Most conversations about entering an Indonesian mine start with the asset and the price. Both sit downstream of a question the regulation answers first: who is allowed to hold the permit, and what must be approved before it changes hands. Indonesia treats the purchase of a company, the purchase of a permit, and a contract to work under someone else's permit as materially different transactions — with different approval gates, different disclosure, and different consequences for who controls the ground.
This article is about that machinery. It is read from the implementing regulation itself, not from deal marketing, and it is written to complement our buying guide rather than restate it.
The framework, and who may hold a licence
Mining in Indonesia runs on Law No. 4/2009 on Mineral and Coal Mining and its amendment Law No. 3/2020, implemented by Government Regulation No. 96/2021 on the Implementation of Mineral and Coal Mining Business Activities (PP 96/2021), as amended by Government Regulation No. 25/2024 (PP 25/2024). Administration sits with the Ministry of Energy and Mineral Resources through the Directorate General of Mineral and Coal.
Article 9 of PP 96/2021 sets out who may hold a mining business licence — an IUP. The Minister grants it on application by a business entity (badan usaha), a cooperative, or a sole proprietorship (a firma or a limited partnership). A private business entity, the same article says, includes one established in the framework of foreign investment. So there is no foreign permit and no domestic permit as separate instruments: there is a foreign-invested company holding an ordinary permit, and the rules below attach to it.
Unless stated otherwise, every article cited in this piece is an article of PP 96/2021, read in the Indonesian legal text published by the Ministry's legal database, JDIH ESDM.
Take over: two transactions wearing one name
"Take over" is used loosely in the market. The regulation splits it into two events, each with its own approval requirement.
Buying the permit. Article 10 prohibits an IUP holder from transferring the IUP to another party without the Minister's approval. Approval may be given only after the holder has, at least: completed the exploration stage, evidenced by resource and reserve data; met administrative, technical, environmental and financial requirements; and submitted documents on the party receiving the permit. The administrative pack includes the application, the business identification number, the composition of management, the register of shareholders or capital, and the register of beneficial owners. The technical pack is the final exploration report with resource and reserve data. The financial pack is three years of audited financial statements, a tax clearance certificate and proof of fixed-fee (iuran tetap) payments for the last three years. The IUPK equivalent is Article 69, on the same conditions.
Buying the company that holds the permit. Article 13 prohibits an IUP holder from transferring share ownership without the Minister's approval, on substantively the same terms — exploration completed, and the administrative, technical, environmental and financial requirements met. Where the share transfer is carried out through an initial public offering on an Indonesian stock exchange, the holder does not seek prior approval; it must report to the Minister. The IUPK equivalent is Article 72.
Two things follow, and both change diligence.
- The gate is not the corporate registry. A change of control that appears only in a shareholder register still requires the Minister's approval if it is a transfer of share ownership of the holder — and the regulation contemplates approval, not registration.
- Beneficial ownership is an input. The register of beneficial owners is part of the administrative pack on both a permit transfer and a share transfer. An indirect structure is not invisible to the regulator.
| Permit transfer | Share transfer | |
|---|---|---|
| Provision (IUP / IUPK) | Article 10 / Article 69 | Article 13 / Article 72 |
| Consent required | Minister's approval | Minister's approval (report only if via an IPO on an Indonesian exchange) |
| Precondition on the ground | Exploration completed, with resource and reserve data | Exploration completed, with resource and reserve data |
| Disclosure | Documents on the receiving party; beneficial-owner register | Register of shareholders and of beneficial owners |
| Where the permit ends up | With the party receiving the transfer | Unchanged — the holder is the same company, under new owners |
Partial areas are not a general right. Where an IUP was granted to a state-owned enterprise (BUMN), part of its mining area (WIUP) at the operating-production stage may be transferred to another business entity in which that BUMN holds at least 51% — a stake that may not be diluted below 51% — and only after the Minister's approval (Article 12). The IUPK equivalent is Article 71. For a private holder, splitting the ground is not a route the regulation offers here.
