Mining Regulatory Reform under the Prabowo Government

Following the election of President Prabowo, who took up office in October 2024, the mining industry has been one of the key targets of regulatory reform for the Indonesian Government (GOI). Following the political success of Indonesia’s recent resource nationalisation and down-streaming policies, particularly in the nickel industry, the GOI has sought further ways to maximise returns from the Indonesian mining sector.

The key themes of the new administration in relation to the mining industry have been to:

• more tightly manage and control ore production;
• utilise the mining sector to help strengthen the Indonesian Rupiah;
• impose higher royalties to extract higher returns for the GOI from the mining sector; and
• further support Indonesia’s downstream program and movement up the industrial value chain, including Indonesia’s continuing ambition to be an important player in the production of electric vehicles. 

NEW LAW AND REGULATIONS

To support the new government’s policies, several new regulations have been issued, including a revision to Indonesia’s mining law:

• Law No. 2 of 2025 (enacted on 19 March 2025) on the Fourth Amendment to Law No. 4 of 2009 on Mineral and Coal Mining (the Amended Mining Law);
• Government Regulation No. 8 of 2025 (effective as of 1 March 2025) on Foreign Exchange Export Proceeds from the Business, Management and/or Processing of Natural Resources (GR 8/2025);
• Government Regulation No. 19 of 2025 on Types and Tariffs of Non-Tax State Revenue Applicable at the Ministry of Energy and Mineral Resources (GR 19/2025);
• Minister of Energy and Mineral Resources (MEMR) Regulation No. 15 of 2024 (enacted on 18 December 2024) on Procedures for Reporting Implementation of Mineral and Coal Mining Business Activities (MEMR Regulation 15/2024);
• MEMR Regulation No. 9 of 2025 (effective as of 15 May 2025) on Procedures for the Imposition, Calculation, Payment and/or Deposit of Non-Tax State Revenue (MEMR Regulation 9/2025);
• MEMR Decree No. 72.K/MB.01/MEM.B/2025 on Guidelines for Determining Benchmark Prices for the Sale of Metal Mineral and Coal Commodities (MEMR Decree 72/2025); and
• Bank Indonesia Regulation No. 3 of 2025 (effective as of 1 March 2025) on Foreign Exchange from Export Proceeds and Foreign Exchange for Import Payments (BI Regulation 3/2025). 

ENHANCED REGULATORY CERTAINTY UNDER AMENDED MINING LAW

The Amended Mining Law was issued with the stated purpose of supporting the Indonesian downstream processing industry while also implementing recent Indonesian Constitutional Court decisions. 

Zoning Plans

Under the 2009 Mining Law, the Government is required to guarantee that there will be no changes to the zoning plans within mining business licence areas. However, this provision was declared unconstitutional by a 2021 Constitutional Court decision. Accordingly, the Amended Mining Law now states that the GOI will guarantee no changes to the zoning plan within mining business licence areas, provided such zoning plans are not contrary to applicable laws and regulations. Additionally, the GOI now has the discretion to alter zoning plans if necessary to support the value-added or downstream industry for metal minerals and coal.

Furthermore, to protect mining licence holders that obtained their licences prior to any amendments to zoning plans, the Amended Mining Law indicates that they may continue mining business activities despite such zoning plan changes. However, it remains to be seen how this apparent protection for existing licence holders will be implemented and enforced in practice.

Granting of Mining Licence Areas

Under the 2009 Mining Law, in general, mining licence areas could only be granted on a priority basis to state- or regional-owned enterprises. However, to support the downstream industry, mining licence areas can also be granted on a priority basis to private business entities based on considerations to increase domestic employment, mining investment, and added value for domestic and global supply chains. This reform should come as some relief to domestic and international businesses with downstream processing ambitions that have previously generally been shut out of opportunities to obtain prime new mining licence areas.

The Amended Mining Law also provides increased rights and opportunities for mining licence areas to be granted to enterprises owned by religious organisations and private business entities for the support of Indonesian universities.

