Last Friday afternoon, market sentiment suddenly turned fragile after the Ministry of Energy and Mineral Resources (ESDM) held a public hearing on the revision of PP 19/2025, which discussed proposed changes to mining royalty rates. The government proposed aggressive royalty hikes across nearly all major mineral commodities, including gold, copper, tin, silver, and nickel. From the government’s perspective, the move is aimed at increasing the state’s share of mining windfall profits amid still-elevated global commodity prices, in line with the implementation of Article 33 of the Indonesian Constitution. However, for a market already highly sensitive to mining regulatory risks since the beginning of the year, the proposal immediately triggered broad-based selling pressure across mining names.

The heaviest pressure was seen in companies with the highest margin sensitivity to royalty increases. TINS became the biggest laggard with a nearly 15% correction as tin faces the steepest royalty hike, while MDKA and INCO also declined by double digits amid concerns over margin compression. Meanwhile, ANTM appeared relatively more defensive due to its diversified business exposure, while AMMN continued to benefit from support provided by elevated global copper prices. Interestingly, PTBA remained relatively stable as the proposed revision has not specifically targeted coal royalties.
 

What unsettled the market further was the way the government structured the revision. The proposal not only raises nominal royalty rates but also tightens the reference price intervals, allowing companies to move into higher royalty tiers much faster. In nickel, for example, the official royalty range remains unchanged at 14–19%, but the threshold for entering the highest tier was lowered from USD 31,000 to USD 26,000 per ton. This effectively means nickel producers could face maximum royalty rates sooner, even without a return to previous supercycle price levels. On top of that, discussions around potentially introducing a PSC-style profit-sharing scheme for the mining sector added another layer of uncertainty, drawing strong opposition from industry players who argue that mining carries fundamentally different operational risks compared to oil and gas.

From a near-term perspective, Friday’s sharp correction may already be approaching overshoot territory given that the regulation remains under public consultation and has not yet been finalized. Nevertheless, the market will remain highly focused on how quickly the government moves toward finalization, as this will determine the scale of earnings revisions across mining issuers going forward. In this environment, the most rational strategy remains selective positioning in companies with low-cost structures, diversified revenue streams, and stronger resilience in protecting margins amid rising fiscal burdens. The sector appears to be shifting from an era of abundant commodity-driven profits toward one where efficiency and margin sustainability become the key differentiators for investors.