The divestment clock that runs with a foreign-held licence
For a foreign-invested holder, a take over is not only an approval. It is a schedule.
Article 147 requires an IUP or IUPK holder at the operating-production stage that operates under foreign investment to divest at least 51% of its shares, in stages, to the central government, regional governments, state-owned enterprises (BUMN), regional-owned enterprises (BUMD) and/or national private business entities. How fast the ladder must be climbed depends on how the mine is worked and whether it is integrated with processing:
| Mining method | First step (share that must be held locally) | Final step |
|---|---|---|
| Open pit, not integrated with processing/refining or coal development | Year 10 — 5% | 51% by year 15 |
| Open pit, integrated with processing/refining or development | Year 15 — 5% | 51% by year 20 |
| Underground, integrated with processing/refining or development | Year 20 — 5% | 51% by year 25 |
The years are counted from the start of production, and the intermediate steps rise through 5%, 10%, 15%, 20% and 30% before reaching 51%, as set out in the same article.
The buyer is not chosen freely either. Under Article 147(3) to (10), the shares must be offered directly to the central government, regional governments, BUMN and BUMD, which must state within at most 90 calendar days whether they are interested. Only if those parties pass does the offer move to a national private business entity by auction, and only if that draws no interest may it go to the Indonesian stock exchange. Once the divestment has been made, Article 147(11) bars a later capital increase from diluting the divested shares below the required level.
There is also a gate before the ladder runs out. Under Article 148, a holder whose shares are more than 49% foreign-owned may transfer foreign shares to another party before the divestment timetable falls due, but the shares must first be offered to a BUMN, which has 75 calendar days to answer in writing. If it is not interested, or does not answer in time, the holder may seek the Minister's approval for the transfer. Article 149 leaves the detailed divestment procedure to a Ministerial Regulation.
PP 25/2024, the amendment in force, does not alter this chapter. Its changes run to other articles — definitions, the WIUPK offer and auction provisions, and a set of operating articles — and the divestment chapter is untouched by them.
Joint venture: a new company that inherits the rules
A joint venture here means an Indonesian company formed for the project. That is not a market usage; it is the regulation's own term. Article 75(6)(a) provides that where a special mining business licence area (WIUPK) is offered to state-owned and regional-owned enterprises, those enterprises may form a new business entity as a joint venture (perusahaan patungan), or use an existing entity they own.
The structural point is where the permit sits. An IUP is granted to the applicant (Article 9). In a joint venture the applicant is the new company, so the permit is held by the joint venture, not by its parents. The parents' relationship to the mine is a shareholding, and the regulation's attention stays on the permit holder.
That has three consequences worth pricing.
- Later changes to the joint venture's ownership are changes to a permit holder's ownership. Once the venture holds the licence, a transfer of its shares runs into Articles 13 and 72 — ministerial approval, beneficial-owner disclosure, and the exploration precondition.
- The divestment clock is the venture's own. If the joint venture is foreign-invested, Article 147 measures its ladder from the venture's production, not from any predecessor's.
- The state can specify the ownership it wants. PP 25/2024's new Article 83A shows how precisely it can be drawn. It allows a WIUPK over an ex-PK2B area to be offered, on a priority basis and for five years, to a business entity owned by a religious community organisation — provided the organisation's stake is majority and controlling, and provided that neither the IUPK nor the organisation's shares in the entity may be transferred or assigned without the Minister's approval. The same article bars that entity from cooperating with the former concession holder or its affiliates.
Joint operation: a contract that leaves the permit where it is
The regulation provides for cooperation without moving the licence. Article 170(2) allows an IUP or IUPK holder at the operating-production stage, for coal, to carry out coal development and utilisation either directly or through cooperation with other IUP and IUPK holders, or with other parties that do that work. Article 126 then sets out the forms that cooperation takes in coal development: direct share ownership of at least 25% in the other entity, together with a guarantee of sufficient coal supply for that entity's commercial operating period.
