ESDM Announces Nickel Royalty Increase to a Maximum of 19%
09 Apr 2025, 04:19 PM
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The Ministry of Energy and Mineral Resources (ESDM) said that changes to royalty rates in the mineral and coal sector will come into effect in the second week of April 2025. This is done as an effort to increase state revenue from the mining sector.Director General of Mineral and Coal (Minerba) Tri Winarno said that the mineral royalty rate will be progressive. Thus, the rate will increase along with the increase in commodity prices in the global market.Meanwhile, for nickel ore itself, the royalty rate is proposed to increase from the current 10% to a progressive rate of 14% to 19%, adjusted to the price."The royalty rate is progressive. This means that when the price goes up, the rate also goes up. That's clear. So you get a lot of profit, the state should also get a lot. The price goes up, goes up. The price goes down, goes down," said Tri at the Ministry of Energy and Mineral Resources Building, Jakarta, Wednesday (9/4/2025).Previously, ESDM Minister Bahlil Lahadalia said that the increase in royalty rates for a number of mineral commodities, including nickel and gold, would come into effect in the second week of April 2025."For royalties, for several commodities, including nickel, gold, the PP (Government Regulation) has been completed and will be effective in the near future. It will be effective this month. That month, maybe the second week. It will be effective," said Bahlil at the Ministry of Energy and Mineral Resources Building, Jakarta, Wednesday (9/4/2025).According to Bahlil, the government itself has conducted socialization for the implementation of the new royalty scheme. The latest royalty scheme will later use a range system that depends on the price of mineral commodities in the global market."If the price of nickel or gold goes up, there is a certain range. But if it doesn't go up, it doesn't go up either. There is a table. If the price goes up, the company automatically makes a profit. Then, if it makes a profit, the country doesn't get a share. We want win-win. We want the entrepreneurs to be good, and the country to be good too," he added.Some time ago, the Secretary General of the Indonesian Nickel Miners Association (APNI), Meidy Katrin Lengkey said that if the nickel ore royalty rate were to be increased to 14-19%, Indonesia would have the highest royalty rate compared to other nickel producing countries."Indonesia is currently at 10%, we are the highest for PNBP royalties compared to nickel producing countries. Because other nickel producing countries have royalties of an average of 2 to 7 or 9%. It is very far and there are even countries whose royalties are base profit", said Meidy at the CNBC Indonesia Mining Zone event, quoted Wednesday (3/26/2025).According to Meidy, being at the 10% level alone has made Indonesia the highest country in terms of the amount of royalty imposed. Moreover, if it is raised to the 14-19% level, it will make business actors even more burdened."At 10% alone, we are already the highest country for royalty placement. But if for example it is added with a royalty of 14 to 19%, 14% is the minimum limit for the Reference Mineral Price (HMA) of 18,000. The question is when will the HMA be 18,000? Because the current condition is that the price is decreasing," he said.So, how much is the planned increase in mining royalty rates? Here is a leak from the proposed revision document for mining royalties received by CNBC Indonesia:Coal:Currently, progressive tariffs apply according to the Reference Coal Price (HBA) and the PNBP IUPK tariff of 14%-28%. In the revised regulation, the royalty tariff is planned to increase by 1% for HBA more than or equal to USD 90 per ton to a maximum tariff of 13.5%. Then, the IUPK tariff is 14%-28% with changes in the tariff range (Revised PP no. 15/2022).Nickel:Nickel ore: Currently, a single nickel ore tariff of 10% is in effect. In the revised regulation, the royalty rate is planned to be progressive at 14%-19%. So the amount of the tariff increase is around 40%-90% of the current tariff.Nickel matte: Currently, a single nickel matte tariff of 2% and windfall profit plus 1% is applicable. In the revised regulation, the royalty rate is planned to be progressive at 4.5%-6.5% and windfall profit is removed. So the amount of the tariff increase is around 125%-225% of the current tariff.Ferro nickel: Currently, a single tariff of 2% for ferro nickel is in effect. In the revised regulation, the royalty rate is planned to be progressive at 5%-7%. So the rate increase will be around 150%-250% of the current tariff.Nickel pig iron (NPI): Currently, a single nickel pig iron (NPI) tariff of 5% is in effect. In the revised regulation, the royalty tariff is planned to be progressive at 5%-7%. So the amount of the tariff increase is around 0%-40% of the current tariff.Copper:Copper ore: Currently, a single copper ore tariff of 5% is in effect. In the revised regulation, the royalty rate is planned to be progressive at 10%-17%. So the amount of the tariff increase is around 100%-240% of the current tariff.Copper concentrate: Currently, a single copper concentrate tariff of 4% is in effect. In the revised regulation, the royalty tariff is planned to be progressive at 7%-10%. So the amount of the tariff increase is around 100%-250% of the current tariff.Copper cathode: Currently, a single copper cathode tariff of 2% is in effect. In the revised regulation, the royalty tariff is planned to be progressive at 4%-7%. So the amount of the tariff increase is around 100%-250% of the current tariff.Gold:Currently, progressive rates are in effect starting from 3.75%-10%. In the revised rules, the royalty rate is planned to be progressive starting from 7%-16%.Silver:Currently, a single rate of 3.25% is in effect. In the revised rules, the plan is for a single royalty rate of 5%.Platinum:Currently, a single rate of 2% is in effect. In the revised rules, the plan is for a single royalty rate of 3.75%.Tin:Tin metal: Currently a single tariff of 3% is in effect. In the revised regulation, the tariff is planned to be progressive starting from 3%-10%. So the amount of the tariff increase is around 0%-233% of the current tariff.
