Government expects higher royalty from state mining firms

By Brigida Ernestina Elu Wea

Despite the lingering downturn in mining commodity prices, the government has set higher royalty from state-controlled mining firms this year at Rp 1.43 trillion compared to the Rp 1.23 trillion target set for last year.

Deputy for Mining, Strategic Industries and Media at the Office of State Minister of State Owned Enterprises, Fajar Harry Sampurno said on Friday that the largest contributor to the royalty from state mining firms has been those engaged in coal mining, followed by tin, nickel, gold, and others.

He said that the higher royalty target comes following the acceleration of coal-fired power plant projects in the country, which should increase domestic demand for coal, and the operation of a ferronickel smelter owned by mining firm PT Aneka Tambang Tbk in Pomalaa, Southeast Sulawesi.

He acknowledged that the mining downturn has affected the revenues of mining firms, consequently lowers royalty revenue for the government.

He pointed out that royalty from state mining firms have been under pressure over the past two years, reaching Rp 1.11 trillion in 2014, and Rp 1.23 trillion last year. In 2013, Harry said, the royalty could reach well over Rp 2 trillion. ?The commodity declines have affected the performance of mining firms,? he said.

Editing by Reiner Simanjuntak