Illegal gold mining (PETI): what it means for a licence holder

Mining without a licence (pertambangan tanpa izin, PETI) is widespread in Kalimantan’s gold districts. It ranges from a few people panning a riverbank to fleets of suction rafts and excavators working a river for months.

It touches an investor in two ways. Illegal miners may already be working the area you want to license or buy into. And their gold can find its way into the supply you buy, which makes the buyer an offender too.

Why it’s so widespread

Much of it works alluvial gold, close to the surface and within reach of a pump, a raft or a hired excavator. The legal route for small miners is narrow. A people’s mining licence (IPR) can only be issued inside a designated people’s mining area (WPR), and designation has lagged behind the digging. In January 2026, West Kalimantan’s deputy governor put unlicensed gold mining in his province at about 70,600 hectares and said hundreds of thousands of families depend on mining. He asked for the work to be brought under permits.

The money involved is large. The financial intelligence unit (PPATK) reported suspicious transactions worth IDR 185 trillion linked to illegal gold mining from 2023 to 2025, across several regions including West Kalimantan, with some of the gold sent abroad. A national police mapping reported in October 2025 counted 1,517 illegal mining sites across Indonesia, 133 of them gold sites in Central Kalimantan.

The human cost is high. Pits collapse: four miners died in a landslide at an illegal site in Kapuas, Central Kalimantan, in April 2025. Mercury used to recover the gold ends up in the rivers.

The penalties

Law 4 of 2009 on mining, as amended by Law 3 of 2020, sets three offences that matter here:

• Mining without a licence carries up to 5 years in prison and a fine of up to IDR 100 billion (Article 158).
• Collecting, using, processing, refining, transporting or selling minerals that don’t come from a licence holder carries the same maximum (Article 161). This is the article that reaches traders, processors, financiers and buyers.
• Obstructing or disrupting a licence holder’s work carries up to 1 year of detention or a fine of up to IDR 100 million (Article 162). It protects only a holder that has settled land rights with the people who hold them.

Enforcement comes in raids. In one, in February 2025, police in Kapuas Hulu, West Kalimantan, named 22 suspects under Article 158.

When miners are already on your licence

In Kalimantan this is common, especially on alluvial ground. Before you acquire, map the workings with current and older satellite images and a site visit. Record the state of the land and the rivers, with pits, tailings and water samples, so the damage done before you arrived is on file. Buying into a gold mining licence covers the rest of the checks.

Removing miners is a job for the police and the ministry’s mine inspectors, and it goes better with the district government and village leaders involved. A forced clearance can turn a community against a project for years, and security that ends in violence becomes the holder’s problem with the law and with every later buyer. Some holders negotiate instead, by hiring local miners, supporting other livelihoods and agreeing who may use which ground. Customary land and community consent explains why those relationships carry weight. Whatever the arrangement, it has to stay legal. A licence holder can’t buy gold dug without a licence, even when it comes from inside its own area.

Knowing where the gold comes from

Article 161 makes the origin of gold a legal question as well as a commercial one. Any gold you buy, finance or refine should trace back to a named licence (an IUP, an IUPK or an IPR) with production and payment records behind it. Refiners that sell internationally run responsible-sourcing checks and ask for that chain of documents. Selling gold from an Indonesian mine sets out the paperwork.

The legal route for small miners

The IPR is open to local residents, for up to 5 hectares each or 10 hectares for a local cooperative, inside a WPR. It runs for up to 10 years, with two extensions of 5 years each, and the provincial governor issues it. Since 2025, local cooperatives can also apply for priority mining areas of up to 2,500 hectares. Law 2 of 2025 says a WPR stays valid even if the spatial plan around it changes, and the ministry’s 2026 plan for Central Kalimantan has 129 WPR blocks, nearly all for gold. Mining licences explains how these fit with the IUP.

An investor can’t hold an IPR. Buying gold from IPR holders is lawful when it comes from inside their licensed area. Put the deal in a written contract and keep records a refinery will accept.

Before you commit

Put these in place before money goes into a gold area in Kalimantan:

• satellite images of the area going back several years, checked against the licence boundary
• a site visit that includes the villages and the river downstream
• a record of any police or ministry action against illegal mining in and around the area
• a plan and a budget for community relations, agreed before the first drill rig arrives
• traceability terms in every offtake, prepayment and processing contract