Vale to ditch 20% of its nickel assets in Indonesia

Vale’s mining and processing facility near Sorowako on the island of Sulawesi. (Image from Vale)

Indonesia’s outgoing government and Brazil’s Vale (NYSE:VALE) signed an amended mining contract Friday under which the company agrees to divest a 20% percent stake to Indonesian parties within five years.

The deal, reports The Jakarta Post, is considered a milestone in the current regime’s attempt to renegotiate a number of mining contracts before the new leaders take office on Monday.

Vale, which produces nickel matte or crude nickel, also agreed to pay higher royalties to Southeast Asia’s largest economy, effective immediately. It will now pay 2% in royalties to Indonesia, up from between 0.6% 0.7%.

In addition, the firm will have to reduce its mining-area size to 118,435 hectares from the previous 190,510.

This is not the first time the Rio de Janeiro-based miner divests stakes in the country. Recently Vale unloaded a 20% stake via its public listing on the Indonesia Stock Exchange.

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