JAKARTA, November 14, 2026 — Indonesian President Prabowo Subianto said the state must secure at least 70% of benefits from all mining permits and, if necessary, hold controlling stakes in mining assets. The directive, delivered in a speech to the Muhammadiyah Islamic organisation, signals a sharper pivot in how Jakarta intends to rewrite the economics of its mineral wealth.
The 70% Mandate and What It Covers
Prabowo said the 70% figure refers to proceeds from the management of mining permits, not royalties alone, according to a presidential palace statement. “From now on, all mining permits, at least 70% must benefit the state. If necessary, the shares should be state-controlled,” he said. The president added that Indonesia remains open to mining investors but insisted “the profits must predominantly go to the Indonesian people.”
From Gross‑Split Proposal to Presidential Order
The concept of a 70/30 split surfaced earlier this year when Deputy Energy Minister Yuliot Tanjung floated a gross‑split scheme for the mineral and coal sectors that would allocate 70% of output to the government and 30% to the operator. Energy Minister Bahlil Lahadalia said in June that the proposal had been dropped after consultations with Prabowo, indicating internal debate before the president’s latest public directive.
Implications for Freeport, Vale and Other Major Operators
Foreign operators such as Freeport, which runs the giant Grasberg copper mine, and Vale, a key nickel producer, have already navigated Indonesia’s tightening ownership rules and export bans on raw minerals. The new mandate forces a renegotiation of royalty rates, equity stakes and export terms. Jakarta’s leverage is reinforced by its position as Southeast Asia’s largest economy and a G20 member, while state‑owned enterprises hold assets worth more than US$1 trillion as of 2024, giving the government substantial capacity to take larger stakes.
Fiscal Tools at Jakarta’s Disposal
The government can adjust royalties, enforce divestment rules that require foreign miners to sell down equity over time, and restrict exports of unprocessed ore to push value‑added processing domestically. These instruments have been used before; the latest order suggests they will be applied more aggressively to meet the 70% threshold.
Sovereign Wealth Fund Model Gains Attention
Economist Raden Pardede, founder of CReco Research Institute, has urged channelling mining revenues into a long‑term investment fund modelled on Norway’s Government Pension Fund Global. Norway’s fund, managed by Norges Bank Investment Management, held NOK22,014 billion (approximately US$2.35 trillion) at the end of September 2026. Pardede argues that Indonesia’s coal, nickel and copper reserves could face depletion within 10 to 15 years and that proceeds should be invested in manufacturing technology, biotechnology, agribusiness and supply chains rather than spent on current consumption. He also cited Saudi Arabia’s diversification efforts as a comparable example. Indonesia already operates two major investment institutions that could form the basis of such a fund.
Sources
- Economy of Indonesia
- French Multinational Eramet, Part Owner of Controversial Mining Complex in Indonesia, Joins IRMA Board
- Indonesia's Rp80 Trillion Elang Mine Plan Puts Mining Camp Planning in the Spotlight
- Economist urges Indonesia to channel mining revenues into long-term investment fund
- Indonesian president orders greater share of mining benefits for the state
Photo: Lyg 2001 (CC BY-SA 4.0)
