Indonesia is abundant in coal, nickel, and tin, making its mining industry a key part of its economy. The government has introduced several mining law reforms to manage these natural resources and attract investment.
These reforms bring both challenges and opportunities for businesses. Understanding the updated laws is crucial for investing or expanding in Indonesia’s mining sector. We will explore the key amendments, their impact, and future business opportunities.
Why Indonesia revises its mining industry laws
The new mining laws are designed to enhance local processing, strengthen state control over resources, attract investment, and align with global market trends. Below is a detailed breakdown of the key motivations behind the reforms:
Mandating Local Mineral Refining
One of the most significant changes is the requirement for mining companies to refine and process minerals domestically before export. This policy, known as “down streaming,” prevents the direct export of raw ores, ensuring that higher-value products are created within Indonesia.
By refining minerals locally, Indonesia generates more employment opportunities in the processing, logistics, and manufacturing sectors. Additionally, this reform supports industrial expansion, leading to the growth of related sectors such as steel, electric vehicle (EV) battery production, and infrastructure.
Stronger Resource Control
The revised laws give state-owned enterprises (SOEs) greater authority over key mining projects, reducing foreign dominance in the sector. This ensures that Indonesia retains more control over its natural resources and secures a larger share of mining profits.
Attracting Investment
The revised laws aim to remove ambiguities, providing clear guidelines on:
- Licensing procedures and tenure extensions.
- Taxation policies for mining companies.
- Mining operation standards and obligations.
Providing more transparent regulations makes Indonesia a more attractive destination for foreign direct investment (FDI). This is particularly important as the global demand for key minerals, such as nickel and cobalt (essential for EV batteries), continues to rise.
Sustainable Mining
The new laws enforce stricter environmental guidelines to ensure responsible mining practices. Mining companies must now rehabilitate mining sites after extraction, reducing environmental harm and ensuring that land can be reused for other purposes.
Global Market Trends
With the global demand for electric vehicles and renewable energy surging, Indonesia is positioning itself as a key supplier of essential minerals such as nickel, cobalt, and rare earth elements. By processing minerals locally, Indonesia can negotiate better export deals and ensure that its mineral wealth translates into long-term economic benefits.
Read more: 6 Key Insights into Indonesia’s Mining Industry
What are the previous amendments?
Before exploring the latest mining law reforms, we need to understand the previous amendments as the essential base of the current regulatory framework:
The 2009 Mining Law (Law No. 4/2009)
Indonesia’s mining industry was primarily governed by Law No. 4 of 2009 on Mineral and Coal Mining. This regulation previously included:
- Contract of Work (CoW) replacement with Mining Business Licenses (IUPs).
- Required mining companies to build domestic smelting and refining facilities.
- Prioritized state-owned enterprises (SOEs) in strategic mining projects.
- Limited foreign ownership, requiring gradual divestment to Indonesian entities.
While these were intended to increase government control and production, they also led to uncertainties for foreign investors due to evolving regulations and unclear implementation guidelines.
The 2020 Amendment (Law No. 3/2020)
To address concerns from investors, the Indonesian government introduced several mining law revisions in 2020:
- New mining permits, such as rock mining certificates, operation continuation IUPK, and licenses for radioactive material.
- Centralized licensing authority under the national government
- Gradual requirement for foreign companies to transfer 51% of their shares to Indonesian entities.
2025 key updates to Indonesia’s mining law
Indonesia’s veterinary sector is rapidly growing, offering new business opportunities driven by rising demand for pet care and livestock health. Several key areas are set to shape the industry’s future, including:
Priority Access to SMEs and Religious Groups
The new mining law regulations have extended its priority rights from only state-owned enterprises to these groups, including:
- Small and Medium-sized Enterprises (SMEs)
- Religious Groups (through a business entity controlled by the group)
- Cooperatives and Local Non-SME Private Businesses
However, universities are not included in the priority list but still receive benefits for research and scholarship funding through state-owned or private mining businesses on their behalf.
Prioritization of Domestic Sales
Indonesia’s mining law amendments prioritize selling minerals domestically over exports, aiming to boost local industries and attract investment.
- Domestic Market First: Companies must prioritize local sales before exporting.
- Supporting Green Industries: Ensures a steady supply of critical minerals to support the growth of EV batteries, solar panels, and green steel production.
