New ESDM Regulation of Benchmark Prices of Metallic Mineral and Coal Commodities (No. 268.K/MB.01/MEM.B/2025)

On August 8th, 2025, Indonesia's Ministry of Energy and Mineral Resources (ESDM) has issued a new regulation titled Guidelines for the Establishment of Benchmark Prices for the Sale of Metallic Mineral and Coal Commodities (No. 268.K/MB.01/MEM.B/2025). Upon this matter, the previous regulation with the same title (72.K/MB.01/MEM.B/2025) are revoked and declared null and void. This regulation is establishing a calculation towards Mineral Benchmark Price (HPM) for mineral resources and processed products sold by mining business license holders. Overall, there seem to be not much difference in the formula calculations compared to the previous version.

However, it is important to note that some new clauses have been added. The fourth clause of new regulation stipulates:

‘’In the case where a holder of a Mining Business License (IUP) in the Production Operation stage, a holder of a Special Mining Business License (IUPK) in the Production Operation stage, or a holder of a Special Mining Business License as a Continuation of the Operation of a Contract/Agreement, including holders of a Contract of Work (CoW) and holders of a Coal Mining Concession Work Agreement (PKP2B) — sells metallic minerals or coal under a contract below the Benchmark Mineral Price (HPM) or the Benchmark Coal Price (HPB), the HPM and HPB shall nevertheless be used in the calculation of tax obligations and shall serve as the base price for the imposition of production royalties."

Meanwhile, the third clause stated that:

“The HPM (Mineral Benchmark Price) and HPB (Coal Benchmark Price) as referred to in first clause are the minimum selling price for metallic minerals or coal by holders of a Mining Business License (IUP) in the Production Operation stage, holders of a Special Mining Business License (IUPK) in the Production Operation stage, and holders of a Special Mining Business License as a Continuation of the Operation of a Contract/Agreement, including holders of a Contract of Work (CoW) and holders of a Coal Mining Concession Work Agreement (PKP2B).”

According to the fourth clause, the wording appears ambiguous, as it could imply that company holders of Mining Business License and other similar licenses are allowed to sell the mineral and coal below the Benchmark Price that has been determined by the ESDM, provided that the HPM and HPB remain the reference for calculating the tax obligations and serve as the base price for determining production royalties. It might create an opportunity for sellers to offer their products below the HPM and HPB, which was previously not permitted. Several local smelters and mining companies are also in discussion concerning this new regulation. This interpretation contradicts the third clause, which explicitly mentioned that the HPM and HPB should be set to be the minimum selling price. As of today, the ESDM has not issued further clarification on this matter. SMM will continue to closely monitor the developments regarding this regulation.