Indonesia Retreats from Mining Royalty Hike: Bahlil Shelves Plan to Protect Investment Climate

JAKARTA, Investortrust.id — In a sudden victory for the mining lobby, Indonesia is hitting the brakes on its plan to squeeze more revenue from the country's vast mineral wealth. Energy and Mineral Resources Minister Bahlil Lahadalia announced on Monday that the government will suspend and re-evaluate a proposed royalty hike that had sent jitters through global commodity markets.

Indonesia is a systemic player in global supply chains, particularly for nickel and copper. Any sudden change in its fiscal regime directly impacts the cost basis for global EV battery production and industrial manufacturing. By shelving the royalty hike, Jakarta is signaling to global investors that it prioritizes a stable investment climate over immediate fiscal gains, especially as it attempts to cement its position as a downstreaming hub.

The Pivot to a "Win-Win" Formula

Minister Bahlil Lahadalia clarified that the previously circulated tariff schemes were part of a public testing phase rather than a finalized decree. Speaking at the Ministry’s secretariat in Jakarta, the Minister emphasized that the government is listening to the industry's anxieties.

"When there are responses that are perhaps inappropriate or require us to build a new formulation, then I, as the Minister of Energy and Mineral Resources, will conduct that evaluation," Bahlil said. He noted that the public consultation is a legal mandate, designed to catch policy flaws before they become law.

Halting the June Deadline

The government’s original target was to have the new rates active by June 2026. However, Bahlil has now scrapped that timeline to prevent the industry from being overwhelmed at a time when downstreaming efforts are still scaling up.

"I think I will delay it to build a good formulation, one that is mutually beneficial. The state must profit, but the entrepreneurs must also profit," Bahlil stated. He reiterated that the government refuses to rush into a policy that could inadvertently cripple the very sectors it is trying to promote. "We must find an ideal formula that does not harm businessmen but still allows us to optimize state revenue."

Broad Impact Across Minerals

The now-suspended revision to Government Regulation (PP) No. 19 of 2025 was set to adjust the Non-Tax State Revenue (PNBP) rates for nearly every major mineral commodity in the country. This included planned adjustments for heavyweights like copper, gold, and tin, as well as nickel ore—the crown jewel of Indonesia’s industrial strategy.

While the "pending" status provides immediate relief for miners, the industry remains on high alert as the Ministry continues to "think again" about where the final royalty floor will land. For now, the focus shifts back to operational efficiency as the specter of increased government take recedes into the second half of the year.