Indonesia weighs on bauxite royalty rule changes on increased output from West Kalimantan

Indonesian government is weighing on the proposal of the bauxite-rich province of West Kalimantan for change in royalty rules after the recent increase in bauxite production.

According to a statement from the coordinating ministry for maritime affairs in charge of mining, the central government is in the process of revising regulations and a draft will soon be submitted to President Joko Widodo for approval. He has already approved some changes in the royalty rate as suggested by the West Kalimantan government.

The ministry however did not specify which regulations are being revised. Currently miners pay 3.75% of revenue from sales of bauxite to the government.

The West Kalimantan government asks for a larger share of revenue from bauxite, and some authority to handle a miner’s export permit as well as over the recalculation of 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.

According to the statement, Indonesia’s bauxite production jumped 204% in the 18-month period that ended in June, much of which was mined in West Kalimantan province. Indonesia’s central bank data showed that the country exported 8.4 million tonnes of bauxite in January to July 2019, almost doubled from 4.4 million tonnes exported in the same period of 2018.

Though Indonesia stopped nickel ore exports from Jan. 1, 2020, it had kept the date for bauxite export ban unchanged for January 2022. However, authorities have been weighing on expediting the ban for bauxite and other ore exports.