Signed by President Prabowo Subianto on 11 April, the new policy was enacted through Government Regulations No. 18 and 19 of 2025 and came into effect on 26 April. The royalty rates apply only to operations holding mining licenses; smelters without mining licenses are exempt.

Under the new rules, nickel products such as mixed hydroxide precipitate (MHP), nickel sulphate, and Class 1 nickel, which were previously exempt, are now subject to a flat royalty rate of 1.5–2.0%. Meanwhile, the royalty rates for ferronickel (FeNi) and nickel matte have been revised downward from the levels proposed in the March draft.

The government set higher royalty fees for high-grade nickel ore to encourage miners to invest in downstream smelting capacity rather than selling unprocessed ore directly to domestic processors. The aim is to support Indonesia’s broader strategy to strengthen its battery and electric vehicle (EV) supply chains and capture greater downstream value.

The policy is also expected to slow the ongoing decline in the average grade of Indonesia’s nickel ore, which has been one of the sector’s greatest challenges in recent years. Notably, the royalty fee for low-grade ore (<1.5% Ni) remains unchanged, incentivising smelters to increase their use of lower-grade feedstocks.

For nickel, the higher royalties may provide some support for LME prices, which continued their downward trend into April 2025. However, the impact of rising costs on prices is likely to be offset by low demand, driven by ongoing global trade tensions, particularly between China and the USA, and a slowdown in demand for NCM (nickel cobalt manganese) cathode material for Li-ion batteries.

The Indonesian government has stated that it will assess the policy’s impact on company profitability and has requested relevant financial data from affected businesses for further analysis.

HMA nickel price (US$/t Ni)	Ni ore (Ni>1.5%)	Ni ore (Ni<1.5%)	NPI	FeNi	Matte	MHP	Nickel sulphate	Class1 Nickel
< 18,000	14%	2.0%	5.0%	4.0%	3.5%	2.0%	2.0%	1.5%
18,000 - 21,000	15%		5.5%	4.5%	4.0%
21,000 - 24,000	16%		6.0%	5.0%	4.5%
24,000 - 31,000	18%		6.5%	5.5%	5.0%
≥ 31,000	19%		7.0%	6.0%	5.5%

Table: Landed non-tax state revenue or Pendapatan Negara Bukan Pajak (PNBP) royalty rates Source: Indonesia Government Regulation No. 19 of 2025

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Strategic Insights: Due Diligence for Upstream Opportunities

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