In the face of rising global prices, the Indonesian government has made royalty adjustments on some minerals and coal commodities.
It is understood that this change in royalties is a result of amending Government Regulation No. 81 of 2019 on non-tax state revenue types and tariffs applicable to the Ministry of Energy and Mineral Resources.
Mohammad Faisal, executive director of CORE Indonesia, said the government does need to consider adjusting royalties, especially as commodity prices soar. However, Faisal said the government also needed to consider the impact of weaker commodity prices.
On the other hand, nickel ore commodities are now subject to royalty adjustment. The Ministry of Energy and Mineral Resources has raised the royalty rate for nickel in No. 26 PP 2022, that is, nickel ore grade <1.5% is used as raw material for the battery electric vehicle industry and the royalty rate is 2% of the levy price. Downstream, the rates are lower than for ores, for example, 2% for nickel matte, 5% for NPI and 10% for nickel ore.
Because some commodities can be exported in their raw form, nickel is not exported like coal or gold.
In addition, the benchmark prices used are lower than international prices. It also requires governments to pay attention to existing governance, particularly in the trading practices between miners and smelters.
