Reclamation and closure: the cost every mine plan carries

Every Indonesian mining licence carries a duty to put the land back. The bill arrives at the end, when the ore has run out and the revenue has stopped. That’s why the law makes a holder set money aside while the mine is still earning, and why a buyer takes on whatever part of the bill isn’t covered.

Two texts carry the duty: the Mining Law (Law 4 of 2009, most recently amended by Law 2 of 2025) and Government Regulation 78 of 2010 on reclamation and post-mining, which is still in force.

Two duties: reclamation and post-mining

Reclamation restores land disturbed at any stage of mining so it can function again for its intended use. Post-mining is the planned work after mining ends, to restore the natural and social functions of the whole mined area.

An exploration licence holder has to reclaim the drill sites, test pits and trenches it won’t use again. A production licence holder has to do both until each meets the success criteria in its approved plans. Those plans go in with the application for a production licence, and the Mining Law’s definition of a feasibility study includes post-mining planning.

The reclamation plan covers 5 years, broken down by year. The post-mining plan covers reclaiming what’s left, maintaining it, community development and monitoring. Both are costed, with direct and indirect costs. Reclamation must start within 30 days of mining stopping on a piece of land, and post-mining within 30 days of mining ending.

While the mine runs, the holder has to keep land opened and land reclaimed in balance, and keep the final pit within a maximum size set by regulation (Article 99 of the Mining Law). Before any part of the area is handed back, reclamation and post-mining there must reach 100% success (Article 123A).

How the guarantees work

Two guarantees back these duties. Since Law 2 of 2025, the minister sets their amounts (Article 100), working from the costs in the approved plans.

	Reclamation guarantee, exploration	Reclamation guarantee, production	Post-mining guarantee
Form	Time deposit in a state bank	Joint account or time deposit in a state bank, bank guarantee from a state or national private bank, or an accounting reserve	Time deposit in a state bank
When placed	Within 30 days of the exploration work plan’s approval	Within 30 days of the plan’s approval	Every year, starting within 30 days of the plan’s approval

Placing a guarantee doesn’t end the duty. If the work falls short of the success criteria, the authority can appoint a third party and pay it from the guarantee. If the guarantee doesn’t cover the work, the holder pays the rest. The holder can apply to release the reclamation guarantee as assessed success rises, and the post-mining guarantee against its post-mining programme and budget.

When the duty is ignored

The minister can impose administrative sanctions for breaches of these rules: a written warning, a fine, suspension of part or all of the work, or revocation (Article 151, as amended in 2025). Revocation doesn’t end the duty. A former holder still has to reclaim to 100% and place the guarantees (Article 123A).

It can also be a crime. Under Article 161B, anyone whose licence was revoked or has ended and who doesn’t carry out reclamation or post-mining, or doesn’t place the guarantees, faces up to 5 years in prison and a fine of up to IDR 100 billion. A court can add an order to pay for the work.

A missing guarantee can stop production too. When work plans went back to a yearly cycle under Minister of Energy and Mineral Resources Regulation 17 of 2025, a transition circular of 31 December 2025 let producers mine up to 25% of their planned 2026 output until 31 March 2026, but only if, among other conditions, they’d placed their production-stage reclamation guarantee for 2025.

What makes a gold closure expensive

Acid drainage is the slow one. Where the rock carries sulphides such as pyrite, pit walls, waste dumps and tailings react with air and water and make acidic water that carries metals. It can run long after the last gold is poured, so closure plans need covers, water treatment and years of monitoring. Government Regulation 78 of 2010 asks reclamation to keep water and soil within quality standards and to keep waste dumps and tailings ponds stable (Article 4).

Cyanide tailings are the second. The dam holding them has to stay stable long after the plant shuts.

Mercury is the third, and it may predate the licence. Presidential Regulation 21 of 2019 notes that it’s widely used in small-scale gold mining and describes it as toxic, persistent and able to build up in living things. Mercury-laden tailings and sediment inside a licence area can end up in its clean-up (see alluvial gold). Land in a forest area brings the forestry rules on top (forest area status). Coal’s open voids are covered in void pits and communities.

The closed Kelian mine in West Kutai, East Kalimantan, shows the timescale. Its pit ran out of ore in May 2003 and the plant stopped on 7 February 2005. A closure steering committee that included government at every level, customary bodies and civil society groups had been set up in 1999. The operator reported 1,016 of the 1,192 hectares it had used rehabilitated by December 2004. It planned monitoring to 2013, and a trust fund to pay for monitoring after that, as long as the site stays protection forest.

Pricing closure before you buy

Put closure in the first valuation model. Treat its unfunded part as debt that comes with the licence. Guarantees held on time deposit are cash the mine can’t spend until they’re released. To size the gap:

• Get the approved reclamation and post-mining plans, their latest revisions and their cost estimates.
• Get proof that each year’s guarantees were placed, and the ministry’s written assessments of reclamation success.
• Compare the area disturbed with the area reclaimed against the yearly targets.
• Re-cost the remaining work, water treatment and dam care included, at an outside contractor’s rates, since the authority can appoint one.
• Check for acid-forming rock and mercury in old tailings, and record a baseline before you take over.
• Take the gap between that cost and the guarantees placed off the price, or hold it in escrow.

The rest of the licence checks are in buying into a gold mining licence.