Mineral downstream products to be exempted from royalty

The government is planning to alter royalty collection mechanism in the mineral mining sector by collecting the royalty in the upstream side instead of the downstream side, Kontan reported on Monday.

Under the plan, the royalty will be applied on mineral ores instead of refined or processed mineral products. As such, products such as nickel in matte and ferronickel will no longer be subject to royalty payment, the paper said.

The paper said that the plan emerged during a meeting of economics ministers Friday. Coordinating Minister for the Economy Darmin Nasution said that the plan is part of efforts to encourage the development of domestic mineral smelters.

Director General of Mineral and Coal Bambang Gatot Ariyono said that the plan would require the revision of Government Regulation No 9/2012 on non-tax state revenue.

He said that it remains unclear as to when the revision of the government regulation would be completed, but added that he expected the planned new policy can be implemented this year.

Bambang predicted that the royalty tariff to be applied on upstream products would be higher than the current royalty tariff applied on downstream products. (*)