Indonesia delays higher mining royalty plan after industry feedback

By Calvin Purba

Indonesia has postponed plans to raise royalty tariffs for mining commodities after receiving objections and feedback from industry players during the public consultation process, Energy and Mineral Resources Minister Bahlil Lahadalia said on Monday.

Bahlil said the proposed royalty adjustments discussed during recent government socialization sessions were not final and remain under review.

“We will postpone this first while we formulate a better arrangement, one that is mutually beneficial,” Bahlil said.

According to him, the government is preparing a revised formula aimed at balancing efforts to increase state revenue with maintaining business sustainability.

He stressed that the proposal has not yet become an official regulation because the related government regulation has not been issued.

The ministry had previously proposed higher royalty rates for several mineral commodities, including nickel, gold, copper and tin, amid elevated commodity prices.

Under the draft proposal, the royalty rate for copper concentrate would increase to 9% from 7% when copper reference prices are below US$7,000 per dry metric ton, while the maximum royalty would rise to 13% from 10% when prices exceed US$13,000 per ton.

Read also: Government sets new mining royalty rates to boost state revenue

Gold royalties would also increase substantially, with rates proposed to rise to 14% for gold prices below US$2,500 per troy ounce from the current 7%, and gradually increase to 20% when prices exceed US$5,000 per ounce.

For nickel ore, the government proposed lowering the threshold for the top progressive royalty bracket, with the highest 19% royalty rate applying when prices exceed US$26,000 per ton instead of the current US$31,000 threshold.

Tin royalties were also proposed to double at the upper end, with the top rate rising to 20% from 10% when prices exceed US$50,000 per ton.

The draft revisions also included new royalty arrangements for cobalt produced from nickel matte processing, zinc and lead concentrates, as well as additional fixed fees for offshore non metallic minerals and rocks located more than 12 nautical miles from shore.

Bahlil said the government would continue evaluating the proposal before deciding on a final policy framework.

Editing by Alexander Ginting