MiningWeekly, citing a Bloomberg report, stated that Indonesia has increased royalty rates for nickel, tin, and other metal producers as the government seeks funding for President Prabowo Subianto’s ambitious yet costly priority policies.
According to a regulatory document reviewed by Bloomberg and confirmed by informed sources, the upcoming changes largely reflect reforms proposed during last month’s public consultations. The previous flat rate based on production will now fluctuate with mineral commodity prices. The sources requested anonymity as the details have not yet been officially released.
The royalty hike comes amid escalating trade tensions and uncertainty in metal markets, highlighting the financial pressures on Indonesia’s government due to policy costs, including a new sovereign wealth fund and free school lunch programs. Many producers are already feeling the impact of declining prices.
The Ministry of Energy and Mineral Resources, which oversees mining regulations, did not immediately respond to requests for comment.
Key Changes in Royalty Rates
Nickel: The previous flat 10% royalty based on output will be replaced by a floating rate of 14%-19%, depending on government-determined price levels. However, if nickel ore is processed into battery-grade nickel products, the royalty drops to just 2%.
Ferronickel & Nickel Matte: Royalties for high-grade ferronickel and nickel matte will be lower than the rates proposed in the public consultation. Indonesia’s vast smelting industry has long faced ore shortages, leading to reduced profits and production cuts at many plants.
Coal: For open-pit coal mines (which account for most of Indonesia’s output), royalty adjustments will depend on existing licenses. Underground coal mines, however, will face slightly lower rates.
The new regulations are set to take effect 15 days after April 11, according to the document.
Source: https://geoglobal.mnr.gov.cn/zx/kczygl/kysf/202504/t20250418_9309131.htm
