Indonesia's Mining Licence Auction: How WIUP and WIUPK Areas Are Awarded

A metal or coal mining licence in Indonesia is not something a company applies for over ground of its own choosing. The state first designates the ground — a Wilayah Izin Usaha Pertambangan (WIUP), the mining licence area — and awards that area to a winner. The licence itself, the IUP, is filed afterwards by whoever won.

For metal minerals and coal, that award has run through a public auction. Since a September 2025 amendment to the implementing regulation it no longer has to: the same areas can now also be granted by priority to defined classes of applicant. This article sets out how the auction works — who runs it, who may bid, what a bidder must prove, and what the winner actually buys — from the regulations as they stand in 2026. Where the priority route changes the picture, it says so.

You bid for an area, not for a licence

Government Regulation No. 96 of 2021 (PP 96/2021), which implements the Mining Law, lists six kinds of WIUP (Pasal 17(1)): radioactive mineral, metal mineral, coal, non-metal, specific non-metal, and rock. The route to each differs.

• Non-metal minerals and rock are obtained by *applying* for an area (Pasal 17(4)). The Minister decides on a first-come basis within ten days (Pasal 27).
• Metal minerals and coal, as passed in 2021, were obtained "dengan cara lelang" — by auction (Pasal 17(3)).

That is the structural point a foreign company meets first: you do not apply for a metal or coal area, the state puts the area up. What you compete for is the right to explore and develop a delineated block, and what you pay for is the state's data and information about it, not a proven reserve.

The three documents that decide an award today

The rules sit in a government regulation and a ministerial regulation, both amended since they were issued:

Two earlier Ministerial Regulations are history rather than current law. Permen ESDM No. 28/2013, the first dedicated "Tata Cara Lelang WIUP dan WIUPK" rule, was revoked by Permen ESDM No. 11/2018, which was in turn revoked by Permen ESDM No. 7/2020. The auction procedure did not disappear between them; it moved.

The auction, step by step

1. The announcement

The Minister must announce the auction openly no later than 14 and no earlier than 60 calendar days before it is held (PP 96/2021 Pasal 20(1)). The announcement runs in at least one local or national print outlet, at the ministry or through its official site, and — for WIUP — at the provincial government office or its site (Pasal 20(2)).

2. The committee

The Minister forms an auction committee (Pasal 21). It must have an odd number of members, at least seven, and may include the regional government. The committee evaluates documents and bids; it may not alter a bid (Permen ESDM 7/2020 Pasal 25(5)).

3. Who may bid — and the 500-hectare line

This is where the auction splits by size, and where a foreign investor's eligibility is set. Under Permen ESDM 7/2020 Pasal 23:

The practical reading: a foreign-invested company can bid only for blocks larger than 500 hectares. Blocks of 500 ha or less are reserved for local entities, cooperatives and individuals. For a small or early-stage foreign entrant, that is a hard floor on the auction route.

4. What a bidder must prove

PP 96/2021 Pasal 22 sets three buckets of requirements — administrative, technical and environmental, and financial:

• Administrative — a business identification number (NIB), a company profile, and the management, shareholder list and beneficial-owner list.
• Technical and environmental — mining experience, or, for a new company, support from an experienced mining company; personnel with at least three years in mining or geology; a written undertaking to comply with environmental law; and an annual RKAB for the exploration period.
• Financial — financial statements for the last three years audited by a public accountant (or an accountant's letter for a new company); a tax clearance certificate; a bid bond placed in cash at a state bank equal to 10% of the data-compensation value; and an undertaking to pay the bid within at most seven working days after the winner is announced.

The RKAB requirement is worth pausing on: even to *bid*, a company must show it has a work plan and budget for exploration. (For what the RKAB is, see our explainer [what is RKAB](/en/news/what-is-rkab-indonesia).)

5. Two stages, then a weighted ranking

The auction runs in two stages — prequalification and qualification (PP 96/2021 Pasal 23). Prequalification tests the administrative, technical/environmental and financial documents. Qualification evaluates the price bid.

