The government is finalizing the revision of two government regulations (PP) No. 15/2022 and PP No.26/2022 in order to increase Non-Tax State Revenue (PNBP) from the mineral and coal (minerba) sector, with the main change in the revision being the increase in royalty rates for gold and nickel by 3 percent.

Minister of Energy and Mineral Resources (ESDM), Bahlil Lahadalia, said that this revision involves adjustments to royalty rates for several main commodities, including gold, nickel, and coal.

"The changes are now almost final, just a little bit more," Bahlil said after a meeting with President Prabowo Subianto at the Presidential Palace, Jakarta, on Thursday, March 20, 2025.

Present at the meeting were Minister of Finance Sri Mulyani Indrawati and Coordinating Minister for the Economy Airlangga Hartarto. They discussed strategies to optimize state revenue from the mineral and coal sector.

Bahlil added that the government is also considering the application of royalties to mineral derivative products that have not been included in the state revenue scheme, although he has not detailed the products that will be subject to the royalties.

Regarding the amount of the royalty increase, Bahlil said the range is between 1.5 percent and 3 percent, depending on the price of commodities on the global market. 

"It depends and it fluctuates. If the price goes up, we will increase it to the highest. If the price goes down, we also cannot impose large taxes on entrepreneurs, because we need entrepreneurs to develop too," he said.

According to him, this measure aims to maintain market balance, especially because the price of gold and nickel is currently relatively high. 

"The price of nickel is also good now, the price of gold is good. It wouldn't be fair if the price went up, but the country didn't get additional income. So, this is just to maintain balance," he said.

Resistance

The Indonesian Nickel Miners Association (APNI) has strongly opposed the government's plan to increase mining royalty rates, citing concerns over the heavy financial burden on the industry.

APNI Secretary-General Meidy Katrin Lengkey said that nickel miners, smelter operators, and other stakeholders had submitted their input regarding the proposed regulation changes. 

APNI argues that the proposed progressive royalty rates do not account for the current decline in global nickel prices. Additionally, rising operational costs − including the increase in B40 biodiesel prices, a 6.5 percent rise in the minimum wage, a 12 percent value-added tax (VAT), and the mandatory 100 percent export earnings repatriation for 12 months − are further squeezing miners' profit margins.

The impact of the royalty increase would also extend to smelter operators, whose capital-intensive projects cost between US$1.5 billion and $2 billion per smelter, excluding reclamation, non-tax state revenues (PNBP), community development funds (PPM), and the 15 percent Global Minimum Tax.

To mitigate the impact, APNI asks the government to implement a fairer and more flexible royalty policy. Meidy suggested adjusting the royalty rate based on commodity prices, ensuring that higher royalties apply only when nickel prices exceed a certain threshold.

The association also called for fiscal incentives for smelters, such as lower royalty rates for companies investing in downstream processing.