According to SMM, some nickel-related companies and civil organizations in Indonesia have expressed opposition to the government's proposal to increase the nickel ore royalty from 10% to 14%~19% as outlined in the "Amended Government Regulation (PP) No. 26/2022." These entities argue that the proposed increase to 14%~19% is "unrealistic," mainly due to the current fluctuation downward of global nickel prices and the high costs of mining and smelting projects, which have already squeezed the profit margins of some industry-related companies, even leading to losses. If implemented, the proposal would weaken the competitiveness of Indonesian nickel products in the global market and force mines to accelerate the development of nickel ore to improve the grade, thereby reducing production levels and shortening mine life, ultimately affecting the government's long-term revenue. The related companies and civil organizations propose that the government consider formulating a "gradual, realistic, and fair policy."
SMM understands that discussions on this matter are still ongoing among various parties in Indonesia, with some local nickel mining and smelting companies, as well as civil organizations, negotiating with the government to appropriately reduce the extent of the nickel ore royalty increase.
SMM will continuously track information regarding adjustments to the PNBP policy in Indonesia and provide first-hand consultations to the market.