The Ministerial Regulation supplies the weighting: the final ranking adds the prequalification score and the price score, with prequalification worth 40% and the price bid 60% (Permen ESDM 7/2020 Pasal 25(2)–(4)). Passing the documents is not enough to win; the price carries more of the result than the file does.

6. Winner, payment, and the licence filing

The committee reports to the Minister, who names the winner (Pasal 25). The winner must then:

• Pay the full "kompensasi data informasi" — the data-and-information compensation — in the amount of its winning bid, within seven working days of the announcement (Pasal 25(4)); and
• Apply for the IUP within ten working days. Miss that window and the winner is deemed to have withdrawn, and the bid bond is forfeited to the state as non-tax revenue. The area is then offered to the next-ranked bidder in sequence; that bidder must pay the same compensation as the first winner, failing which the Minister re-auctions the block (Pasal 29).

So the money at risk is not the licence fee at this stage — it is the data compensation and the bond. What the winner has bought is the state's geological data and the right to explore; proving up a reserve is the winner's own cost and risk.

WIUPK: priority first, then the auction

Special mining licence areas (WIUPK) — the ex-Contract of Work and ex-PKP2B ground used for strategic national interests — follow a stricter order (PP 96/2021 Pasal 75–76). The Minister must first offer a WIUPK by priority to BUMN and BUMD:

• If only one BUMN or BUMD is interested, the WIUPK is granted to it on payment of the data compensation.
• If more than one is interested, the Minister coordinates over 60 calendar days; they may form a joint venture or use a company whose shares a BUMN or BUMD holds. If they cannot agree, the WIUPK goes to auction among the interested BUMN and BUMD.
• If no BUMN or BUMD is interested, the WIUPK is offered to private companies by auction, and the winner pays the data compensation (Pasal 76).

The announcement, committee and bidder requirements for a WIUPK auction mirror the WIUP rules — 14 to 60 days' notice, an odd committee of at least seven, and the same administrative, technical/environmental and financial tests (Pasal 77–79).

The Ministerial Regulation adds a local-participation condition. Where a BUMN wins a WIUPK auction, it must give a BUMD at least 10% participation, and its own holding in the venture or affiliate must be at least 51%; where a private company wins, it too must give a BUMD at least 10% (Permen ESDM 7/2020 Pasal 28, 32–33, as amended). PP No. 25/2024 added a further channel: a WIUPK in an ex-PKP2B area may be offered by priority to a business entity owned by a religious mass organisation, a window that runs for five years from the regulation (Pasal 83A).

The 2025 change: the auction is no longer the only door

The most important recent development is the second amendment, PP No. 39/2025. It rewrote Pasal 17(3) so that a metal-mineral or coal WIUP is obtained:

a. lelang; atau b. pemberian prioritas — by auction, or by priority allocation.

The priority route has three categories (Pasal 17(4)):

1. Cooperatives, small and medium enterprises, and business entities owned by religious mass organisations;
2. BUMN, BUMD, or private companies granted an area in connection with expanding access to higher education and strengthening universities; and
3. BUMN and private companies granted an area for value-added / downstreaming (hilirisasi).

Applications are made through the OSS licensing system (Pasal 26B), and each category carries its own criteria (Pasal 26D). For example, a cooperative or SME must be located in the same regency or city as the WIUP; an entity owned by a religious mass organisation must be at least 67% owned by that organisation; and a higher-education partner must undertake to give the university at least 60% of net profit once in production. PP No. 39/2025 extended the same priority logic to WIUPK (new Pasal 75A–75G).

For a foreign private bidder, that is the crux. Part of the ground that would once have reached a public auction can now be allocated by priority to local, cooperative, state or hilirisasi-linked applicants first.

The auction versus buying a company

There are two ways a foreign investor enters an Indonesian metal or coal asset.

