EI1 Mining Licensing (handout english)

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Revenue Watch Institute - Seminar on Extractive Industry Governance at the Local Level: Challenge and Opportunities;
Jakarta, May 22-23, 2012

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EI1 Mining Licensing (handout english)

  1. 1. Sub-National Mining Licensing FrameworkPaper and Application to Two Kabupaten (Districts)in Indonesia- Bangka and Kutai Kartanegara (Kukar) Preliminary Draft for Comment and Discussion
  2. 2. Sub-National Mining Licensing Framework Paper and Application to Two Kabupaten (Districts) In Indonesia- Bangka and Kutai Kartanegara (Kukar) Preliminary Draft for Comment and Discussion1 May 22, 2012Background and PurposeWhile in most countries “mineral rights”, that is the rights to explore for and/or extractminerals from the ground are vested in the national government, there are a small numberof countries where the mineral rights are vested in sub-national government authorities.Such countries include Argentina which has a long established system of decentralizedgovernment and Indonesia which has introduced decentralization since 1999.The purpose of this of this Sub-National Mining Licensing Framework Paper is:  first, to develop a framework for examining the potential benefits and vulnerabilities of mineral licensing taking place at the sub-national rather than the national level;  second; to apply the framework to two districts in Indonesia; and  third: to propose possible policy recommendations for Indonesia.The proposed framework consists of three main building blocks, namely the Performance ofthe Mining Industry; the Performance of the Government Mining Institutions that overseethe mining industry; and the Mining Regulatory Framework. These are now described indetail.A: The Proposed Framework For Examining Sub-National Mineral LicensingFirst Building Block - Performance of the Mining IndustryThe Framework starts by examining the performance of the mining industry looking at threemain criteria of a well-functioning mining industry. The first criterion is how much of theindustry is operating legally and how much new investment is being attracted? The secondcriterion is whether the industry is operating in line with good international health, safety,environmental and social practices and in compliance with all relevant laws and regulations.The third criterion is whether the industry is paying mining fees, taxes and royalties or not.A well-functioning mining industry will have mining operations and activities that areproperly licensed, environmentally and socially responsible and tax and fee paying. This isgenerally the case for medium and large-scale operations but may not be the case forsmaller-scale and artisanal operations. It will also attract investment from a range of goodquality mining companies.1 A draft paper prepared for Revenue Watch by John Strongman and Ambasari DC for the RWI Jakarta Seminar May 22-23 2012
  3. 3. The potential benefits of sub-national licensing are that local officials should know the localarea better than national officials and be able to processes licenses more promptly than alocal licensing office that is part of a national agency. However, a major vulnerability of sub-national licensing compared with national licensing is that illegal mining may flourish. Asecond vulnerability is that mining may take place with more harmful environmental andsocial impacts, including mining in protected areas. A third vulnerability is that mining maycause unresolved conflict with nearby communities due to conflicting land uses, loss of landand livelihoods and/or damage to culture –especially in the case of Indigenous Peoples.While it is possible that illegal or unacceptable mining may take place because ofinadequacies in the mining law and regulations (for example no provision for artisanalmining licenses) more often than not it is because either mining operations are evading theauthorities due to a lack of enforcement capacity or because they are flouting the law withthe complicity of local authorities.Generally speaking most medium and large-scale legally licensed operations will be incompliance, or working towards compliance, with licensing, safeguard and fiscal laws andregulations. The question is whether or not this will also be the case for licensed small-scaleand artisanal operations. Almost certainly any illegal operations will be polluting, unsafe andavoiding paying mining related fees and taxes.Second Building Block - Performance of the Government Mining InstitutionsAfter examining the performance of the mining industry, the next building block examinesthe performance of the government mining institutions in overseeing and administering theindustry and implementing the mineral licensing system. There are four main authorities toconsider as follows:  a Mineral Licensing Office which is responsible for overseeing and administering mining rights and collecting industry production and performance data  a Granting Authority which grants and signs the mining right in the form of a license or contract  a Mining License Cadastre (record keeping) Office which is the repository of all exploration and mining licenses and is responsible for ensuring that licenses do not overlap and for making license and licensing information available to interested parties  a Mines Inspection Agency which supervises mining activities at the mine sites including compliance with license conditions and obligations such as occupational health and safety requirements.Other agencies include the Geological Survey which holds the geological information for thecountry and which may also undertake geological survey work; and other units within aMining Ministry or Mines Department which may include an Artisanal and Small-scale
