Licensing matters within the minerals and mining sector are highly complex when compared with those governing other energy sectors, such as oil and gas, geothermal, etc. This complexity is primarily due to several factors, including the substantial involvement of regional government at the regency/mayoral levels as regards the issuance of licenses (although the latter such authority was abolished through the issuance of Law No. 23 of 2014 on Regional Level Government). Other problems have included non-compliance by mining companies in terms of them securing other related permits or approval from the environmental and forestry sectors, an excessive amount of license types, changes in cooperation regimes between government and mining companies as regards the conversion of Working Contracts (“KK”) and Coal-Mining Business Work Agreements (“PKP2B”) into Mining-Business Licenses (Izin Usaha Pertambangan – “IUP”)and so forth.
 
This general complexity and overlap as regards licensing matters has ultimately had an effect upon the levels of state revenue that the sector can generate. Indeed, the contribution of the mining sector to Indonesia’s Gross Domestic Product (GDP) steadily declined from 6.14% in 2011 to 4.23% in 2016.[1] In early 2017, the government set a somewhat ambitious target for annual state revenue generated through the mining sector of IDR 2.4 trillion, which represents an increase of 7.9% over last year’s target.
 
In order to increase economic growth as generated through this important sector, the government has now redefined several main provisions on minerals and coal mining. Earlier this year, the government finally put in place a new regime governing the conversion of KK and PKP2B into IUP. Moreover, just recently, the Ministry also issued a new regulation which alters and hopefully improves licensing matters within the mining sector, specifically Ministry Regulation No. 34 of 2017 on Licensing for the Minerals and Coal Sector (“Regulation 34/2017”).
 
Regulation 34/2017 repeals and replaces all previous regulations which set out various provisions relating to mining licensing matters (collectively referred to “Previous Regulations”), specifically:[2]