Indonesia's Nickel Product Royalty Policy Finally Implemented, Detailing the Progressive Changes in Tax Rates

The President of Indonesia officially signed a new policy on nickel products on April 11, 2025, which will take effect on April 26, 2025. The policy primarily adjusts the royalties for nickel ore, nickel matte, NPI, and ferronickel products, with the royalties for each nickel product dynamically adjusted based on the benchmark price HMA. The nickel ore tax rate was adjusted from a fixed 10% to 14%-19%, the nickel matte tax rate from 2% to 3.5%-5.5%, the ferronickel tax rate from a fixed 2% to 4%-6%, and the NPI tax rate from a fixed 5% to 5%-7%. The detailed changes in the new tax rates compared to the original rates are shown in the figure below. According to the new policy, the tax rates exhibit two main characteristics: an overall increase and a tiered escalation. Taking nickel ore as an example, when the HMA price is below $18,000/mt (metal content), the nickel ore tax rate is 14%, and when the HMA price exceeds $31,000/mt (metal content), the tax rate is 19%. However, based on the historical trend of HMA prices, the HMA price mostly fluctuates around $18,000/mt (metal content). Therefore, according to SMM analysis, the tax rate range after the implementation of this policy will mainly fluctuate between the first and second tiers. For further impacts after the policy implementation, please continue to follow SMM.