  4. 4. Mining (ASM) Unit, an Environmental Unit; a Social/Community/Gender Unit; a Policy Unit;an Economics Unit; and an Investment Promotion Unit.Well-functioning mining agencies will process licenses and undertake site inspections in acompetent, efficient, non-corrupt and timely manner, with stable and predictableoperations and a willingness and capacity to engage with stakeholders. They will beadequately resourced with modern information management systems and equipment;sufficient, well experienced and well skilled staff; and an adequate budget including therecurrent funding needed for a strong on site presence.Well governed licensing application and approval procedures will be fully transparent andsecure with all license data and information including license applications protected fromtampering. Licensing records will be kept up to date, secure and accurate and readilyavailable to any interested parties. This can be best accomplished by license applicationsand decisions being registered electronically with public access through an internet-basedweb site. They will also have effective grievance or dispute resolution mechanisms that areaccessible, affordable, timely, impartial and effective.Along with well-functioning mining agencies, there should also be well functioningenvironmental institutions that oversee environmental protection compliance, a socialagency that is responsible for oversight of mining-related social impacts such as involuntaryresettlement procedures and compensation and, where applicable, an agency that isresponsible for the protection of Indigenous Peoples rights. There should also be taxationand possibly other authorities with the capacity to assess, audit and collect taxes, fees androyalties.2Corruption and inadequate capacity are two of the most significant vulnerabilitiesassociated with sub-national licensing authorities. First, sub-national agencies are morelikely to be prone to corruption than national authorities because there may be lesstransparency and scrutiny of sub-national licensing practices and signing authoritiescompared with national agencies and because the larger number of sub-national miningsigning authorities increases the probability that one or more may be corrupt. Sub-nationalofficials are also likely to be more prone to complicity with illegal mining operators.Second, is that given a potentially large number of sub-national authorities3, the weaker subnational authorities may lack the capacity to strictly follow the licensing procedures andmaintain reliable licensing records with the result that they become prone to issuinglicenses that overlap with other licenses. A third vulnerability is that it may not be possibleto maintain a national mining cadastre either because accurate licensing data is notavailable or because sub national authorities do not update the national authority in anaccurate and timely manner. This can be part of a larger sector wide vulnerability that sub-national licensing offices do not share license, production and performance data with other2 In Indonesia profits taxes are collected by the Directorate General of Tax but royalties which are considered a non-tax charge are collected by the Directorate General of Minerals and Energy3 Indonesia has about 400 Kabupatens (Districts)
  5. 5. arms of government such as environmental, social and taxation authorities including thoseauthorities collecting royalties or fees as opposed to profits taxes.Third Building Block - The Mining Regulatory FrameworkHaving examined the performance of the mining institutions, the third and final buildingblock is to examine the underlying mining framework of laws and regulations that providesthe legal basis for the licensing procedures and the authorities and responsibilities of themining institutions in implementing the licensing system.A well-designed mining regulatory framework will have laws, regulations and proceduresthat are uniform, clear, stable, predictable and non-discretionary and that not only definethe government authority and responsibilities but also the rights and obligations of licenseholders.While the main focus is on exploration and mining, a well-designed licensing system willcover all stages of the mining life cycle – from initial prospecting to mine closure, minereclamation and rehabilitation, and, if needed, post closure protection and monitoring.Well-designed mining laws and regulations will provide licensing procedures that aretransparent and clearly specify license holder qualifications or, in the case of competitiveprocesses, evaluation criteria along with licenses or contracts that specify the term, areasize, geographical coordinates and minerals covered.Well-designed mining laws and regulations will clearly specify Government authority toprocess, issue, renew and cancel licenses that are “criteria-based” and non-discretionary i.e.the legal provisions should be that “licenses shall be granted” subject to meeting givencriteria, not “may be granted”. They