Indonesia to revise royalty rates on coal, gold in bid to boost revenue

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Indonesia plans to adjust its royalty payment policies on sales of gold and coal in an effort to boost state revenues as prices of the two commodities recover, a Reuters report said.

The world’s top exporter of thermal coal expects a recovery in prices and exports this year after scoring a $1.5-billion trade deal with China.

Home to the world’s biggest gold mine, Indonesia also ranks among the top producers of the precious metal, benefiting from a price rally last year.

“In an effort to increase state revenue, we are in the process of adjusting the gold and coal royalty rates,” Ridwan Djamaluddin, the director general of minerals and coal at the ministry, told an online conference.

Indonesia now plans to revise coal royalty payments to a system based on both calories and market price, as opposed to just calories now, Ridwan added.

Companies currently pay 2 per cent to 7 per cent of coal sales to the central government in royalties, while gold royalty payments are now set at 3.75 per cent to 5 per cent of gold sales, based on prices of up to $1,700 per ounce. Since prices have exceeded that, it is time to revise the royalty rates, Ridwan said. “With the increasing gold price, state revenue from this precious metal could increase too,” Ridwan added, without disclosing details, such as when the changes will take effect.

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