A worker uses the tapping process to separate nickel ore from other elements at a nickel processing plant in Sorowako, South Sulawesi Province, Indonesia March 1, 2012.
Starting later this month, Indonesia plans to implement higher royalty fees on nickel ore, ranging from 14% to 19% based on price levels, up from a flat 10% rate, according to a regulation. Nickel pig iron, a semi-refined product, will face royalties of 5% to 7%, while nickel matte will be charged 3.5% to 5.5%. These rates replace the existing 5% tariff on nickel pig iron and 2% on nickel matte.
“We support the government’s royalty plan, but we need to pick a more appropriate timing,” said Alexander Barus, chairman of the Indonesia Nickel Industry Forum (FINI), following discussions with mining ministry officials. Barus noted that FINI requested the Energy and Mineral Resources Ministry delay the fee increase until LME nickel prices hit $17,000 per ton, a level that would help companies offset the higher costs.
Industry challenges are mounting due to declining prices for products like stainless steel, nickel pig iron, and ferronickel. “The issue is, prices of our output, such as stainless steel, nickel pig iron, and ferronickel, are also dropping now. It will be onerous with the royalties,” Barus added. Additionally, the Indonesia Nickel Miner Association (APNI) highlighted rising operational costs, particularly for fuel, after the government ended biodiesel subsidies earlier this year. APNI has also advocated for delaying the new royalty fees.
A recent report from BMI revised its 2025 nickel price forecast downward from $17,000 to $15,000 per ton, citing oversupply and uncertainties related to global trade policies. These conditions further strain nickel producers’ margins.
The Energy and Mineral Resources Ministry has not yet responded to inquiries regarding the proposed delay. The new royalty policy also includes increased fees for other commodities, such as copper ore, copper concentrate, and refined tin. The government stated that the policy aims to enhance industry governance amid a widening budget deficit driven by lower tax revenue and increased spending on key programs.