will also outline the main responsibilities ofgovernment which should include the responsibility to ensure transparency and accuratelicense record keeping and data bases as well as responsibility for timely and accurateinformation transmission between different agencies and levels of government. Well-designed mining laws and regulations will also specify the license holder rights whichshould include security of tenure; exclusivity of license area; license renewals; licenseassignment; and conversion of exploration licenses to mining licenses. They will also detailthe main obligations of the license holder which should include fulfilling any specified workrequirements including minimum expenditure requirements, complying with any and alllicense conditions including mine closure requirements and information disclosure andreporting obligations, undertaking community consultations, paying taxes and fees andputting aside funding as required for mine closure and possibly post closure.A well designed and implemented mining licensing system is necessary, but not sufficient, toachieve sustainable mining development. In addition, environmental and social laws andregulations and institutional roles, authorities and responsibilities are needed that ensure
  6. 6. that exploration and mining (including mine closure) take place in an environmentally andsocially acceptable manner and, where applicable, that the rights of Indigenous Peoples arefully respected. Well-designed environmental and social laws and regulations will includeenvironmental and social impact assessments and environmental management, social riskmitigation and community engagement plans.In addition, there should be a profits taxation system that provides a fair distribution of theeconomic rent (profitability over and above a normal risk-adjusted rate of return) of amining operation between the government (as owner of the resource) and the licenseholder (as developer and operator of the mining operation). Many countries also havemining royalties based on production volumes or values. The overall mining taxation systemincluding royalties and other charges should be progressive and efficient.There are few if any easily identifiable benefits of sub-national mining legislation andregulations. But there can be substantial vulnerabilities when sub-national authorities havethe legal authority to set their own licensing rules. This will then result in different licensingrules in different sub-national jurisdictions. A first vulnerability is that different sub-nationallegislatures may not have the capacity and resources to prepare well-designed licensing orsafeguard regulations and rules. The greater the number of jurisdictions, the greater is therisk that some will have poor quality rules and regulations. A second vulnerability is subnational regulations may be highly discretionary and opaque – with associated risks ofcorrupt practices. A third vulnerability is that licensing agencies may not be obligated todisclose license, production and performance data with other authorities such as taxation,environmental, social, health, safety, and lands authorities as well as agencies responsiblefor protecting Indigenous Peoples.Other vulnerabilities are that there may be a lack of consistency between sub-nationallicensing rules in different jurisdictions and other related laws and regulations, including atthe national level. One example would be sub-national licensing rules that are notconsistent with the national mining law. A related vulnerability is that different licensingprocedures, systems, and cadastre data codification will result in a lack of compatibility forcoordinating the activities and data bases of different sub national authorities. Thesevarious vulnerabilities can create substantial barriers to attracting large investments fromgood quality investors, especially international investors.B. Applying The Framework to Two Districts In Indonesia - Bangka and KutaiKartanegara (Kukar)This section describes the application of the Framework to two districts in Indonesia, namelyBangka and Kutai Kartanegara (Kukar) and also gives examples from some other districts.These two districts were selected because both have issued a large number of licenses (see
  7. 7. Annex 1) and are considered to be important mining districts. The application follows thethree building blocks. In considering the performance of the mining industry it should benoted that following the enactment of a new Mining Law (Law 4/2009) the nationalgovernment has placed a moratorium on new mining operation permits licenses (IUPs)being issued and has undertaken an audit of 10,235 mining licenses and found that only4,151 (about 41%) of the licenses are considered to have “Clean and Clear” (CNC) title.First Building Block - Performance of the Mining Industry – Bangka and KukarThe research found that there is a major illegal mining vulnerability in Bangka, which is a tinmining district, where as much as half of tin mining may be illegal, all of which is artisanal orsmaller-scale mining. Small-scale miners have swamped old mining areas and are illegallyproducing tin – with a reportedly massive local “mafia” of vested interests financing andcontrolling much of the illegal mining. The ambiguity and inconsistency of regulationsbetween the local and national levels, as well as lack of law enforcement, have contributedsignificantly to illegal