Amendment to the Minerba Law Changes Provisions on KK and PKP2B Extensions

The Legislative Body of the House of Representatives of the Republic of Indonesia (Baleg DPR RI) has proposed the fourth amendment to Law No. 4 of 2009 on Mineral and Coal Mining (“Minerba Law”). The Draft Bill on Mineral and Coal Mining (“Minerba Bill”) contains several changes.

One significant amendment concerns the extension of Contract of Work (“KK”) and Coal Mining Concession Work Agreement (“PKP2B”) into Special Mining Business Permits (“IUPK”) for Contract/Agreement Continuation Operations.

According to the Minerba Bill document obtained by Hukumonline, Article 169A(1) modifies the provisions for KK and PKP2B extensions. The previous guarantee of extension has been replaced with the phrase “granted an extension.”

“KK and PKP2B as referred to in Article 169 may be granted an extension into an IUPK for Contract/Agreement Continuation Operations after meeting the prescribed requirements,” states Article 169A(1).

Article 169A(3) specifies that assets obtained during the implementation of PKP2B, which have been designated as state property, may still be used for coal mining operations, provided they comply with the applicable regulations. Meanwhile, Article 169A(4) emphasizes that IUPK holders must develop and/or utilize coal domestically in accordance with the relevant legislation.

Regarding the extension period, Article 169A(5) states that it can be granted for ten years with approval from the Minister of Energy and Mineral Resources.

“Holders of IUPK for Contract/Agreement Continuation Operations for coal mining commodities who have fulfilled the obligation to develop and/or utilize coal domestically in accordance with the approved development plan of the entire agreement area will be granted an extension of ten (10) years for each extension period, subject to compliance with the applicable regulations,” states Article 169A(5).