Government won?t apply progressive royalty on coal

The Ministry of Energy and Mineral Resources said it will not apply progressive royalty tariff on coal, Kontan reported on Thursday.

Kontan quoted Director of Mineral Development and Management at the ministry, Bambang Susigit as saying that the progressive tariff will be only applied on three mining commodities including gold, copper and silver. He did not say the reason why coal is excluded from the proposed progressive tariff policy.

Royalty of coal produced by coal miners holding the coal contract of work (PKP2B) is currently set at 13.5 percent of selling price. Meanwhile, the tariff of royalty for coal miners holding the IUP mining business license is set at between 3 and 7 percent, depending on the calorific value of the coal. The ministry in 2014, proposed for higher royalty tariff on coal, but later backed down from the plan.

As has been previously reported, the ministry has proposed for the government to apply a progressive royalty tariff for three mineral commodities of gold, copper and silver as part of the ongoing revision of Government Regulation No 9/2012 on tariff and type of state non-tax revenue (PNBP).

Bambang said that the proposal was made to help increase state revenue. He said that the progressive tariff will be applied once the prices of gold, copper and silver have reached certain levels. He cited as an example that the progressive royalty tariff on gold will be applied once the price of the commodity reaches US$1,300 per oz. The tariff will increase by 0.25 percent for every price increase of $100 per oz. (*)