IMPORTANT POINTS ON OBLIGATIONS AND LEGALITY OF MINING COMPANY THAT MUST BE KNOWN
“Surat Keterangan Terdaftar (SKT) is a certificate of registration for Non-Core Business Mining Company which conducts continuous activities at the mining site.”
For those who want to run a business in mining sector in Indonesia, you need to understand the important points in legal aspects related to the mining business in Indonesia.
Before we discuss further, we need to understand the definition of Mining Services. Mining Services are supporting services related to the mining business, in the regulations, it is known as Non-Core Mining Business.
What kind of business is included in the Non-Core Mining Business category? This can be found in the Minister of Energy and Mineral Resources Regulation No. 24 of 2012 concerning Amandement to the Minister of Energy and Mineral Resources Regulation No. 28 of 2009 on Implementing Mineral and Coal Mining Business Services (Permen ESDM No. 24/2012), as stated in the 1B attachment, that non-core mining business services are:
- Catering Services;
- Security Services;
- Health Services;
- Civil Construction;
- Electric Construction;
- Mechanical Construction;
- Telecommunication Construction;
- Architectural Construction;
- Spare Parts Supplier;
- Labor Provider;
- Mining Equipment Supplier;
- Mining Equipment Maintenance;
- Mining Equipment Rental;
- Mining Supporting Equipment Supplier;
- Mining Supporting Equipment Maintenance;
- Mining Supporting Equipment Rental;
- Sea, Land, and Air Transportation Services;
- Test Labolatory;
- Fire Extinguisher Supplier and Maintenance;
- Chemical Substances Supplier;
- Management Consultation;
- Construction Material Supplier;
- Information Technology Services;
- Document Handling Services;
- Cooling Equipment Supplier, Rental, and Maintenance;
- Fuel and Oil Supplier;
- Explosives Supplier;
- Ship Rental Services;
- Draught Survei Services;
- Independent Audit Services;
- Insurance Services;
- Training Services;
- Safety Equipment Supplier;
- Waste Management Service of Hazardous and Toxic Material.
From the category of business as mentioned above, those are divided into several category as stated in Article 124 of Law No. 4 of 2009 on Mineral and Coal Mining (Law No. 4/2009): Consultation, Planning, Implementation, and Equipment Testing.
Surat Keterangan Terdaftar (SKT) as a License for Mining Services Company
Legality or license for the mining services company engaged in businesses as mentioned above is Surat Keterangan Terdaftar (SKT) obtained from Ministry of Energi and Mineral Resources or other officials. SKT becomes prerequisite for all Mining Services Company to conduct their business.
According to its regulation, Surat Keterangan Terdaftar (SKT) is a certificate of registration for Non-Core Mining Services Company which conducts continuous activities at the mining site. (Article 1 number 17 of Permen ESDM No. 24/2012).
Moreover, the mining service company also has qualification from small to big, as stated in Article 14 Permen ESDM No. 24/2012 which are small, medium, and big mining service business. It is categorized based on the net worth:
- Small business, if the amount of net worth is Rp 50.000.000,00 (fifty million rupiah) to Rp 300.000.000,00 (three hundred million rupiah);
- Medium business, if the amount of net worth is more than Rp 300.000.000,00 (three hundred million rupiah) to Rp 1.000.000.000,00 (one billion rupiah); and
- Big business, if the amount of net worth is more than Rp 1.000.000.000,00 (one billion rupiah).
What is the process and requirement for SKT to be met by the mining services company? Besides Permen ESDM No. 24/2012, the requirements for SKT are also regulated in the Decision of General Director of Mineral and Coal No. 567.K/30/DJB/2015 concerning Standard Services in General Directorate of Mineral and Coal.
Application for SKT is submitted to the General Directorate of Energy Mineral Resources directly (non online) by submitting a letter of application (according to the format in Permen ESDM No. 24/2012) in 2 (two) duplicates, by attaching the legality of the company such as:
- Tax Identification Number (NPWP) of the Company and All Board of Directors and Commissioners;
- Articles of Associations and its latest amandement;
- Company Registration Certificate (TDP);
- Certificate of Domicile of Company (SKDP).
The other documents required are statement letter (according to the format in Permen ESDM No. 24/2012) and application form for new SKT (according to the format in Permen ESDM No. 24/2012) on:
- Capital status;
- Investment for non-core mining service business;
- Valid license for non-core mining service business from relevant institution.
The time duration for SKT application is 15 days (at the latest) if the application is deemed complete and correct. SKT is valid for 5 (five) years and can be extended (Article 17 Permen ESDM No. 24/2012).
The obligations of SKT-Holder Mining Service Company.
After obtaining business license or SKT, the mining service company has to follow the regulations.
Permen ESDM No. 24/2012 stated the obligations of SKT holder in conducting its business:
- Prioritize domestic product;
- Prioritize local subcontractor according to its competence;
- Prioritize local manpower;
- Conduct business in accordance with the type of business;
- Submit mining services contract with IUP or IUPK holder documents to the Minister, governor, or regent/mayor in accordance with respectives authority;
- Conduct environmental management efforts in accordance with the applicable law;
- Optimize the local expenditure of goods and services needed for business operation;
- Carry out the provisions on Occupational Safety and Health in accordance with the applicable law;
- Conduct community development and empowerment program including training and education, health, local economic growth; and
- Prepare and submit activity report to the IUJP or SKT issuer;
The obligation to prepare the report as mentioned above, covers quarterly and annual reports, which are:
- Contract Value;
- Contract Realization;
- Equipment (masterlist);
- State Revenue;
- Local Revenue;
- Local, National, and/or import expenditure; and
- Community development.
What if the SKT-holder violates those obligations?
Permen ESDM No. 24/2012 also regulates sanction. the authorized officials to impose sanctions are Minister, governor and regent/mayor in accordance with respective authority. The officials may impose administrative sanctions to the SKT holder that:
- Conductiong business not in accordance with SKT; or
- Not submitting quarterly and/or annual activities report within 30 (thirty) working days after the end of period in 3 (three) month consecutively;
- Providing false data or forging a document; or
- Transfering SKT to other party.
Administrative sanction may be in form of written warning, temporary suspension of operation on all or part of business, and revocation of SKT.
We hope this article is useful.
Please download the related regulations:
- Law Number 4 of 2009 concerning Mineral and Coal Mining;
- Minister of Energy and Mineral Resources Regulation No. 24 of 2012 concerning Amandement to the Minister of Energy and Mineral Resources Regulation No. 28 of 2009 on Implementing Mineral and Coal Mining Business Services;
- Decision of General Director of Mineral and Coal No. 567.K/30/DJB/2015 concerning Standard Services in General Directorate of Mineral and Coal.
Iskandar D.P., SH