The obligation to restore former mining land has one characteristic that is often overlooked: the funds are required upfront, long before any restoration is needed. Holders of IUP and IUPK must place reclamation guarantees and post-mining guarantees as a condition of operation, not as a closure at the end of the mine's life. The logic is simple. If the company stops operating or runs out of funds, the money remains available, and the government can assign a third party to carry out the restoration.
What has changed since October 23, 2025, is the technical aspect, and the change is significant enough to alter how companies manage their cash.
From four forms to one
Previously, the reclamation guarantee during the production operation phase could be placed in four forms: joint accounts, time deposits, bank guarantees, or accounting reserves. The last form was only available to companies listed on the Indonesia Stock Exchange with more than 40 percent of shares placed and paid-up capital of no less than 50 million US dollars.
The Minister of Energy and Mineral Resources Decision Number 344.K/MB.01/MEM.B/2025 has reduced these options. Reclamation guarantees and post-mining guarantees must now be placed in the form of time deposits at government banks in Indonesia, in the name of the Director General of Mineral and Coal or the governor on behalf of the license holder, in rupiah or US dollars. Other forms of guarantees that have already been placed before this regulation remain valid until their expiration, after which they must be re-placed as deposits for the same period.
The difference is not merely administrative. Bank guarantees and accounting reserves do not tie up the company's cash; deposits do.
Deadlines to mark on your calendar
| Obligation | Deadline |
|---|---|
| Submission of reclamation plan | 45 working days from the issuance of the permit |
| Approval of reclamation plan | 45 working days from the complete application |
| Approval of post-mining plan | 75 working days |
| Correction of returned documents | 20 working days |
| Placement of reclamation guarantee for the first five-year period | 20 working days from plan approval |
| Changes to plans affecting success criteria | July 31 of the current year |
| Annual reclamation performance report | January 31 of the following year |
| Full collection of post-mining guarantees | 2 years before the production operation permit expires |
| Post-mining completion | 5 years from the expiration of the permit, extendable once for a maximum of 3 years |
The amounts are not fictional numbers
Attachment II of the Ministerial Decision 344/2025 contains a matrix of standard revegetation reclamation costs per province for 2025 to 2030, and this matrix serves as the basis for determining guarantee values. For West Nusa Tenggara in 2026, the standard is Rp196.6 million per hectare. Planning to open 10 hectares in the first five years therefore results in a base guarantee value of around Rp1.966 billion. Specifically for bauxite, the guarantee is set at 50 percent of the standard cost per hectare. The calculation must consider the future value of money, not today's value.
Depositing does not equal completion
The placement of guarantees does not eliminate the obligation to carry out reclamation, and any funding shortfall remains the responsibility of the license holder. Disbursement can only be granted gradually after the final success value reaches at least 60 percent, based on document evaluation and field verification. If the achievement remains below 60 percent for two consecutive assessment periods, the Director General may appoint a third party with an IUJP license to carry it out using the guarantee funds.
At the end, there is a criminal threat. Article 161B of Law Number 3 of 2020 penalizes holders of IUP or IUPK whose permits are revoked or expired and who do not carry out reclamation, do not conduct post-mining, or do not place their guarantee funds, with a prison sentence of up to 5 years and a fine of up to Rp100 billion, plus additional penalties in the form of payment for the execution of those obligations.
What remains uncertain for small-scale mining
For holders of Small-Scale Mining Permits, the picture is still unclear. Founder of the Haidar Alwi Institute, Haidar Alwi, highlights three regulations that address one environmental recovery obligation: the environmental component of the Small-Scale Mining Fee in the Ministerial Decision ESDM Number 174.K/MB.01/MEM.B/2024, which is due 75 percent 30 days after the permit is issued; the cost standards in Ministerial Decision 344/2025; and the obligation to deposit 10 percent of every mineral sale in Ministerial Regulation ESDM Number 18 of 2025. According to him, there has been no clarification on whether these three are mutually exclusive, mutually calculated, or operate concurrently.
If you prefer to see the explanation directly, there is a clip at Why Mining Companies Must Deposit Guarantee Funds First?
Sources
- Minister of Energy and Mineral Resources Decision Number 344.K/MB.01/MEM.B/2025 on Technical Guidelines for the Implementation of Reclamation and Post-Mining in Mineral and Coal Mining Activities, JDIH Ministry of ESDM
- Ministerial Decision ESDM 344/2025 Officially Enforced: Standards for Land and Sea Post-Mining Reclamation, Guarantee Schemes, and Latest Deadlines, Meridian Hukum, November 3, 2025
- New Accountability Standards: Technical Guidelines for Reclamation and Post-Mining in Minister of Energy and Mineral Resources Decision Number 344.K/MB.01/MEM.B/2025, Veritask, November 6, 2025
- Reclamation Guarantee During Production Operation Phase and Post-Mining Guarantee, summary of Ministerial Decision ESDM 1827 K/30/MEM/2018 Attachment VI, Inspektur ID
- The Ministry of ESDM is Requested to Improve Regulations on Small-Scale Mining Reclamation, Potentially Layered Burdens, Tribunnews, August 1, 2026
- Law Number 3 of 2020 on Amendments to Law Number 4 of 2009 on Mineral and Coal Mining, JDIH BPK RI