29 Sep 2026 · TAMA Insight
New Guidelines on the Use of Subsidiaries and Affiliates in Mineral and Coal Mining Services in Indonesia
Indonesia has introduced a new technical framework governing the use of subsidiaries and/or affiliates in mineral and coal mining services through Minister of Energy and Mineral Resources Decree…
Indonesia has introduced a new technical framework governing the use of subsidiaries and/or affiliates in mineral and coal mining services through Minister of Energy and Mineral Resources Decree No. 365.K/MB.01/MEM.B/2026 on Technical Guidelines for the Implementation of Approval for the Use of Subsidiaries and/or Affiliates in Mineral and Coal Mining Services (“MEMR Decree 365/2026”).
MEMR Decree 365/2026 was issued on 18 September 2026 and has been effective since the date of its issuance. The Decree regulates the approval mechanism for the use of subsidiaries and/or affiliates in mining services by holders of a Mining Business License (Izin Usaha Pertambangan or “IUP”) or a Special Mining Business License (Izin Usaha Pertambangan Khusus or “IUPK”).
MEMR Decree 365/2026 provides that IUP or IUPK holders may not involve subsidiaries and/or affiliates in mineral and coal mining services without the approval contemplated under the Decree. Such approval may be granted under certain circumstances, particularly where the IUP or IUPK holder is carrying out a Government assignment.
The Decree also expressly revokes Director General of Mineral, Coal and Geothermal Decree No. 376.K/30/DJB/2010 on Procedures and Requirements for Applications for Approval of the Participation of Subsidiaries and/or Affiliates in Mining Services.
1. MEMR Decree 365/2026 and Its Scope
MEMR Decree 365/2026 provides technical guidelines concerning the application, approval, and evaluation of the use of subsidiaries and/or affiliates in mineral and coal mining services.
The regulation is particularly relevant to corporate groups that conduct mining and mining services activities through related entities. The Decree establishes the circumstances requiring approval and the procedures to be followed before subsidiaries and/or affiliates may be used in mining services.
2. Requirement to Use IUJP Holders
Provision ONE of MEMR Decree 365/2026 stipulates that IUP or IUPK holders that use mining services in their business activities must engage companies holding a Mining Services Business License (Izin Usaha Jasa Pertambangan or “IUJP”). The Decree also provides that priority should be given to mining services companies located in regencies/cities surrounding the relevant Mining Business License Area (Wilayah Izin Usaha Pertambangan or “WIUP”) or Special Mining Business License Area (Wilayah Izin Usaha Pertambangan Khusus or “WIUPK”).
The fact that a mining services company is a subsidiary or affiliate of an IUP or IUPK holder does not, in itself, remove the requirement to engage a company holding an IUJP covering the relevant mining services business field and sub-field.
3. Prohibition on the Use of Subsidiaries and/or Affiliates Without Approval
Provision TWO stipulates that IUP or IUPK holders are prohibited from involving subsidiaries and/or affiliates in mineral and coal mining services without approval from the Minister.
This provision is particularly relevant to corporate groups that have mining companies and mining services companies within the same corporate structure. The use of related companies should be assessed based on the criteria and approval mechanism established under MEMR Decree 365/2026.
4. Criteria for Subsidiary and/or Affiliate Relationships
Provision THREE provides that the involvement of subsidiaries and/or affiliates includes circumstances involving direct share ownership by an IUP or IUPK holder in an IUJP holder, as well as the existence of one or more identical beneficial owners between the IUP or IUPK holder and the IUJP holder.
Accordingly, an assessment of the corporate relationship is not limited to direct share ownership but should also take into account beneficial ownership. This is particularly relevant for corporate groups with ownership structures involving multiple entities.
5. Exception for Government Assignments
MEMR Decree 365/2026 does not eliminate all possibilities for the use of subsidiaries and/or affiliates. Provision FOUR provides that approval may be granted to IUP or IUPK holders carrying out a Government assignment. Such assignments include the implementation of national strategic projects, the development of mineral processing and/or refining facilities or coal development and/or utilization activities, as well as the fulfilment of domestic mineral or coal requirements.
Accordingly, such approval is not formulated as a general facility available to every IUP or IUPK holder. The relevant Government assignment is an important element of an application for approval to use a subsidiary and/or affiliate.
6. Application for Approval to the Minister
Provision FIVE stipulates that an application for approval to use a subsidiary and/or affiliate must be submitted to the Minister. In submitting the application, an IUP or IUPK holder should pay attention to the applicable requirements and supporting documents.
In practice, companies should ensure that information concerning the IUP/IUPK holder, IUJP holder, ownership or beneficial ownership relationship, relevant IUJP business field and sub-field, and the basis for the Government assignment is adequately set out in the application.
7. Timeframe for Granting Approval
Provision SIX stipulates that approval for the use of a subsidiary and/or affiliate is granted within 14 working days from the date the application is received in complete and correct form.