mining flourishing. In particular, the district government has issuedand legalized mining licenses that do not comply with regulations at national level.Needless to say the illegally mined tin avoids production-related taxes. Illegally produced tinis sold to legal miners and tin buyers who add it to their stocks when selling to smelters. It isalso sold to directly to smelters who include it as legal feedstock or it is simply exportedillegally. As illegal mining practices have become rampant, environmental damage hasincreased substantially and is now bordering on devastation of some areas in Bangka. As ofMay 2012, only 17 IUPs out of 283 issued by the Bangka district authority received Cleanand Clear (CNC) status. Livelihoods are shifting from agriculture (pepper farm) to illegalartisanal tin mining and there are reportedly also many outsiders who have gone to Bangka,attracted by the tin mining earnings.While problems with illegal mining may not be as great in Kukar as Bangka, the researchfound that there are considerable vulnerabilities in Kukar associated with over-lappinglicenses with only 240 IUPs out of 485 IUPs issued by the district government receiving CNCstatus as of May 2012. The main vulnerabilities are associated with smaller-scale andpossibly also medium-scale mining. New licenses are often issued that overlap with existinglicenses so overlapping licenses is a growing problem. License overlaps can result inproduction not being reported and being traded outside the legal system. 4 Kukar has a large4Examples of over lapping licenses in other districts include IUPs owned by PT. Bukit Asam (the coal state-owned company)being overlapped by 16 other IUPs in South Sumatra, In South Sulawesi, IUPshave been issued that overlap with IUPsowned by PT. Aneka Tambang (another mining state-owned company). In Central Sulawesi, Rio Tinto is in a dispute with 14other IUP holders that overlap the Rio Tinto IUPs and PT. Inco is also in a dispute due to overlapping licenses. The biggestdispute caused by overlapping is experienced by Churchill Mining, an Australia company which will possibly go tointernational arbitration. There are also examples of IUPs being issued by districts that overlap with forest and conservationareas. These include the district of Kolaka in Southeast Sulawesi, some districts in the Province of Jambi, and the district ofIn Bengkulu
  8. 8. amount of coal production and environmental impacts are poorly managed, for examplepolluted water waste and pollution from coal stockpiles. There are also reportedly frequentconflicts between the mining operations and the people living in the area in both Kukar andBangka.Second Building Block - Performance of Bangka and Kukar Government Mining InstitutionsThe research found that according to media reports and investigations as well as interviewswith stakeholders, there are many reported concerns and vulnerabilities regarding poorgovernance and corruption. Civil society representatives report concerns about the awardand trading of licenses in both Bangka and Kukar are not transparent and are prone tocorruption. There are also reports that the mining sector mafia in Bangka reportedly hasclose links to some of the public officials. In Kukar license approvals are reported tonormally take nine months or more but some applicants are able to get special treatmentwith licenses issued in just a few days. Some applicants in Kukar are reportedly allowed toapply for adjacent license areas of less than 100 ha each and thereby avoid environmentalprotection requirements which are required for licenses for areas over that size. In bothBangka and Kukar, the Energy and Mining Office budget and staffing are relatively small tooversee mining activities. For example, Kukar had an occupational safety and healthinspection budget of only Rp 375,000 (USD 41,700) in 2011 5 which was sufficient forinspections to be undertaken at only 65 out of 285 operations in Kukar. There are only 16officials in Kukar that have mining, geology, and environmental qualifications in theireducational background. Kukar has a complaints mechanism for environmental issues that isonly partially effective and no such mechanism for communities for conflict resolution withmining operators. Bangka has neither mechanism.Until 2010, mining companies were making their royalty payments to the nationalgovernment without any reporting to the local governments. The national governmentsubsequently transferred the royalties to the local governments under the scheme ofrevenue sharing fund (DBH). But not knowing precisely how much money was being paid bythe mining sector and by which companies, the local governments were unable to verify ifthe full amounts were being paid to them by the national government. They were alsounable to verify if the mining companies were paying royalties on their full production.Starting in 2010 the mining companies have been required to provide local governmentswith copies of the proof of the amount of royalties being paid to the national government.Thus, local government including Bangka and Kukar can now hold the national government5 Out of a budget of Rp 1,300 million for mining activities; by comparison Banka’s total budget for mining activities was aboutRp 2,200 million in 2011. Both budgets are very small to undertake monitoring and oversight activities to the very largenumber of mining companies in each district.
