Government mulls royalty tariff hike for mineral commodities

The government is considering to increase royalty tariff of mineral commodities next year amid signs of commodity price recovery in a bid to obtain greater non-tax revenue from the mining sector, Kontan reported on Saturday.

The paper said that the royalty tariff hike plan emerged during a meeting Friday between the government and the House of Representatives State Budget Committee discussing the 2017 proposed state budget.

Mineral commodities to be affected include copper, gold, silver and nickel, the paper said.

While Government Regulation No 9/2012 sets the royalty tariff of copper at 4 percent, Contract of Work sets the tariff lower at 3.75 percent. The Contract of Work also sets lower tariff for gold at 1 percent, compared to the 4 percent tariff set under the government regulation. The same occurs with silver (3.25% Vs 1%), and nickel (2% Vs 0.95%).

If realized, analysts said the higher tariff will undermine the margins of mining firms including IDX-listed PT Aneka Tambang Tbk (Antam), and IDX-listed integrated nickel mining firm PT Vale Indonesia Tbk particularly as commodity prices are expected to remain volatile going forward amid the fragile state of the global economy.

Antam Corporate Secretary Trenggono Sutioso said his company is still waiting for a clearer picture of the planned policy before determining its effect, but said that the royalty hike is unlikely to significantly affect its performance. (*)