Entrepreneurs Welcome Cancellation of Mining Profit-Sharing Scheme: Crucial for Investment
The Indonesian Mining Association (API-IMA) has commended the government’s decision to cancel the planned implementation of a profit-sharing scheme, similar to the oil and gas model, for the mineral and coal (minerba) mining sector.
API-IMA Executive Director Sari Esayanti stated that the move is highly appropriate and crucial for eliminating issues and plans that could disrupt investment. She emphasised that the mineral and coal mining industry possesses business characteristics that are significantly different from the oil and gas industry.
“The mineral and coal mining industry has unique characteristics with varying levels of complexity for each commodity. These fundamental differences are why many countries apply royalty and fiscal systems that differ from the oil and gas sector,” Sari said in a written statement on Monday.
Following the cancellation of this scheme, the IMA hopes the government can achieve stability in fiscal policy and corporate financial obligations to ensure the sustainability of investment and mining industry operations. According to Sari, this stability is vital as the mining industry currently faces various policy adjustments and new operational challenges, including the implementation of single-door export regulations, export proceeds (DHE), adjustments to royalties and mineral reference prices (HPM), export duties, and the mandatory implementation of B50 biodiesel.
IMA emphasised that certainty and consistency in government policy are key to maintaining the competitiveness of Indonesia’s mining industry. “This is particularly important amidst the increasing need for long-term investment to support the national downstreaming and energy transition agendas,” she added.
During a press conference on Monday, the Minister of Energy and Mineral Resources (ESDM), Bahlil Lahadalia, affirmed that there would be no profit-sharing scheme in the mining sector. This statement effectively cancels the previously proposed plan for a new profit-sharing model between the government and mine operators. The model under consideration was intended to follow practices from the oil and gas sector, specifically cost recovery or gross split models.
Bahlil emphasised that the gross split policy applies only to the upstream oil and gas sector. Consequently, he asserted that the mining sector will not implement such a policy.
“As for the mineral and coal sector, there is no change at all. Therefore, it is important for me to state clearly that the existing regulations will remain unchanged indefinitely. It is my duty to maintain that,” Bahlil said during the press conference in Jakarta.
According to Bahlil, this clarification is intended to provide certainty to business actors. He urged entrepreneurs not to worry about regulatory stability. “Today we held a long discussion, nearly 1.5 hours, on how to formulate a policy that provides certainty to business actors, particularly in the mining sector,” Bahlil explained.