Read against Articles 10 and 13, the difference from a take over is structural rather than commercial. A cooperation contract does not transfer the permit, and it does not of itself change who holds the permit. What moves is the performance of work or the sharing of output. The obligations that attach to the holder — the exploration precondition, the reclamation guarantee, the reports — remain with the holder, because the holder is unchanged.
PP 96/2021 does not create a licence called a joint operation. The instrument is a contract, read against a permit that stays where it is, and that is exactly why the approvals in Articles 10 and 13 are not engaged by it. Where the foreign party's involvement is structured instead as an equity interest in the holder, the analysis returns to Article 13.
The three structures side by side
| Take over | Joint venture | Joint operation | |
|---|---|---|---|
| What is bought | the permit, or the company that holds it | equity in a new permit-holding company | contractual rights to perform work or share output |
| Does the permit move? | Yes — by ministerial approval (Art. 10/69), or as a change of the holder's ownership (Art. 13/72) | No — the permit is granted to the new company (Art. 9) | No — the holder is unchanged |
| Approval gate | The Minister, plus the exploration and disclosure conditions | Granting of the permit; later ownership changes re-enter Articles 13/72 | None of itself; the holder keeps its own obligations |
| Divestment clock (foreign-invested) | Runs from the existing permit's production start (Art. 147) | Runs from the venture's production | Not engaged by the contract itself |
| Where the inherited risk sits | In the permit's history and its reclamation position | In the new company's obligations from day one | With the holder, which keeps the permit and the liability |
What this means for an investor
- Approval is a condition precedent, and it is conditioned on the ground. Neither a permit transfer nor a share transfer can be approved before exploration is finished and evidenced by resource and reserve data. An exploration-stage permit is therefore difficult to trade on the strength of its licence alone.
- Model the clock before signing. A take over of a producing, foreign-invested permit steps into a divestment ladder already running. A joint venture starts its own. The gap between those two positions can be a decade of ownership.
- Assume beneficial ownership will be disclosed. It is a listed input to the approval, on both routes.
- Control and equity are separate variables. Article 12 shows how narrowly the state treats a partial-area transfer, and the Article 147 cascade shows its order of preference for buyers: government first, then state and regional enterprises, then a national private buyer by auction, then the exchange.
- A contract keeps the approvals, and the liabilities, with the holder. That is the appeal of a joint operation and also its limit: the operator's exposure is defined by the contract, while the regulatory exposure stays with the licence.
Catatan Teramine
This section is Teramine's editorial assessment. It is not a fact reported by either regulation above, and it is not legal advice.
The useful way to read these provisions together is as a single design. Indonesia does not prohibit foreign participation in a producing mine; it sequences it. The exploration precondition means the state will not let a licence be flipped before the ground has been measured. The beneficial-owner register means it will not be flipped invisibly. The Article 147 ladder means that if the deposit does turn out to be worth owning, the state's preferred buyers are approached first, in a stated order, before the market gets a look. And Article 148 closes the obvious loophole — selling the foreign stake to a third party before the ladder is due — by putting a BUMN in front of the queue with 75 days to decide.
For a buyer, that argues for treating the permit's calendar as the deal's calendar. The structure that keeps control is not automatically the structure that keeps the schedule: a joint operation preserves the licence untouched and therefore preserves the divestment position of the holder, who may be the very party whose timetable is the reason the asset is for sale. A joint venture resets the clock but hands the permit to a company the buyer does not yet fully own. The choice is not between more and less risk; it is between which of the two clocks a buyer would rather be holding.
We handle the permit work behind any of these structures — IUP and IUPK applications, RKAB, and the operating documents a project must hold — through [mining permit services](/en/layanan-izin). Indonesian mining opportunities offered for take over, joint operation and joint venture are listed on the [mining marketplace](/en/marketplace), each with its commodity, location and scheme stated.
