Metal Mining  

Moderating Regulatory Risks

 

  • We believe the regulatory risks for the sector are moderating as the punitive proposals are becoming more accommodative.
  • Single-SOE exporter (DSI) remains a key overhang as goods ownership, pricing, settlement and implementation remain unclear.
  • We prefer ANTM and TINS, given limited exposure to DSI, resilient demand drivers, and improving earnings visibility.

 

A stack of domestic overhang capped the sector in 1H26

Despite the strong fundamentals, Indonesian metal names spent 1H26 under a cluster of policy noises namely: proposed royalty revision (prev report), HPM reset, changes into gross split system, and the one-door export scheme (BUMN Eksporter/ PT DSI) which raised questions over prices realization. Together these compressed sector multiples even as commodity price held firm.

 

The government has since defused most of them.

We see recent policy developments to have become more constructive. Following an 8th June coordination meeting between parliament and the government, Energy Minister Bahlil Lahadalia confirmed that the gross-split scheme will remain exclusive to oil & gas, removing a key overhang for mining names. He also signaled a more flexible, price-linked RKAB approach, while the royalty revision was postponed pending a revised formula. With the most punitive proposals now delayed and production quotas becoming more supportive, we believe regulatory risks have moderated.

 

One overhang stays live and it is structural

The remaining uncertainty lies in Permendag 17/2026, which from 1st January 2027 channels ferroalloy exports through PT DSI. We believe NPI falls within scope, as it is classified under the ferronickel HS category (7202.60), while nickel matte and HPAL intermediates remain excluded. However, critical implementation details remain unresolved, including ownership structure, pricing methodology, title transfer, settlement mechanisms, and DSI’s formal appointment. Although PP 24/2026 accommodates multiple models, the absence of commercial clarity keeps the regulatory overhang in place.

 

Top picks: ANTM and TINS, insulated from DSI mechanism.

We prefer names with limited exposure to the evolving export framework. ANTM (Buy, TP Rp4,800) derives more than half of earnings from royalty-free domestic gold trading, while exports contribute only ~2.5% of revenue. Meanwhile, anticipated RKAB additions should support volume growth in 2H26F. TINS (Buy, TP Rp4,500) sits entirely outside the three commodities covered by the single-door export policy, giving it zero DSI exposure. With potentially royalty risks easing and structural demand from solder and semiconductors intact, its risk reward remains attractive.

 

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