Contract of Work Extensions

Under the 2009 Mining Law, the GOI guaranteed the extension of contracts of work to become mining licences upon expiration of the original contracts. However, this provision was declared unconstitutional by a 2020 Constitutional Court decision. 

In response to this decision, the Amended Mining Law now states that while the GOI may grant such an extension after expiration of the original contract, the GOI does not guarantee such extension. Instead, the GOI will consider efforts to increase state revenue in exercising its discretion to grant extensions, as well as the results of an environmental audit of existing mining operations.

Evaluation of Existing Mining Licences

Any mining licence issued prior to the Amended Mining Law that overlap with another mining business area may now be subject to revocation by the GOI. The GOI will publicly disclose the results of any such revocation and will provide an opportunity for clarification for a 14-day period from the date of the announcement. It appears that the GOI wishes to synchronise mining areas across Indonesia to avoid any future issues with overlapping mining areas. The implementation of these proposed arrangements will be subject to additional implementing regulations. 

Domestic Market Obligations

The Amended Mining Law also includes a new provision that appears to require mining companies (particularly in the coal industry) to prioritise the coal demands of state-owned enterprises (SOEs) that control the livelihood of people, including SOEs in the power, energy and fertiliser sectors, and in national strategic industries. While no implementing regulations have yet been issued in respect of this new prioritisation, this new provision seems to be an attempt to further secure domestic commodity requirements (including for PLN, Indonesia’s state-owned electricity company) that underpin the Indonesian economy.

MORE GOVERNMENT CONTROL BUT GREATER BUSINESS FLEXIBILITY IN UPDATED RKAB PROCEDURES

In recent times, the GOI has sought to use its approval of mining Work Plan and Cost Budgets (Rencana Kerja dan Anggaran Biaya or RKAB) to more tightly manage and control production of coal and metal minerals. Through the RKAB approval process, several major mining companies have reported reductions in their production quotas. The new Energy and Mineral Resources Minister, Bahlil Lahadalia, has reportedly confirmed the GOI’s intention to manage supply and demand (and resource prices) by limiting production quotas. In practice, this has led to a reduction in processed metal production, resulting in some nickel smelters starting to import ore from the Philippines.

Within this context, MEMR Regulation 15/2024 was issued to further regulate the RKAB approval process. The most notable changes are as follows:

• The MEMR (rather than the Directorate General of Mineral and Coal or DGMC) is now the institution authorised to evaluate and approve or reject RKABs. This reform reflects the heightened importance of the RKAB approval process for the GOI.
• Previously, mining companies were only granted one opportunity to re-submit an RKAB application if the initial application was rejected. However, this restriction has now been lifted, allowing multiple RKAB re-submissions. This represents a more flexible and iterative approval process and is reflective of the GOI’s increased willingness to reject proposed RKABs.
• Mining companies are now expressly permitted to continue conducting feasibility study activities without an approved RKAB. This change is to accommodate the increasing evaluation of (and delays in granting) RKAB approvals and to help ensure that feasibility study activities can continue during the approval process.
• Rather than being required to wait for the prescribed RKAB submission periods, mining companies with zero approved production may now immediately (and at any time) apply to amend their RKABs after obtaining approval of an amended feasibility study and/or relevant forestry and environmental licences.

INCREASED LENIENCY UNDER UPDATED PNBP PROVISIONS

Mining companies in Indonesia are subject to mandatory Non-Tax State Revenue (Penerimaan Negara Bukan Pajak or PNBP) payment obligations, including for the payment of deadrent and royalties, and for the utilisation of state-owned assets.

MEMR Regulation 9/2025 also sets out new comprehensive administrative provisions on the imposition, calculation, payment, and submission of PNBP under the authority of the DGMC. Upon the submission of a PNBP payment and/or report, the DGMC will now conduct verification, examination, and monitoring to determine the relevant payer's compliance status. Based on this process, payments will be classified as underpaid, nil (nihil), late, or overpaid. 

The most noteworthy reform under MEMR Regulation 9/2025 is that mining companies may now file objections or request leniency for PNBP payments (in the form of suspensions, reductions, installments and/or exemptions) under certain conditions, including force majeure events, financial liquidity challenges, and considerations arising from government policies. However, in practice, it remains to be seen how the GOI will respond to such requests for leniency. 

