Jakarta, Indonesia Sentinel — Indonesia’s Ministry of Energy and Mineral Resources (ESDM) projects that royalty rates for nickel ore will increase to between 14 and 19 percent. The hike, government’s effort to boost state revenue from the mining industry, is set to take effect in the second week of April.
Indonesia’s Ministry of Energy and Mineral Resources (ESDM) announced that a new progressive royalty scheme for the mineral and coal sector will take effect in the second week of April 2025.
Tri Winarno, Director General of Minerals and Coal, said the new royalty rates will follow a progressive structure, increasing in tandem with rising global commodity prices. As for the nickel ore, the royalties would range between 14% – 19%.
“For nickel ore, the proposed royalty rate will rise from the current 10% to a progressive scale ranging from 14% to 19%, depending on market prices,” Winarno said during a press briefing at the ESDM headquarters in Jakarta on Wednesday, April 9, as reported by Tempo.
He emphasized that the adjustment aims to optimize national income amid soaring nickel prices. However, he also noted that the royalty rate could decrease if prices fall. “When prices go up, royalties will rise. Companies make more profit, so the state should too,” he said.
Energy and Mineral Resources Minister Bahlil Lahadalia confirmed that the increased royalties for several mineral commodities, including nickel and gold, will officially take effect in mid-April.
“For royalties, the regulation covering several commodities such as nickel and gold has already been finalized. It will become effective this month, likely in the second week,” Bahlil stated, as reported by CNBC Indonesia on Wednesday, April 9.
According to Bahlil, the government has conducted outreach to stakeholders regarding the implementation of the new scheme, which will apply a royalty range based on international mineral price fluctuations. The revised rates will cover a wide array of commodities, including nickel, gold, copper, and coal.
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Industry Criticism
The new policy comes as prices for key minerals like nickel and gold have surged in recent months. However, the plan has drawn criticism from industry players.
The Indonesian Nickel Industry Forum (FINI) voiced strong opposition to the planned royalty hike. FINI Chairman Alexander Barus warned that the move could hurt the sector, especially at a time when global nickel prices have slumped due to ongoing geopolitical tensions and the trade war between the U.S. and China.
Alexander argued that the timing of the royalty increase is problematic, citing additional domestic pressures such as rising regional minimum wages, the B40 biodiesel mandate, foreign exchange retention requirements, and the upcoming implementation of the global minimum tax in 2025.
“Fiscal policy adjustments, such as royalty hikes, should consider current market conditions, which are seeing declining prices. Otherwise, it could burden industry players at a critical time for the sustainability of Indonesia’s downstream nickel strategy,” Alexander said in an official statement as reported by Investor.id on Friday (April 11).
He urged the government to take a cautious approach in reviewing fiscal policies, ensuring that they support rather than hinder the long-term viability of the country’s nickel value-added initiatives.
(Raidi/Agung)
