Indonesia Proposes Increase In Mining Royalties On Coal, Nickel And Copper

Indonesia is contemplating an increase in the royalties paid by mining companies for commodities such as coal, nickel and copper.

This proposal is part of the new government’s plan to accommodate President Prabowo Subianto’s spending initiatives, reported Reuters, citing sources.

The aim is to improve governance within the sector, according to Tri Winarno, a ministry official, during a public consultation.

Mining is a significant revenue source for resource-rich Indonesia, the world’s largest exporter of thermal coal and nickel products and a major supplier of tin and copper.

Officials have proposed raising royalty rates for miners and metal producers, introducing progressive rates for metals such as nickel and copper, the report said.

The government is considering levying royalties between 14% and 19% for nickel ore, based on benchmark price levels, compared with the current flat rate of 10%.

The proposal also includes progressive rates for nickel matte and ferronickel.

For coal, royalty rates could increase by one percentage point to a maximum of 13.5%, contingent on the benchmark coal price reaching at least $90 (Rp1.48m) per tonne (t).

At present, the government applies progressive royalty charges for coal, with the minimum rate set at 8% for coal with a calorific value of up to 4,200 kilocalories per kilogram, provided the price is at least $90/t.

The proposal also includes a plan to raise the royalty rate for copper ore to between 10% and 17%, up from the current fixed rate of 5%.

Additionally, royalty increases are being considered for copper cathode, copper concentrate, gold, platinum, silver and tin.

The Indonesian parliament recently approved a revision to Law Number 4 of 2009 on Mineral and Coal Mining (Minerba) to promote the development of domestic mineral processing industries.

The amendment seeks to guarantee a secure supply of ore and offer regulated access to mining for small businesses and religious groups.