The Indonesian government is considering changing the royalty rate for tin.
The government has been debating the existing system in a session today (21 June 2022). Currently, tin producers pay a flat rate of 3% on all tin production to the government.
However, the new structure would be progressive, meaning that at higher tin prices, producers pay a higher rate. The change was supported by the Ministry of Energy and Mineral Resources (EDSM) in today’s hearing. The Ministry noted that it would attempt to strike a balance with the rates to both benefit the country and not harm the competitiveness of Indonesian producers.
The proposed rates and final progressive structure have not yet been announced.
Our view: The Indonesian government has been looking to increase the value the country gets from its natural resources in recent years. The changing royalty rate structure may be one such way to achieve this. This plan is not an alternative to the proposed change to exports and would affect domestically sold tin as well.