The Indonesian government has implemented new royalty rates, also known as the non-tax revenue or Penerimaan Negara Bukan Pajak (PNBP) for nickel products, effective from 26 April.
Some of the effective royalty rates were slightly adjusted from the previous proposal on 8 March.
The PNBP royalty rate for nickel ore remained the same as the proposal, which was revised from a fixed 10pc to a range of 14-19pc, depending on the Harga Mineral Acuan (HMA) nickel price — the reference price for nickel ore.
Implemented nickel pig iron (NPI) royalty rates were also as proposed at 5-7pc, depending on the HMA, from a flat rate of 5pc.
The Indonesian government set the new royalty rate for ferronickel at 4-6pc, a slight drop from the proposed 5-7pc but an increase from the previous fixed 2pc.
Royalty rates of nickel matte were similarly imposed lower at 3.5-5.5pc, down from the proposed 4.5-6.5pc but higher than the previous 2-3pc.
Royalty rates for nickel mixed-hydroxide-precipitate (MHP) were newly introduced at a flat rate of 2pc.
The new royalty rates are expected to increase production costs in the longer term but is likely to have limited immediate impact on prices. The nickel industry and government are in ongoing discussions over profitability concerns and possibility of delaying the implementation, but other details could not be confirmed.
| Nickel royalty rates | ||
| HMA nickel ($/t) | Proposal on 8 March (%) | Implemented rates (%) |
| Nickel ore | ||
| <18,000 | 14.0 | 14.0 |
| 18,000 < 21,000 | 15.0 | 15.0 |
| 21,000 < 24,000 | 16.0 | 16.0 |
| 24,000 < 31,000 | 18.0 | 18.0 |
| ≥ 31,000 | 19.0 | 19.0 |
| NPI | ||
| <18,000 | 5.0 | 5.0 |
| 18,000 < 21,000 | 5.5 | 5.5 |
| 21,000 < 24,000 | 6.0 | 6.0 |
| 24,000 < 31,000 | 6.5 | 6.5 |
| ≥ 31,000 | 7.0 | 7.0 |
| Ferronickel | ||
| <18,000 | 5.0 | 4.0 |
| 18,000 < 21,000 | 5.5 | 4.5 |
| 21,000 < 24,000 | 6.0 | 5.0 |
| 24,000 < 31,000 | 6.5 | 5.5 |
| ≥ 31,000 | 7.0 | 6.0 |
| Nickel matte | ||
| <18,000 | 4.5 | 3.5 |
| 18,000 < 21,000 | 5.0 | 4.0 |
| 21,000 < 24,000 | 5.5 | 4.5 |
| 24,000 < 31,000 | 6.0 | 5.0 |
| ≥ 31,000 | 6.5 | 5.5 |
| MHP | ||
| Flate rate | - | 2.0 |
| Source: Indonesian government | ||