  9. 9. accountable if the amount transferred to the local account does not match with amountthey calculate from copies of the proof of royalty payments.Third Building Block - The Mining Regulatory Framework - Bangka and KukarUnderlying the poor performance of both the mining industry and the government offices inBangka and Kukar6 is a mining regulatory framework in which licensing procedures andregulations are set by each district. This creates vulnerabilities in terms of how well theregulations are designed in terms of detail and linkages to other related laws andregulations (such as environmental and social safeguards). The national government hasstepped in to revoke sub-national mining laws which have not been consistent with nationallaws including in the case of Kukar where the 2001 mining regulation was been revoked in2008 due to not being in line with tax lawThe disparities between mining rules in different jurisdictions are well illustrated betweenBangka and Kukar. In both cases the regulations were issued in 2001. First, Bangka has threetypes of licenses, the IUP (general mining license), a PUP7 (mining operation agreement) andan IUPR (people mining license) whereas Kukar just issues an IUP. Second, Bangka issueslicenses for two mining stages in line with the new 2009 mining law – exploration andproduction. Kukar issues licenses for six stages - general investigation; exploration;exploitation; processing and refining; transport; and selling which is in line with the 1967Mining Law. Third, Bangka’s licensing procedures are considered to have appropriate detailand to be understandable whereas Kukar’s lack specificity and are not related to otherregulations. Annex 2 provides a comparison of some of the features of mining regulations insix different districts which illustrates that the differences are greater than the similarities.However, the situation should improve with the application of the 2009 Mining Law.However, neither requires transparency of licensing procedures and information orobligates licensing offices to make data available to other government offices, in particular,taxation authorities. Most importantly both give complete discretion to the Regent in theissuing of licenses. In the case of Kukar, many legitimate investors may simply not apply forlicenses for fear of graft or fear of the licenses area being awarded on a preferential basis toa local vested interest, relative or crony of the issuing authority because of the high degreeof discretionary power regarding licenses being issued. But equally, in the case of Bangkalegitimate investors may not apply because of the influence of the mafia.Summary6 Kukar mining regulation has been revoked in 2008 due to not in line with tax law.7 This is an agreement for holder of exploration license to apply for license of exploitation and production. PUP must be approved before the holder carry out production.
  10. 10. In summary, the main conclusions of applying the framework to Bangka and Kukar based oninformation received are as follows Mining Industry Performance:  Extensive illegal mining and smuggling including mining in protected areas  Unacceptable, non-compliant environmental and social impacts  Tax avoidance by illegal mining operations Government Mining Institutions  Considerable corruption – licensing graft, bribery and cronyism  Inadequate mining licensing records  Newly issued licenses that overlap other licenses or protected areas  Insufficient mine site inspections and lack of oversight of illegal mining Mining Regulatory Framework  Inconsistent and inadequate sub-national licensing rules and procedures and environmental and social safeguards including conflict resolution  Excessive discretionary power to license offices and Mayors/Governors  Inadequate release of licensing information and environmental performance and social impact dataC. Preliminary Policy Recommendations for Indonesia.Having presented the application of the framework to Bangka and Kukar, this sectionprovides some preliminary policy recommendations that might point a way forward toreducing the vulnerabilities and improving the situation.Building Blocks 1 and 2: Improving the Performance of Mining Operators and GovernmentInstitutionsBecause the performance of mining operators and government institutions are closely inter-linked this section considers ways to address not only the mining companies’ vulnerabilitiesof illegal mining, harmful environmental and social impacts and tax avoidance but also themining institutions’ vulnerabilities of corruption, inadequate licensing record keeping,overlapping licenses and insufficient inspections.
