Mining licences in Indonesia: IUP, IUPK and IPR

In Indonesia the minerals in the ground belong to the state. A mining licence gives the holder the right to explore an area and produce from it, for a fixed term and under conditions. It doesn’t give ownership of the land on top, which still has to be acquired or compensated separately.

For gold, three licences matter: the mining business licence (Izin Usaha Pertambangan, IUP), the special mining business licence (IUPK) and the people’s mining licence (Izin Pertambangan Rakyat, IPR).

The law behind them

The base is Law 4 of 2009 on mineral and coal mining. Law 3 of 2020 rewrote much of it and the Job Creation Law changed it again in 2020 and 2023. Law 2 of 2025, in force since 19 March 2025, is the fourth amendment. Government Regulation 96 of 2021 sets out the detail. It was amended in 2024 and again by Government Regulation 39 of 2025.

Law 3 of 2020 took licensing for metals and coal away from the regions. Gold IUPs and IUPKs are now issued by the Ministry of Energy and Mineral Resources through the online licensing system (OSS). Presidential Regulation 55 of 2022 handed a few licences back to provincial governors, including the IPR, rock mining permits and IUPs for non-metallic minerals. Until the mid-2010s, district heads issued most mining licences, and many of the overlapping areas found today date from that period.

The three licences compared

	IUP	IUPK	IPR
Area	Mining business area (WIUP)	Special area (WIUPK) set by the central government	People’s mining area (WPR)
Who can hold it	Companies, cooperatives, sole proprietors, small and medium businesses, companies owned by religious organisations	State and regional companies, cooperatives, small and medium businesses and religious organisations’ companies; private companies only by auction	Local residents, or cooperatives whose members are local residents
Issued by	Ministry of Energy and Mineral Resources	Ministry of Energy and Mineral Resources	Provincial governor
Largest area for metals	100,000 ha to explore, 25,000 ha to produce	100,000 ha to explore; production area set by the minister	5 ha for a person, 10 ha for a cooperative
Term	Up to 8 years of exploration, then 20 years of production plus two 10-year extensions	Same as the IUP	Up to 10 years plus two 5-year extensions

How an IUP works

An IUP has two stages. Exploration covers the general survey, the exploration itself and the feasibility study. Production operation covers construction, mining, processing, transport and sale. For metal minerals, exploration can last up to 8 years. A holder that finishes exploration is guaranteed the right to move into production, as long as it meets the administrative, technical, environmental and financial requirements.

Production runs for up to 20 years, with two extensions of 10 years each that the law guarantees once the requirements are met. A metal mine integrated with its own processing or refining plant gets 30 years, extended 10 years at a time.

The licence can’t be transferred, and the holder’s shares can’t change hands, without the minister’s approval (Articles 93 and 93A). That rule shapes every acquisition, covered in buying into a gold mining licence.

How gold areas are allocated

Under Law 3 of 2020, a new metal mining area went out by auction. Auctions still exist. Law 2 of 2025 added a second route, allocation by priority, for:

• cooperatives, small and medium businesses and companies owned by religious organisations
• state, regional or private companies that support a university and share part of their profit with it
• state or private companies that commit to downstream processing in Indonesia

Government Regulation 39 of 2025 caps a priority area for a cooperative or small business at 2,500 hectares. The applicant has to be based in the district where the area lies.

On 16 July 2026 the Constitutional Court read two decisions on these routes. Decision 160/PUU-XXIII/2025 held that priority, for the groups above and for the IUPK, can’t be treated as direct appointment. It has to rest on clear parameters and an objective, transparent and accountable assessment. Decision 202/PUU-XXIII/2025 applied the same reading to the downstream processing route and added that it must put domestic value-adding and the domestic supply chain first, with global supply considered only once domestic needs are met. The ministry said the priority routes stay and that new rules on assessing applicants would follow. Until they’re out, treat any newly allocated priority area with care and ask how the allocation was made.

The IUPK works on the same terms for metals, with one cost the IUP doesn’t carry. An IUPK holder in production pays the state 10% of its net profit, 4% to the central government and 6% to the regions (Article 129). Old contracts of work (Kontrak Karya) can also continue as IUPKs when they expire. Coal’s older contracts are covered in coal licences.

The IPR and people’s mining

The IPR is the legal route for small-scale miners. It’s open only to local residents and to cooperatives of local residents, and only inside a designated people’s mining area (WPR). A WPR covers at most 100 hectares. The criteria point to river, terrace and floodplain deposits, or to primary deposits no deeper than 100 metres.

The ministry designates WPRs on proposals from the provinces. In January 2026 it told parliament it planned to set 129 WPR blocks in Central Kalimantan, 95 of them in Murung Raya and all but one for gold.

An outside investor can’t hold an IPR. Funding miners who hold one, or buying their gold, carries the risks set out in illegal gold mining.

Before you rely on a licence

A licence document on its own proves little. Check it against the ministry’s records: the licence number, the holder, the commodity, the stage, the expiry date and the area coordinates. Confirm the area doesn’t overlap another licence. Law 2 of 2025 lets the government revoke overlapping licences issued before 19 March 2025 and return the area to the state.

Check the forest status of the area too. A mining licence doesn’t give the right to clear or use forest land, which needs its own approval (see forest area status). And ask a mining lawyer which route the area came through (auction, priority or an older grant), because the rules for priority areas are still being written.