Regulation Watch · Business Licensing · Indonesia, for mineral and coal IUP and IUPK holders and, mutatis mutandis, holders of IUPK as a continuation of contract or agreement operations, Contracts of Work and Coal Contracts of Work. Applications involving a governor-issued IUP may be submitted to the governor.
Mining Groups Need Approval Before Using Affiliate Contractors
Kepmen ESDM 365.K/MB.01/MEM.B/2026 requires mineral and coal mining licence holders to obtain Minister or governor approval before using a subsidiary or affiliate for mining services, with eligibility limited to specified government-assigned projects.
- Published
- Established by the Minister of Energy and Mineral Resources in Jakarta on 18 September 2026. The Ministry's official JDIH lists the decision as active and supplies the signed text, but records no separate State Gazette promulgation date or online publication date.
- Effective
- 18 September 2026. The decision states that it takes effect on the date it was established and provides no general transition or grace period.
- Added to Watch
- 6 October 2026
Who is affected
Indonesian mineral and coal IUP or IUPK holders, including PT PMA and PT PMDN mining companies; holders of IUPK continuation licences, Contracts of Work and Coal Contracts of Work; their foreign and domestic shareholders, directors and ultimate beneficial owners; subsidiaries or affiliates holding an IUJP mining-services licence; and project, procurement, legal, licensing, finance and compliance teams responsible for intragroup mining-service arrangements.
Practical impact
A mining licence holder may not involve a subsidiary or affiliate in mineral or coal mining services without prior approval. The decision treats the contractor as an affiliate where the mining licence holder directly owns shares in the IUJP holder or where the two entities share one or more ultimate beneficial owners. Approval is available only where the licence holder is carrying out a government assignment for a national strategic project, mineral processing or refining or coal development or utilization, or domestic mineral or coal supply. A complete and correct application is to be decided within 14 working days. Any approval is limited to the fields and subfields covered by the contractor's IUJP and lasts only until that IUJP expires. Mining licence holders must also prioritize mining-service companies located in the regency or city around the mining area.
The Minister of Energy and Mineral Resources established Kepmen ESDM 365.K/MB.01/MEM.B/2026 on 18 September 2026 and made it effective on the same date. The decision supplies the technical procedure for obtaining approval to use a subsidiary or affiliate in mineral and coal mining services. ESDM JDIH lists it as active and provides the signed text, but records no separate State Gazette promulgation date.
An IUP or IUPK holder must ordinarily use a licensed IUJP mining-services company and prioritize mining-service businesses located in the regency or city around the mining area. It may not involve a subsidiary or affiliate without prior approval. For this procedure, an affiliate relationship exists where the mining licence holder directly owns shares in the IUJP holder or where one or more ultimate beneficial owners are common to both entities.
The approval route is not a general permission for intragroup contracting. It is available only where the IUP or IUPK holder is carrying out a government assignment involving a national strategic project, development of mineral processing or refining facilities or coal development or utilization, or supply of minerals or coal for domestic needs. The application is submitted to the Minister; a holder of an IUP issued by a governor may apply to the governor.
The approving authority has 14 working days after receiving a complete and correct application. An approval can cover only the fields and subfields stated in the subsidiary's or affiliate's IUJP and remains valid only until that IUJP expires. The procedure also applies mutatis mutandis to an IUPK as a continuation of contract or agreement operations, a Contract of Work and a Coal Contract of Work.
Mining groups should now map direct ownership and common ultimate beneficial owners across every mining-service contractor, identify the government assignment supporting eligibility, verify IUJP scope and expiry, and obtain approval before covered work begins or continues. Existing intragroup arrangements operating from 18 September need an immediate file review because the decision provides no general transition period and revokes the former 2010 Director General procedure.
Late discovery: the instrument was established on 18 September but was not previously recorded in the Regulation Watch ledger. Its immediate effect, narrow eligibility test and direct impact on intragroup contractor appointments make it material for affected mining investors and operating companies.
Required action
- Map every proposed and existing mining-service contractor against the mining licence holder's direct shareholdings and ultimate beneficial owners; a different legal name does not remove the affiliate test where ownership or beneficial ownership overlaps.
- Confirm that each contractor holds a valid IUJP and that the planned work falls exactly within the IUJP fields and subfields, then calendar the IUJP expiry because an affiliate-use approval cannot outlast it.
- Determine and document whether the mining operation is covered by a qualifying government assignment for a national strategic project, processing or refining, coal development or utilization, or domestic supply before relying on the approval route.
- Submit the application and complete supporting documents to the Minister, or to the governor for a governor-issued IUP, before using the subsidiary or affiliate; allow for the 14-working-day decision period only after the file is complete and correct.
- Review procurement records and demonstrate that mining-service companies in the regency or city around the mining area were prioritized as required by the decision.
- Recheck intragroup mining-service contracts operating on or after 18 September 2026 and retain the government assignment, ownership and beneficial-ownership map, IUJP, application, approval, local-priority evidence and service contract in one compliance file.
- Do not rely on the revoked 2010 Director General procedure for a new engagement, and verify the continuing scope and validity of any legacy approval against the new decision before extending or changing the work.