- Attracting Foreign Investment: Mandates local processing and sales to attract international companies to establish production facilities in Indonesia.
Extended Mining Permits
Previously, holders of Coal Contract of Work (CCoW) could extend their contracts by 20 years if they had not been extended or by 10 years if they had already been extended.
Under the new mining regulation, all CCoW holders are now eligible for two 10-year extensions, regardless of prior extensions
Strict Land Use and Mining License
Under the 2025 amendment, the Indonesian government has established extended regulations on land use and licensing, such as:
- Stricter Land Use Regulations: Mining areas must remain unchanged.
- Tighter Licensing Rules: New mining licenses must comply with stricter land use policies.
- Specific Mining Area Criteria: Land designated for mining must meet requirements for resource availability, production capacity, and domestic needs
Opportunities of the new mining law
Indonesia’s mining reforms create business opportunities by boosting competitiveness, enforcing sustainability, and expanding compliance needs.
1. Increased Competitiveness
The updated mining law streamlines regulations to attract more foreign investment. Promoting sustainable practices enhances export value, increases transparency, and secures long-term resource availability.
2. Stricter Environmental Regulations
New rules on waste management and land reclamation enforce sustainability. To minimize environmental impact, companies must invest in community development, emission reduction, and renewable energy adoption.
3. Growth in Compliance & Sustainability
Rising demand for environmental consulting, regulatory compliance, and green mining tech creates new business opportunities. Stronger policies drive innovation in eco-friendly mining solutions.
Read more: Exploring opportunities from the largest nickel reserves in Indonesia
Outlook of the Indonesian mining industry
Indonesia’s updated mining laws aren’t just about stricter regulations—they also open doors for businesses looking to invest in a more competitive, sustainable, and responsible industry. From attracting foreign investment to boosting eco-friendly practices, these reforms create exciting opportunities across multiple sectors.
Technological advancements
With the global demand for key minerals like nickel and copper rising, companies that invest in local processing and supply chains will be well-positioned for success.
By simplifying regulations and providing more precise guidelines for licensing and operations, the new mining laws make Indonesia a more attractive destination for investors. This means:
- Easier access for foreign companies looking to enter the market.
- Increased transparency, reducing risks for businesses.
- Higher export value, especially for sustainably processed minerals.
Economic Growth
Businesses that offer environmental services, sustainable infrastructure, or green energy solutions will find growing demand in Indonesia’s evolving mining sector. While this means higher compliance standards for mining companies, it also creates new opportunities:
- Demand for eco-friendly mining technology, such as water treatment and emission control solutions.
- Growth in renewable energy adoption as mines shift toward solar, wind, and hybrid power.
- Community development programs, ensuring local benefits from mining operations.
Regulatory Transformation
The push for responsible mining means businesses focusing on sustainability and compliance will be more in demand than ever. As regulations tighten, companies must ensure compliance, increasing the demand for services that support legal, environmental, and technological adaptation. Key opportunities include:
- Consulting for regulatory compliance and sustainability reporting.
- Green mining innovations, such as low-carbon extraction methods.
- Digital solutions for monitoring and managing environmental impact.
Read more: Discovering the Future of the Coal Mining Industry in Java
Seize opportunities in Indonesia’s mining industry
To exploit Indonesia’s growing mining sector, businesses must comply with the updated local regulations. Our experts at InCorp Indonesia (An Ascentium Company) can provide valuable insights into Indonesia’s mining landscape to ensure seamless entry and smooth operations
Our comprehensive service includes:
- Company Registration: Set up your mining-related business efficiently with professional guidance on legal requirements, ownership structures, and tax obligations
- Business License: Obtain the necessary permits for exploration, extraction, and processing to ensure compliance with Indonesia’s updated regulatory framework.
Fill out the form today and secure your current position in the growing industry.
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The information is provided by PT. Cekindo Business International (“InCorp Indonesia/ we”) for general purpose only and we make no representations or warranties of any kind.
We do not act as an authorized government or non-government provider for official documents and services, which is issued by the Government of the Republic of Indonesia or its appointed officials. We do not promote any official government document or services of the Government of the Republic of Indonesia, including but not limited to, business identifiers, health and welfare assistance programs and benefits, unclaimed tax rebate, electronic travel visa and authorization, passports in this website.
Daris Salam
COO Indonesia at InCorp Indonesia
With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships.
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