Indonesian Nickel Association and Forum Oppose Excessive Nickel Mining Penalty Standards

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The Association of the Indonesian Nickel Industry (APNI) and the Forum of the Nickel Industry (FINI) have challenged the Ministerial Decree recently issued by the Minister of Energy and Mines. The Decree stipulates administrative fines for mining violations in forest areas, the highest of which is 6.5 billion rupiah per hectare per year for nickel, which is much higher than for bauxite (1.76 billion), tin (1.25 billion) and coal (354 million).The Association sent a letter to the President and relevant ministries and the Forest Remediation Working Group, expressing its support for forest protection and compliance with the law, but arguing that the fines were too high, lacked the principles of fairness and proportionality, and were prone to create an imbalance in treatment between industries, distort the cost structure of the nickel industry, and were not in line with the principle of equal regulation.

The nickel industry is currently facingInternational price pressuresand narrowing profits and multiple financial burdens(royalties, taxes, non-tax revenues, reclamation obligations, ESG criteria, etc.)(math.) genusUniformly high fines throughout the countrywould severely squeeze business cash flow or delay investment and production, weakening the continued contribution to the state and even leading to aIncrease in short-term one-time incomeHowever, long-term tax revenues, export earnings and downstreaming contributions have declined, reducing national revenues overallThe

Association recommendationsAdjustment of fines by the proportionality formula insteadIt is also proposed that some of the fines be converted into environmental deposits, forest restoration funds, geological exploration funds, etc., to be managed by the State, so as to strike a balance between environmental protection and long-term fiscal revenues, taking into account the size, degree and type of damage, duration, economic value and characteristics of the commodities, as well as the harmonization of fines for each mineral to ensure fairness.

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