IMA Seeks Fiscal Certainty for Mining, Worried New Burdens Will Disrupt Investment
The national mineral and coal mining industry is facing increasingly complex policy pressures. Amid various government regulatory adjustments, the Indonesian Mining Association (IMA) hopes for stability in financial obligations to maintain the investment climate and ensure the sustainable operation of the national mining sector.
Executive Director of the Indonesian Mining Association (IMA), Sari Esayanti, emphasised that the mineral and coal mining sector cannot be equated with the oil and gas industry (migas), particularly in the application of fiscal policies and state revenue mechanisms.
According to her, the mineral and coal mining industry has far more diverse business characteristics, ranging from commodity types, investment patterns, risk levels, to operational models in the field.
“The mineral and coal mining industry has unique characteristics with varying levels of complexity for each commodity. This fundamental difference is why many countries apply royalty and fiscal systems that differ from the migas sector,” said Sari in her statement in Jakarta on Friday (8/5).
This statement comes amid growing discussions on applying a scheme similar to the production sharing contract (PSC) in the mining sector, as has been implemented in the migas industry. However, IMA assesses that such an approach could face significant challenges if forced into the mineral and coal mining industry.
IMA highlights the fundamental differences between the two sectors, from business cycles, cost structures, exploration risks, to permitting mechanisms and production operations.
On the other hand, mining industry players are currently facing various policy adjustments deemed to add pressure to business continuity. Some of these include changes to export proceeds regulations (DHE), royalty adjustments, benchmark mineral prices (HPM), export duties, and the implementation of mandatory B50 biodiesel.
“We hope for stability in financial obligations so that the investment climate remains maintained and mining operations can run sustainably,” said Sari.
IMA views regulatory certainty and consistency as crucial factors in maintaining the competitiveness of Indonesia’s mining industry amid global economic uncertainties. Moreover, this sector requires substantial long-term investments to support the mineral downstreaming programme and the national energy transition agenda.
As one of Indonesia’s largest mining organisations, IMA currently has more than 90 members consisting of mining companies and supporting mining industry companies. The organisation, established in 1975, states that its members contribute around 60 percent to the national coal mining GDP and 80 percent to the national mineral mining GDP.