Indonesia drops plan for mining gross split scheme, keeps existing contract system

By Calvin Purba

Indonesia has abandoned plans to introduce a gross split revenue-sharing scheme for the mining sector and will retain the existing contractual framework for mineral and coal operations, Energy and Mineral Resources Minister Bahlil Lahadalia said on Monday.

The decision follows discussions within the government on measures to increase state revenue from natural resources.

"Based on existing regulations and the President's directive, the gross split calculation scheme applies only to the oil and gas sector. Meanwhile, there will be no changes whatsoever in the mineral and coal mining sector," Bahlil told a press conference.

He said the government remains committed to maintaining regulatory certainty for mining companies and preserving the current legal framework governing mineral and coal operations.

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Bahlil also reiterated plans to manage mineral and coal production through a relaxation mechanism linked to market conditions.

Under the policy, production quotas may be increased when commodity prices are strong, while output could be restrained when prices weaken to help maintain market balance.

"We will implement measured relaxation. If prices are strong, we will increase production. If prices begin to plateau, we will also introduce policies to maintain the balance between supply and demand," he said.

The clarification removes uncertainty surrounding earlier discussions on extending the gross split model, which is currently used in Indonesia's upstream oil and gas sector, to the mining industry.

Editing by Alexander Ginting