Royalties on mineral ores may be raised, lawmaker says

Ika Krismantari, The Jakarta Post, Jakarta

The government may raise the royalties on certain mineral ores under the new mining bill, a legislator involved in the deliberation of the bill says.

Chairman of the House of Representatives' energy and mineral resources commission, Airlangga Hartarto, said Tuesday that the current royalties on valuable minerals, such as gold, silver and copper, would be raised.

"With the current high commodity prices on the domestic market, royalties of 1 percent on gold, copper and silver are too low. We are in discussions with a view to raising the royalties on these ores," Airlangga said.

He refused to reveal how much the new royalty rate would be, saying that discussions were still underway.

Airlangga said that the commission was also discussing a revision of the royalty mechanism applied to coal.

"We are considering differentiating between the royalty on high-rank coal and low-rank coal. We will consider applying a lower royalty to low-rank coal producers to boost production," Airlangga said.

Currently, the state gets a cut of 13.5 percent in taxes and royalties on coal production.

Indonesia is expected to see increasing demand for low-rank coal over the next three years, by the end of which state power firm PT PLN will have opened a large number of new coal-fired plants under its 10,000-megawatt program.

The mining bill, which has been under deliberation for the past several months, still has a small number of outstanding items to be resolved -- such as determining the transition period for the holders of existing contracts of work (CoW) in adjusting to the new permit system.

"Some have suggested that we give a 5 year transition period, but the government wants us to keep honoring the existing contracts and let them continue operating until they expire."

Airlangga is optimistic that the House will have passed the bill into law by December.
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