JAKARTA: The government has scrapped a planned profit-sharing scheme while relaxing coal and nickel production quotas to support industry stability.
Energy and Mineral Resources Minister Bahlil Lahadalia said on Monday (June 8) that the profit-sharing model applied in the upstream oil and gas sector, namely cost recovery and gross split schemes, will not be extended to mineral and coal mining.
"In the mineral and coal sector, there are no changes at all. I need to emphasise that the existing regulations will remain unchanged. It is my duty to maintain that," Bahlil said at a press conference in Jakarta on Monday.
The minister also announced a relaxation of coal production targets. The government had initially planned to cut output to 600 million tonnes this year, down from 834 million tonnes in 2024 and a 2025 target of 790 million tonnes.
Bahlil said the government is monitoring geopolitical developments and global demand closely, noting that production should ideally rise when prices are favourable.
"If prices are good, we will increase production. If prices start to plateau, we will implement policies to maintain supply and demand," he explained.
On nickel, the government will adjust ore production in the 2026 annual production plan (RKAB) to match the needs of domestic smelters. Bahlil said that the move is intended to “protect the investment climate” and ensure the downstream processing programme remains sustainable.
Industry players welcomed the government's decision to scrap the proposed profit-sharing scheme for the mining sector, coupled with planned relaxations on coal and nickel production quotas.
The Indonesian Mining Association (IMA) viewed the moves as a positive step toward ensuring stability and investment certainty in the sector. IMA executive director Sari Esayanti said the policy is needed to maintain sector resilience and maximise economic contributions amid global uncertainty.
Sari noted that while a strong United States dollar boosts coal export revenue in rupiah, it also raises miners’ operational costs, as fuel, heavy equipment and spare parts are largely imported.
"The relaxation gives companies room to offset high operational costs […] helps companies sustain operations and prevents layoffs," she said in a statement issued on Monday. She added that cost pressures and reduced quotas have already forced several mines to stop production.
IMA also expects the relaxation to boost state revenue through higher royalties and taxes, given high commodity prices and the strong dollar. "We fully support implementing this policy in a measured way for the national interest," Sari said.
The association also commended the government's decision to cancel plans to apply the profit-sharing scheme to the mineral and coal sector. Sari said the industry have fundamentally different characteristics with oil and gas sector, where the profit-sharing scheme is implemented.
"Mineral and coal mining has unique complexities. Many countries use different royalty and fiscal systems for mining compared to oil and gas," she explained.
Cancelling the scheme, IMA said, removes a potential disruption to investment, stressing that stable fiscal policies are critical amid multiple challenges faced by the industry, including new export regulations, export proceeds rules, royalty hikes and the implementation of the mandatory B50 biodiesel policy. - The Jakarta Post/ANN
