BUMI Revitalized by Planned Coal Royalty Adjustments
14 Mar 2025, 04:24 PM
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PT Bumi Resources Tbk (BUMI) welcomed the proposed adjustment to coal royalty fees put forward by the Ministry of Energy and Mineral Resources (ESDM).Ahmad Reza Widjaja, Vice President of Investor Relations and Chief Economist of Bumi Resources, stated that as the holder of a special mining business license (IUPK), the company stands to benefit from the revision of the royalty tariff.The company is now seeing a positive outcome with the potential reduction in the royalty tariff, after previously being subjected to the highest progressive royalty rate of 28%. He assured that the new regulation proposed by the Ministry of ESDM will not burden the company's operations."In principle, it will not overly burden the company's operations. Including for us at BUMI, we will benefit from the proposed new tariff. BUMI, which has been paying the highest royalty tariff, will receive a significant adjustment," Reza said when contacted on Friday (March 14, 2025).According to him, the proposed revision of the coal royalty fee has been eagerly awaited, especially for companies holding the IUPK (Special Mining Business License) for the continuation of the Generation 1 Coal Contract of Work (PKP2B)."The proposal is good, this is what players in the field have been waiting for. It seems that the Palace also agrees. However, the Ministry of Finance has yet to give the green light," he said.Bumi Resources targets coal production of 80 million tons in 2025. The company’s coal production increased year-on-year, from 56.2 million tons during the nine-month period in 2023 to 57.3 million tons during the January-September 2024 period. By the end of 2024, the company’s coal production is targeted to reach between 76 and 78 million tons.Last week, the Ministry of Energy and Mineral Resources (ESDM) presented a proposal to adjust royalty tariffs for mining commodities. For coal, the royalty rate is proposed to increase by 1% for HBA ≥ USD 90, with a maximum tariff of 13.5%.The Ministry of ESDM detailed the proposed changes in the coal royalty rates based on the type of contract for the existing special mining business licenses (IUPK) 28%, as follows:Calorific value ≤ 4,200: For HBA < USD 70/ton, the proposed royalty rate remains unchanged at 5%. For HBA between USD 70 and USD 90, the royalty rate remains at 6%. For HBA ≥ USD 90, the royalty rate will increase from 8% to 9%.Calorific value > 4,200 – 5,200: For HBA < USD 70/ton, the proposed royalty rate remains unchanged at 7%. For HBA between USD 70 and USD 90, the royalty rate remains at 8.5%. For HBA ≥ USD 90, the royalty rate will increase from 10.5% to 11.5%.Calorific value ≥ 5,200: For HBA < USD 70/ton, the proposed royalty rate remains unchanged at 9.5%. For HBA between USD 70 and USD 90, the royalty rate remains at 11.5%. For HBA ≥ USD 90, the royalty rate remains at the maximum rate of 13.5%.
