Indonesia’s mining industry holding company, MIND ID, agreed on Monday to acquire a 14% stake in Vale Indonesia from Vale Canada and Japan’s Sumitomo Metal Mining, to become the top shareholder at one of the country’s largest nickel miners.
The divestment is a key condition for the extension of Vale Indonesia’s mining permit beyond 2025, with foreign investors required to transfer 51% of their combined stakes to local buyers after a certain period of operation.
Upon completion, MIND ID will be the largest shareholder in Vale Indonesia, with its stake rising to 34% from 20%.
Vale Canada will hold 33.9% and Sumitomo 11.5%, down from 43.79% and 15.03%, respectively. About 20% of the shares are publicly traded.
The shares were valued at 3,050 rupiah ($0.1952) each, senior minister Luhut Pandjaitan told reporters. They were traded at 3,830 rupiah by Monday’s closing on the local stock exchange, down 3.1% from the previous session.
Vale Canada would receive around $160 million in cash upon completion, the company said in a separate statement.
The government will work on issuing the new mining permit for Vale within ten days after the signing on Monday, Dadan Kusdiana, senior mining ministry official said, offering certainty to the company’s future operation.
Vale Indonesia will get ten years to operate under the new permit after 2025, which can be extended.
Asked about the make up of the board of directors, Deshnee Naidoo, chief executive of Vale Base Metals, the parent of Vale Canada, said all parties are in further discussion, but have agreed on the chief executive and chief operating officers.
“For now, the CEO will come from MIND ID and the COO from us,” Naidoo said.
Vale is committed to maintaining its environmental, social and governmental standards for its operation in Indonesia, she added.
($1 = 15,625.0000 rupiah)
(By Fransiska Nangoy and Bernadette Christina Munthe; Editing by Martin Petty and Louise Heavens)
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