Accordingly, this timeframe is calculated based on the receipt of an application that is complete and correct. Companies should therefore pay close attention to the completeness of their supporting documents upon submission, as the receipt of a complete and correct application is relevant to the calculation of the applicable timeframe.
8. Scope and Validity Period of Approval
Provision SEVEN stipulates that approval is granted in accordance with the business field and sub-field of the subsidiary’s and/or affiliate’s IUJP, as specified in the application.
The approval is also valid until the expiry of the relevant IUJP. Accordingly, the scope and validity period of the IUJP are factors that should be taken into consideration when relying on such approval.
9. IUPs Issued by Governors
For IUPs issued by Governors in accordance with their respective authorities, Provision EIGHT provides that an application for approval to use a subsidiary and/or affiliate may be submitted to the relevant Governor.
Accordingly, companies should consider the authority under which the relevant IUP was issued when determining the appropriate authority to which the approval application should be submitted.
10. Correction of Administrative or Evaluation Errors
Provision NINE provides that where an administrative error and/or evaluation error occurs in the process of issuing an approval or rejecting an approval application, the relevant correction may be made by the Minister or Governor in accordance with their respective authority.
This provision provides a basis for correcting an approval or rejection where a relevant error has occurred, subject to the applicable laws and regulations.
11. Application to IUPKs as Continuation of Operations, KK, and PKP2B
Provision TEN provides that MEMR Decree 365/2026 applies mutatis mutandis to IUPK holders as a continuation of Contract/Agreement operations, holders of Contracts of Work (Kontrak Karya or “KK”), and holders of Coal Mining Business Work Agreements (Perjanjian Karya Pengusahaan Pertambangan Batubara or “PKP2B”).
Accordingly, the provisions concerning the use of subsidiaries and/or affiliates in mining services may also apply to these mining regimes, with the necessary adjustments.
12. Revocation of Previous Regulation and Effective Date
Provision ELEVEN expressly provides that Director General of Mineral, Coal and Geothermal Decree No. 376.K/30/DJB/2010 is revoked and declared no longer effective upon the effectiveness of MEMR Decree 365/2026.
MEMR Decree 365/2026 was issued and became effective on 18 September 2026. Following the revocation, the approval mechanism for the use of subsidiaries and/or affiliates should be assessed with reference to MEMR Decree 365/2026 and other applicable regulations that remain in force.
13. Practical Implications for IUP/IUPK Holders and Corporate Groups
MEMR Decree 365/2026 should be considered by IUP and IUPK holders that engage companies within the same corporate group as mining services providers. Companies should review the direct ownership and beneficial ownership relationships between the IUP/IUPK holder and the IUJP holder to determine whether such relationships fall within the scope of the Decree.
Companies should also consider whether the use of a subsidiary or affiliate relates to a Government assignment as contemplated under the Decree. This is relevant because approval for the use of a subsidiary and/or affiliate is linked to the Government assignment circumstances specified under the Decree.
14. Key Considerations for Businesses
For companies that currently use or intend to use subsidiaries and/or affiliates in mining services, MEMR Decree 365/2026 creates a need to review their corporate relationships, the status and scope of the relevant IUJP, and the basis for engaging the relevant company.
Companies should also ensure that any application for approval is submitted to the appropriate authority and supported by the required documentation. For arrangements or transactions that were already in place before the Decree took effect, an assessment should be conducted based on the specific circumstances and applicable documents to determine how the new requirements may be relevant to those existing arrangements.
Conclusion
MEMR Decree 365/2026 provides technical guidelines governing the use of subsidiaries and/or affiliates in mineral and coal mining services. The Decree regulates the requirement to use IUJP holders, the prohibition on involving subsidiaries and/or affiliates without approval, the criteria for determining relevant corporate relationships based on direct share ownership and beneficial ownership, and the Government assignment circumstances that may form the basis for granting approval.
The Decree also provides that approval is granted within 14 working days from the receipt of a complete and correct application, with the scope of approval following the relevant IUJP business field and sub-field and its validity period following the validity of the relevant IUJP.
With MEMR Decree 365/2026 having taken effect on 18 September 2026 and Director General of Mineral, Coal and Geothermal Decree No. 376.K/30/DJB/2010 having been revoked, IUP/IUPK holders and corporate groups that engage affiliated companies in mining services should take the new provisions into account when reviewing and assessing their existing mining services arrangements.
This article is intended to provide general information regarding MEMR Decree No. 365.K/MB.01/MEM.B/2026 and does not constitute legal advice or a legal opinion in respect of any particular transaction or circumstances. The application of the relevant provisions should be assessed based on the specific facts, ownership structure, licenses, and documents applicable to each company.
Disclaimer: Here
For additional insights on Indonesian immigration compliance and global mobility matters, explore our related publications:
New Amendment to Mandatory SNI Requirements for Solid NPK Fertilizer in Indonesia
New Amendment to Mandatory SNI Requirements for Tires in Indonesia
New Guidance on Products and Materials Exempted from Halal Certification in Indonesia
New Import Restrictions on Non-New Industrial Electronic Goods in Indonesia