  11. 11. The national government has set the stage for improvements by enacting the new MiningLaw (number 4 of 2009) and also issuing the implementing regulations. With thisbackground, improving the situation has two main elements.  First, is effective implementation of the new 2009 Mining Law which will require time and a sub-national government commitment to reducing and eliminating illegal mining, over lapping licenses and harmful mining environmental and social performance.  Second, is the provision of greater resources to sub-national Energy and Mining Offices to put in place professional leadership and build better management and information systems and more competent and qualified staff to reduce these vulnerabilities.A greater sub-national government commitment will likely involve for some authorities ashift away from corrupt practices. Greater openness and transparency regarding licensinginformation and improved reporting to national government are preconditions for improvedmining sector governance.The situation in Bangka is especially difficult given the strong and entrenched mafia who willlikely oppose any improvements. If the situation is to be improved and the vulnerabilitiesreduced, it will require some combination of identifying practical ways to:  legalize presently illegal mining operations that are willing to report their tin production, pay taxes and improve their environmental performance and  Close those operations that persist in smuggling their tin and refuse to improve their environmental practices.On Bangka, it will require both the commitment and the capacity to put in place closerscrutiny of licensed miners and smelters who may take possession of or process illegallymined materials. It will also require a forceful engagement with the mafia who will likely notcede their control of much of the industry willingly. Such a change will not come easily and ifit is to happen will likely require strong national government support and oversight.In the case of Kukar, there is a need for greater oversight and policing of illegal mining, inparticular, unreported production from overlapping license areas. But the greatervulnerability may relate to graft and corruption in issuing licenses, including issuing licensesthat overlap with existing licenses. This also becomes an issue of political will to reducecorruption and build greater capacity to follow licensing rules, keep accurate and up to datelicensing records and inspect all mining operations on a regular basis.The national government has made a very substantial start to improving the licensingsituation through its Clean and Clear program, but the issue remains as to what will happen
  12. 12. regarding the licenses that are not clean and clear, including license overlaps. Licenseoverlaps should be eliminated in favor of the first license holder.Greater scrutiny by national government including increased and regular auditing of licenseswould be an important measure to reduce and eventually prevent over lapping licensesbeing issued in future. But to be fully successful, each district would need to maintain anaccurate record of the geographical coordinates, term and other conditions of licenses thathave been issued.The underlying vulnerability of sub-national Energy and Mining Offices lacking sufficientbudgets and staff is a common occurrence in many countries. The reality is that thelikelihood of sub-national governments allocating sufficient resources for their licensingoffices to operate efficiently and effectively is very small. If sufficient funding is to be madeavailable then most likely it would need to be provided by allocating part of the mining-related payments to government as dedicated funds to increase the number of staff, toprovide training and incentives to improve staff abilities and incentives to retain them; andto fund investment in improved management and information systems.Improving the dialogue with civil society can also contribute to reducing vulnerabilities inboth Bangka and Kukar, but this is also in large part a matter of political will and leadershipas much as mandatory national regulatory requirements.Building Block 3: Improving the Regulatory FrameworkThe 2009 Mining Law has made an important step towards improving inconsistent andinadequate sub-national licensing rules, but even so the other two regulatory vulnerabilitiesof excessive discretionary power and inadequate disclosure and release of information anddata still need to be addressed through further changes to laws and regulations. Legalmeasures can mandate such improvements.Ideally the 2009 Mining Law should be modified to make the issuing of licenses mandatory,not discretionary, providing that the licensing criteria have been satisfied.Equally and mostimportantly, the laws and regulations should mandate full transparency regarding licensingapplications, evaluation, approvals and records including mandatory disclosure of licensinginformation and production, environmental and social performance data Full transparencyis a regulatory change that would considerably improve governance and reduce corruption.Full transparency is a regulatory change that has the potential to considerably reducecorruption. Improved transparency with regard to making all the details of licenseapplications and approvals readily and publically available is a corner stone to
  13. 13. improvements which would reduce the vulnerability to corruption. Transparency should belegislated and regulated and supported by funding for standardized licensing systems ateach license office.Just as EITI has established the principle of transparency for extractive industries taxpayments and collections, so there should also be licensing transparencyIndonesia has the potential for many more large-scale mines that could bring significantemployment at the local level and wealth to both national and sub national governmentsthrough tax payments and induced growth. But, large-scale investments are no longertaking place due to the uncertain investment environment, largely created by sub-nationallicensing. There is much at stake which would warrant the national government consideringmeasures to address the present vulnerabilities and improve the licensing system.But what if sub-national authorities do not follow the new Mining Law or the regulatoryrequirements proposed here for greater transparency and information disclosure. Thenational government may have to both reward and coerce improved sub nationalgovernment performance through legal measures regarding “carrots and sticks”. Thesecould include • a moratorium on issuing licenses for non-performing governments and • adjusting transfers of mineral-related payments to sub-national governments according to their needs and performanceFinally, the dialogue with and role of civil society can also be enhanced by mandatoryrequirements for disclosure of information and consultation with local communities.
