Indonesia Tightens Mining Rules, Prioritizes Local Contractors Over Affiliates
[SMM Aluminum Express News] Indonesia tightens rules on affiliated mining contractors, prioritising local service providers. Indonesia’s Ministry of Energy and Mineral Resources (ESDM) has issued Kepmen ESDM No. 365.K/MB.01/MEM.B/2026, effective September 18, requiring IUP and IUPK holders to prioritise licensed mining-service companies located in the regency or city surrounding their mining areas. Mining companies are also prohibited from directly appointing subsidiaries or affiliated mining-service companies without approval from the Minister of ESDM, including where the companies share the same ultimate beneficial owner. Subsidiaries and affiliates can still be used with government approval under certain circumstances, including National Strategic Projects, construction of mineral processing or refining facilities, and fulfilment of domestic mineral requirements. ESDM Director General of Minerals and Coal Tri Winarno clarified on September 29 that the regulation does not completely prohibit the use of affiliated contractors, but introduces an approval mechanism while increasing opportunities for local mining-service companies.
