Jakarta. The government has revoked 2,051 business licenses in the mining sector as of March due to alleged misuse by the holders, a senior official revealed on Monday.

Thousands of companies that were awarded mining licenses appeared to have violated their own commitments made when they applied for the licenses with the government, Investment Minister Bahlil Lahadalia said during a hearing with the House of Representatives Commission on Trade and Investment in Jakarta.

The primary reason for the revocation was that the license holders failed to materialize their business plan, Bahlil said.

"Businesses won the licenses, but never did anything about them," he said.

Secondly, the government licenses were misused as collateral to obtain bank loans. 

Finally, the government revoked mining licenses after learning that they were obtained by some companies willing to boost their profile before conducting an initial public offering. It turned out the proceeds generated from the IPO weren’t spent on mining activities in the designated areas.

The stern measure to revoke “unproductive licenses” followed a directive from President Joko Widodo, who said last year that the government would void thousands of mining concessions that were left idle, transferred to a third party, or misused.