Indonesia nickel ore royalties double in regulations shake-up

FILE PHOTO: A worker watches as trucks load up raw nickel near Sorowako, Indonesia's Sulawesi island, January 8, 2014. REUTERS/Yusuf Ahmad/File Photo

JAKARTA (Reuters) - Major nickel ore exporter Indonesia will double royalties on sales of the ore to 10% while also adjusting the charges for other minerals, according to a copy of new government regulations seen by Reuters.

Indonesia is aiming to reduce its reliance on natural resources exports by building smelting industries for minerals such as nickel, bauxite and copper. It will stop exporting nickel ore from January to process it domestically.

“The (royalty) tariffs on nickel needed readjustment to give more balanced rates between ore miners and those who produce refined products,” said Yunus Saefulhak, director of minerals at the mining ministry.

The adjustment is also aimed at encouraging miners to add value to ores by imposing lower royalties for processed products, he added.

The new regulations, which take effect from Dec. 25, also include a 5% royalty on sales of nickel pig iron.

Royalties for sales of ferronickel and nickel matte will be halved to 2% for each, down from 4% previously, with 2% new royalties also imposed on other nickel products, such as mixed hydroxide precipitate and nickel sulfide.

The country currently only processes nickel ore into nickel pig iron, nickel matte and ferronickel but aims to start producing products such as battery grade nickel chemicals in the coming years.

On other minerals, the government is raising royalties on copper ore to 5% and has set royalties for copper concentrate at 4%, the regulations showed.

Royalties on bauxite are doubled to 7%, with aluminum set lower at 2%.

Reporting by Wilda Asmarini, Fransiska Nangoy; Editing by David Goodman