Indonesian Mining Association (IMA) applauds the government's decision to abandon the implementation of the oil and gas gross split revenue distribution scheme in the mineral and coal sector, stating that it eliminates major policy uncertainties that disrupt mining investment planning. The IMA executive chairman noted that the operational characteristics of the mineral and coal industry differ significantly from those of the upstream oil and gas sector, and the complexity of developing various types of minerals varies, which is the core reason why most countries set differentiated royalty and fiscal regimes for the two industries. The association expects the government to maintain fiscal policy stability, stabilize corporate financial burdens, and ensure the sustainability of mining investment and production operations. Currently, Indonesia's mining industry faces multiple policy adjustments and operational pressures, including regulations on single window export mechanism, foreign exchange retention from natural resource exports, benchmark mineral price adjustments, export tariffs, and mandatory blending of 50% biodiesel (B50).
Stable and consistent policies are key to maintaining Indonesia's international competitiveness in the mining sector, while the country's downstream processing and energy transition strategy also requires substantial long-term investment support. The Minister of Energy and Mineral Resources officially confirmed that the gross split mechanism applies only to the oil and gas sector, and the existing revenue distribution rules for the mineral and coal industry remain unchanged. He mentioned that he had previously met with President Prabowo at the Presidential Palace and studied the possibility of reforming the mining revenue sharing system by drawing on the oil and gas revenue model, with the initial aim of maximizing state mining fiscal revenue, planning to refer to two models: oil and gas cost recovery and gross split to restructure the public-private partnership mechanism for mining companies.
The two current revenue distribution models in the oil and gas industry differ significantly: the cost recovery model allows contractors to first deduct all operating costs from production revenue before distributing remaining profits with the state; the gross split model does not deduct operating expenses and directly distributes all production revenue according to the initial contractually agreed proportions. Bashir explicitly stated that the existing mining fiscal regime will remain unchanged for the long term, ensuring policy certainty in the market. The mining industry widely feared that copying the oil and gas gross split rules would significantly compress corporate profits and deter long-term domestic and foreign capital. The government's eventual shelving of the reform plan effectively alleviated industry concerns, creating a stable policy environment for the development of minerals such as nickel and coal, as well as downstream industry investments.
Indonesian Mining Association (IMA) applauds the government's decision to abandon the implementation of the oil and gas gross split revenue distribution scheme in the mineral and coal sector, stating that it eliminates major policy uncertainties that disrupt mining investment planning. The IMA executive chairman noted that the operational characteristics of the mineral and coal industry differ significantly from those of the upstream oil and gas sector, and the complexity of developing various types of minerals varies, which is the core reason why most countries set differentiated royalty and fiscal regimes for the two industries. The association expects the government to maintain fiscal policy stability, stabilize corporate financial burdens, and ensure the sustainability of mining investment and production operations. Currently, Indonesia's mining industry faces multiple policy adjustments and operational pressures, including regulations on single window export mechanism, foreign exchange retention from natural resource exports, benchmark mineral price adjustments, export tariffs, and mandatory blending of 50% biodiesel (B50).
Stable and consistent policies are key to maintaining Indonesia's international competitiveness in the mining sector, while the country's downstream processing and energy transition strategy also requires substantial long-term investment support. The Minister of Energy and Mineral Resources officially confirmed that the gross split mechanism applies only to the oil and gas sector, and the existing revenue distribution rules for the mineral and coal industry remain unchanged. He mentioned that he had previously met with President Prabowo at the Presidential Palace and studied the possibility of reforming the mining revenue sharing system by drawing on the oil and gas revenue model, with the initial aim of maximizing state mining fiscal revenue, planning to refer to two models: oil and gas cost recovery and gross split to restructure the public-private partnership mechanism for mining companies.
The two current revenue distribution models in the oil and gas industry differ significantly: the cost recovery model allows contractors to first deduct all operating costs from production revenue before distributing remaining profits with the state; the gross split model does not deduct operating expenses and directly distributes all production revenue according to the initial contractually agreed proportions. Bashir explicitly stated that the existing mining fiscal regime will remain unchanged for the long term, ensuring policy certainty in the market. The mining industry widely feared that copying the oil and gas gross split rules would significantly compress corporate profits and deter long-term domestic and foreign capital. The government's eventual shelving of the reform plan effectively alleviated industry concerns, creating a stable policy environment for the development of minerals such as nickel and coal, as well as downstream industry investments.
