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Implementation of Mineral and Coal Mining Services Business.

Worker examining pile of coal at mineRegulation of Minister of Energy and Mineral Resources Number 28 of 2009 on Implementation of Mineral and Coal Mining Services is amended by Regulation of Minister of Energy and Mineral Resources Number 24 of 2012 (“RM on Mining Services”). There are some material provisions that are covered in Regulation of Minister of Energy and Mineral Resources Number 24 of 2012.

Engagement and Activity of Mining Services

Under Article 10 RM on Mining Services, it is stated that the holder of Mining Business Permit (“IUP”) or Special Mining Business Permit of Operation Production (“IUPK OP”) should perform its own mining activity. However, the holder of IUP or IUPK OP is able to delegate the obligation to perform its mining activity to other service mining company for stripping activity of rock or soil cover. The stripping activity consists of activity of excavation, loading and removal of rock or soil cover’s layer with or without prior explosion.

Further, the holder of IUP or IUPK OP of underground mining is able to transfer its task to other tunneling service mining company for making tunnel access or shaft to vein ore/steam coal, distribution and ventilation.

State-owned Enterprises (“BUMN”) or Regional owned Enterprises (“BUMD”) that holds IUP or IUPK OP is able to delegate its mining activity to local service mining company or to the community in mining area through partnership for excavation of tin alluvial sediment after its partnership proposal has been approved by Minister of Energy and Mineral Resources.

Pursuant to Article 10 paragraph (6) RM on Mining Services, the holder of IUP or IUPK OP is able to rent heavy equipment provided by the company holding the registered letter (“SKT”).

Licensing

According to Article 17 paragraph (1) of RM on Mining Services, a Mining Services License (“IUJP”) or SKT shall be issued for a period of 5 (five) years and may be extended. The application for extension of the IUJP or SKT shall be submitted at the latest 1 month prior to expiration of the IUJP or SKT.

IUJP or SKT shall be issued upon application for (i) new application, (ii) extension and/or (iii) revision. For revision, the application shall be submitted if there is any revision with respect to classification and/or qualification of mining business field. Further, IUJP or SKT that has been issued to a mining services business cannot be assigned to another party.

Foreign Employees

Pursuant to Article 22A RM on Mining Services, the holder of IUJP that will use foreign employees shall obtain permission from Minister of Manpower and Transmigration or appointed officer. Prior to obtaining permission from Minister of Manpower and Transmigration, the holder of IUJP shall obtain permission from Minister of Energy and Mineral Resources (“Minister”), governor or regent/mayor in accordance with their authority.

Obligation of Holder of IUJP or SKT

The holder of IUJP or SKT is obligated to do the following actions:

  1. Prioritizing the use of domestic product;
  2. Prioritizing the engagement of local subcontractor according to their capability;
  3. Prioritizing the use of local employees;
  4. Perform activities within their types and lines of business;
  5. Submit any documents of mining services contract with the holder of IUJP or SKT to Minister, governor or regent/mayor in accordance with their authority;
  6. Use efforts to manage the environment;
  7. Optimize local expenditures on either mining goods or services as required in the performance of their services business activities;
  8. Implement the requirements of occupational safety and health;
  9. Implement the community development and empowerment program that includes enhancement of education and training, health and local economic growth; and
  10. Prepare and submit a report on activities to the issuer of IUJP or SKT.

Administrative Sanction

Under Article 31 paragraph (1) RM on Mining Services, the competent Minister, governors or regent/mayor may impose administrative sanctions against IUJP or SKT’s holder that violates the following:

  1. Perform activities outside the scope as set forth in  IUJP or SKT;
  2. Fail to submit quarterly report and/or yearly report within 30 (thirty) working days after the end of period for 3 (three) consecutive times;
  3. Fail to meet obligation as set out in Article 23, 24, 25 and 26 of RM on Mining Services;
  4. Provide untrue data or forged documents; or
  5. Transfer IUJP or SKT to other party.

Administrative sanctions may take the following forms:

  1. Written warnings;
  2. Suspension of part or all of the activities of mining services; or
  3. Revocation of IUJP or SKT.
Implementation of Mineral and Coal Mining Services Business.
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