Indonesian government raised nickel royalty from 5 percent to 10 percent, said energy and mineral resources ministry today (12/10) - Photo by ING

JAKARTA (TheInsiderStories) – Indonesian government raised nickel royalty from 5 percent to 10 percent, said energy and mineral resources (EMR) ministry today (12/10). The new policy regulate through presidential decree Number 81 of 2019 concerning Tariffs on Non-Tax Revenues.

“The royalty rate provisions apply to nickel ore commodities. As for nickel that has been downstream, the royalty rate is getting smaller,” said the ministry in official statement.

In details the government will put royalty for nickel ore 10 percent, and pig iron 5 percent. While nickel matte, ferro-nickel, nickel oxide hydroxide and MHP 2 percent. High tariffs are also charged for manganese ore which reached 10 percent.

As known, Indonesian government planned to ban nickel ore starting January 2020. In addition, the top global source of nickel ore wants to raise higher export revenue and tackle the current account deficit.

Recently, Indonesian government ensured that after 41 smelters operating, the country will stop raw minerals export in 2022. So far, most of the miners still export the raw products to finance their operations.

The director general at the EMR ministry, Bambang Gatot Ariyono revealed, the rule only for nickel ore while exports of bauxite and copper concentrates can continue until 2022. He also assured, even the implementation late based on the law Number 4 Year 2009 about Mineral and Coal that the government will comply with the rules.

Based on the regulation, five years after the rules were issued, all the miners must run the rule five years after published. He said that the mining industry is not ready to implement it because the smelter facilities are inadequate.

Therefore, Ariyono believe starting 2022, Indonesia will not export raw minerals anymore and the downstream projects can be carried out optimally. He added, that in 2022 Indonesia is expected to produce semi-finished products from copper, nickel, alumina, iron, tin, gold, silver to complement the entire supply chain of domestic industrial trees.

Based on the ministry data, there are 41 units of smelters operating in 2022 ,consisting of 22 nickel smelters. In details, six bauxites processing, four iron smelters, four lead and zinc plants, copper and anodic mud, each of two factories and one smelter smelter.

It is known that currently there are 20 smelters operating in Indonesia consisting of copper, nickel, bauxite, iron and manganese smelters. PT Smelting is the only processing plant and smelter. The facility is working on copper concentrate from PT Freeport Indonesia  mine in Papua.

Initially, nickel ore exports were originally banned in 2014. In 2017, Indonesia announced that it was in a position to allow nickel ore to be exported-only those with a nickel content of less than 1.7 per cent. From 2012 to 2013, Indonesia was China’ largest supplier of laterite nickel, which accounted for more than 50 percent of the country’ total supply of the ore.

Philippines monopolized China’ supply of laterite nickel mines after Indonesia banned exports in 2014. Suddenly, On Jan 12, 2017, Indonesia announced that it was in a position to allow nickel ore exports, and the amount of nickel ore imported by China from Indonesia gradually recovered.

During January to August, China imported 17.16 million wt of nickel ore from Indonesia. As of the end of August, the outstanding quota was 38.61 million wt, with the remaining available quota of about 15 million wt. China imported 32.65 million wt of ore from Indonesia for the whole of 2019.

US$1: Rp14,000

Written by Staff Editor, Email: theinsiderstories@gmail.com