Sector Update / Commodity / Click here for full PDF version
Author(s): Ryan Winipta
- Ministerial Decree No. 365, effective on 18th Sept 2026 is set to impose stricter terms on affiliated mining services.
- Under our coverage, (via SIS) and (Pama) are likely to be the most exposed if the regulation is implemented.
- The clause dates back to the 2009 Mining Law; leaving open the possibility that current operations remain unaffected.
Key overview of the regulation: stricter IUJP company
ESDM has issued Ministerial Decree (Kepmen) No. 365.K/MB.01/MEM.B/2026, which took effect upon issuance on 18th September 2026. Under the decree, IUP/IUPK holders may not involve their subsidiaries or affiliates as mining contractors without the Minister's approval and must prioritise IUJP companies based in the regencies/cities surrounding the mining concessions. Approval is only available to holders carrying out a government assignment, namely: 1) National Strategic Project (PSN); 2) construction of mineral processing/refining facilities, or coal development and/or utilisation (i.e., downstreaming); and/or 3) supplying minerals or coal for domestic needs (likely to be DMO on coal for domestic needs). The decree also applies to Contract of Work (KK) and PKP2B holders, as well as IUPK holders operating as their continuation.
Alamtri Group and United Tractors are likely to be the most affected
The decree defines affiliation using two tests: 1) direct shareholding by the IUP/IUPK holder in the IUJP (mining services) company; or 2) one or more shared ultimate beneficial owners (UBOs) between the IUP/IUPK holder and the IUJP company, with either test alone being sufficient. As a result, several names under our coverage could be affected. These include /ADMR/ADRO and SIS, which may be treated as sister companies with a shared UBO, and , given PAMA 's role as mining contractor at TTA's own coal mines, with both sharing a UBO. Among non-rated names, could also be affected given its plan to grow its share of work at 's KPC. By contrast, we expect limited impact on most pure-play coal/nickel IUP holders under our coverage, as they do not have in-house contracting arms and rely on third-party contractors.
The devil is on the details; which are not yet being specified
The key caveat lies in the exemption under the fourth provision of the decree (Fig. 1), which allows approval where affiliated contracting supports domestic supply, likely to be DMO on coal for domestic needs. Since virtually all coal IUP/IUPK holders are subject to DMO requirements, this exemption could cover most coal miners in practice - albeit it is unspecified whether only the DMO portion are allowed to be operated by affiliated entity. In addition, the decree contains no transitional provision, leaving it unclear whether approvals issued under the now-revoked 2010 regulation (Perdirjen No. 376.K/30/DJB/2010) remain valid. If existing arrangements are honoured until expiry, the near-term impact would be softer; if not, affected listed companies may need to re-apply for approval or restructure their contracting arrangements. Another caveat is the fact that previous regulation and mining law (UU) in 2009 has already prohibited affiliated company to operate in their own concession. This regulation was actually unchanged but only the exception changes; with new regulation imposing stricter terms on UBO and ownership.
Sumber : IPS