Oil and Gas Profit-Sharing Scheme Applied to Mining? Here is the Reaction from Businesspeople and Experts

The government is examining the application of a profit-sharing system similar to that in the oil and gas sector for the mineral and coal mining industry. This is intended to ensure that the management of natural resources provides greater benefits to the state and public welfare.

In response to the proposal, Chairman of the Indonesian Mining & Energy Forum (IMEF), Singgih Widagdo, stated that the mining sector has very different characteristics from the oil and gas industry, so applying a similar scheme requires careful consideration.

“I don’t know the details of the policy yet. However, it is clear that the mineral mining industry differs from oil. In the past, there was indeed profit-sharing and royalties in kind, but through Presidential Decree 76/1996, it was changed to cash,” said Singgih to CNBC Indonesia, quoted on Friday (8/5/2026).

According to him, the fundamental differences are evident in the permitting system in the mining sector, which is far more diverse than in oil and gas. He explained that mining business permits range from small-scale like IPR to IUPK.

“If it’s equated to oil, especially with cost recovery, how to supervise with 946 licence holders—this is just for coal, not yet minerals,” he said.

Additionally, he highlighted the highly diverse characteristics of mining commodities. For coal, for example, there are various qualities with different market patterns. Meanwhile, minerals have hundreds of types with different processing patterns, especially since the government no longer permits the export of raw materials.

“I see the government’s aim more as increasing state revenues amid the current financial situation. However, in the current global economic climate, there should be no rush,” said Singgih.

He then reminded that Indonesia is not the world’s largest owner of mining resources, so regulatory certainty is an important factor for new investors. According to him, business actors will still compare Indonesia’s investment attractiveness with other countries.

“We are not the world’s largest resource owner for mining either, so for such certainty, new investors need to compare with other countries. It could backfire, so don’t just look at the policy draft details first,” said Singgih.

Separately, the Indonesian Mining Experts Association (Perhapi) also highlighted the government’s plan to apply the oil and gas profit-sharing scheme to the mining industry.

General Chairman of the Indonesian Mining Experts Association, Sudirman Widhy, stated that the government should not rush into implementing the policy. As is known, in the oil and gas sector, there are cost recovery and gross split schemes used in cooperation contracts between the government and private parties.

“The government needs to study it first to understand the impacts on the mining industry if the scheme is applied; it shouldn’t end up deteriorating the mining industry climate,” said Widhy.

According to him, the mining industry is a sector that requires very large investments to operate. Therefore, investors need legal certainty so that the invested capital can yield positive results.

“And for such large investments, it will certainly take a considerable amount of time to produce profitable outcomes,” he said.

Widhy added that guarantees of legal and regulatory certainty are important for businesspeople who have invested in the mining sector. This is because business actors have calculated investments based on the current conditions and rules, including the royalty profit-sharing scheme.

Furthermore, if the government changes the mining profit-sharing scheme, he continued, it will affect the investment return calculations that have already been invested by businesspeople. Therefore, Perhapi requests that the government first open space for discussion with mining industry players before applying cost recovery or gross split schemes in the mining sector.

“It is important for the government to first engage in talks and discuss with mining industry players, which in this case can be represented by mining industry associations such as IMA, APBI, APNI, and others, regarding the plan to apply cost recovery or gross split as profit-sharing schemes in the mining industry,” said Widhy.

Previously, Minister of Energy and Mineral Resources (ESDM) Bahlil Lahadalia explained that the government wants to ensure that both old and new mines can contribute maximally to state revenues. One approach being considered is adopting the cooperation model from the oil and gas sector.

In the oil and gas sector, there are at least cost recovery and gross split schemes used in cooperation contracts between the government and private parties. This model is considered a reference for application in the mining sector.

“And we will use examples like the profit-sharing from our oil and gas management. Our oil and gas has cost recovery, gross split; perhaps those patterns that we will try to exercise to build cooperation with private parties,” he said.

Nevertheless, Bahlil emphasised that the concession scheme will not be abolished. The government will maintain that system but with adjustments to increase the state’s revenue share and make it more balanced.

“Still concessions, but we will optimise for revenues to be balanced with the state, and the state should get a larger share,” said Bahlil.