TIGHTER EXPORT PROCEEDS REQUIREMENTS

Since 2019 (see our previous publication here), Indonesia has required exporters of natural resources (including refined resources) to deposit their export proceeds in a dedicated bank account in Indonesia, where these proceeds must be retained and may only be used to meet certain payment obligations, evidenced by underlying supporting documents. Initially, 30% of these natural resources export proceeds had to be retained in the special account for at least three months from the date of deposit.

As a domestic response to the pressures of global economic developments, including pressure on the Indonesian Rupiah (an election issue in Indonesia’s parliamentary and presidential elections last year), the GOI has sought to tighten the export proceeds requirements. GR 8/2025 and BI Regulation 3/2025 now mandate that 100% of natural resources export proceeds must be deposited in a dedicated bank account for at least 12 months unless they are being used to meet certain payment obligations. Notably, this new 100% 12-month retention period does not apply to proceeds from the oil and gas sector (which remains subject to the initial requirement of a deposit of 30% of proceeds for at least three months).

As part of these reforms, the GOI has set out a wider range of instruments that may be used for placing natural resource export proceeds, including foreign currency promissory notes and Bank Indonesia foreign currency securities. Further, the new regulations allow permitted payments in the form of conversion of the foreign currency export proceeds into Indonesian Rupiah. Interestingly, at this stage, there do not appear to be any further restrictions on export proceeds once they are converted to Indonesian Rupiah. So, in theory, these proceeds could then be immediately converted back into foreign currency without having to be re-deposited in the dedicated bank account.

BENCHMARK PRICE REFORMS

Indonesia has, for several years, required metal minerals and coal to be sold at or above the relevant metal mineral benchmark price (Harga Patokan Mineral Logam or HPML) or the coal benchmark price (Harga Patokan Batubara or HPB). The HPML is based on the metal mineral reference price (Harga Mineral Logam Acuan or HMA) while the HPB is based on the coal reference price (Harga Batubara Acuan or HBA).

MEMR Decree 72/2025 has introduced the following reforms to the benchmark price regime:

• The HMA and HBA rates are now determined twice a month (on the 1st and 15th of each month) rather than once a month. This change addresses concerns that the HMA and HBA were previously too slow in reacting to changes in global commodity prices.
• Also, rather than expressly referencing the average of relevant commodity indexes (including, for example, the Indonesia Coal Index, the Newcastle Export Index, the Globalcoal Newcastle Index and Platt’s index) the new HMA and HBA rates are now determined by the MEMR in its sole discretion. This indicates the greater control that the GOI is seeking to exert over commodity benchmark prices.

SIGNIFICANT INCREASE IN MINING ROYALTIES

As has been widely reported, the new administration has enacted GR 19/2025, which significantly increases the mining royalties payable to the GOI to help deliver on election promises, including funding an ambitious new social spending program. In addition to generally increasing mining royalty rates, GR 19/2025 applies a progressive royalty system (with higher benchmark prices resulting in higher royalties) to several additional commodities, including nickel, copper and tin.

The changes to the mining royalties are set out in the accompanying table (please click or tap on the button below to download the table). These increased royalty rates will inevitably influence the economic viability of both existing and potential mining projects across Indonesia.

GOING FORWARD

The Prabowo administration’s mining reforms represent a significant shift toward increased state oversight, strengthened fiscal returns, and a more strategic deployment of Indonesia’s natural resources in support of Indonesia’s domestic economic priorities. These measures are designed to enhance government revenue, stabilise the Indonesian Rupiah, and position Indonesia more competitively within global value chains — particularly in industries such as electric vehicle manufacturing. At the same time, these reforms introduce heightened compliance obligations and additional fiscal burdens that may affect the economic feasibility of both existing and prospective mining projects. 

As the mining regulatory framework continues to evolve under the Prabowo government, businesses will need to closely monitor future implementing measures as they navigate an increasingly complex and policy-driven regulatory framework.

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