUP), Community Mining Zones (Wilayah Pertambangan Rakyat / WPR), and the State Reserves Zones (Wilayah Pencadangan Negara / WPN). With regards to WUP and WPN, both determinations are made pursuant to Article 16 of the Mining Zones Regulation. However the Mining Zones Regulation does not stipulate the criteria for determining a WPR, instead one has to return to Article 22 of the Mining Law to fully understand the criteria for a WPR.

The Mining Zones Regulation sets out that the distances and borders of the Mining Efforts Zone License (Wilayah Izin Usaha Pertambangan / WIUP) and the Special Mining Efforts License (Wilayah Izin Usaha Pertambangan Khusus / WIUPK). It is worth noting that these determinations are assessed in accordance to the following five criteria, among others, the geographical location and; the density of the local population. Nevertheless these assessments are different from those of WIUP and WIUPK that engage in non-metal minerals and ore mining activities. The criteria for the latter are currently unavailable as well, however the Mining Zones Regulation stipulates that it will be regulated by Ministerial Regulation.