Regulation on Mineral Sales Benchmark Again Released, Nickel Selling Price Maintained

MINISTRY OF ENERGY AND MINERAL RESOURCES

REPUBLIC OF INDONESIA

PRESS RELEASE

NUMBER: 167.Pers/04/SJI/2020

Date: 24 April 2020

Regulation on Mineral Sales Benchmark Again Released, Nickel Selling Price Maintained

To create a fair and competitive trading system for the sales of mineral and coal as well as to increase state revenue, the government issued Regulation of Minister of Energy and Mineral Resources Number 11 of 2020 on Third Amendment to Regulation of Minister of Energy and Mineral Resources Number 07 of 2017 on Procedures for Setting the Price Benchmark for the Sales of Metallic Minerals and Coal.

The ministerial regulation controls the obligation of Holders of Operation Production IUP of Metallic Minerals and Operation Production IUPK of Metallic Minerals who produce nickel ores, to refer to the Mineral Benchmark Price (HPM) for Metals in selling nickel ores. The obligation also applies if these Holders want to sell nickel ores to their affiliates.

All provisions set out in the ministerial regulation will become applicable thirty days from the regulation issuance.

"Through this ministerial regulation, we want to support the growth of domestic nickel market and to make sure nickel ores are sold according to market price, so that holders of Operation Production IUP, particularly those of nickel, are protected", said Head of Bureau of Communication, Public Information Services, and Cooperation of Ministry of EMR, Agung Pribadi.

The Metals HPM itself is the floor price used to calculate the production fee obligation of the holders of Operation Production IUP for Metallic Minerals and Operation Production IUPK for Metallic Minerals; as well as the selling price reference used by the holders of Operation Production IUP for Metallic Minerals and Operation Production IUPK for Metallic Minerals to sell nickel ores, the sales of which refer to the HPM formula and the HMA issued by the Minister on a monthly basis.

If there are differences in the quote period of the Metallic Minerals Reference Price used to calculate the Metals HPM with the quote period of the transaction, penalties on impurities, or bonus for certain minerals, sales of nickel ores will be carried out according to the following rules:

1. if the transaction price is lower than the Metals HPM in the quote period according to the Metallic Minerals Reference Price or if there are penalties on impurities, sales can be made below the Metals HPM with a difference of 3% (three percent) maximum; or
2. if the transaction price is higher than the Metals HPM in the quote period according to the Metallic Minerals Reference Price or if there are bonuses for certain minerals, sales must be completed according to the transaction price which is above the Metals HPM.

"The Metals HPM is based on a formula consisting of metallic mineral grade/content; constant; HMA; corrective factor; treatment cost and refining charges; and/or payable metal determined by Minister of EMR, and which we will review every 6 months, or at any time if needed," Agung explained. (IY)

Head of Bureau of Communication, Public Information Services, and Cooperation

Agung Pribadi (08112213555)

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