Indonesia Mining Sector Reform
On February 18, 2025, Indonesia’s parliament passed the revised Fourth Amendment to the Mineral and Coal Mining Law (UU Minerba), marking a significant shift in the country’s regulatory landscape. While the amendment introduces potential new partnership opportunities for U.S. companies specializing in mineral processing technologies, equipment manufacturing, and industrial project development, it also presents notable challenges that U.S. firms will need to navigate. The amendment claims to improve governance, enhance legal certainty, and support domestic mineral processing and downstream industries—factors that can benefit American firms looking to expand their presence in Indonesia’s mining economy. However, concerns remain that the revisions move the sector away from transparency and toward more discretionary issuance of mining licenses.
One of the most notable changes introduced by the amendment is a more local, inclusive approach to mining concessions. The new provisions prioritize the granting of mining permits—specifically WIUP (Mining Business License Area) and WIUPK (Special Mining Business License Area) licenses— cooperatives, small- and medium-enterprises (SMEs), and business entities owned by religious organizations, engaged in economic activity. State-owned enterprises (SOEs) and large Indonesian companies will now partner with SME concession holders, rather than holding the concessions directly. For U.S. companies, this development underscores the need to identify suitable local partners, as opportunities will increasingly flow through these SME-led concession holders, rather than directly through major players or SOEs.
It is important to note that the sector was already effectively closed to foreign majority ownership, given the existing requirement for foreign mining companies to divest at least 51 percent of ownership to Indonesian interests. As such, the amended law continues to reinforce policies favoring Indonesian control over mining assets, while formalizing new structures of partnership.
The revised law also aligns with Indonesia’s broader national objective of industrializing its mineral economy by emphasizing downstream development. Under the new framework, mining areas will be preferentially allocated to companies that invest in value-added processing, such as smelting and refining. However, U.S. firms have consistently flagged the downstreaming requirements introduced in the 2014 law and reinforced in these revisions as a continued challenge, potentially increasing the cost and complexity of market entry. Furthermore, the law reinforces Indonesia’s commitment to ensuring a stable coal supply for domestic use through the Domestic Market Obligation (DMO). While this provision continues to limit export flexibility, as companies will be required to prioritize domestic supply commitments before exporting, it may also create opportunities for U.S. companies offering solutions in coal handling, pollution control, and process efficiency to support Indonesia’s domestic consumption goals.
Overall, the UU Minerba presents a complex mix of opportunities and risks for U.S. companies seeking to operate in or partner with Indonesia’s mining sector. With its focus on inclusivity, value-added processing, and domestic industrial demand—but also a trend toward more discretionary licensing and market restrictions—the revised law creates both openings and obstacles. The U.S. Commercial Service in Indonesia stands ready to assist American firms in navigating this evolving landscape, identifying local partners, and seizing emerging opportunities.
For more information or support, companies may contact Commercial Specialist Helda Sitorus at helda.sitorus@trade.gov.