• The auction route buys a *new* WIUP from the state: you pay the data compensation, take the exploration risk, and build the licence from the exploration stage up.
• The M&A route buys *shares in an existing licence holder*, inheriting an approved licence, its RKAB history and its data — usually at a price that reflects the risk already retired.

They are not substitutes. The auction is where licence rights originate; M&A is where they change hands. The mechanics of acquiring a company that already holds an IUP are in our explainer [how to buy a mine in Indonesia](/en/news/how-to-buy-a-mine-in-indonesia), and the licence types — IUP versus IUPK — are set out in [IUP vs IUPK](/en/news/iup-vs-iupk).

What it means for a foreign investor

Five things follow from the rules above.

1. Eligibility has a floor. A foreign-invested company can only bid for blocks above 500 ha. Below that line, the auction is closed to it.
2. You are buying data, not reserves. The winning bid is the data-and-information compensation. Everything after that — proving the deposit, feasibility, construction — is the holder's cost.
3. Cash discipline is tight. A 10% bid bond goes in first; the full bid is due within seven working days of the result; the IUP filing has to follow within ten working days or the bond is lost to the state.
4. You compete with the state and domestic majors. Lots above 500 ha are open to BUMN, BUMD and national private companies as well as PMA, so a foreign bidder is not in a separate lane.
5. The priority channel can pre-empt the ground. Since PP 39/2025, a prospective block may be allocated to a cooperative, SME, religious-organisation entity, university-linked vehicle or hilirisasi partner before it ever reaches an auction. Screening *which* blocks are likely to be reserved is now part of the entry decision.

Timeline

Catatan Teramine

*This section is Teramine's editorial assessment, not a statement from any government body and not a recommendation.*

The design signal in these amendments is consistency of direction. In 2021 the state's model for a metal or coal area was a single, price-weighted auction — an open contest in which the bid mattered most. By 2025 the same statute offers a second door, and that door is largely shut to a purely foreign private applicant: it opens for cooperatives and SMEs tied to the local regency, for religious organisations, for university-linked vehicles, and for downstreaming partners. Read together, the two blended messages are that the auction remains the level route for a foreign bidder with scale, while the strategic and locally rooted cases are being routed around it.

For an investor, the practical implication is that the 500-hectare line now matters twice over. It already decides whether a foreign-invested company can bid at all. It also correlates with which blocks survive to an auction rather than being taken by a priority applicant — smaller, community-linked blocks being exactly the ones the new categories target. The diligence question is no longer only "what is the block worth", but "will this block reach the auction, or is it on a priority path".

The honest caveat is that a priority grant is not automatically cheaper or easier for the state to manage: the criteria — same-regency location, minimum ownership by the sponsoring organisation, profit-sharing with a university — create their own compliance burden, and the ministry must verify them across departments. How strictly that filtering is applied will determine whether the auction stays the main channel or becomes the residual one. On the text alone, both routes now exist; which dominates is an empirical question the next year of awards will answer.

Where the question turns transactional — buying an existing asset rather than bidding for a new area — the listed inventory sits on the [mining marketplace](/en/marketplace). Where it is permit or filing work against a licence or an area — the IUP application, the RKAB, the IUJP — that is handled through our [permit services](/en/layanan-izin).

What we could not verify

• Whether any later Ministerial Regulation has amended the 500-ha participant split in Permen ESDM 7/2020 Pasal 23. We read the current text of that regulation on the ministry's legal portal and found no revoking instrument, but the provision predates PP 96/2021.
• The formula by which the data-and-information compensation is calculated. PP 96/2021 delegates the formula and the implementing guideline to a Ministerial Decision (Kepmen), which we did not read.
• Whether the 10% BUMD participation and 51% BUMN holding figures in the WIUPK auction are still current, since they sit in a 2020 Ministerial Regulation amended in 2021 and the parent Government Regulation has since been amended twice.
• Any live or recent WIUP/WIUPK auction lot, its winning bid, or its block size. This article describes the procedure as written; it does not report a specific award.

