October 11, 2019 / 8:16 AM / 3 days ago

Indonesia considers bauxite royalty rule changes amid output surge

JAKARTA (Reuters) - The Indonesian government has opened discussion on a proposal by the bauxite-rich province of West Kalimantan for a change in royalty rules after a jump in production in recent months, according to a statement issued on Friday.

The central government is in the process of revising regulations and a draft will soon be submitted for President Joko Widodo’s approval that has already accommodated some of the West Kalimantan government’s request to change the royalty rate, according to a statement issued by the coordinating ministry for maritime affairs, which oversees mining.

The ministry did not specify which regulation it was referring to.

Authorities currently charge miners 3.75% of revenue from sales of bauxite.

The West Kalimantan government wants to get a larger share of revenue from the commodity, by being granted some authority to handle a miner’s export permit as well as through the recalculation on the royalty rate for bauxite, Syarif Kamaruzaman, an assistant to the provincial secretary, said in the statement.

“We want the mining products to be an initial capital for our people so that when we run out of them, residents in the area can still have economic independence to start to develop businesses in other sectors,” Kamaruzaman said.

Bauxite output in the country jumped 204% in the 18-month period that ended in June, much of which came from the West Kalimantan province, the statement said.

Indonesia’s central bank data showed that the country exported 8.4 million tonnes of bauxite in January to July this year, nearly double the exports in the same period last year at 4.4 million tonnes.

Indonesia, the world’s top nickel ore supplier, last month said it will stop nickel ore exports from Jan. 1, 2020, pushing forward a ban by two years and raising concerns of global supply shortage.

Although it had kept the deadline on bauxite export ban unchanged for January 2022, a senior official said on Sept. 12 that authorities were considering to expedite the ban for exports of bauxite, tin, and others.

Reporting by Wilda Asmarini; Writing by Gayatri Suroyo and Fransiska Nangoy; Editing by Christian Schmollinger

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