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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.
3 Comments
Wanderlust
Good luck with the 20% divesture! In Indonesia, that means giving away 20% to Indonesian interests. A somewhat different interpretation of what westerners have.
Peter D
Not sure if Cecilia understands how mining is carried out in the “developing” world! Vale “ditching interest” ?. The correct article title should have been : “Indonesia illegally forced Vale to give away 20% of their mines after the company risked …billions of its shareholders monies in order to develop these mines in this high risk country”. The main reason the multinationals develop new mines in these high sovereign risk countries is the very low labour cost. Than these corrupt governments force the companies to give away 20…50% of their mines to the government officials, their families and friends, so they become ultra-rich without risking their own monies and meantime their working people are being paid peanuts.
Leach T.
Life is good when your a leach living off of someone elses work.