Legislators back govt plan to lower mining royalties

The government?s plan to lower royalties imposed on mining companies involved in downstream operations has received supports from legislators, Tempo reported Monday.

?It won?t be a problem for us as long as the planned reduction in royalties will encourage mining companies to enter the downstream industry,? said Satya W. Yudha, a member of the House of Representatives? energy commission.

Satya acknowledged that the cut in the royalty rate would result in the decline in the state revenue from mining industry. ?But, it is not a problem because the increase in downstream activities will also generate more added value in the mining sector,? he added.

Bambang Setiawan, Director General of Mineral, Coal,Geothermal at the Ministry of Energy and Mineral Resources said in Jakarta last week that the government was considering reducing royalties payable by mining companies involved in processing operation in order to promote the downstream industry in the country?s mining sector.

?The incentive is needed so that more miners will enter the downstream operations such as in processing and purification of their mineral production,? he said. ?At present, only a few companies are involved in downstream activities due to large investment requirement, and low return on investment (ROI),? he added.(*)