IMA Speaks Out on the Government's Plan to Implement a Mining Revenue Sharing Scheme

Illustration. (Photo: Dok. Antara)

JAKARTA - The Indonesian Mining Association (API-IMA) has spoken out regarding the Ministry of Energy and Mineral Resources (ESDM) plan regarding the implementation of the revenue sharing scheme or production sharing contract (PSC) in mining.

For information, this scheme is usually found in the upstream oil and gas sector.

API-IMA Executive Director Sari Esayanti said that the mineral and coal mining industry (minerba) has very different business characteristics compared to the oil and gas industry (migas), both in terms of business models, investment patterns, risk levels, regulations, and licensing mechanisms.

According to him, the minerba mining industry has a high level of complexity with different characteristics for each commodity.

This condition makes the approach to fiscal policy and state revenue mechanisms in the mining sector cannot be equated with the oil and gas sector.

"The minerba mining industry has unique characteristics with different levels of complexity for each commodity. It is this fundamental difference that makes many countries implement different royalty and fiscal systems with the oil and gas sector," said Sari, Friday, May 8.

IMA assessed that the implementation of a revenue sharing scheme such as PSC in the oil and gas sector would face significant challenges if implemented in the minerba mining sector.

This is due to fundamental differences in business cycles, risk profiles, cost structures, and operational mechanisms between the two sectors.

Furthermore, IMA emphasized the importance of policy stability, especially regarding the company's financial obligations, to maintain the sustainability of investment and operations of the national mining industry.

"We hope that there will be stability in financial obligations so that the investment climate remains maintained and the sustainability of mining operations can run well. Currently, the industry is facing various policy adjustments such as changes in DHE, royalties, HPM, exit fees, to the implementation of B50 which also adds to the operational challenges of mining companies," added Sari.

IMA believes that policy certainty and consistency are important factors in maintaining the competitiveness of the Indonesian mining industry, especially in the midst of global dynamics and increasing long-term investment needs to support national energy diversification and transition.