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Mining SOEs gain more privilege with recent court ruling
The Constitutional Court (MK) has revoked the special mining permit (IUPK) guarantee for the work of private-sector mineral and coal mine contract holders.
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A barge transporting coal is seen behind an angler casting his line at a beach in Banda Aceh, Aceh, during Earth Day on April 22, 2021. (AFP/Chaideer Mahyuddin)
S
tate-owned miners are poised to gain an even bigger presence in Indonesia’s mining industry after the Constitutional Court revoked last month an important guarantee for private mining giants.
The guarantee entailed extending the giants’ contracts to operate within highly lucrative special mining sites for up to 20 years, provided they met certain requirements, including undergoing a process to rename the contracts as special mining permits (IUPK).
The guarantee is enshrined in Article 169A of the 2020 Mining Law.
The court ruled on Oct. 27 that the article’s wording be changed from “guaranteed” into “could be given”, arguing that such an advantage for private companies “goes against the spirit of state control” over natural resources, a principle enshrined in the 1945 Constitution.
“The MK’s decision is a turning point in strengthening SOEs and ROEs [region-owned enterprises] in getting priority over the special mining permits,” said mining law expert Ahmad Redi of Tarumanagara University.
However, the greater legal protection also meant that regulators faced the potential challenge of corruption, rent seeking and weak governance within SOEs and ROEs, he said.
Lawmakers introduced the guarantee last year to provide legal certainty for big privately owned mineral miners and coal miners, whose contracts were nearing expiry, starting with coal giant PT Arutmin Indonesia in 2020.
