Ministry plans to increase royalty of mineral ores

The Ministry of Energy and Mineral Resources (MEMR) plans to increase the royalty of mineral ores supplied to domestic smelters, which are not integrated with mineral mines, Bisnis Indonesia reported on Tuesday.

This type of smelters hold so-called industry business permit (or IUI) issued by the Ministry of Industry. Meanwhile, smelters integrated with the mines hold the IUP mining business permit issued by the MEMR.

The paper quoted Director General of Mineral and Coal at MEMR Bambang Gatot Ariyono as saying that the royalty of mineral ores supplied to IUI smelters has been based on the market value of the ores, while royalty of ores for IUP smelters based on the market value of the final refined output. Considering that refined output has higher market value, the royalty from the latter is greater.

Bambang pointed out as an example that the royalty paid by integrated mining company PT Vale Indonesia Tbk, whose final output is nickel in matte, pays royalty based on the market value of the final output, while the royalty of ores supplied to PT Bintang Delapan Mineral whose smelter holds the IUI permit is only based on the value of the raw commodity.

As such, Bambang said the government plans to adjust upward the royalty of mineral ores supplied to the IUI smelters. No further details were provided. (*)