Contracts of Work have been in existence in Indonesia as early as the enactment

of the 1967 Mining Law. IUPs have only come to be with the enactment of the
2009 Mining Law. The two types of mining licence are results from changes in
governmental stance / policy.
In the 1967-2009 era, the Government was willing to act in its capacity as a
commercial actor and sit in equal standing with the Company to negotiate a
contract.
That ends with the 2009 Mining Law, where the situation changes: The company
now sits as a private party asking to the government (which now acts in its
capacity as a sovereign), for a permit.
Relationship

Terms regarding taxes,

royalties, reporting,
divestment etc

Contract of Work
Business to Business
(Government of
Indonesia acting in the
capacity of a private
party equal to the
Company)
May be nailed down
explicitly in the Contract,
or follows the prevailing
laws, depending on
negotiations.

IUP
Government to Business
(Government of
Indonesia acting as the
sovereign, superior to
the Company)
No negotiations,
Company has no choice
but to follow the
prevailing laws.

The other thing we can infer from the foregoing is that all Contracts of Work must
have been signed before any application for IUP, or in other words, no Contract
of Work may be signed after the application for IUP. This means also that, any
Area designated as a Contract of Work Area must exist / be determined prior to
the application (let alone existence) of any IUP.
Now, on to the topic of Clean and Clear. Several things are to be noted.:
1. The purpose of Clean and Clear is to certify that a given Mining Area held by
one company does not overlap with any Mining Area held by another company.
2. The Clean and Clear Certificate is then used as a requirement for applying for
Export Licence, a licence for exporting the commodity produced.
3. The Clean and Clear certification does not exist until the enactment of the
2009 Mining Law.
In any Contract of Work, the Area determined to be held by the Company is
mapped and the map is added as an annex (Usually Annex A). Crucially, it is
stipulated that any (i) Mining Authorizations granted by the Government and (i)
Peoples Mining Right which are declared before the date of the Contract of Work
is also listed (if any) and are considered excluded from the Contract of Work Area
(This is usually stipulated in Article 4, under the heading Contract Area, but

different Contracts may have this clause elsewhere). The list of any such preexisting Authorizations or Rights are also put as annexes (Usually Annex C). This
may be seen as an early, rough form of Clean and Clear status as these
stipulations also (i) determines if there is any overlapping, pre-existing claim for
mining area and (ii) guarantee the freedom from any future claim by any other
company to the Contract of Work Area designated therein. If anything, the
existence of Contract of Work areas may prevent the obtainment Clean and Clear
status regarding any subsequent claim for mining areas by another company.
In Ensburys Contract of Work, the Annex C, which are to set out the pre-existing
Authorizations / Rights, is empty, which means that, there are no pre-existing
Area held by any other party.
Secondly the Clean and Clear certification is initiated by the Government, as a
form of their effort to organize and consolidate the mapping of the mining areas
in the Country. So far, the practice adopted by the MEMR is to announce the
Clean and Clear status. That announcement may then serve as a basis used by a
IUP holder to apply for Clear and Clean certificate. The Clean and Clear
announcements made by the MEMR only lists IUPs (the form of Mining Business
Licence introduced by the 2009 Mining Law)