IMA: To Maintain Investment Climate, Financial Obligations Stability is Needed
Jakarta, MINING - In recent times, the mining world has been abuzz with discussions on the planned implementation of the Product Sharing Cost (PSC) scheme. Regarding this, the Indonesian Mining Association (API-IMA) has shared its views. IMA reminds that the minerals and coal mining (minerba) industry has very different business characteristics compared to the oil and gas (migas) industry. The minerba industry differs in terms of business models, investment patterns, risk levels, regulations, and permitting mechanisms.
Executive Director of API-IMA, Sari Esayanti, explained that the minerals and coal mining industry has a high level of complexity with varying characteristics for each commodity. This condition makes the fiscal policy approach and state revenue mechanism in the minerba sector unable to be equated with the migas sector.
“The minerals and coal mining industry has unique characteristics with different 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.
IMA assesses that implementing a profit-sharing scheme like the production sharing contract (PSC) as in the migas sector will face significant challenges if applied to the minerba mining sector. This is due to the fundamental differences in business cycles, risk profiles, cost structures, and operational mechanisms between the two sectors.
Furthermore, IMA emphasises the importance of policy stability, particularly regarding companies’ financial obligations, to maintain the sustainability of investment and operations in the national mining industry.
“We hope for stability in financial obligations so that the investment climate remains maintained and mining operations sustainability can run well. Currently, the industry faces various policy adjustments such as changes to DHE, royalties, HPM, export duties, and the implementation of B50, which further add to operational challenges for mining companies,” added Sari.
IMA views that policy certainty and consistency are important factors in maintaining the competitiveness of Indonesia’s mining industry, especially amid global dynamics and the increasing need for long-term investment to support national downstreaming and energy transition.