The Indonesian government has clarified the controversial profit-sharing requirement between mining companies and universities applies only to priority mining permit holders that partner with higher education institutions, and not all operators.
However, industry players cautioned that the policy must be clearly communicated to avoid misinterpretation that could undermine business confidence.
The provision, stipulated in Energy and Mineral Resources Ministerial Regulation No. 7/2026 on risk-based business activity standards, signed on June 8, requires at least 60% of a miner’s net profit to be allocated to universities through a priority distribution mechanism from the start of production.
“(The rule applies only to) priority IUP (mining business permit) holders that collaborate with universities,” Energy Ministry coal and minerals director general Tri Winarno told The Jakarta Post last Friday.
Ardhi Ishak, head of industrial relations at the Indonesian Mining Experts Association, traced the rule’s legal basis to the Mineral and Coal Mining Law No 2/2025 and Government Regulation No 39/2025, which introduced priority granting of Special IUPs to micro, small and medium enterprises, cooperatives and collaborations with universities.
“We believe this is a derivative regulation regarding the priority granting of Special IUPs,” Ardhi said.
Under Article 51a of the Mineral and Coal Mining Law No 2/2025, the central government is empowered to grant priority business licence mining areas (WIUP) to state-owned enterprises, regionally-owned enterprises or private business entities for the benefit of higher education institutions.
The provision, designed to strengthen the financial independence and competitiveness of universities, allows mining companies that partner with higher education institutions to secure permits for designated mining areas without going through the competitive tender process typically required for such licences.
In determining eligibility, the government will assess factors such as the size of the mining concession, the university’s accreditation status and the partnership’s potential to expand access to education.
Entities that secure priority WIUP permits under this scheme are required to share a portion of their profits with their partner universities, with the exact terms governed by a cooperation agreement between the parties.
Despite assurance that the profit-sharing requirement applies only to a specific subset of Special IUP holders, the absence of a formal briefing has left operators uncertain about their obligations.
The Indonesian Coal Mining Association executive director Gita Mahyarani stressed that mining permits issued and still valid before the regulation took effect remain in force until their expiration.
She noted that the regulation’s implementing provisions exclude existing business actors, suggesting a more limited application than initially feared.
“This provision cannot be read separately from the overall regulatory regime,” Gita told The Jakarta Post last Friday, pointing to Energy Ministerial Regulation No. 18/2025, where the 60% context appears within the scheme for granting priority WIUP or special business licence mining areas (WIUPK).
“Therefore, we believe this provision requires careful reading,” she added, echoing broader industry calls for nuanced interpretation rather than alarm.
Andry Satrio Nugroho of the Institute for Development of Economics and Finance acknowledged the policy’s upside.
“This presents an opportunity for universities to profit from the current mining process,” he said last Saturday, adding that campuses would have no excuse not to develop graduate competencies aligned with industry needs, from extraction to downstream processing.
However, the 60% contribution, drawn from the profit side while costs remain with operators, is substantial.
“What industry players fear is shrinking margins,” Andry said.
He predicted operators would gravitate toward high-margin deposits with lower capital expenditure, abandoning low-grade, remote sites where high infrastructure costs would compete with the mandatory contribution from the start of production.
Experts have raised concerns over the arrangement, noting that while universities are now positioned as “mere” beneficiaries under the law, rather than becoming mining operators themselves, as previously deliberated by the government, they are still regarded as free from conflicts of interest in the industry.