Related reading on this site: [How to Buy a Mine in Indonesia](/en/news/how-to-buy-a-mine-in-indonesia) for the diligence sequence that precedes these structures; [IUP vs IUPK](/en/news/iup-vs-iupk) for what the two licences are; and [Foreign Ownership in Indonesian Mining](/en/news/foreign-ownership-indonesian-mining) for the divestment position as it played out at one company.
Sources
Both documents below were read in full text for this article. Indonesian provisions are translated into English here; the translation is Teramine's, and where a figure appears above it is the figure printed in the regulation.
- Government Regulation of the Republic of Indonesia No. 96 of 2021 on the Implementation of Mineral and Coal Mining Business Activities (Lembaran Negara RI Tahun 2021 No. 208), official salinan published by the Ministry of Energy and Mineral Resources' legal database, JDIH ESDM. Used for: Article 9 (IUP granted by the Minister on application by a business entity, cooperative or sole proprietorship; private business entities include those established in the framework of foreign investment; the IUP is granted after the WIUP is obtained); Articles 10 and 11 (prohibition on transferring an IUP without the Minister's approval; the completed-exploration precondition; the administrative, technical, environmental and financial requirements, including the shareholder/capital register and the register of beneficial owners, the final exploration report and resource and reserve data, the reclamation report and proof of the reclamation guarantee, and three years of audited financials, tax clearance and fixed-fee payments; and the documents required on the receiving party); Article 12 (partial WIUP transfer at operating-production stage by a BUMN holder to an entity it holds at least 51% of, non-dilutable, with the Minister's approval); Article 13 (prohibition on transferring share ownership without the Minister's approval; the same preconditions; the administrative pack including the register of beneficial owners; and the report-to-Minister requirement where the transfer is an IPO on an Indonesian exchange); Article 14 (further regulation of permit transfer, partial WIUP transfer and share transfers by Ministerial Regulation); Articles 69, 70, 71 and 72 (the equivalent provisions for the IUPK and WIUPK); Article 75(6)(a) (state-owned and regional-owned enterprises may form a new business entity as a perusahaan patungan — joint venture — or use an existing owned entity, where a WIUPK is awarded); Article 126 (cooperation in coal development): Article 147 (divestment obligation of at least 51% for foreign-invested IUP and IUPK holders at operating-production stage; the schedules by mining method measured from the start of production — open pit not integrated, first step year 10 to 51% by year 15; open pit integrated, first step year 15 to 51% by year 20; underground integrated, first step year 20 to 51% by year 25, rising through 5%, 10%, 15%, 20% and 30%; the direct offer to the central government, regional governments, BUMN and BUMD; the 90-calendar-day period to state interest; the cascade to a national private business entity by auction and then to the Indonesian stock exchange; and the non-dilution rule); Article 148 (transfer of foreign shares by a holder more than 49% foreign-owned before the divestment falls due, requiring the shares first to be offered to a BUMN, which has 75 calendar days to answer in writing, after which the Minister's approval may be sought); and Article 149 (delegation of the divestment procedure to a Ministerial Regulation). Read 1 October 2026.
- Government Regulation of the Republic of Indonesia No. 25 of 2024 on the Amendment of Government Regulation No. 96 of 2021 (JDIH Kementerian ESDM). Used for: the list of articles amended by the 2024 amendment, which does not include the divestment chapter (Articles 147 to 149) or Articles 10, 12, 13, 69, 71 and 72 relied on above; and its new Article 83A, under which a WIUPK over an ex-PK2B area may be offered on a priority basis, for five years, to a business entity owned by a religious community organisation, whose stake must be majority and controlling, and neither the IUPK nor the organisation's share ownership in that entity may be transferred or assigned without the Minister's approval, with the entity barred from cooperating with the former PK2B holder or its affiliates. Read 1 October 2026.