  14. 14. Annex 1 Districts/Municipalities in Indonesia Issuing Most Licenses in Indonesia District/ Number of Commodities Provinces Municipality LicenseBangka 283 Tin Bangka BelitungTanah Laut 197 gold, chrome, coal, iron South Kalimantan ore, nickel ore, manganeseTanah Bumbu 185 coal, iron ore South KalimantanKutai 153 Coal East KalimantankartanegaraBelitung Timur 150 Tin, bauxite, hematite, Bangka Belitung iron, Kaolin, quartzKetapang 149 Zircon, tin, iron ore, West Kalimantan bauxite, gold, granite, kaolin, barite, galena.Bangka Barat 143 Tin Bangka BelitungBarito Utara 139 Coal South KalimantanKutai Barat 135 coal (132 licenses), gold East Kalimantan (3 licenses)Kutai Timur 133 coal, gold (2 licenses) East KalimantanKotabaru 132 coals, iron ore, limestone South KalimantanKapuas 106 coals, gold South KalimantanBarito Timur 105 coals, iron ore South KalimantanKonawe Utara 102 nickel (majority), gold, Southeast Sulawesi chrome, limestoneMorowali 100 nickel, chrome, gold, iron Central Sulawesi oreIslands of Sula 98 iron ore North Maluku Source: own table
  15. 15. Annex 2 Comparison of Mining Licensing Regulations in Different DistrictsDescription Bangka Tanah Bumbu Kutai West Kutai East Barito South Kalimantan Central Kartanegara KalimantanYear of Issue 2001 2007 2001 2003 2004 2009 2002Name and - IUP - KP is used to - IUP - IUPUD IUP refer to: KP - IUPtype of license - PUP refer the mining - KP - KP - IUPR license but not - CoW clearly defined in - CCoW article 1. - SIPR - SIPDStage of 2 (exploration 6 (general 6 (general 6 (general Complicated and 5 (general 5 (generallicensing for and investigation; investigation; investigation; mixed between investigation; investigation;mining activity exploitation) exploration; exploration; exploration; procedures and exploration; exploration; exploitation; exploitation; exploitation; stages. exploitation; exploitation; processing and processing and processing and processing and processing and refining; transport; refining; refining; refining; refining; and selling) transport; and transport; and transport and transport and selling) selling) selling) selling) + IUP for serviceAre CoW and No No No No Yes Yes NoCCoWregulated?Procedures/ IUP: Detailed Not detailed and Not detailed Not detailed Very detailed of The licensing The licensingRequirements and easy to must refer to and no other for IUPUD but procedures to procedures procedures understand. Regent Regulation regulation as not specify apply 13 types regulated under regulated under IUPR: to be and in annex reference other licensing related Decision of Governor regulated by (unable to be regulation as to KP; and 37 Governor Regulation Regent accessed) reference. types licensing Not detailed in related to CoW KP and must and CCoW. refer to Decision of RegentIf more than Not regulated First come first First priority is IUPUD: first Not regulated First applicant, Not regulatedone applicant served. decided by priority for first priorityfor the same Regent, first applicantarea. KP: not specifiedSource: own table

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