Mining Industry Examines Impact of Royalty Adjustment
JAKARTA - The government’s plan to once again adjust royalty rates for several strategic mineral commodities is seen as adding pressure to the national mining industry. Amid global commodity price dynamics and a slowdown in downstream industrialisation, business players hope the government maintains a balance between state revenues and investment certainty in the minerals and coal sector.
The government, through the Ministry of Energy and Mineral Resources (ESDM), has previously proposed adjustments to royalty rates for commodities such as gold, copper, tin, and nickel along with their downstream products.
“This policy can fundamentally be understood as the state’s effort to increase revenues amid global commodity price dynamics,” said Professional Expert at Lemhanas, Edi Permadi, in his statement on Friday (9/5/2026).
“However, on the other hand, industry players view adjustments that are too frequent and aggressive as potentially creating investment uncertainty in the national mining sector,” he continued.
Market players also highlight the frequency of policy changes, which is seen as increasingly rapid. The previous royalty rate adjustment was only implemented in April 2025. Then, in March 2026, there was talk of a further increase, though it was ultimately not enforced.
Subsequently, on 9 May 2026, the proposal for an increase re-emerged in a relatively short timeframe. This situation is seen as fostering perceptions of rising regulatory risk in the eyes of investors.
“Annual changes to the Work Plan and Budget (RKAB), combined with repeated royalty adjustments in short periods, are seen as making project economic calculations increasingly complex,” said Edi.
“In fact, the mining sector is a capital-intensive industry that greatly requires long-term policy certainty,” he added.
According to him, this pressure is also reflected in the increasing market sensitivity to the direction of natural resources sector policies. The pressure experienced by the Composite Stock Price Index (IHSG) in recent times is seen as not only influenced by external factors but also investor concerns about the direction of fiscal policies in the minerals sector.
Edi also assessed that there is a tendency for the fiscal approach to the minerals and coal sector to be directed towards resembling the revenue patterns of the oil and gas industry. However, the characteristics of the two sectors differ.
He explained that the oil and gas industry has contract structures, reserve profiles, and investment patterns that are not entirely comparable to the minerals and downstream sectors. Meanwhile, the minerals industry, particularly nickel and its derivatives, is currently facing pressures from global oversupply, declining smelter margins, expensive raw materials due to geopolitical pressures, and substantial downstream investment needs.
However, entering 2024, growth slowed to 4.9 percent in line with corrections in global commodity prices and increasing nickel oversupply pressures worldwide. Subsequently, in 2025, the mining sector contracted by minus 0.66 percent.
Several smelter projects and high pressure acid leach (HPAL) facilities are also facing margin pressures due to falling international nickel prices, while energy, operational, and financing costs remain high.
“Entering the first quarter of 2026, the contraction trend continues to minus 2.14 percent. Industry players are still monitoring the weakness in prices of several mineral commodities and uncertainty in global demand amid a slowing world economy,” revealed Edi.