The Indonesian president’s statement is likely to impact Chinese investments in the country’s mining sector. On November 15, according to Reuters, President Prabowo Subianto stated that at least 70% of the revenues from all mining licenses must now be retained by the state, with the possibility of state ownership if necessary. The presidential office clarified in a statement that the 70% threshold refers specifically to revenues generated through the management of mining licenses. At the same time, Prabowo emphasized Indonesia’s openness to investors in the mining industry, while asserting that profits must primarily benefit the Indonesian people.

To be candid, this declaration has raised legitimate concerns. In fact, prior disruptions—such as the significant reduction in nickel mining quotas and the shift from triennial to annual review processes—had already prompted many Chinese firms to scale back operations due to tighter licensing conditions and reduced extraction allowances. Now, this latest announcement, if implemented, would place Chinese mining companies holding sole mining permits—those operating mines without integrated smelting facilities—at particular risk.

The implications are clear: first, the policy aims to reallocate revenue from mining license holders; second, Indonesia may consider taking equity stakes. If enforced, these measures could severely compress profit margins for affected enterprises. Should profitability decline sharply or turn negative, some investors might face pressure to sell their stakes at discount prices and exit the market altogether. Furthermore, after revised profit-sharing arrangements, smelters relying solely on imported ore—without direct mining rights—could face rising input costs.

Of course, the rationale behind Indonesia’s policy shift stems from two primary considerations. First, the government seeks greater share of mining revenues to ensure domestic economic benefits. Second, it aims to secure control over mineral resources and build a comprehensive domestic industrial chain, transforming raw material advantages into value-added manufacturing capacity, rather than remaining dependent on commodity exports. These objectives are not without merit. However, the inconsistency in policy direction raises concerns about long-term investor confidence.

Original source: toutiao.com/article/1881878408420364/

Disclaimer: This article reflects the personal views of the author.