On 20 December 2010, the Government issued Government Regulation No. 78 of 2010 on Reclamation and Post Mining Activities (“GR No. 78”). It is the fourth Government Regulation issued pursuant to Law No. 4 of 2009 on Mineral and Coal Mining, along with several lower level regulations. Under GR No. 78, holders of an Exploration Mining Business License (Exploration IUP) and Exploration Special Mining Business License (Exploration IUPK) must carry out reclamation activities, while holders of Production Operation Mining Business Licenses (Production Operation IUP) and Production Operation Special Mining Business Licenses (Production Operation IUPK) must carry out reclamation activities and post mining activities.
Reclamation activities are to be carried out during the life of the mine. Post-mining activities, on the other hand, may be carried out during the life of the mine or conducted entirely after the mine is no longer operational. Exploration IUP and Exploration IUPK holders which have finished their feasibility study activities must submit their (i) reclamation plans; and (ii) post mining activity plans to the Minister of Energy and Mineral Resources, governor or regent/major (as applicable) for their approval simultaneously with the submission of the application for a Production Operation IUP and Production Operation IUPK. Subsequently, reclamation implementation reports must be submitted on an annual basis and post mining activity reports must be submitted on a quarterly basis.
IUP and IUPK holders must provide reclamation guarantees (one for each of the exploration and the production operation stages) and a post mining activities guarantee. The reclamation guarantee for the exploration stage must be provided in the form of a term deposit with a government owned bank, while the reclamation guarantee for the production operation stage may be provided in the form of: an escrow account at a government owned bank; a term deposit with a government owned bank; a guarantee from a government owned bank or a national privately owned bank; or an accounting reserve.
Reclamation guarantees must be provided within 30 calendar days of the date when the work plan and budget of exploration costs are approved for exploration licenses and within 30 calendar days of the date of approval of the reclamation plan for production-operation licenses.
The post mining activities guarantee must be provided in the form of a term deposit with a government owned bank. This guarantee fund is to be contributed to over the life of the mine and must reach 100% two years before the mine closes. If the mine closes early, the outstanding guarantee funds fall due immediately. Holders of existing mining licenses (including Contract of Work and Coal Contract of Work holders) were required to provide their reclamation and post-mining guarantees within three months of the issuance of GR No. 78 (i.e. by 20 March 2011).
The reclamation and post-mining activity funds do not relieve a license holder of its obligation to undertake the relevant activities but does provide some form of recourse for the government if the license holder does not comply. The government may appoint a third party to conduct the work of a delinquent license holder. If the guarantee or post-mining activity funds are not sufficient to complete the required activities, a delinquent license holder is liable for funding the shortfall. The license holder may request access to the guarantee funds or post-mining activity funds as the required activities are conducted based upon the success rates. Any excess funds at the successful end of the activities should be returned to the license holder.
Ministerial implementing regulations are pending.
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