Introduction
In recent years, the Indonesian government has increasingly strengthened the regulatory framework for small-scale mining as part of efforts to regulate small-scale mining activities, which have largely been conducted informally. One of the key instruments within this framework is the Small-Scale Mining Area (WPR) and the issuance of Small-Scale Mining Permits (IPR) to local communities.
Mining regulatory reforms triggered by amendments to Law No. 4 of 2009 on Mineral and Coal Mining—as amended by Law No. 3 of 2020—have significant implications for the governance of community-based mining. In addition, various implementing regulations issued by the Ministry of Energy and Mineral Resources (ESDM) also clarify the procedures for designating areas and the mechanisms for granting permits to community mining operators.
In practice, the delineation of WPRs and the issuance of IPRs are not only related to granting rights to communities but are also closely tied to environmental control, legal certainty, and the integration of small-scale mining activities into the national mining governance system.
This Client Update aims to provide an overview of regulatory developments regarding the designation of WPRs and the granting of IPRs, including their implications for mining operators, local governments, and communities engaged in small-scale mining activities.
Legal Framework for the Designation of Community Mining Areas (WPR)
Conceptually, a WPR is part of a Mining Area (WP) specifically allocated for mining activities conducted by local communities on a limited scale.
The primary legal basis regarding WPRs can be found in:
- Law No. 4 of 2009 on Mineral and Coal Mining, as amended by Law No. 3 of 2020.
- Government Regulation No. 96 of 2021 on the Implementation of Mineral and Coal Mining Business Activities.
- Regulations of the Minister of Energy and Mineral Resources governing the procedures for designating areas and granting community mining permits.
Under this regulatory framework, the central government has strategic authority to establish policies for the management of mineral resources, while local governments play a role in identifying and proposing areas that can be designated as WPR.
In principle, the designation of WPRs is carried out by considering several key factors, including:
- The availability of mineral or coal resources that can technically be mined by the community using simple technology.
- Safety and environmental aspects, including potential impacts on the ecosystem surrounding the area.
- Consistency with regional spatial planning and local development policies.
- The existence of small-scale mining activities that have been carried out for generations in the area.
Thus, the designation of WPRs is not merely an administrative decision but also a policy process involving technical, social, and environmental considerations.
Mechanism for Granting Small-Scale Mining Permits (IPR)
Once an area has been designated as a WPR, local communities may apply for a Community Mining Permit (IPR) to conduct mining activities legally.
An IPR is essentially a permit granted to:
- individuals;
- community groups; or
- cooperatives,
that conduct small-scale mining activities within a WPR area.
The latest regulations clarify that the purpose of granting an IPR is to:
- Providing legal certainty for artisanal miners, so that mining activities are no longer conducted illegally.
- Enhancing oversight of small-scale mining activities, particularly with regard to workplace safety and environmental protection.
- Promoting the economic empowerment of local communities, particularly in areas that depend on small-scale mining activities.
However, the process of granting an IPR still requires the fulfillment of various administrative and technical requirements, including, among others:
- proof of the applicant’s residence in the local area;
- a recommendation from the local government;
- a mining activity plan;
- and a commitment to environmental management.
Through this mechanism, the government seeks to integrate small-scale mining activities into a more orderly and controlled licensing system.
Mechanism for the Preparation, Submission, and Revision of the Work Plan and Budget (RKAB)
Within the framework of national mining business governance, the Work Plan and Budget (RKAB) serves as the primary instrument for controlling mining operations, including aspects of production, the environment, and government revenue.
Based on the provisions of Regulation of the Minister of Energy and Mineral Resources No. 17 of 2025, every holder of a mining business permit is, in principle, required to prepare and submit the RKAB periodically as a prerequisite for conducting production activities.
The RKAB is prepared annually and submitted electronically through an integrated licensing system, which enables the evaluation process to be conducted in a more transparent, measurable, and data-driven manner.
Under this mechanism, RKAB submissions must meet various administrative and technical requirements, including those related to reserve data, production plans, occupational safety, and environmental management. Once submitted, the RKAB undergoes an evaluation process by the government, with a specified timeframe and a mechanism for corrections if there are deficiencies in the submitted documents.
In addition to the initial submission, the regulations also allow for revisions to the RKAB in the event of changes in operational conditions, changes to the feasibility study, or other factors affecting mining operations. The revision process generally follows a mechanism similar to that of the initial submission.
However, in the context of small-scale mining, provisions regarding obligations and the mechanisms for drafting, submitting, and revising the RKAB have not been explicitly regulated under the Small-Scale Mining Permit (IPR) regime. This indicates a difference in regulatory approaches between large-scale mining and small-scale mining, particularly regarding the planning and control of operational activities.
Moving forward, more comprehensive regulations regarding the implementation of the RKAB in small-scale mining activities could serve as a key instrument in enhancing effectiveness and promoting more orderly and sustainable mining practices.
Challenges in Implementing WPR Designation and IPR Granting
Although the regulatory framework has been developed in a relatively comprehensive manner, the implementation of WPR designation and IPR granting in the field still faces a number of challenges.
One of the main challenges is the limited area officially designated as a WPR, while at the same time artisanal mining activities have been taking place in many regions without a clear legal basis.
Furthermore, the process of designating WPRs often requires cross-sectoral coordination, including with ministries responsible for forestry, the environment, and spatial planning. This becomes even more complex when the areas proposed as WPRs are located within forest areas or have the potential to conflict with large-scale mining business permits.
Another challenge relates to the institutional capacity of mining communities, which in many cases remains limited in meeting the administrative and technical requirements for obtaining an IPR.
As a result, although regulations have opened the door to legalizing artisanal mining, some mining activities still take place outside the formal permitting framework.
Implications for Business Operators and Investors
Regulatory developments related to WPR and IPR also have significant implications for mining operators, particularly companies that hold concessions in areas where artisanal mining activities also take place.
In some cases, artisanal mining activities may occur within or around a company’s concession area, which could potentially lead to:
- social conflicts with local communities;
- occupational safety risks;
- and potential legal liability for holders of mining business permits.
Therefore, companies need to conduct a comprehensive analysis of legal and social risks to understand the dynamics of artisanal mining activities in the areas surrounding their operations.
A proactive approach to mapping the area, engaging with local communities, and coordinating with local governments are crucial steps in mitigating potential conflicts that may arise.
Conclusion
The regulation of artisanal mining activities through the mechanisms of designating WPRs and granting IPRs is a strategic step by the government to integrate small-scale mining activities into the national mining governance system.
Meskipun kerangka regulasi telah semakin jelas, implementasi di lapangan masih menghadapi berbagai tantangan, termasuk keterbatasan wilayah WPR, kompleksitas koordinasi antarinstansi, serta kapasitas kelembagaan masyarakat penambang.
For mining operators and investors, these regulatory developments must be comprehensively understood, as they can influence operational dynamics in mining areas as well as relationships with local communities.
An approach based on legal analysis, social risk mapping, and stakeholder engagement strategies is key to ensuring that mining operations can proceed sustainably and in accordance with the applicable regulatory framework.
