Vale Canada, Sumitomo Metal sign initial deal to sell 14% stake in Indonesian nickel miner

JAKARTA : Mining company Vale Base Metals said its unit Vale Canada Ltd and Japan’s Sumitomo Metal Mining Co. Ltd signed an initial agreement on Friday to sell a 14 per cent stake in their Indonesian nickel mining unit to Indonesia’s state miner.

Vale Canada and Sumitomo signed a heads of agreement to sell the shares to PT Mineral Industri Indonesia (MIND ID), the country’s state mining holding company, Vale Base Metals said in a statement.

Share divestment is a condition required by Indonesia to extend Vale Indonesia’s mining permit, which is currently due to end in 2025. Foreign investors are required to divest 51 per cent of their stake to local buyers after a certain period of operation.

Upon completion, MIND ID will become the largest shareholder of Vale Indonesia with 34 per cent of shares, up from 20 per cent. Vale Canada and Sumitomo will hold 33.9 per cent and 11.5 per cent respectively, according to the statement, down from 43.79 per cent and 15.03 per cent.

Around 20 per cent of Vale Indonesia’s shares are publicly traded.

A “balanced” management structure will be set up to maintain operational stability at the Indonesian unit, the statement said.

“We look forward to working within the new shareholding structure with our partners to support the country’s downstreaming ambitions and deliver strong economic value to our stakeholders and communities over the long run,” said Deshnee Naidoo, chief executive of Vale Base Metals.

Indonesia, which has major nickel reserves, is keen to develop batteries and electric vehicles to take advantage of its rich nickel reserves.

Vale Base Metals is committing around $10 billion of investment in Indonesia over the next decade.