The Ministry of Energy and Mineral Resources' Directorate General of Minerals and Coal ("Directorate General") issued Circular No 04 E/DJB/2013 on July 4 for the purpose of "optimizing non-tax state revenues." In contrast to the previous rules, when royalties had to be paid within one month subsequent to shipment, the new Circular requires miners to pay royalties upfront before shipping their output. Thus, it is now incumbent upon mining companies to make sure they have sufficient funds in hand to pay their royalties upfront -- prior to shipment and possibly prior to payment from their buyers. On the upside, however, advance payment of the royalties will ensure that good title to the minerals is vested in the mining companies, which can then be transferred to the buyers.
The Circular makes no changes to the rules governing the calculation of dead rents.
Ahmad Fikri Assegaf, Bono Daru Adji, Chandra M. Hamzah, Eri Hertiawan, Eko Ahmad Ismail Basyuni and Ibrahim Sjarief Assegaf