Sources

Every claim above comes from the documents below, each opened and read for this article.

• Government Regulation (PP) No. 96 of 2021 on the Implementation of Mineral and Coal Mining, dated 9 September 2021 — Pasal 17(1) and 17(3) (WIUP types; metal and coal WIUP by auction), Pasal 20 (announcement 14–60 days, media and websites), Pasal 21 (auction committee, odd, at least seven), Pasal 22 (bidder administrative, technical/environmental and financial requirements, including the 10% data-compensation bid bond, three-year audited financials and three-year personnel experience), Pasal 23 (two stages, prequalification and qualification), Pasal 25 (Minister names the winner; payment within seven working days), Pasal 26 (further auction rules by Ministerial Regulation), Pasal 27 (non-metal and rock WIUPs by application, ten-day decision), Pasal 29 (IUP filing within ten working days; bond forfeiture; next-ranked bidder), and Pasal 75–80 (WIUPK priority to BUMN/BUMD, 60-day coordination, auction where they do not agree or no state bidder is interested, and the mirror auction procedure).
• Government Regulation (PP) No. 25 of 2024 on the First Amendment to PP No. 96 of 2021, dated 30 May 2024 — Pasal 22 and Pasal 79 (updated bidder requirements) and Pasal 83A (WIUPK in ex-PKP2B areas offered by priority to a business entity owned by a religious mass organisation; 5-year window).
• Government Regulation (PP) No. 39 of 2025 on the Second Amendment to PP No. 96 of 2021, dated 11 September 2025 — amended Pasal 17(3)–(4) (metal and coal WIUP obtained by auction or priority allocation; the three priority categories), Pasal 26A–26G (priority through application, OSS, verification and criteria, including same-regency location for cooperatives and SMEs, minimum 67% ownership by the religious organisation, and the higher-education partner's commitment of at least 60% of net profit), Pasal 30A–30B (IUP application after a priority WIUP), and Pasal 75A–75G (priority for WIUPK).
• Regulation of the Minister of Energy and Mineral Resources (Permen ESDM) No. 7 of 2020 on the Procedure for the Grant of Areas, Licensing and Reporting in Mineral and Coal Mining, dated 6 March 2020 (Berita Negara 2020 No. 220) — Pasal 18 (metal and coal WIUP granted by auction), Pasal 19–22 (announcement, committee, auction authority), Pasal 23 (participants by area size, with foreign-investment companies admitted only above 500 hectares), Pasal 24–25 (two-stage procedure; 40% prequalification and 60% price weighting), and Pasal 27–33 (WIUPK priority to BUMN/BUMD and the participation requirements on the winner).
• Regulation of the Minister of Energy and Mineral Resources (Permen ESDM) No. 16 of 2021 on the Amendment to Permen ESDM No. 7 of 2020, dated 28 June 2021 (Berita Negara 2021 No. 734) — amended Pasal 28 and Pasal 32–33 (BUMD participation split) and amended Pasal 66 (prohibitions).
• Regulation of the Minister of Energy and Mineral Resources (Permen ESDM) No. 28 of 2013 on the Procedure for the Auction of WIUP and WIUPK for Metal Mineral and Coal Mining, dated 13 September 2013 — read only to date the earlier auction rule and establish that it was revoked. Its detail page records the revocation by Permen ESDM No. 11/2018, itself revoked by Permen ESDM No. 7/2020.
• Regulation of the Minister of Energy and Mineral Resources (Permen ESDM) No. 11 of 2018 on the Procedure for the Grant of Areas, Licensing and Reporting in Mineral and Coal Mining, dated 19 February 2018 — read only to confirm it revoked Permen ESDM No. 28/2013 and was revoked by Permen ESDM No. 7/2020.

All documents were read on the legal information portal of the Ministry of Energy and Mineral Resources (JDIH ESDM), jdih.esdm.go.id.