Govt asks to renegotiate PT INCO's royalty payment

The government will ask PT International Nickel Indonesia (PT INCO) to renegotiate on royalty payment in a bid to increase revenue from the nickel mining company amid high nickel prices, according to senior offical at the Ministry of Energy and Mineral Resources.

 

Director General of Coal, Geothermal and Mineral Resources Simon F. Sembiring said the govenrment considered the royalty paid by PT INCO was too small in light of the current high nickel prices.

 

According to Simon, PT INCO now pays the government a fixed royalty of US$78 per ton.

 

Simon said the government had set the amount of royalty while extending the firm's contract in 1998, when nickel price stood at $2 per pound.

 

"We did not know that the nickel's price would increase. Now, the price has risen to $17 per pound or US$40,000 per ton. Meanwhile, we only get $78 per ton," Simon said, adding that the government would lose $5 million in potential royalty payment from PT INCO in 2008  if the contract is not reviewed.

 

Simon said the government agreed to extend PT INCO's contract in 1998 on the condition that the firm will follow the government's regulation on royalty payment in 2008, which is based on the commodity's price. (Bernard/Godang)